Deck 6: Forming Contractual Relationships

Question 1

An offeror has specified the method of communication to be used by the offeree when accepting the offer. What principle would a court apply to determine whether acceptance had been perfected?

A) The offer must have been made using the same method of communication.
B) The offer cannot be accepted by another method of communication.
C) Acceptance by a specified method of communication must be reasonable.
D) Acceptance by other means is effective when received by the offeror.

Answer 1

B

Question 2

How would one avoid the application of the rule established by Dickinson v. Dodds [1876] 2 Ch.D. 463 (C.A.)?

A) use words that imply contract formation
B) have all parties agree on price
C) enforce a gratuitous promise
D) form an option agreement

Answer 2

D

Question 3

What distinguishes the lapse of an offer from the rejection of an offer?

A) An option agreement cannot lapse, but it may be rejected.
B) Acceptance of an offer will be subject to rejection.
C) A lapse requires a communication of deliberate intent by the offeree.
D) Acceptance has not occurred when an offer lapses.

Answer 3

D

Question 4

What is a defining characteristic of an option agreement?

A) It states that the option will lapse within a reasonable passage of time.
B) It states that acceptance must be presented in written form.
C) It prohibits a lapse of the original offer prior to a time set for acceptance.
D) It states written notice is required to revoke the firm offer.

Question 5

Which of the following would a court require a disputed agreement to clearly evidence in order for it to be deemed an enforceable contract?

A) a mutually favourable intention to create legal relations
B) a promise to enter into a contract on general terms
C) an exchange of mutually adequate consideration
D) a consensus as to each party's rights and obligations

Question 6

What common distinguishing characteristic may be attributed to both an option agreement and a counteroffer?

A) Both can result in a lawsuit for damages if deliberately rejected by the offeror.
B) Both are subject to revocation by the offeror prior to a lapse of a set period of time.
C) Both form a separate contract that may or may not lead to the acceptance of an offer.
D) Both serve to prohibit the lapse of an offer before a set time period has expired.

Question 7

What is meant by the term "firm offer"?

A) the consideration given in return for something to be received
B) an offer that is irrevocable prior to its acceptance
C) the monetary consideration exchanged for an offeree's promise
D) a promise to keep an offer alive for a set period of time

Question 8

Which of the following is NOT an example of an invitation to treat?

A) a newspaper advertisement
B) a display of goods in a retail store
C) a lost and found advertisement
D) an expression of interest to enter negotiations

Question 9

Sometimes a contract is drafted in such a way that it fails to clearly and precisely express the essential terms of the offer. Which of the following would have the greatest influence on a court's willingness to interpret such an offer and resolve uncertainties?

A) the terms that would have resulted from completed negotiations
B) a stated workable formula for determining market price
C) evidence of a clear intention of the parties to create legal relations
D) certain matters in the agreement left to be decided in the future

Question 10

On April 2, Tundra Outfitters Ltd. received an offer to purchase from Lakeview Resorts Inc. Lakeview sought 35 canoes for a May 30 delivery, at $300 per canoe. The offer specified acceptance was to be by fax, received by 4:00 p.m. on April 5. Tundra did not reply. Why would a court consider that no agreement had come into existence?

A) The offer was rejected by the offeror.
B) The offeree took the offer off the table.
C) The offer was revoked prior to its acceptance.
D) The offer is missing because it is no longer alive.

Question 11

Madeline, a garment buyer, left Lance with her business card and a clear impression she was very interested in his line of fashion products. Which of the following is the element that would qualify Madeline's communication as an offer to treat?

A) Qualification is dependent upon the speaker's intention, subjectively assessed.
B) Lance has clearly advertised his products as available for purchase.
C) Qualification is dependent upon an objective assessment of the orator's intent.
D) Lance has relinquished his option by refusing to complete the transaction.

Question 12

On Tuesday, Jatelle offered to sell one of her racing motorcycles to Rofan for $8000. Rofan said he needed time to consider her offer. On Friday morning, Jatelle sent Rofan an e-mail message advising the offer was no longer open. Which of the following actions would allow Rofan to try to complete the purchase of her motorcycle?

A) present Jatelle with an offer to buy the motorcycle
B) revitalize the offer by communicating a counteroffer
C) immediately communicate a need for more time to Jatelle
D) immediately communicate the acceptance of Jatelle's offer

Question 13

In the case of R. v. Ron Engineering & Construction Ltd. [1981] 1 S.C.R. 111, the Supreme Court of Canada reformed the legal structure concerning the tendering process in Canada. What did the Supreme Court state would form an element of the reformed legal structure?

A) Every party submitting a tender is accepting the offer of Contract B.
B) The only successful tenderer would enter into a Contract A with the owner.
C) The call for tender offered a preliminary contract called Contract A.
D) The call for tender offered a preliminary contract forming Contract B.

Question 14

Why is it important for the parties involved in contractual negotiations to know that an offer has been rejected?

A) The risk in rejecting an offer is that it may not be renewed.
B) A counteroffer is legally recognized as a form of rejection.
C) The distinction between rejection and counteroffer can be unclear.
D) The offer is automatically terminated upon rejection by the offeree.

Question 15

What is the meant by the statement that an offer extended by one party to another can be accepted only if it is "alive?"

A) that the time for acceptance by the offeror is not specified
B) that the offer must be available for acceptance
C) that the offeree has extended a valid offer to treat
D) that the rejection of a conditional offer has transpired

Question 16

Which of the following reflects one of the aims of Canada's new anti-spam legislation known as CASL?

A) Internet advertising will be illegal.
B) Sending commercial electronic messages, unless the recipient has consented to receiving them, will be prohibited.
C) Sending any unsolicited electronic messages, even when there has been implied consent, will be prohibited.
D) All electronic messages will be prohibited unless they are being sent to a commercial entity.

Question 17

Which of the following would distinguish an invalid offer from an offer in law?

A) a standard set of terms developed over the years by a business
B) a requirement that a contract be read and understood prior to acceptance
C) a suitably broad, clear, detailed offer that readily facilitates acceptance
D) a condition that acceptance is required to be made within the time specified

Question 18

A consumer conducting business with a bank must accept the standard set of terms expressed in the loan agreement, even though those terms are non-negotiable and typically favour the bank. Why would a modern-day court most likely continue to uphold these contractual "take it or leave it" arrangements?

A) the law expects a bank to show goodwill toward its customers
B) the agreement does not require further elaboration or clarification
C) the law expects people to take care of themselves
D) consumers accept the bank's unconditional offer

Question 19

Thomas gave Jerron his final sales pitch, offering 10 percent off the list price, 60 days for payment, a delivery date, and delivery terms. What has happened so far at this point in the negotiation process?

A) A consensus on the parties' rights and obligations has been reached.
B) A consensus on the terms of the offer between parties was reached.
C) A complete offer has been extended that is now open to acceptance.
D) There has been a mutual expression of willingness to do business.

Question 20

What is the difference between the communication of an invitation to treat and the communication of an offer to enter into a contract?

A) An offer to enter into a contract is an expression of a willingness to do business.
B) An offer to enter into a contract seeks to facilitate commercial profitability.
C) An invitation to treat expresses an inclination to form a business relationship.
D) An invitation to treat is a promise to perform specified acts on certain terms.

Question 21

Which of the following would provide a party with an excellent chance of relying on the doctrine of promissory estoppel in a common law court?

A) the absence of undue pressure to alter contractual rights
B) the existence of a pre-existing right covering the scenario
C) payment of a smaller amount to satisfy an outstanding debt
D) a promise to rely on pre-existing contractual rights

Question 22

Which of the following is strongly linked to the contractual requirement of consideration?

A) the idea that consideration need not be monetary
B) the idea of equality during bargaining
C) the idea that a promise to pay be mutual
D) the idea of freedom of parties to bargain

Question 23

A cancer hospital asked its privately owned medical isotope source to arrange an earlier shipment of an urgent order. The private supplier confirmed an earlier shipment was possible for a 30 percent surcharge on the contractual price. Because the hospital's cancer patients needed the isotopes desperately, the hospital faxed a written acceptance of the varied terms. The hospital subsequently refused to pay the price increase. What would a New Brunswick court hearing the ensuing dispute be most likely to determine?

A) Contractual variation supported by pre-existing duties is enforceable.
B) Where there is consent to a gratuitous variation, it is enforceable.
C) Contractual variation was supported by consideration, and therefore the variation is enforceable.
D) Contractual variation unsupported by consideration is enforceable.

Question 24

Recent legislation in some provincial jurisdictions overrides the common law that governed the acceptance of a payment of a lesser amount in full satisfaction of a debt. What is the policy rationale for the legislation?

A) to allow debtors to pay by instalments over time
B) to promote the settlement of debts on a final basis
C) to allow creditors to increase the collection of debts
D) to promote a reduction in consumer debt

Question 25

Why is placing a seal beside the signature of a guarantor who signs a guarantee still enforced in modern-day Canadian society?

A) Absence of the seal renders the gratuitous promise in the guarantee unenforceable.
B) Absence of the seal suggests an absence of the intention of the parties to contract.
C) Absence of the seal suggests an absence of the acceptance of a firm offer.
D) Absence of the seal renders the acceptance of the offer of guarantee unenforceable.

Question 26

Which of the following would immediately let you know that a promise is gratuitous?

A) the lack of sufficient consideration
B) the absence of consideration
C) the lack of adequate consideration
D) the absence of formalization

Question 27

Caroline agreed to purchase organic hemp fabric from an Ontario manufacturer. While making an inquiry to purchase organic dyes from a Manitoba producer, she learned they offered a superior organic hemp fabric at a much lower price than the Ontario manufacturer. Knowledge of what legal principle would immediately let Caroline know she made a costly error?

A) Parties must be informed as to the adequacy of price, as it is usually not open to challenge.
B) The consideration to be given for each party's duties is the other party's duties.
C) Parties must pay the price for a promise before they can sue when it is broken.
D) The traditional perspective that alteration of a pre-existing duty is enforceable.

Question 28

What is the meaning of the statement "Promissory estoppel may be used as a shield and not as a sword" with respect to the classical application of the common law doctrine of promissory estoppel?

A) The doctrine is unavailable as a defence in a lawsuit.
B) The doctrine is unavailable as the basis for a lawsuit.
C) The doctrine is unavailable to a person who has made a promise.
D) The doctrine is unavailable to a person who has broken a promise.

Question 29

Why would members of a family experience an uphill battle in a common law court with respect to the enforcement of contractual obligations owed to one another?

A) The law presumes promises between family members are non-contractual.
B) The law presumes all promises between family members are gratuitous.
C) The family members' intention to contract must be subjectively tested.
D) The family members must understand the legal consequences of a promise.

Question 30

Karl, Robin's champion male German Shepherd, has been missing for two days. Robin posted an offer of a $1,000 reward for Karl's return throughout the two-kilometre radius surrounding his home. What is the correct legal term for the type of contract Robin has offered to enter into?

A) a bilateral contract
B) a unilateral contract
C) a unilingual contract
D) a multilateral contract

Question 31

What key ingredient must be present in order to distinguish a legally enforceable promise from one that is legally unenforceable?

A) acceptance
B) formalization
C) consideration
D) revocation

Question 32

In his decision, Lord Wilberforce stated, "No universal rule can cover all such cases; they must be resolved by reference to the intention of the parties, by sound business practice and in some cases by a judgment of where the risks should lie...." What legal rule did Lord Wilberforce establish in his ruling on this case?

A) the postage rule
B) the postman rule
C) the postbox rule
D) the post office rule

Question 33

Albert's mother signed a three-month listing agreement with a real estate agent. Prior to considering or accepting either of two below-listing-price offers the agent brought to Albert's mother, she suffered a fatal stroke. What would a judge likely decide if the agent and/or the offerees attempt to legally force the mother's estate to accept one of the offers?

A) that someone who makes an offer and then dies would not be bound
B) that the death increased the chance of one of the offers being accepted
C) that the deceased party cannot personally perform, hence her offer also died
D) that the estate is obligated to complete the sale by accepting one of the offers

Question 34

What element must be present to enable an innocent party to commence a lawsuit when a promise is broken?

A) The innocent party must agree to a "price" for the defendant's promise.
B) The work must be performed.
C) The consideration must be adequate.
D) The promise must be accepted.

Question 35

What is the proper method of leading contrary evidence to challenge a legal presumption favouring one party?

A) a rebuttable presumption of the parties' intent to contract
B) the doctrine of rebuttable inference of refusal to contract
C) the doctrine of rebuttable assumption of pre-existing condition
D) a rebuttable promise for which no consideration is given

Question 36

Under what circumstances would a judge who is determining a remedy to a commercial dispute consider that a contract does not exist even though all of the required elements of reaching an agreement are present?

A) A phrase indicates the agreement is subject to formal contract.
B) A contract lacks sufficient consideration for both parties.
C) A contract lacks adequate consideration for both parties.
D) A phrase indicates the agreement is subject to its exact wording.

Question 37

In what way are a contractual promise and a contractual obligation similar?

A) Both must be adequate to be enforceable.
B) Both represent a pre-existing duty.
C) Both may be arbitrarily revoked.
D) Both must be present for validity.

Question 38

What is the purpose of the practical application of the rules governing the acceptance of an offer, which has been upheld in a number of decisions of the Canadian courts?

A) It ensures the application of the postal rule remains valid across Canada.
B) It qualifies any witness to the event who can testify to that effect.
C) A party must be aware it may become bound to contractual obligations.
D) It satisfies the need for proof that the necessary events occurred.

Question 39

Gandrel received an offer to purchase on his home. The offer provided for the payment of the asking price but required Gandrel's new appliances and riding lawnmower to be included in the purchase price. Does Gandrel's offer to sell his home still have legal substance?

A) Yes, the original offer could be conditionally accepted.
B) No, the lapse of time automatically terminates the original offer.
C) Yes, it forms the basis of the purchaser's counteroffer.
D) No, a counteroffer is a terminal rejection of an original offer.

Question 40

With respect to electronic contracting, what solution did the Uniform Law Conference of Canada adopt to provide for the electronic acceptance of an electronic offer?

A) clicking an "accept" button
B) clicking an "I accept" button
C) clicking an "agreed" button
D) clicking an "I agree" button

Question 41

A contract in which one of the parties has agreed to pay too much for what she receives in return is not enforceable.

Question 42

Because a court infers an intention to contract, it will also speculate on what the parties would have agreed had they fully completed their negotiations.

Question 43

Once made, an offer cannot be revoked.

Question 44

A gratuitous promise is never enforceable.

Question 45

Before a contract can take place, the parties must have reached a consensus as to their respective rights and obligations.

Question 46

Vague commitments involving commercial exchange between parties are invitations to treat because of the lack of specification of the terms or scope of the proposed arrangement.

Question 47

The concept that a contract is formed only when a complete offer is unconditionally accepted by the other side forms a fundamental rule in codified law.

Question 48

An offer is a conditional promise.

Question 49

An advertisement in a newspaper will never be considered to constitute an offer.

Question 50

Canada's new CASL law (anti-spamming legislation) makes it illegal to send an electronic commercial message without the prior actual or implied consent of the recipient.

Question 51

The postbox rule prohibits the formation of contracts through the mail.

Question 52

If a purported offer is sufficiently comprehensive that it can be accepted without much more elaboration or clarification, it is an offer in law.

Question 53

A firm offer differs from an offer because it contains a promise to leave the offer open for a set period of time.

Question 54

An offeree may revoke an offer any time prior to acceptance by merely notifying the offeror of its withdrawal.

Question 55

In an option agreement, the offeror sells her right to revoke the offer.

Question 56

A standard form contract requires one party, typically a consumer, to enter into it without benefit of negotiation.

Question 57

In order to avoid having a contract fail for uncertainty, it must meet the standard of perfect clarity and precision in how it is expressed.

Question 58

Use of a seal in a written contract acts as a substitute for the requirement of consideration.

Question 59

An invitation to treat is one of the basic components of a contract.

Question 60

It is difficult to prove the presence of contractual intention in agreements between family members.

Question 61

Where an agreement reached through offer and acceptance contains the phrase "this agreement is subject to formal contract," the agreement itself is unenforceable unless and until the formal contract comes into existence.

Question 62

Identify the source of a competing analysis of the traditional common law view of unenforceability of a gratuitous promise. Provide a brief explanation of the competing analysis and explain the goal it was meant to achieve.

Question 63

To be effective, the acceptance of an offer must demonstrate a qualified willingness to enter into a contract on precise terms.

Question 64

How does the common law treat partial payment of a debt in lieu of full payment, and what might a debtor do in response to the common law?

Question 65

Identify and briefly define the events that will cause an offer to be taken off the table.

Question 66

Where the expiry date for acceptance of an offer lapses, the offer is no longer alive.

Question 67

Firm offers can be revoked prior to their deadlines by the formation of an option agreement, whereby the offeror pays the offeree to keep the offer open for a specified time.

Question 68

An offer is automatically terminated when it is rejected by an offeror.

Question 69

Briefly describe the options available to a party to a contract who wishes to avoid problems related to cost increases.

Question 70

How do the courts get around the basic rule that a gratuitous promise is not enforceable if they feel that not enforcing such a promise would be unfair? Identify and briefly describe the requirements for this "get around."

Question 71

Identify and briefly described two main risks negotiators face when attempting to negotiate commercial agreements that will lead to legally enforceable contractual obligations.

Question 72

Identify and briefly describe what element is recognized as forming the basis of a contract in common law. Include a brief explanation of what is meant by the legal requirement of certainty of offer and identify and briefly described the circumstances under which a court would endeavour to resolve ambiguities in an alleged offer.

Question 73

Identify and briefly describe the provisions of the Uniform Electronic Commerce Act that deal with communication of acceptance messages. Identify and briefly explain what step an electronic trader must take to avoid disputes involving where acceptance becomes effective.

Question 74

Briefly describe how a store maintains the option of refusing to complete a transaction involving a product it displayed at a cash register. Identify and briefly describe the effects of any legislation that may affect the store's ability to refuse to complete a sale to a customer.

Question 75

Explain the difference between offer and invitation to treat. Give an example of each.