Deck 9: Termination and Enforcement of Contracts

Question 1

Two financial institutions unknowingly advanced loans in exchange for an assignment of rents on the same apartment building.The tenants were served with notice of the assignment by one financial institution immediately,the other served notice one week later.With respect to the payment of the rents under the assignments,which of the following would most likely be the advice given by a lawyer to the tenants?

A) Payment of the rents by the tenants is payable to the landlord.
B) Priority ranking is delegated in the order notice was effected.
C) Priority ranking is delegated to the first party to advance the loan.
D) Payment of rents must be made to the assignor of the rents.

Answer 1

B

Question 2

Where a court has been asked to determine whether the termination of a contract amounts to termination by performance,which of the following will readily allow the judge to make a determination?

A) the determination of the nature of the contract
B) the oral evidence given by each of the parties
C) the reasonableness of unforeseeability of an event
D) the factual circumstances of subsequent events

Answer 2

A

Question 3

With respect to an assignment relating to a contract,which party is entitled to receive the assigned benefits due under the original contract?

A) the signator
B) the assignee
C) the creditor
D) the assignor

Answer 3

D

Question 4

A court has considered counsel's arguments that neither of his client's signing officers were signatories to a contract and its corporate seal is absent from the document.Which of the following would the judge most likely identify as the common law doctrine counsel is attempting to satisfy?

A) balance of probabilities
B) breach of contract
C) privity of contract
D) entitlement to remedy

Question 5

Why did the Supreme Court of Canada grant leave to hear the case of London Drugs Limited v.Kuehne & Nagel International Ltd.(1992),97 D.L.R.(4th)261 (S.C.C.)?

A) to restrict employee liability relative to the doctrine of privity of contract
B) to ensure employee exclusion clauses are no longer recognized by the lower courts
C) to restrict employee liability relative to the doctrine of vicarious liability
D) to ensure employer exclusion clauses are no longer recognized by the lower courts

Question 6

Which of the following would strongly support a lawyer's opinion that a contract has come to an end due to a frustrating event?

A) The event was caused by voluntary withdrawal from the contract by one party.
B) The event was foreseeable by the parties from the outset of the relationship.
C) The event was foreseeable but not provided for in the contract by the parties.
D) The event was unforeseeable by the parties from the outset of the relationship.

Question 7

Which of the following is a distinguishing feature of vicarious performance of contractual obligations by an employee at the direction of the employer?

A) The doctrine of frustration of contract protects the employee from employer bad faith.
B) The doctrine of frustration of contract will hold the employee liable for certain acts.
C) The doctrine of privity of contract bars the employee from suing or being sued.
D) The doctrine of privity of contract bars the employer from suing or being sued.

Question 8

Donelle agreed to rent her cottage to Juan for the first two weeks of June.Juan paid Donelle the rent due on May 29 by certified cheque.On the last day in May,a forest fire burned the cottage to the ground.Under these circumstances,what is the role of the doctrine of frustration with respect to the status of the contract?

A) It applies because Donelle has breached the contract.
B) It is not applicable; performance can be postponed.
C) It applies, as performance is no longer practical.
D) It is not applicable; the settled amount has been paid.

Question 9

What is synonymous with the phrases "better than 50 percent" and "to the court's satisfaction"?

A) burden of certainty
B) burden of proof
C) beyond reasonable doubt
D) balance of probabilities

Question 10

Albert entered into a contract under the name of one of his corporations.After consulting with his accountant regarding tax implications,he asked,and the other party agreed,to change the name of the company in that contract.Which of the following would your law professor most likely state has transpired with respect to the contract between these parties?

A) amendment
B) novation
C) assignment
D) substitution

Question 11

Leslie offered to pay Murray $100 a day to show her dog in an upcoming three-day competition.Murray accepted and showed the young male dog,winning best of breed during each day's competition.Leslie paid Murray $300.Which of the following correctly describes the status of their contractual arrangement?

A) The contract has been terminated by performance.
B) The termination of the competition frustrated the contract.
C) The payment of the settlement ended the contract.
D) The contract terminated by agreement of the parties.

Question 12

If a creditor assigns a debt owed to it as a result of a contractual obligations that neither party has as yet completely performed,how would the creditor be advantaged by having done so?

A) reduction of liability insurance premiums
B) reduction of its accounts receivable
C) reduction of the risk of remuneration default
D) early collection of accounts receivable

Question 13

Lilan entered into a construction contract with William to build her new home in Moncton.Subsequently,her architect approved an alteration to the original plan,allowing for two additional windows.William agreed to the change.In order for the change to be contractually enforceable,which of the following did Lilan's lawyer most likely advise that she must do?

A) Lilan must provide fresh consideration to William to validate the contract.
B) Nothing further is required because parties are free to vary their contracts.
C) Lilan must ensure both she and William sign the varied contract under seal.
D) Nothing; the variation to the contract is lawful without fresh consideration.

Question 14

A flood will require cessation of mining operations for at least six months.How would a force majeure clause affect the legal status of the miner's obligations relating to its existing supply contracts?

A) non-performance of the contract will be excused without liability
B) gives the innocent party the right to terminate and sue for breach
C) performance obligations are suspended until a specified event occurs
D) gives the innocent party the right to sue for damages for breach

Question 15

Which of the following would immediately let you know that your existing contractual obligations have come to an end as a result of the doctrine of frustration?

A) An unforeseen occurrence caused subsequent initiation of legal proceedings.
B) An unanticipated event rendered discharge of duties functionally unrealistic.
C) An unanticipated event has caused a protracted delay in performance.
D) An unforeseen dispute over quantum has rendered performance impossible.

Question 16

If a mechanic employed by an auto repair shop does the actual work required under the shop's contractual agreement to repair a customer's automobile,which of the following will have occurred?

A) novational performance
B) substitutional performance
C) assigned performance
D) vicarious performance

Question 17

Rumie paid a $5000 retainer to a lawyer to commence a law suit on her behalf.After rendering two $1000 accounts for research,the lawyer advised the claim was too small for him to attend to.He recommended another lawyer to Rumie.In these circumstances,how does the law allow Rumie to proceed?

A) She must forfeit the full retainer and hire a different lawyer.
B) She must treat the contract as ended and sue for breach.
C) She must sue the lawyer to recover the balance of the retainer.
D) She must retain the lawyer that has now been recommended.

Question 18

Which of the following is the definition of the legal term "assignment"?

A) the substitution of parties or replacement of one contract with another
B) the right to a remedy for breach when a party has sustained a loss
C) the transfer of contractual rights from one party to someone else
D) the transfer of a contractual right by an assignee to an assignor

Question 19

Which of the following is a distinguishing feature of the doctrine of frustration?

A) Rescission is impossible due to economic impracticality.
B) No liability arises on account of the contractual breach.
C) Liability rests with the party assuming risk of occurrence.
D) A remedy of novation is generally mediated by the courts.

Question 20

A senior partner delegated the drafting and filing of a statement of claim to a first-year lawyer employed by the firm.The first-year lawyer erroneously sued the wrong parties.How will the law assign responsibility for the obligation with regard to the quality of the work performed?

A) The employer will be held responsible in law for the incompetent performance.
B) Both parties will be jointly held responsible for their combined incompetence.
C) The law will hold each party proportionately responsible for the incompetence.
D) The employee will be held responsible in law for the incompetent performance.

Question 21

Which of the following would a law professor most likely indicate as being representative of the policy rationale with regard to the remoteness test?

A) to compensate the appropriate party for decreased risk
B) to encourage the purchase of liability insurance coverage
C) to avoid unlimited liability for consequences of breach
D) to prevent one party from turning down the prospective job

Question 22

A party to a contract erroneously acted on an assumption involving breach of a innominate term.That party is itself now being sued for breach.Which of the following would a lawyer likely indicate was the erroneous action taken by this party?

A) the initiation of a claim for damages
B) the repudiation of the contract
C) an incorrect application of a warranty
D) a delay of performance of obligations

Question 23

Which of the following must be used as the determining factor upon which a court will rely to settle a dispute involving the classification of a contractual term?

A) the conditions specified in the contract
B) the warranties set out in the contract
C) the implied terms relevant to the contract
D) the intentions of the contractual parties

Question 24

Howard received $12 000 of the $39 000 price for his rare,impeccably maintained antique 1976 Jaguar XL from Wyn.Wyn will be able to add the Jaguar to her classic car collection upon payment of the balance,due 30 days from the signing the contract.Prior to that date,Philip paid Howard $45 000 outright in exchange for the Jaguar.In these circumstances,what amount of damages could you be reasonably certain of a court awarding to Wyn?

A) $ 6000
B) $45 000
C) $18 000
D) $12 000

Question 25

Within each provincial jurisdiction,a beneficiary under an insurance contract is entitled to sue under that contract even though the contractual arrangement is between parties other than the beneficiary.How is this legally possible?

A) legislation limiting application of exclusion clauses in life insurance contracts
B) common law reclassification of the application of the doctrine of privity
C) legislative amendment to modify application of the doctrine of privity
D) common law limiting application of exclusion clauses in life insurance contracts

Question 26

In order to avoid having a court impose a classification of a contractual obligation as an innominate term,which of the following actions would be appropriate?

A) Ensure that all contractual obligations are clearly described in the contract.
B) Avoid use of ambiguous language that leads to erroneous assumptions.
C) Avoid use of contractual promises that hold less significance or importance.
D) Clearly set out consequences of breach at the time the contract is created.

Question 27

Which of the following possibilities would a party considering non-performance of a contract weigh?

A) the actual anticipated gains versus the likely cost of breach
B) the moral cost to society of unethical commercial activity
C) that actual moral cost balanced against the economic gains
D) the ethical cost to the essential functioning of business

Question 28

If a plaintiff suffering harm as a result of breach of contract has received expectation damages,what has the plaintiff in fact received?

A) the dollar equivalent of contractual performance
B) monetary compensation for breach or other actionable wrong
C) monetary compensation awarded to punish the defendant
D) the dollar equivalent of awarded punitive damages

Question 29

Which of the following would a court consider the common law duty to mitigate to be imposed upon?

A) the assignee to a contractual agreement
B) the party causing a contractual breach
C) the party affected by contractual breach
D) the third party unaffected by the breach

Question 30

Aaron's $175 000 a year employment contract was terminated without notice or compensation two years before it was to expire.Within six months,he was able to secure a position under a one-year contract paying an annual consideration of $90 000.In these circumstances,which of the following could you reasonably expect a judge to award to Aaron for damages for wrongful termination?

A) $175 000
B) $70 000
C) $260 000
D) $85 000

Question 31

Which of the following would be considered to be a distinguishing feature regarding the common law remedy of punitive damages?

A) It is an award of an equitable remedy of punitive damages.
B) It represents every adverse consequence following actionable breach.
C) It is a damage award arising from a unique actionable wrong.
D) It represents an award for reasonably foreseeable damages.

Question 32

With respect to contractual relations,what is the name of the type of breach that affects the foundation of the contract?

A) conditional breach
B) substantive breach
C) fundamental breach
D) innominate breach

Question 33

Which of the following would give rise to the ability of one party to terminate a contract and bring an action for damages?

A) breach of an express term of the contract
B) breach of an innominate term of the contract
C) breach of a warranty of the contract
D) breach of a condition of the contract

Question 34

Dana has received a cheque from Storage4U Ltd.compensating her for the theft of her stored property.Which of the following denotes the types of damages Dana has been compensated for?

A) pecuniary damages
B) non-pecuniary damages
C) punitive damages
D) special damages

Question 35

Fatalia is a party to a contract with Juno.She has initiated a claim for damages arising from breach relating the quality of workmanship.Which of the following depicts the type of breach involved?

A) breach of innominate term
B) fundamental breach
C) breach of warranty
D) breach of condition

Question 36

A lawyer was negligent in his duties,causing his client to lose entitlement to ongoing support she needed and was legally entitled to receive.The error remained unresolved and the client,unable to meet mortgage commitments,went into foreclosure six months later.In these circumstances,why would the client's new lawyer commence an action including damages relating to the foreclosure?

A) They are a special consequence of the breach.
B) There was no exclusion clause in the retainer agreement.
C) The degree of suffering is sufficient to warrant compensation.
D) They are a natural consequence of the breach.

Question 37

A court hearing a matter involving a contractual dispute has had to rely on a close examination of the events that transpired relative to the breach.If you were to ask the judge to explain why this was necessary,how do you expect the judge would respond?

A) to establish the proper rank of an innominate term
B) to examine the scope of a term of warranty
C) to establish the necessity of imposing implied terms
D) to establish the seriousness of breach of condition

Question 38

Which of the following is the definition of an anticipatory breach?

A) a breach that occurs purely for ethical reasons
B) a breach that occurs purely for economic reasons
C) a breach that occurs at the time of founding the contract
D) a breach that occurs before the date for performance

Question 39

In the case of Fidler v.Sun Life Assurance Company of Canada,[2006] 2 S.C.R.3.,the Supreme Court of Canada rejected the traditional view that damages for mental distress and asked instead,"What did the contract promise?" Which of the following represents the answer the court arrived at with respect to that question?

A) Damages arise from lack of provision of a psychological benefit.
B) Damages arising from mental distress should be tightly controlled.
C) Damage awards should be a benefit of a personal nature.
D) Damages arising from mental distress should be exceptional.

Question 40

Among other things,Genevieve received an award from the court relating to her inability to sleep for 14 months following the collapse of the roof covering a newly built addition to her home.Which of the following accurately depicts the nature of this portion of Genevieve's award?

A) non-pecuniary general damages
B) pecuniary expectation damages
C) punitive damages for intangible loss
D) punitive damages for tangible losses

Question 41

Under common law,an individual improperly fired from their employment has a duty to their former employer to try to find a replacement job as quickly as possible.

Question 42

A clause that excludes or limits liability even for a profoundly serious breach of contract is unenforceable,if it is unconscionable or would be unfair or unreasonable.

Question 43

Under the common law test for remoteness,damages are not generally considered reasonably foreseeable where any unusual circumstances were communicated to the offending party at the time the contract was formed.

Question 44

Which of the following is the legal term for a remedy in which the court utilizes its jurisdiction to order an injunction for a stated period of time?

A) specific injunction
B) interim injunction
C) temporary injunction
D) interlocutory injunction

Question 45

Employees can be held liable for their employers' actions.

Question 46

Which of the following would a law professor most likely identify as the main objective of the remedy of restitution?

A) to enforce actual performance of contractual obligations
B) to restrain a party from acting for a limited period of time
C) to redress circumstances of unjust enrichment
D) to monetarily compensate for breach of contract

Question 47

Either party can decide to terminate a contract at any time.

Question 48

A court has refused to order specific performance owing to the effects it would have on a third party.Which of the following would the defendant's lawyer most likely identify as the circumstances that gave rise to the court's refusal?

A) impossibility to enforce an employment contract
B) improper behaviour on the part of the defendant
C) improper imposition of severe hardship
D) improper delay on the part of the defendant

Question 49

A breach can have the effect of terminating a contract.

Question 50

An assignee is entitled to collect the debt owed under a contract despite not being involved in the creation of the contract that produced the debt.

Question 51

There are very few ways in which a third party may acquire an enforceable benefit flowing from a contract.

Question 52

Which of the following is synonymous with the phrase "a party who seeks equity must come with clean hands"?

A) doctrine of probabilities
B) rules of equity
C) duty to mitigate
D) doctrine of frustration

Question 53

The Supreme Court of Canada has recently reaffirmed the traditional common law view that damages for mental distress should be tightly controlled and exceptional.

Question 54

An employee is typically considered at law to be a party to the employer's contracts.

Question 55

When a contract is terminated through performance,the commercial relationship between the parties comes to an end.

Question 56

Which of the following remedies would a court most likely award to restore parties to their original pre-contractual positions?

A) contractual rescission
B) injunctive performance
C) interlocutory performance
D) restitutionary quantum meruit

Question 57

Both parties to the original contract must agree to an assignment for it to be enforceable.

Question 58

A creditor has assigned a debt to a collection agency.As an assignee,the collection agency is not a party to the original contract and is therefore barred under the doctrine of privity from acquiring any rights to own the debt under it.

Question 59

Shady business practices are advantageous only if most businesspeople recognize the existence of moral obligations.

Question 60

Which of the following correctly denotes the legal remedy that has been applied in circumstances where a court has ordered a party to refrain from acting in a specific manner?

A) injunction
B) interlocative injunction
C) specific performance
D) rescission

Question 61

The courts are reluctant to allow a breaching party to rely on the protection of a limited liability clause when the breach is severe and undermines the foundation of the contract.

Question 62

Explain why a court may deny the remedy of specific performance where it is satisfied that there has been improper behaviour by the plaintiff.Identify and provide two examples of the rules that are applicable in these particular circumstances and explain briefly the meaning both of those rules imply.

Question 63

Both contractual rights and contractual obligations can be assigned.

Question 64

Recovery for non-pecuniary damages is not possible in contract law.

Question 65

The remedy of rescission is not available if the plaintiff does not bring an action seeking rescission within a reasonable time.

Question 66

Buildco Ltd.entered into a contract that contains a clause limiting Buildco's liability for any breach of the contract.Buildco's employees performed its obligations negligently and have caused harm to the other party as a result.Are the employees protected by the clause that limits Buildco's liability? Explain.

Question 67

If neither party has performed its obligations under a contract when a frustrating event occurs,they are both left where they were before the contract was formed.

Question 68

What four requirements must be met in order for a contract to be terminated by frustration?

Question 69

Identify four situations in which the equitable remedy of an order for specific performance may not be available.

Question 70

Identify the test established in the still-leading decision of Hadley v.Baxendale (1854),9 Exch 341.Briefly describe what the test determines and how it is applied.

Question 71

Briefly describe what is meant by an anticipatory breach.Explain why this type of breach is actionable and identify and briefly describe any distinguishing characteristic with respect to seeking a remedy.

Question 72

Lelainy and Trax Green hired Jamey,owner of WeBuild4U Inc.,to construct their new family home.Construction is underway,but the Greens have decided they would like to modify the contract by upgrading to marble countertops throughout the home.Identify and briefly explain how the Greens should proceed and what the traditional common law approach will require of them in order to ensure contractual enforceability.Identify any common law jurisdiction whose court has taken a modern approach to these contractual circumstances and briefly explain what that approach entails.

Question 73

What four things must generally be shown on the balance of probabilities in order for a party to succeed in an action for breach of contract?

Question 74

Damages are not available for an anticipatory breach because the time for performance has not yet arrived.

Question 75

Identify and briefly described the type and circumstances under which punitive damages are to be awarded as firmly established by the Supreme Court of Canada in the case of Whiten v.Pilot Insurance Co.(2002),209 D.L.R,.(4th)257 (S.C.C.).

Question 76

Identify the circumstances in which a party will receive the benefit of the law of restitution.Identify and briefly explain the main objective of the law of restitution,how that objective is applied,and what is ordinarily the remedy awarded by the court.