Deck 8: Factors Affecting the Contractual Relationship

Question 1

With regard to the law concerning misrepresentation, which of the following is true?

A) The case law provides a remedy for a wildly exaggerated claim, such as "This is the best car ever built."
B) A statement of opinion can be a one-sided mistake.
C) A misrepresentation can be a False assertion of fact that induces (persuades) the party to contract, and need not be an assertion about a term of the contract.
D) For fraudulent misrepresentation, the buyer could ask only for the equitable remedy of rescission.
E) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that the misrepresentation was true.

Answer 1

C

Question 2

Mary has a little scam most everywhere she goes. She sells by saying anything. Her buyers just have woes. Which of the following is true with regard to misrepresentation?

A) There are several remedies available in case law for an exaggerated claim made by Mary.
B) If Mary induces the buyer to buy by making a misrepresentation that she honestly thought was true, the buyer has no remedy in law or in equity.
C) A misrepresentation can be made about a term of a contract and result in an award of rescission and/or damages.
D) In some types of misrepresentation there are no remedies available.
E) For fraudulent misrepresentation, the buyer can be granted the equitable remedy of only rescission.

Answer 2

C

Question 3

When Gary went into Computer Heaven, Ltd. to get a better manual for the program he was trying to master, he was caught by a demonstration of a computer created by StarSystem Inc. He was fascinated by its performance. The salesman, Ross, told Gary that he should have this machine; that "it was the last computer, no other will ever be better"; that "UBC, Simon Fraser University, and BCIT just ordered over 1000 of them"; that he only had "a few left and the demand is so great it will take almost a year for the next shipment to arrive." When Gary said he needed a computer with at least 1 terabyte of hard drive space, Ross said this model had 2.5 terabytes. Gary was persuaded and contracted for it. Later Gary learned that every statement made by the salesman Ross was untrue, including the statement about the memory capacity. The model only had 400 gigabytes. On these facts, which of the following is true?

A) Gary could be awarded the equitable remedy of rescission even if Ross, the salesman, honestly believed everything he said was true.
B) Only if Ross, the salesman, knew that all the statements he made were False could Gary get a remedy.
C) Merely the exaggerated claim "it was the last computer, no other will ever be better" is enough, according to the case law, to allow Gary to get out of the contract.
D) Statements that induced Gary to contract, but that are not the terms of the contract, are not significant enough for the courts to award a remedy by case law or by statute.
E) Such misrepresentations could only result in contractual remedies, legal or equitable, but not in tort remedies.

Answer 3

A

Question 4

With regard to the law concerning misrepresentation, which of the following is true?

A) The case law allows a remedy for an opinion given by a non-expert.
B) A misrepresentation can be a true assertion of fact that induces (persuades) the party to contract.
C) If the buyer realizes the seller persuaded him to contract by a misrepresentation, he will not be able to get the remedy of rescission if he was tainted with wrongdoing himself, (i.e., not coming with "clean hands").
D) Damages as a remedy are not available where the misrepresentation becomes part of the contract.
E) Rescission is available as a remedy for misrepresentation only if it is innocent misrepresentation.

Question 5

Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is False with regard to these areas of the law?

A) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that his misrepresentation, which persuaded the buyer to buy, was true.
B) If a seller persuades a person to buy something by a fraudulent misrepresentation, the buyer could ask for rescission and/or damages for the tort of deceit.
C) A person can successfully argue non est factum and avoid his obligations under a contract only if he was misled about the very nature of the document and was not careless.
D) Independent legal advice given to a person who wants to give a gift to a dominant person (e.g., his doctor) is good evidence to rebut a presumption of undue influence.
E) Where, because of a mistake, a written document does not embody the unchanged term of the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification.

Question 6

Damages are available as a remedy where the misrepresentation has become a term of the contract that is breached, where the misrepresentation is ________, and where there is negligence.

A) innocent
B) fraudulent
C) negligent
D) material
E) actionable

Question 7

Keri went to Crandon's computer outlet with her brother Paul, who was buying a laser printer. While she was waiting for him, she saw a poster saying the store was collecting funds for a special computer for a student recently disabled in an accident. The seller induced Paul to buy the model "X" printer by stating as a fact that the printer could interface with his iMac. Paul paid $400 for the printer. Also, Keri gave $15 to the student fund after the seller confirmed he was collecting for the student's computer. Later Paul and Keri learned that neither statement was true-the printer didn't work with Paul's computer and the store was doing nothing for the student-and that the seller didn't believe that either statement was true when he made them. On these facts, which of the following is true?

A) Keri could sue for damages due to a misunderstanding.
B) Paul could sue for damages due to an innocent misrepresentation.
C) Paul could sue for rescission because of the misrepresentation.
D) The court would rescind Paul's contract only with proof that the seller knew his statement was False.
E) Only Keri has a remedy because she had been fraudulently misrepresented.

Question 8

Which of the following constitutes a misrepresentation that would not allow the courts to award the equitable remedy of rescission?

A) A man who contracted for an insurance policy did not state on the application form that he had been treated for cancer. He died from the cancer two months later.
B) The seller concealed the broken drawer of the desk from the buyer. He would not be able to see it until he got it home.
C) The seller was persuaded to buy the car by a misrepresentation that it had the fewest repairs of any car of its class. After the buyer learned of the truth, he kept the car for three weeks to get some benefit from it before taking it back.
D) The seller persuaded the buyer to buy the car by misrepresenting it as having just been serviced and passing emissions tests. Neither had been done, but the seller honestly believed both had been done.
E) None of the above.

Question 9

Jenny went to the store and asked to see a Bluetooth headset. The salesman brought out a set that he said had all the features that she wanted. After looking at the price tag and little else, she said she would think about it. The salesman said that this was the most popular model sold, that they sold 1000 of them during the World Series alone, that it had the highest rating in Consumer Reports, and that he only had that one left. Jenny bought it. Later she found out that all the statements made to her by the salesman were False, including the statement that the headset had all the features that she wanted, because it did not have noise suppression. Which of the following is true?

A) Jenny could obtain the remedy of rescission only if the statements made to induce her to contract were fraudulent.
B) The statements of the salesman are fraudulent only if the salesman knew they were False.
C) Jenny would only have a remedy for breach of contract.
D) The equitable remedy of rescission is available only if Jenny were able to restore the headset to the seller.
E) Jenny could return this headset to the seller only if she could prove undue influence.

Question 10

The contract for an Oakville property had been signed by both parties. Which of the following is necessary for the contract to be set aside on the grounds of misrepresentation?

A) The misrepresentation must have been a False statement of a fact; False statements of opinion are never misrepresentations.
B) The misrepresentation must have been a term of the contract.
C) The misrepresentation must have induced the party to enter the contract.
D) The misrepresentation must have been in writing.
E) The misrepresentation must have been made recklessly or wilfully.

Question 11

A computer salesman innocently misrepresented a fact about a StarSystem computer to a customer. Although this fact was not about a term of the contract, it did induce the customer to buy the computer. The customer has now learned the true facts and wants to return the computer. If the store refuses to take it back, the customer would ask the court for which equitable remedy?

A) Damages
B) Rescission
C) Rectification
D) Restitution
E) Injunction

Question 12

Mrs. Sharp, the owner of a restaurant, induced the Morissons to buy the business by a misrepresentation; the invoices made her costs appear less than they actually were, and thus her profits more than they actually were. On these facts, which of the following is False?

A) The cause of action could be for the tort of deceit, if there was evidence that Mrs. Sharp intended to deceive them.
B) The court could not award the equitable remedy of rescission if evidence showed that Mrs. Sharp really believed the invoices were accurate.
C) The court could award the equitable remedy of rescission if the evidence showed she had fraudulently misrepresented the costs.
D) The court could terminate the contract for breach of contract if the accurate statement of costs and profit were essential terms of the contract.
E) The court could not award the equitable remedy of rectification because the argument is not about rectifying an erroneous written version of a previous oral contract.

Question 13

If Mills agreed to sell Boothe a used Nissan automobile, which in the contract was described as a 2012 Nissan Murano with a rebuilt transmission, Boothe could sue for ________ if the vehicle turned out to be a 2010 Murano and the transmission was used, not rebuilt.

A) rescission
B) compensation
C) breach of contract
D) damages
E) the tort of deceit

Question 14

Damages as a remedy will not be available in which of the following situations?

A) Jones, although being careful, makes an innocent misrepresentation persuading Smith to enter a contract with him.
B) Jones makes a fraudulent misrepresentation, persuading Smith to enter a contract with him.
C) Jones makes a negligent misstatement, persuading Smith to enter a contract with him.
D) A False statement made by Jones becomes a term of the contract.
E) Jones makes an intentional misrepresentation of fact in order to get Smith to sign the agreement.

Question 15

A salesman innocently misrepresented a fact to a customer about a new printer. He honestly believed his statement was true and was not careless. Although this fact was not about a term of the contract, it did induce the customer to buy that printer. The next day, the customer learned the true facts and wanted to return the printer. If the store refused to take it back and the customer sued, which of the following would be the most likely result?

A) An award of damages
B) The buyer's case dismissed
C) An order of specific performance
D) An order of rescission
E) An injunction

Question 16

A fraudulent misrepresentation which induces another person to enter into a contract can result in which of the following remedies?

A) Rescission and/or damages
B) Rescission only
C) Damages only
D) Rectification
E) There is no remedy available for fraudulent misrepresentation.

Question 17

Victims of misrepresentation who have affirmed the contract are bound by the affirmation and cannot later insist on

A) rescission.
B) remedies.
C) breach.
D) original positions.
E) quantum meruit.

Question 18

It came to your attention that your great-grandmother had signed a contract pursuant to which she would be paying $5000 for an electronic organ that retails in reputable stores for $3000. Furthermore, the interest being charged is 18%, even though today's rate fell to a 20-year low. This debt is totally out of line with her pension income. It is apparent that she was misled by the door-to-door salesman who came to her place. On these facts, which of the following laws is the most likely to help her?

A) Undue influence only
B) Unconscionability only
C) Misrepresentation only
D) Non est factum
E) Both unconscionability and misrepresentation

Question 19

The major problem with ________ is the need to establish that the person being sued knowingly misled the victim.

A) fraudulent misrepresentation
B) innocent misrepresentation
C) negligent misrepresentation
D) undue influence
E) deceit

Question 20

The office manager of a real estate agency was at an office supply store to replace a filing cabinet when he saw a demonstration of a new Xerox copier. Undoubtedly, the agency would benefit from the copier, especially since it had the capability of enlarging the original-a good feature when dealing with the small print of contracts. The next day, he called the manager of the store to discuss the machine further. The seller said that it was "ten years ahead of the competition," that it "was rated as maintenance-free by an independent consumer research group," and that he had "sold five to other real estate agencies in this area" and "had only one left." The agency, relying on these statements, asked to have it delivered. When it arrived, the office manager had learned that every statement made by the seller had been False. Furthermore, the seller did not send out the machine discussed, but the old model. Which of the following is true?

A) The agency would have to keep the machine, but could sue the seller for damages for the tort of deceit.
B) This is a "buyer beware" situation and the buyer has no remedy.
C) The agency would have a remedy for breach of contract, but no remedy for other statements that merely persuaded it to enter the contract.
D) The agency could have returned the machine even if it had been sent the right model, since the remedy of rescission was available to it for misrepresentations made.
E) Had the office supply store sent the right machine, the agency would have had no remedy.

Question 21

In which of the following instances would the court most likely hold the contract to be void on the basis of a mistake?

A) Barry and Mary contracted for the sale and purchase of a boat for the price of $1200. When the contract was written up, the price was incorrectly stated as $1700.
B) Two parties contracted for a shipload of fish, but unknown to both parties, at the time of the contract the ship had sunk and the fish had been lost.
C) Carson and Leno had a serious misunderstanding about a term in the contract and the court found that the more reasonable interpretation was that of Leno.
D) Sarah bought three rolls of wallpaper, but found she had made a mistake, since two would have been sufficient.
E) Although the seller said nothing to the buyer about the characteristics of the answering machine, the buyer bought it, thinking that it would tell him the date and time of the call. Later, he learned that it did not perform this function.

Question 22

The victim of ________ can seek monetary compensation as well as rescission for any loss incurred.

A) innocent misrepresentation
B) negligent misrepresentation
C) fraudulent misrepresentation
D) misrepresentation
E) deceit

Question 23

When two parties are involved in a mutual mistake (misunderstanding) as to the meaning of a term of the contract, which of the following is usually applied by the court to settle the matter?

A) The court will find that there is no contract because there is no meeting of the minds.
B) Non est factum
C) Caveat emptor
D) The reasonable person test
E) The equitable remedy of rectification

Question 24

On September 1, Beeton contracted to sell $4000 worth of specified Kenyan lumber to Cairns. Beeton expected the arrival of the lumber soon, so the delivery date was set for September 8. On September 5, Beeton assigned, in writing, his contractual right to receive the $4000 to his bank, which was pressing him to reduce his $17,000 debt. The bank sent a written notice to Cairns instructing him to forward the $4000 to the bank and not to pay Beeton directly. Unknown to either Beeton or Cairns, the lumber had been lost at sea in August, before they had even entered the contract. On these facts, which of the following is true?

A) This assignment was not a statutory assignment; i.e., it failed to satisfy the statutory requirements for enforcement by the assignee against the debtor.
B) Because the assignment was made by Beeton to his bank in good faith, Cairns must pay the bank $4000.
C) The assignee would receive whatever the assignor had assigned to him, namely, the $4000.
D) Because the goods bargained for had perished before the parties had contracted for them, the court would hold the contract void.
E) The time for determining the "equities between the parties" is always the time that notice of the assignment is given.

Question 25

Jones offers to sell Smith his car. Smith thinks Jones is selling his 2015 Toyota, and Jones thinks he is selling his 2014 Buick. This is an example of which of the following?

A) Misunderstanding
B) Common mistake or shared mistake
C) Unilateral mistake or one-sided mistake
D) Fraudulent misrepresentation
E) Non est factum

Question 26

Which of the following will have the likely consequence of the court finding the contract void on the grounds of mistake?

A) Mr. Twigg carelessly signed a mortgage for $24,000, which he was told was a mortgage for only $14,000. This was assigned to Mr. Jones.
B) Mr. Ideer bought some property, erroneously thinking that the province was planning to put a highway nearby, even though the seller had never made any such suggestion.
C) The parties signed a document that stated the consideration as $1200 instead of the $1100 that the buyer and seller had contracted for, but the buyer cannot prove the terms of the original contract.
D) Mr. Ille, although using due care, signed a cheque for $100 in favour of his secretary, who had told him it was a receipt for money received.
E) Mr. Jones, without reliance on a salesperson, purchased an HTC smartphone, thinking it was actually a Samsung smartphone.

Question 27

A real-estate agent, Jones, was owed a $17,000 commission, having sold property for Mr. Quick. Mr. Quick couldn't be found, but Jones did find his wife and learned that she had over $20,000 in treasury bills. Mr. Jones told her that if she didn't assign to him $17,000 of the $20,000, he would make sure her husband was imprisoned for his debts and "for other crimes" he knew about. If she did make an assignment in writing to Jones of the $17,000 but later tried to void the agreement, she would argue which of the following?

A) Statutory assignment
B) Mistake
C) Non est factum
D) Duress
E) Privity

Question 28

Randal embezzled $6000 of his employer's money and then disappeared. The employer's accountant called at Randal's residence and found out that his wife had a $3500 term deposit. When the accountant threatened to have her husband arrested and imprisoned if she did not agree, she assigned the term deposit to the employer to help to defray the loss from the embezzlement. If the wife were later to sue for return of the term deposit, what would be her ground for avoiding the assignment?

A) Undue influence
B) Duress
C) Mistake of law
D) Fraudulent misrepresentation
E) Non est factum

Question 29

With respect to having the court set aside a contract on the basis of undue influence, which of the following is False?

A) If a client transferred property to his lawyer and later claimed the transfer was due to undue influence, the law would presume the transfer was due to undue influence.
B) If the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back.
C) A contract made in favour of a dominant person who exerted undue influence over the weaker party is voidable at the option of the weaker party.
D) If you are a dominant person in relation to an aged relative who wants to sell you his house below market value, you should insist that the aged relative receive independent legal advice.
E) Where undue influence is established, the resulting contract is voidable, not void.

Question 30

The law attempts to help persons who may feel forced to enter contracts. Which of the following is False with regard to the law of undue influence, duress, etc.?

A) An unconscionable transaction is one in which one party has been seriously taken advantage of, and the courts, in their equitable jurisdiction, can set such a contract aside.
B) If a contract favours the stronger party in a relationship (e.g., if a lawyer bought property from a client at far below the market value), the court would presume undue influence (i.e., that the stronger party abused his dominant position).
C) If the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back.
D) A contract entered into because of a threat of violence is voidable at the option of the victim.
E) Independent legal advice given to a person who wants to give a gift to a dominant person (e.g., his doctor) is good evidence to rebut a presumption of undue influence.

Question 31

In Rochdale Credit Union v. Barney, a lawyer persuaded his client to guarantee a loan. The relationship of solicitor/client leads to a presumption of

A) duress.
B) mental incapacity.
C) lack of intention.
D) unconscionability.
E) undue influence.

Question 32

According to Braut v. Stec, what is the Courts' position when one enters into a contract where a claim is made that a bargain is unconscionable?

A) There is an automatic presumption of undue influence due to the relationship of the parties.
B) A close relationship between business associates prevents a finding of unconscionability.
C) When one party lacks the intellect to enter into a contract, the contract continues to be binding on both parties.
D) A presumption of fraud is raised when there is an inequality in the position of the parties due to the ignorance of the weaker party.
E) Because a party to the contract is an uneducated immigrant, the contract is voidable.

Question 33

Which one of the following mistakes voids a contract?

A) Two parties contract for a shipload of coal, but unknown to both parties, at the time of the contract the ship had sunk and the coal had been lost.
B) Sally and Wacky had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was Sally's.
C) Two parties contracted for the sale and purchase of a painting for the price of $800. When the contract was written up, the price was incorrectly stated as $900.
D) Sam bought three gallons of paint, but found he had made a mistake; two would have been sufficient.
E) When Mr. and Mrs. Houston put their property up for sale, Sam without speaking to the Houstons or their agent about the land, offered close to the asking price because he thought it was suitable for growing wheat. After his offer was accepted, he learned it was not suitable for wheat.

Question 34

You and your parents were both surprised when grandmother said the doctor told her to come for weekly checkups, because she didn't seem sick. Nevertheless, you dutifully took her to and from her appointments for a period of about six months. She never talked about these sessions, but loved to go. Now she has come to the family and said that she is sorry that she gave him the oil paintings and sold him the farm. On these facts, which of the following is False?

A) If a court held that the property was obtained by undue influence, the contract would be voidable at the option of grandmother, the weaker person.
B) In a court action, if she claimed the return of her property on the basis of undue influence, the court would presume undue influence and the doctor would have to prove that the property was freely given.
C) A presumption of undue influence doesn't mean the weaker party will automatically get her property back.
D) If grandmother had gone to her own lawyer for independent advice before conveying her property to the doctor, she would have more difficulty arguing undue influence.
E) It would be easier for her to argue duress than undue influence.

Question 35

A woman sought to set aside a mortgage on the grounds of misrepresentation, undue influence, and non est factum. She had been persuaded to enter into that mortgage contract with a mortgage company by her doctor. Which of the following is true with regard to these challenges to the mortgage contract?

A) If she were influenced to sign the mortgage by her doctor and the mortgage benefited the doctor, the court would presume undue influence.
B) If she were influenced to sign the mortgage by her doctor and the court found undue influence, the mortgage would be void and she wouldn't have to pay the mortgage company.
C) If she failed to read the mortgage agreement, the mortgage would be void on the basis of non est factum.
D) If the person who misled her as to the contents of the mortgage agreement honestly thought what he was stating was correct, she could sue for only damages, not rescission.
E) If the court found that there was undue influence by her doctor, who obtained the money from the mortgage, she would not have to repay the mortgage company.

Question 36

________ attempts to return both parties to their original positions. The subject matter of the contract must be returned to the original owner, and any monies paid under the contract must also be returned.

A) Damages
B) Remedies
C) Recession
D) Compensation
E) Avoidance

Question 37

Mr. Copperfield, a collector of movie memorabilia, bid $250,000 on the Batmobile. After taking delivery, he discovered the car was not the car actually used in the film "Batman," it was merely one of five cars used to promote the film. He is suing the seller, Mr. Eisenberg. In which of the following cases would Mr. Copperfield not be entitled to a remedy? (Assume that in each case the facts could be proven.)

A) Fraudulent misrepresentation by Mr. Eisenberg
B) Innocent misrepresentation by Mr. Eisenberg
C) Breach of contract by Mr. Eisenberg
D) Negligent misrepresentation by Mr. Eisenberg
E) Unilateral mistake by Mr. Copperfield

Question 38

Which of the following is an example of duress?

A) Joe refuses to sell Harry his car unless Harry offers him more money.
B) Joe, knowing of Harry's financial situation, refuses to sell him his car.
C) Joe counteroffers Harry's original offer.
D) Joe wants to purchase Smith's car from him, and Smith sells it to someone else.
E) Joe threatens to smash Harry's car if Harry won't sell it to him.

Question 39

An 80-year-old woman signed, in the presence of a solicitor, a contract for land by which she sold property to her daughter. She later asked the court to set the contract aside on the grounds of non est factum (mistake) and undue influence. Which of the following is true with regard to these grounds for the contract?

A) She can successfully use the plea of non est factum if there is evidence that she was careless when she signed the document.
B) She can successfully use the plea of non est factum if she was not misled about the very nature of the document.
C) If the court presumes that undue influence was used by the adult who gained from the contract with an aged parent, the contract is automatically set aside.
D) If the lawyer were the daughter's husband, his advice would be seen as independent legal advice.
E) If the aged mother received independent legal advice, it would be good evidence for the daughter that the mother's transferring the property was done freely, without undue influence being exerted.

Question 40

When the courts find that undue influence is present, the resulting contract is

A) voidable.
B) void.
C) unenforceable.
D) binding.
E) illegal.

Question 41

Misgana ran into Tarja at their local gym. Tarja, it turns out, operated an art gallery that did custom framing and mounting. Misgana had some beautiful prints she wanted to have put into special frames and agreed to pay Tarja $400 to have this done. Tarja passed the task along to her new assistant, Shandy. Shandy used the wrong adhesive when mounting the prints, which meant they did not stick properly to the backing. Which of the following is true?

A) Misgana could successfully sue only Shandy or Tarja for breach of contract, whichever she chooses, but not both.
B) Misgana could successfully sue only Tarja for breach of contract.
C) Misgana could only sue Shandy because she is the one who did a poor job of the framing.
D) Misgana could successfully sue Shandy and Tarja for breach of contract because both were connected with the job.
E) If Tarja doesn't pay Shandy, Shandy could sue Misgana directly for her pay because she worked on Misgana's prints.

Question 42

Which of the following situations gives rise to the application of the equitable remedy of rectification?

A) Both parties to a contract agree that they want to change some of its terms and thus apply jointly to the court to have the relevant terms altered.
B) The two parties to a contract have made a mutual mistake and one of these parties is asking the court to choose the more reasonable meaning of the terms in question.
C) The defendant has a justifiable defence of non est factum.
D) A written instrument, because of an obvious mistake, does not embody the unchanged terms of an original oral agreement.
E) The contract is one requiring "utmost good faith."

Question 43

In which of the following would the court find that the contract is void (i.e., not a binding agreement)?

A) After some negotiation, Paul accepted Monafo's offer to sell him the painting for $5000. When the contract was put in writing, the price was incorrectly stated as $500. Monafo could prove the terms of the oral contract.
B) Two parties contracted for a tanker of oil, but unknown to either of them at the time of the contract, the tanker had caught on fire and all the oil had burned.
C) Kramer, thinking that the city was going to build a new school in the area, offered to buy a house. She had not talked with the seller or his agent about the possibility of a school. After the offer was accepted, she learned that there would be no such new school.
D) Joe bought pizzas, but after eating one he realized that purchasing them was a big mistake.
E) Ry and Ali, two parties to a contract, each had a different understanding about the term "royalties" in the contract. The court found Ali's interpretation the more reasonable.

Question 44

Gomer paid the seller of a car with a worthless cheque. He then sold the car to an innocent person who paid him good consideration. Gomer took the money and left the country. The original seller found out who had the car and wanted it back. Who is entitled to the car if the court holds that the contract between the original seller and Gomer is voidable?

A) Original seller
B) Gomer
C) Innocent purchaser
D) The innocent purchaser, but he must pay damages to the original seller
E) The original seller, but he must pay compensation to the innocent party

Question 45

Mr. Ho talked with Mr. Tarr, who ran a business called Roscali Roofing. Mr. Ho agreed to pay Tarr $250 for the repair of his roof. In time, Gene Fix, Tarr's employee, came to Mr. Ho's and worked on the roof. Fix used the wrong material in the repairs, which made all his effort worthless, and during the next rain the roof leaked as before. Which of the following is true?

A) Ho could successfully sue only Tarr for breach of contract.
B) Ho could successfully sue only Fix or Tarr for breach of contract, whichever he chooses, but not both.
C) Ho could successfully sue Fix and Tarr for breach of contract since they were both connected with the job.
D) If Tarr doesn't pay Fix, Fix could sue Ho directly for his pay because he worked on Ho's roof.
E) Ho could only sue Tarr because he is the one who did a poor job of the roof.

Question 46

A and B entered into a contract for the purchase and sale of three grams of cocaine. B delivered the goods, but A didn't pay. If B sued for payment, the court would not enforce the contract because of which of the following?

A) Mistake
B) Illegality of object
C) Rescission
D) Non est factum
E) Rectification

Question 47

While selling the contents of his house in preparation for a move to a condominium, Mr. Lotski sold an antique desk to a Mr. Rogers, who paid by a cheque that was later returned N.S.F. (nonsufficient funds). Lotski later learned that Rogers had sold the desk to Mrs. Lee for cash, which he took and then disappeared. Who is entitled to the desk if the court holds that the first contract between Lotski and Rogers is voidable?

A) Lotski
B) Rogers
C) Lee
D) Lotski, but he must pay compensation to Lee
E) Lee but, she must pay compensation to Lotski

Question 48

Mike is given a bottle of wine as a gift. Josh, a neighbour, sees it and recognizes it as a very rare bottle. Knowing that Mike doesn't drink, Josh offers him $300 for it, which he believes to be a fair price. Mike happily agrees. Later, when Josh is looking up the price of the bottle on eBay, he realizes that it is not a valuable bottle of wine at all. He had confused it with another vintage. Josh, who is taking a law class, wonders whether or not he could have the contract set aside. Which of the following statements is true?

A) It is unlikely to be set aside unless Josh could show that it would be unfair or unjust to enforce it.
B) It will automatically be set aside on the basis of the doctrine of mistake.
C) It will only be set aside if Josh's mistake rendered the contract illegal.
D) A contract can never be set aside where a mistake has been made.
E) The contract will only be set aside if Josh's mistake was the result of willful blindness.

Question 49

Back in the days when people in Vancouver sold houses as houses and not for demolition, Mrs. Reid prepared her house for the market by contracting with Silversteps Ltd. to have her front steps replaced for the sum of $2800. Warren, an employee of the company, worked for days framing the stairs and pouring the concrete. Unfortunately, he had done the framing wrong and, in addition, the concrete mix was faulty, so all of his efforts were in vain, and the stairs were not useable. On these facts, which of the following is true?

A) Mrs. Reid could successfully sue only Silversteps Ltd. for breach of contract.
B) Mrs. Reid could successfully sue Silversteps Ltd. for breach of contract or Warren for breach of contract but not both.
C) Mrs. Reid could successfully sue both Silversteps Ltd. and Warren for breach of contract because they were both connected with the job.
D) If Silversteps Ltd. failed to pay Warren under the employment contract, Warren could sue Mrs. Reid directly for his pay because he worked on her stairs.
E) Mrs. Reid could successfully sue the manufacturer of the cement for breach of contract because the cement was not fit for its purpose.

Question 50

In AMJ Campbell v. Kord Products Inc., a comma was inserted into the contract with the effect that both "freight" and "rebates" would be deducted from the sale price, rather than simply "freight rebates." This resulted in a difference of price amounting to $759,000. What was the result?

A) The Court denied a request for rectification because a Court will not rectify a contract that is in writing.
B) The Court denied a request for rectification because it was not clear both parties had the same intention.
C) The Court denied a request for rectification because the appropriate remedy was rescission.
D) The Court allowed the request for rectification because the price difference was significant.
E) The Court allowed the request for rectification because one party had obviously made a mistake.

Question 51

In Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., the defendant attempted to take advantage of a mistake made by the plaintiff. What did the Court hold?

A) The defendant's conduct was sharp business, and the Court dismissed the plaintiff's claim.
B) The defendant's conduct was improper, but there is no remedy available to address such a mistake.
C) The defendant's conduct was equivalent to a fraud or a misrepresentation amounting to fraud, and the Court awarded damages in lieu of rectification.
D) The defendant's conduct was essentially a breach of a fiduciary duty and the Court ruled that the entire contract was void as a result.
E) The defendant's conduct was admirable and the Court ordered the plaintiff to pay costs.

Question 52

When you went home for Thanksgiving dinner, your great aunt, now 80 years old, seemed very unhappy. You learned that she had just signed a contract to buy an expensive condominium in a retirement community. She had attended a real estate "seminar" with her friend. In trying to think of a way for her to get out from under this contract, you review mistake, duress, undue influence, and unconscionability. Which of the following is False?

A) To avoid the contract on the basis of non est factum, she would have to prove, among other things, that she did not understand the nature of the document signed.
B) To avoid the contract on the basis of undue influence, she would have to show that she was improperly pressured by a trusted person in a dominant position.
C) To avoid the contract on the basis of duress, she would have to show that she was forced into signing the contract against her will by serious threats.
D) To avoid the contract on the basis of unconscionability, she would have to have evidence that the sellers of the property knowingly took advantage of their superior bargaining position and that the consideration was grossly unfair.
E) To avoid the contract on the basis of mistake, there is a presumption of mistake and she will automatically get out of the contract.

Question 53

Al sells gravel to Bob on credit, and Bob sells it to Chuck, an innocent purchaser. Then Bob runs away with the money, without paying Al. Who will get the gravel if the court holds that the contract between Al and Bob was "void"?

A) Al
B) Bob
C) Chuck
D) Al and Bob
E) Bob and Chuck

Question 54

The equitable remedy of rectification is granted by the courts in which of the following situations?

A) The parties to a contract disagree as to the meaning of a term in their contract.
B) The seller made a fraudulent misrepresentation that induced the buyer to buy.
C) The seller of goods has made an innocent misrepresentation that persuaded the buyer to buy.
D) A person buys something that he later learns he already owned.
E) Because of a mistake, a written document does not include a corrected term to which the parties had orally agreed.

Question 55

Mr. and Mrs. H were induced to sign a mortgage in favour of M Co. Ltd. by Johnston, a man living with their daughter. Johnston led them to believe that the document was an unimportant amendment to an existing mortgage, when in reality, it was a second substantial mortgage of their home. Neither read the document or questioned it. When the payments were in arrears, the mortgagee took an action for foreclosure (to take their home). Which of the following is correct with respect to the legal position of the parties?

A) If the court finds that Johnston committed a fraudulent misrepresentation, Mr. and Mrs. H will not have to honour the mortgage.
B) If the court finds that this is an example of undue influence by Johnston, Mr. and Mrs. H will not have to honour the mortgage.
C) If the court finds that this is an example of duress by Johnston, Mr. and Mrs. H will not have to honour the mortgage.
D) If Mr. and Mrs. H can show they didn't read the document, they will not have to honour the mortgage contract.
E) Assuming there was consideration, they will likely have to honour the mortgage contract even though they didn't read it.

Question 56

Kassem was a real estate agent with his own firm. Because his agency was new in a competitive field, he hired the company of Barrett and Barrett Ltd. to advise on an advertising strategy and to design ads for the newspaper and for brochures. Jack Barrett, senior employee, was handling the market research, and the employee Armstrong was doing the illustrations. When the work was complete, the ads went to press. Unfortunately, after the printing, it was discovered that in all the ads and in every brochure "Kassem" was spelled "Kassim." Armstrong had made the mistake in his copy. On these facts, which of the following is true?

A) For breach of contract, Kassem could successfully sue only the company, Barrett and Barrett Ltd.
B) Kassem can choose to sue either the company or its employee Armstrong for breach of contract, but not both.
C) Kassem can sue both the company and its employee Armstrong for breach of contract, since they were both connected with the job.
D) If the company did not pay Armstrong, Armstrong could sue Kassem for his pay because Armstrong did do work for Kassem.
E) Kassem's only recourse is against Armstrong, the employee who made the mistake.

Question 57

In 978011 Ontario Ltd. v. Cornell Engineering Co., a businessman signed a contract without reading it. He later discovered it contained a provision with which he did not agree. What did the Court hold?

A) The Court refused to grant an equitable remedy to correct a mistake that the businessman himself had allowed.
B) The Court held that the contract was void due to a lack of consensus.
C) The Court held that the contract was unenforceable due to a lack of consensus.
D) The Court ordered rectification to correct the mistake in the contract.
E) The Court ordered severance due to a lack of intention to be bound to the particular provision.

Question 58

Lars Jepsen, a fisherman from Tofino, regularly sells his catch to packing plants in Steveston. His shipment had already left dock last Monday, but he didn't contract for its sale until yesterday. He sold this shipment for $10,000 to B.C. Packers. Jepsen still owes Sam $3000, part of his commission for having sold one of his waterfront properties. This morning he assigned to Sam, in writing, $3000 of the $10,000 owed under the contract with B.C. Packers. Unknown to Jepsen or B.C. Packers, at the time they made the contract, his transporter had gone down in a storm and all the cargo was lost. Jepsen had no insurance for loss of his boat. Which of the following is correct with respect to his legal position?

A) This is an example of a frustrated contract.
B) This is an example of a breach of contract by Jepson with B.C. Packers.
C) This is an example of a mistake causing the contract between Jepson and B.C. Packers to be void.
D) Because of the frustration, Sam has no claim against either Jepson or B.C. Packers.
E) Despite the frustration, Sam can collect the $3000 from B.C. Packers.

Question 59

In Works v. Works, what was the result where one party was mistaken about something significant in the contract?

A) The Court will exercise its discretion to set aside the contract only if satisfied that it would be unfair or unjust to enforce it.
B) The Court will automatically set aside the contract on the basis of the doctrine of mistake.
C) The Court will only set aside the contract if the mistake renders the contract illegal.
D) The Court will never set aside a contract where a mistake has been made.
E) The Court will exercise its discretion to set aside the contract only if satisfied the mistake was the result of willful blindness.

Question 60

In Moss v. Chin, Chin's insurer, ICBC, made an offer to settle a claim that was accepted by the public trustee representing Mrs. Moss. ICBC was not aware that Mrs. Moss had died in the interim. ICBC made a unilateral mistake and yet the Court ordered that the contract be rescinded. What was the rationale?

A) ICBC lacked capacity to make an offer, as only Chin had such a right.
B) The public trustee lacked capacity to accept an offer, as only Mrs. Moss could do so, and she had died.
C) It is illegal to settle a claim when the claimant is no longer alive.
D) There was no consideration to support the claim, and therefore the contract was invalid.
E) ICBC had not misled itself, rather the public trustee had deliberately set out to keep ICBC from discovering the truth.

Question 61

With regard to the law governing privity of contract and assignment, which of the following is true?

A) A statutory assignment is more difficult to enforce than an equitable assignment.
B) A party to a contract for services can assign both his contractual obligations and his contractual rights.
C) Novation refers to the modifications of the privity of contract rule since it allows a stranger to the contract to receive benefits from the contract.
D) Assignments are modifications of the privity of contract rule since they allow ending the original contract and entering into a new contract with changes in terms, such as substituting one party for another.
E) An employee sent by his employer to do a routine job for one of the employer's customers is not in a contractual relationship with the customer.

Question 62

Mr. Jans owned a small building with four offices upstairs and a restaurant on the main floor. Jans contracted with a company, Signs Limited, to construct a sign indicating the names of his tenants and their room numbers. The sign was created and installed by John Monet, an employee of Signs Limited. Signs Limited assigned $500 of the $700 contract price to Ms. Franz, its landlord, when she called and pressed for the rent. Ms. Franz gave notice of the assignment in writing to Jans. Read the following statements, independently of one another, and indicate which is the true statement.

A) If Signs Limited fails to pay Monet's salary, Monet is legally entitled to sue Jans for it because Monet did work for Jans.
B) Franz cannot enforce this assignment because the assignment was not in writing, and only assignments in writing will be enforced by the courts.
C) If the sign were not done properly, Jans should sue Monet for breach of contract because Monet, as the employee, did the work.
D) If the contract were completed satisfactorily, Franz could enforce the assignment, although it is a partial assignment.
E) If the assignment is not honoured by Jans, Franz' only recourse is to sue Monet, the employee who actually did the work.

Question 63

Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is true with regard to these areas of the law?

A) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that his misrepresentation, which persuaded the buyer to buy, was true.
B) If a seller persuades a person to buy something via an innocent misrepresentation, the buyer could ask for rescission and damages for the tort of deceit.
C) A person can successfully argue non est factum and avoid his obligations under a contract only if he was misled about the very nature of the document and was not careless.
D) Independent legal advice given to a person is good evidence of undue influence.
E) Where a written document embodies the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification.

Question 64

The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr. Takemori for $2000. The co-op assigned, in writing, its contractual right to receive the $2000 to the Royal Bank, to which it was indebted. The Royal Bank gave written notice of the assignment to Takemori. Unknown to the buyer and the seller, at the time of the contract the grain had been destroyed because of a train derailment caused by the negligence of the train conductor. On these facts, which of the following is true?

A) The Royal Bank, the assignee, will receive the $2000 because it could prove privity of contract with Takemori.
B) The Royal Bank will receive part payment from Takemori.
C) The Royal Bank will receive nothing from Takemori because Takemori owes nothing to the Co-op.
D) The Royal Bank will receive $2000 from Takemori because there was an assignment in writing and that is the sole test for determining if the assignee will be paid the amount of the assignment.
E) Because of the conductor's negligence, the railroad will have to honour Mr. Takemori's contract with the Royal Bank.

Question 65

Able Company contracted to sell to Baker Company 400 barrels of chemical C for $12,000. Able Company assigned the entire $12,000 in writing to Mr. Long, who sent a letter informing Baker Company of the assignment and directing Baker Company to forward money to him instead of Able Company. Unknown to both companies, at the time of the contract the ship carrying the chemical had sunk and all cargo was lost. Which of the following is true?

A) Mr. Long, the assignee, will receive $12,000 from Baker Company.
B) The assignment to Mr. Long would fail to be a statutory assignment.
C) Mr. Long will receive nothing from Baker Company because nothing is owed to Able company.
D) Mr. Long will receive part payment.
E) Since Able Company has breached the contract, it must pay compensation for the damages of both Baker Company and Mr. Long.

Question 66

Adam bought a boat from Charlie for $900 payable on November 6. On November 6, when Charlie came for the money, Adam didn't have it. Adam was, however, employed by Ms. Bey to do some market research. He was to be paid $1000 for his report, due on November 12. Charlie wanted an assignment of $900 of the amount Adam expected to receive November 12. Adam wrote out an assignment with all the essential information and signed it. Charlie gave written notice of the assignment with all pertinent information to Ms. Bey the next day, November 7. On November 12, Adam had not finished his report. The contract provided that he would lose $100 for every week he was late. Adam was two weeks late in submitting his report. Which of the following is true?

A) The assignment fails to be an assignment at all because Adam failed to get the consent of Ms. Bey.
B) This assignment is a statutory assignment.
C) Ms. Bey must honour the notice of assignment by paying out the $900 on the day the notice was received.
D) Charlie, the assignee, would receive $800 from Ms. Bey and have to look to Adam for the other $100 owed.
E) Charlie would get nothing because Ms. Bey owed less than the amount assigned.

Question 67

When two parties are involved in a misunderstanding as to the meaning of a term of the contract, which of the following is usually applied by the court to settle the matter?

A) The court will find that there is no contract because there is no meeting of the minds.
B) Non est factum
C) Caveat emptor
D) The most reasonable interpretation of the terms
E) The equitable remedy of rectification

Question 68

Privity of contract applies in which of the following situations?

A) Where an interest in land is involved
B) Where a trust is involved
C) Where an insurance contract is involved
D) Where goods are being sold
E) Where a trust has been created

Question 69

A week after signing a contract, you became aware that you and the other party, Sheldon, seemed to have a different understanding of one of the provisions of the contract. Before you said anything to him, you reread it to see if your interpretation was valid. As you reread it, you noticed that not only was that provision vague, but also other terms and provisions were ambiguous or left out. Which of the following is False with regard to the methods used by the courts to interpret contracts?

A) The court will do its best to give effect to the intention of the parties.
B) To interpret express terms, the courts will look first to the plain meaning of the term (e.g., the dictionary meaning).
C) The parol evidence rule holds that when a contract is in writing, the court will not allow evidence to contradict, vary, add to, or subtract from the written contract.
D) Evidence of a condition precedent agreed upon by the parties but not included in the written contract is admissible despite the parol evidence rule.
E) Evidence of misrepresentation will not be admissible because of the parol evidence rule.

Question 70

Tong hired Hocaloski to design an ad for her business. Hocaloski gave the job to Peppar, her employee. After the ad was run, it was noticed that Peppar had made a serious error. He gave the wrong address and phone number for the business. On these facts, which of the following is true?

A) For breach of contract, Tong could successfully sue only Hocaloski.
B) Tong can sue either Hocaloski or Peppar for breach of contract, but not both of them.
C) Tong can sue both Hocaloski and Peppar for breach of contract, since they are both connected with the job.
D) If Hocaloski did not pay Peppar, Peppar could sue Tong for his pay because Peppar did do work for Tong.
E) Only Peppar is liable since he made the mistake.

Question 71

The longer Adolph stayed on his job, the more he hated it. He thought his boss was too demanding. He especially disliked being reprimanded for being late. One afternoon, he was asked by a secretary to take a letter to his boss for his signature. His boss had had an eye operation and was recuperating at home. Adolph got two signatures, one on the letter and one on a note promising to pay Adolph $1000 in consideration for services rendered. His boss was not careless, but couldn't read the papers. What plea or argument, if any, could his boss use to avoid paying on the promissory note?

A) Duress
B) Unconscionability
C) Shared mistake
D) Non est factum
E) Rectification

Question 72

Which one of the following will be excluded by the parol evidence rule?

A) Express terms
B) Extrinsic evidence
C) Evidence of implied terms
D) A condition precedent
E) Evidence of a collateral agreement

Question 73

With regard to the law governing privity of contract and assignment, which of the following is true?

A) Where the assignor assigns the same debt to two or more persons, if the promisor (debtor) pays out in good faith to the first assignee to give him notice, he has no further obligation.
B) If a promisor (debtor) accidentally pays out to the assignor after receiving notice of the assignment, he is free from any obligation to the assignee; the assignee must look to the assignor for payment.
C) An equitable assignment is easier to enforce than a statutory assignment.
D) An exception to the doctrine of privity of contract is a contract selling a car.
E) Novation refers to the voiding of the original contract and substituting another.

Question 74

Allen hired Beth to do a marketing survey. The contract provided that she would start the work on January 15 and finish it by March 15, the date for completion being a condition on the contract. She would be paid $2000. After one month of work, when the work was half completed, Beth assigned the $2000 contract price to Charlie, from whom she had bought computer hardware. Charlie gave written notice of the assignment to Allen on the same day. The second month's work went badly. Information entered into the computer was lost and Beth could not finish on time. She was five days late, and each day cost Allen $100. His total foreseeable loss was $500 because of her breach. On these facts, which of the following is true?

A) Charlie could receive only $1000 from Allen because half of the $2000 project was finished when he gave notice of the assignment to Allen.
B) Charlie could receive $2000 from Allen because that is the amount owed to Charlie and the amount assigned by Beth.
C) Charlie could receive $1500, because when the contract was completed, that was all that was legally owed to Beth.
D) Charlie could receive only $1000 from Allen because only half the work was done when the assignment was made.
E) Charlie gets $0 from Allen because one can assign contractual obligations but not contractual rights.

Question 75

Mr. Frank, a foreman supervising some 43 employees, was asked by his secretary to sign a form requesting additional supplies needed on the factory floor. He was not careless when he examined the form, but his secretary had cleverly arranged the signature line so that instead of signing a request for supplies he signed a cheque payable to his secretary. What principle, if any, would be used to defend against her action on the cheque?

A) Mistake
B) Illegality of object
C) Rescission
D) Non est factum
E) Rectification

Question 76

Which of the following is true with regard to the law of contract?

A) Assignments are modifications of the privity of contract rule, since they do allow one person to take over the obligations of another.
B) An employee sent by his employer to do a routine job for one of the employer's customers is in a contractual relationship with the customer.
C) The assignor for value of a negotiable instrument may acquire better rights than the assignee has.
D) A statutory assignment is easier to enforce than an equitable assignment.
E) A party to a contract for services can assign both his contractual obligations and his contractual rights.

Question 77

Len was behind in his work at the office. He decided to go in for a few hours on Sunday to catch up. He asked an assistant to come in for four hours. He turned on his office TV. Just then his assistant came in and asked him to sign four letters that she said concerned general office matters. He carelessly signed them without taking his eyes off the TV screen. One of the "letters" was, in fact, a cheque for $500 payable to the assistant. The assistant cashed the cheque at her bank, and when her bank presented the cheque for payment, Len instructed his bank not to honour it. He said that he had been tricked and that his signing it was all a big mistake. On these facts, which of the following is true?

A) Because Len did not know what he was signing, he cannot be held liable.
B) Len's carelessness in failing to read what he was signing will likely defeat any claim of non est factum.
C) Len could avoid his obligation on the cheque on the basis of duress.
D) Len could avoid his obligation on the cheque on the basis of unconscionability.
E) Undue influence would be his best defence on these facts.

Question 78

With regard to the law governing privity of contract and assignment, which of the following is False?

A) Where the assignor assigns the same debt to two or more persons, if the promisor (debtor) pays out in good faith to the first assignee to give him notice, he has no further obligation.
B) If a promisor (debtor) accidentally pays out to the assignor after receiving notice of the assignment, he is free from any obligation to the assignee, and the assignee must look to the assignor for payment.
C) A statutory assignment is easier to enforce than an equitable assignment.
D) An exception to the doctrine of privity of contract is a contract granting an interest in land.
E) Novation refers to the ending of the original contract and entering into a new contract with changes in terms, such as substituting one party for another.

Question 79

Len's new secretary came in and asked him to sign four letters that he said concerned general office matters. One of the "letters" was, in fact, a cheque for $500, payable to the secretary. The secretary cashed the cheque at his bank, and when his bank presented the cheque for payment, Len refused to pay it. He said he had been tricked and it was all a mistake. On these facts, which of the following is true?

A) Len may be able to avoid his obligation on the cheque on the basis of non est factum.
B) Len would be obligated to honour the cheque no matter how careful he was.
C) Len may be able to avoid his obligation on the cheque on the basis of duress.
D) Len may be able to avoid his obligation on the cheque on the basis of unconscionability.
E) Even if he was careless, Len will not have to honour the cheque.

Question 80

In which scenario will the court likely find the contract void on the grounds of mistake?

A) Annette bought a suit thinking she would be invited back for a second interview. She wasn't, and now wants to return the suit on the basis of mistake.
B) Ms. Hunt bought some property erroneously thinking that the province was planning to put a highway nearby, even though the seller had never made any such suggestion. She wants out of the contract.
C) The parties signed a document that stated the consideration as $1100 instead of the $900 that the buyer and seller had contracted for, but the buyer cannot prove the terms of the original contract.
D) Mr. Armstrong accepted an offer by Sidhu, who was selling a "computer program," but learned that they had different understandings of what program was meant. The court cannot say that one interpretation is better than the other.
E) Mary contracted to buy "the Acura car" from a collector of cars. He was selling his 2011 model but she thought she was buying the 2012 model. The court, looking at all the evidence, found that his interpretation was the more reasonable.