Deck 10: Contractual Defects

Question 1

Sina employs Joe, who is 16.The terms of the employment contract are to Joe's benefit.Still, Joe wants to walk away from his obligations.Joe can do so whenever he wants because the contract was always void.

Answer 1

False

Question 2

Which of the following distinguishes a chartered corporation from a statutory corporation?

A)Chartered corporations have a limited contractual capacity, but statutory corporations do not.
B)Statutory corporations are treated the same as individuals of a majority age, but chartered corporations are not.
C)Statutory corporations cannot be said to act ultra vires, but chartered corporations can.
D)Statutory corporations are indistinguishable from chartered corporations in terms of contractual capacity.
E)Chartered corporations generally have full capacity and consequently are not subject to the ultra vires rule, but statutory corporations have limited capacity and consequently are subject to the ultra vires rule.

Answer 2

Chartered corporations generally have full capacity and consequently are not subject to the ultra vires rule, but statutory corporations have limited capacity and consequently are subject to the ultra vires rule.

Question 3

Sarah bought a stereo system in Vancouver under a payment plan that must be completed within two years.Technically speaking, the contract is enforceable only if it is evidenced in writing.

Answer 3

False

Question 4

Which of the following contracts will not be enforced even if the purchaser is a minor?
A.purchase of groceries
B.retainer for legal services
C.a beneficial employment contract
D.a video game sale
E.payment for a medical prescription

Question 5

Across Canada, the age of majority is 19, which is a federal law.

Question 6

The Statute of Frauds eliminates the writing requirements of the common law.

Question 7

Unconscionable transactions can be characterized as one-sided transactions obtained by unfair use of power.

Question 8

Tandindar was holding a shipment of goods that belonged to Todd and threatened not to release them unless he agreed to sign a contract to buy two more shipments over five years.Todd did not need the goods, but he decided to go through with the contract and agree to Tandindar's terms.This is an instance of economic duress.

Question 9

The form and content requirements of the Statute of Frauds requires a signature from each of the parties.

Question 10

Cy and Kelly negotiate the sale of "Indian art" over the internet.Because of an electronic miscommunication, Cy thinks he is buying art from Calcutta.But it turns out upon delivery that Kelly was selling Inuit art all along.Because the mistake was material and prevented the creation of a shared contractual intent, Cy will be able to claim the contract was defective and may have a remedy.

Question 11

While Indian bands generally have the same contractual capacity as corporations, individual Aboriginals are subject to several special restrictions.

Question 12

A minor's contract for necessaries of life is not voidable on the grounds of capacity.

Question 13

Svetlana paid an advance under a contract of sale for a unique antique in Ontario, but the performance of the contract was rendered impossible because of a terrible accident that happened during delivery.Because the seller incurred expenses while trying to deliver the antique, the court is permitted to allow the seller to keep some of the advance towards those expenses.

Question 14

Lawrence and Jane were negotiating a contract, for the purchase and sale of widgets, over cocktails.Jane believed that Lawrence was completely intoxicated and she was hoping to take advantage of his condition to get the best possible deal for herself.Lawrence, however, knew what Jane was trying to do because he was really only slightly impaired.He therefore manipulated the situation to sign two contracts.The first was to his advantage and the second benefitted Jane.Lawrence believed that he would be entitled to enforce the first, but walk away from the second.Which of the following is most likely to be TRUE?

A)Both deals are enforceable because Lawrence was not truly incapacitated.
B)Neither deal is enforceable because Jane believed Lawrence to be intoxicated and therefore could not have reasonably expected to enforce either transaction.
C)A court will enforce the first contract, but not the second, because Jane tried to take advantage of Lawrence before he tried to take advantage of her.
D)A court will enforce the second contract, but not the first, because Lawrence knew the true facts, but Jane did not.
E)Neither contract is enforceable because even a person who pretends to be intoxicated does not have contractual capacity.

Question 15

The reason contracts for necessaries are enforceable is to ensure that minors do not avoid contracts with suppliers for perishable goods.

Question 16

The plea of non est factum allows a person to avoid a signed contract whenever they are mistaken about a key term or condition even if they do not bother to read the contract.

Question 17

The notion of public policy is somewhat vague as it is difficult for a judge to decide what the public policy is in a democratic society.

Question 18

Whenever parties of unequal bargaining powers transact, undue influence is always presumed but can be rebutted.

Question 19

Just moments ago, you created five different contracts with five different parties.Which of those contracts is least likely to be enforced?
A.Arvid-you did not notice anything unusual about him, but a court had declared him to be mentally incompetent
B.Brynn-who was slightly impaired, but not really drunk, after having several martinis
C.CeeCee-you assumed that she was about 16 years old, but she is really 20
D.Deacon-who appeared to be ancient, but is really 76 years old
E.Eugenia-who told you that she was acting on behalf of the Topiary Association

Question 20

The concept of capacity
A.means the legal power that we all have just to walk away from any contractual obligation on the basis that we did not understand the contract that we signed or otherwise entered into.
B.means that the law requires parties who enter into contracts to have a legal capacity to enter into contracts, and not everyone in society necessarily has that capacity.
C.refers to when one party is mistaken about the terms of a contract.
D.refers to pre-contractual statements.
E.requires all contracts to be in writing.

Question 21

An Aboriginal person named Joe was born and raised on a Native reserve.Upon reaching the age of majority, however, he abandoned the reserve and moved to Calgary so that he could better develop a career as an artist.Ten years later, Joe was asked to participate in a major exhibition of his work.Most of Joe's art depicts life on his reserve.Which of the following is most likely to be TRUE?

A)Joe is unable to sell his art anywhere other than the reserve.
B)The profits from Joe's sales will be held by the Crown.
C)Joe's art could be used as security for a credit transaction if the art is not on his reserve.
D)Joe has only a limited capacity to contract.
E)Joe lacks the capacity to contract.

Question 22

How do courts regard restrictive covenants?

A)Courts will assume that unless there was unfairness during the bargaining process, restrictive covenants should be upheld because the parties have freedom to contract.
B)Courts will find all restrictive covenants to be against public policy.
C)Courts will presume restrictive covenants to be against public policy unless the party seeking to enforce the covenant demonstrates that the restriction is reasonable.
D)Courts will presume restrictive covenants to be reasonable unless the party seeking to avoid the covenant demonstrates that the restriction is against public policy.
E)Courts will rewrite all restrictive covenants to make them reasonable and therefore enforceable.

Question 23

Nora was furious that his neighbours allowed their dog, Asta, to bark long into the night.She therefore hired Nick to steal Asta.Nora paid Nick according to the terms of the contract, but he did not follow through with his end of the bargain.Can Nora get her money back?

A)No.The contract is defective because it was not in writing.
B)No.The contract is defective because it is illegal.
C)No.The contract is defective because it is a restraint on trade.
D)Yes.The parties will be returned to their pre-contractual position.
E)Yes.The lawsuit can be brought in small claims court.

Question 24

Duress is distinguishable from undue influence in that

A)duress always involves an inequality of bargaining power, whereas undue influence is concerned with physical pressure.
B)duress may arise from a threat to a person's property, whereas undue influence generally involves excessive manipulation or persuasion.
C)the receipt of independent legal advice is relevant to duress, but not to undue influence.
D)duress involves the application of improper pressure, whereas undue influence focuses on improvident bargains.
E)duress causes a contract to be void, whereas undue influence renders a contract voidable.

Question 25

The difference between a guarantee and an indemnity is that

A)indemnities need to be in writing to be enforceable.
B)a guarantee is a conditional promise and an indemnity is not.
C)a guarantee is a promise to assume another's debt.
D)the Statute of Frauds applies to indemnities but not to guarantees.
E)a guarantee is given to a bank and an indemnity is given to a party that is not a bank.

Question 26

Which of the following statements regarding the Statute of Frauds is TRUE?

A)The signature requirement may be satisfied by a name on letterhead.
B)The statute generally requires the document to be signed by the person who wants to enforce the agreement.
C)The writing requirements must always be satisfied by a single document-a court will not consider several documents together.
D)Because of the importance of the subject matter, Parliament enacted a Statute of Frauds that applies across Canada.
E)The Statute of Frauds was first created in Canada, but it has been copied in other countries as well.

Question 27

Which of the following statements is TRUE?

A)The doctrine of non est factum is not available if a person failed to read a contract simply because her glasses were broken.
B)The phrase "non est factum" is a Latin phrase that means "I cannot find the document."
C)The doctrine of non est factum was developed in law and not in equity.
D)The doctrine of non est factum can lead to rescission, but it cannot be used for the purpose of rectification.
E)The doctrine of non est factum is available only under a statute.

Question 28

Common law illegality

A)is an attempt to regulate conduct through an administrative regime.
B)aims to punish individuals who make agreements contrary to public policy.
C)requires a determination of legislative intent.
D)causes agreements that are contrary to public policy to be unenforceable.
E)requires proof that one party is involved in an actual crime in entering into the contract.

Question 29

Constance and Rosemary are in a fiduciary relationship.This fact is relevant to a claim of unfairness during bargaining because

A)it means that the two of them will never be allowed to contract with each other as a result of the conflict of interest.
B)it means that Connie could never enforce her contract with Rosemary.
C)the court will presume that a contract between them was founded on the basis of duress.
D)the court will presume that a contract between them was founded on the basis of undue influence.
E)the court will presume that a contract between them was founded on the basis of an unconscionable transaction.

Question 30

Which of the following is LEAST LIKELY to be understood by a court as a contract for the sale of an interest in land?
A.the purchase of a home
B.the lease of a farm
C.the short-term lease of a residential apartment
D.the lease of mineral rights in an oilfield
E.the purchase of lakefront property

Question 31

Economic duress

A)occurs whenever one party puts another party under financial pressure.
B)occurs when the victim could not reasonably resist improper pressure.
C)is assumed to exist once the victim of duress commences legal proceedings against the party exerting duress.
D)is impossible to prove unless the victim of duress protested at the time the duress was exerted.
E)occurs when a victim of duress seeks independent legal advice and that advice is wrong.

Question 32

Having recently made a fortune by inventing and selling a new piece of software, Matt heard that his friend, Lois, was having a hard time obtaining a bank loan.Matt therefore generously promised the bank that he would be responsible for the debt if Lois failed to repay a loan.That promise will be enforceable against Matt if

A)he provides a notarized copy to the bank.
B)Lois repeats Matt's promise in a document that she signed.
C)he provides it to the bank in a signed document.
D)the promise is contained in a document that Lois and the bank signed.
E)either Lois or the bank provides some positive benefit to Matt personally.

Question 33

Unincorporated associations

A)are always treated the same way as corporations.
B)are not legal entities and therefore do not have contractual capacity unless a statute says otherwise.
C)generally have the capacity to contract.
D)are independent legal entities.
E)no longer exist in Canadian society.

Question 34

Shogun Used Cars Ltd supposedly sold a car to Alan Rogue.Shogun, however, has discovered that Rogue was not who he pretended to be and the company wants the court to declare that the apparent contract is invalid because of the mistake of identity.A judge will agree

A)even if Shogun would have created the same contract if it had known Rogue's true identity.
B)only if Rogue knew that Shogun acted under a material mistake.
C)only if Rogue has paid at least part of the price.
D)only if Rogue has tried to re-sell the car to a third party.
E)only if Shogun took every possible precaution to verify Rogue's identity.

Question 35

Which of the following examples of a covenant in restraint of trade is most likely to be contrary to public policy and therefore invalid?

A)A high-tech firm requires its engineers to contractually promise that, during their terms of employment, they will not reveal any information about patents to any other high-tech, communications, or pharmaceutical companies.
B)Partners in an advertising agency contractually promise that, during their time with the partnership, they will engage in advertising sales exclusively for the agency.
C)A contract for the sale and purchase of a business prohibits the vendors from directly competing with their former company for a period of two years.
D)A contract for the sale and purchase of a bakery requires the sellers to promise that they will never own or operate another bakery anywhere in the world.
E)A franchisor requires a franchisee to conduct the franchise operations solely in accordance with the written franchise agreement and not in any other manner.

Question 36

For which of the following lists would the Statute of Frauds require ALL THREE contracts to be evidenced in writing in most Canadian jurisdictions?
A.a five-year commercial property lease agreement; the sale of a house; a mortgage of a condominium
B.a guarantee to assume someone's debt upon default; an indemnity agreement; the sale of a $2000 leather sofa
C.a four-year financing agreement secured by goods but not land; purchase of a $2000 leather sofa; the sale of a house
D.an agreement to rake your neighbour's leaves; the sale of a house; an indemnity agreement
E.a contract to buy a stereo; a contract to buy a car; and a contract to buy a new pair of blue jeans

Question 37

The doctrine of frustration applies if
A.after a contract is created, some unexpected event either makes it impossible for the parties to perform or radically undermines the purpose of their agreement.
B.the defendant repeatedly refuses to perform despite being able to do so.
C.the contracting parties are unable to reach an agreement and are forced to abandon negotiations.
D.the parties attempted to create a contract in ignorance of some fact that would make it impossible for the parties to eventually perform.
E.both parties agree to not perform the contract.

Question 38

Selma recently signed a contractual document with Olaf.She now believes, however, that she should be entitled to walk away from the agreement as a matter of fairness.She has phrased her argument in terms of the doctrine of non est factum.A court is most likely to agree with that argument

A)if, even though Selma was not careless, there is a radical difference between what the document contains and what Selma thought it contained.
B)if the document contains an exclusion clause that Olaf did not expressly draw to Selma's attention.
C)if Selma failed to notice that the document did not reflect the agreement that she had reached with Olaf, even if Selma simply chose not to read the document.
D)if the document contained a space for Selma's signature, but she forgot to sign.
E)only if Olaf promised Selma that the agreement would not be legally enforceable even if she signed the document.

Question 39

Which of the following mistakes is most likely to prevent the creation of a contract?
A.As a result of a mistake regarding the future value of a technology company, a stock broker buys stock in that company.
B.In January, a person agrees to pay $10 000 for the right to occupy a lakeside cottage during July and August.When both parties go to the lake on July 1, however, they discover that the cottage burned to the ground several weeks earlier.
C.A grocery supplier fills an order for 5000 cans of beans but mistakenly sends only 500 cans.
D.A bean wholesaler ships 5000 cans of golden wax beans to a customer who thought that he was ordering 5000 cans of corn.
E.A person agrees to a standard form contract on the internet by clicking the mouse on the "I Agree" icon.

Question 40

Ariel pays Newton a $17 000 deposit as part performance of an oral contract for the sale of land and that Ariel takes possession of the land at the time of possession.According to the terms of their agreement, Ariel is to pay the balance 30 days after taking possession, failing which Newton is allowed to keep the deposit and Ariel must vacate.Suppose that the contract of sale does not complete as Newton fails to provide a transfer of title even though Ariel tenders the whole amount on the thirtieth day after possession was taken by Ariel.Which of the following is TRUE in most Canadian jurisdictions?

A)Ariel can enforce the contract of sale against Newton.
B)Newton has a defence to enforcement of the contract based on the Statute of Frauds.
C)Newton can refund the deposit and take the money back because the parties' actions were not part performance of a contract.
D)Ariel can only sue for return of the deposit.
E)Ariel will lose the deposit, she must pay rent to Newton for the month of possession, and she must then vacate the land.

Question 41

Salvatore contractually agreed to by a shipment of widgets from Acme Corp.A dispute has arisen in connection with that agreement and Acme claims the protection of a force majeure clause.Which of the following statements is most likely to be TRUE?

A)The company has discovered that Salvatore is under the age of majority.
B)Salvatore has argued that the contract is unenforceable because it is not evidenced in writing.
C)Salvatore is upset because the widgets were destroyed by a typhoon while they were in transit, and because he mistakenly believed that the widgets were protected by an insurance policy.
D)The company wants to escape from the contract on the grounds of frustration.
E)Salvatore has argued that he entered into the contract as a result of undue influence.

Question 42

An unconscionable transaction

A)is a contract that was created when at least one party was unconscious or otherwise lacked capacity.
B)always requires proof that one party violated a statute.
C)will exist if either the bargain was improvident or the parties did not have equal bargaining power.
D)requires proof of either an improper threat or excessive coercion.
E)is a doctrine that was developed in equity rather than law.

Question 43

Jerry and four of his friends form the Inventor's Club, a private club that allows inventors to get together and share new ideas.This organization is
A.a chartered corporation, meaning that it shares the same legal rights as someone who has reached the age of majority.
B.an association, meaning that it shares the same legal rights as someone who has reached the age of majority, but still cannot contract.
C.an association, meaning that all contracts will have to be created by Jerry or one of his friends.
D.a chartered corporation, meaning that it must have someone contract for its benefit.
E.a statutory corporation, meaning that it can contract, but has limited contractual capacity.

Question 44

Which of the following have limited capacity to contract for the necessities of life?
A.minors and people who have been declared mentally incompetent by the courts
B.Aboriginals and the elderly
C.public authorities and Indian bands
D.corporations and alcoholics
E.minors

Question 45

Malkit sold a house to Amanda.The evidence indicates that Amanda owed fiduciary obligations to Malkit both before and after the agreement was signed.Which of the following statements is TRUE?

A)Amanda has an absolute right to have the contract set aside.
B)The court will presume that Malkit entered into the contract as a result of Amanda's undue influence.
C)In order to set aside the contract, Malkit must prove that the agreement is unfair to him.
D)The contract will be set aside unless Amanda proves that she was unaware of her fiduciary obligations.
E)Malkit is entitled to receive Amanda's performance even though he is not required to perform his obligations under the agreement.

Question 46

Because she was moving to Calgary, Lucy wanted to sell the furniture store that she had created in Edmonton.Chas was interested in buying the business, but he insisted that the contract must include a non-compete clause.Lucy agreed, the contract was created, and Chas became the new owner of the store in Edmonton.A year later, however, he learned that Lucy had opened a new furniture store in Calgary and was doing great business.Chas then sued Lucy for breaking the non-compete clause.Which of the following statements is most likely to be TRUE?

A)The non-compete clause will be enforced unless Lucy can prove that the process leading up to the contract was defective in some way.
B)All non-compete clauses are contrary to public policy and therefore void.
C)As long as Lucy received independent legal advice before she signed the contract, the non-compete clause will be enforced.
D)The non-compete clause may be enforced as long as it is reasonable in terms of the geographical area and the time period that it covers.
E)The non-compete clause will be enforced as long as Lucy received special consideration in exchange for it.

Question 47

Adrian and Darah entered into a contract.After the agreement was partially performed, Adrian successfully claimed that the contract is voidable.Which of the following statements is most likely to be TRUE?

A)Adrian, who is an Aboriginal living on reserve land, had created a contract to sell that land to Darah.
B)Adrian, who is 17 years old, had entered into a contract to purchase a set of computer games from Darah.
C)Adrian, who has been declared mentally incompetent by a court, entered into a contract to purchase food and shelter from Darah.
D)Adrian, who is an Aboriginal living in Toronto, entered into a contract to purchase recreational sporting goods from Darah.
E)Adrian, who is 17 years old, entered into a contract to obtain life-saving medical services from Darah.

Question 48

A fiduciary relationship

A)is exclusive to the law of corporations.
B)is exclusive to the law of employment.
C)exists whenever there is an inequality in the bargaining power of contracting parties.
D)must be established in order to prove undue influence.
E)exists when one party is in a position of dominance over another, for example a trustee and a beneficiary, a lawyer and a client, or a doctor and a patient.

Question 49

A force majeure clause

A)allows a frustrated contract to be rescinded.
B)overrides the effect of an event that normally would constitute frustration.
C)is important primarily because of the possibility of duress or undue influence.
D)means that if there is a dispute regarding the effect of a contract, and there are more than two parties to the contract, the majority view will prevail.
E)provides protection against the possibility of unconscionable conduct.

Question 50

On Tony's 21st birthday, he spent the afternoon in a pub with his friends and then visited a car dealership.Although Tony exhibited clear signs of intoxication, the dealership persuaded him to sign a contract to buy an expensive new car.Which of the following is most likely to be TRUE?

A)A signed contract is never void or voidable.
B)The contract is voidable if Tony repudiates the contract by contacting the dealership within a reasonable time after regaining capacity.
C)The contract is fully enforceable because Tony is of the age of majority, which means he is held fully accountable in law.
D)The contract is voidable if Tony does not do anything to affirm the contract.
E)The contract is voidable only if it can be proven that the dealership inflated the price of the car.

Question 51

Jane is interested in purchasing a condominium property from Full House Real-Estate Group.She recently graduated college, so she does not have much of a credit record.Knowing this, she goes to Version Bank with her wealthy cousin, Ted, who previously agreed to assist her in buying a house.Which statement is most likely to be TRUE?

A)Ted can indemnify the bank loan as an unconditional promise to pay only when Jane defaults on her payments.
B)Ted can guarantee the bank loan as an unconditional promise to pay only when Jane defaults on her payments.
C)Ted can guarantee the bank loan as a conditional promise to pay only when Jane defaults on her payments.
D)Ted can indemnify the bank loan as a conditional promise to pay only when Jane's obligations become due.
E)Ted can indemnify the bank loan, but the indemnification is only enforceable if the indemnity is signed under a notary public seal according to the Indemnification Acknowledgments Act.

Question 52

Wilma had worked for Acme Inc for more than ten years.Unfortunately, she fell out of favour with the company after she began to complain, on behalf or herself and her co-workers, about working conditions.Eventually, the relationship became intolerable and Wilma reluctantly agreed to leave.Acme provided a severance package, but only after Wilma contractually promised that she would not sue the company in connection with her dismissal.Wilma now believes that her employment was improperly terminated.She cannot sue the company, however, unless she can escape from the severance contract.Which of the following statements is most likely to be TRUE?

A)Because of the relationship that always exists between an employer and an employee, a court will assume that Wilma was subject to undue influence unless Acme can prove otherwise.
B)The concept of duress of goods has been extended to situations in which a person has been improperly fired and therefore cannot afford to buy the necessities of life.
C)If Wilma sues for economic duress, she is more likely to win if she signed the severance contract without receiving independent legal advice.
D)The facts reveal a clear case of an unconscionable transaction.
E)To succeed in a claim for economic duress, Wilma would have to prove that Acme Inc was motivated primarily by the desire to enjoy a financial advantage as a result of terminating Wilma's employment.

Question 53

Which of the following is most likely an improvident bargain?
A.an elderly woman assigns all of her assets to a powerful business in exchange for the promise to take care of her in the future
B.an elderly woman assigns all of her assets to a convicted fraudster in exchange for the fraudster's promise to take care of her grandson in the future
C.an elderly woman trades her farm in Manitoba for a condo in Florida
D.an elderly woman trades her cottage in Nova Scotia for blue chip stocks
E.an elderly woman goes to play bingo for the third time in a week

Question 54

Pam entered into a contract with Dave.A court will declare that the contract was frustrated if

A)Dave promised to keep Pam's sidewalks clear of snow for a flat fee of $500 for the winter, but now wants to escape the contract because the city has already been hit by six major blizzards and it is only the middle of January.
B)Pam repaired Dave's truck, but before he could resume possession, the vehicle was destroyed by a fire of unknown origin.
C)both parties performed as promised, but neither party is satisfied with the end result.
D)Dave stored Pam's household goods while she was attended school in Spain for a year, but he now refuses to allow her to take possession of the property unless she pays storage fees.
E)neither party realized, when they created the contract, that they would both have to pay a tax on the transaction.

Question 55

Stewart is a fifteen-year-old boy who comes from a very wealthy family. Throughout his life, Stewart has been given expensive jewelry.In May, he and his mother got into an argument and he decided to sell some of his jewelry at Frank's Pawnshop.Excited about the collection they were about to receive, the pawnshop clerk immediately entered into a contract with Stewart to complete the transaction.Which of the following statements is most likely to be TRUE?

A)The contract is fully enforceable as long as the pawnshop paid fair market value.
B)The contract is enforceable as long Frank, or someone else in the pawnshop, provided Stewart with legal advice before he signed the agreement.
C)Stewart can avoid the contract at any point in the future as long as he repays the money that he received.
D)The contract is voidable, but Stewart must elect to avoid it in a timely manner.
E)The contract is illegal and therefore void.

Question 56

Maeve entered into a contract with Tyler.The parties had equal bargaining power and Tyler did not pressure Maeve into the agreement.Although she does not suffer from a mental illness or intellectual disability, and although she is an adult, Maeve is easily victimized in some commercial dealings.She is naive, immature, and unsophisticated.As a recent immigrant to Canada, she speaks English reasonably well, but she cannot read or write in English.She now wants to set aside her contract with Tyler on the basis that it is an unconscionable transaction.Which of the following statements is most likely to be TRUE?

A)A judge may enforce the contract even if it is an improvident bargain from Maeve's perspective.
B)The contract will be set aside unless Tyler proves that the agreement benefits Maeve more than it benefits himself.
C)A court will presume that the transaction is unconscionable as soon as it hears evidence of Maeve's disadvantages.
D)The contract cannot be enforced unless Maeve received independent legal advice.
E)The contract will be set aside only if Maeve proves that Tyler exercised undue influence over her.

Question 57

Where is exists, the Statute of Frauds imposes a writing requirement on

A)all contracts of employment.
B)all loans and all guarantees.
C)all contracts with a government and all contracts for the sale of interests in land.
D)all enforceable contracts created by minors.
E)guarantees and contracts that cannot be performed within one year.

Question 58

Tajeash and Faye entered into a contract.Before either party began to perform, however, Tajesh successfully claimed that the contract is void.Which of the following statements provides the best explanation for that outcome?

A)Faye was drunk when the contract was created.
B)Tajesh is the name of a chartered corporation, and the contract dealt with non-essential goods.
C)Faye sold a shotgun to Tajesh even though Tajesh, who is a minor, lacked the necessary licence to purchase a shotgun.
D)Tajesh, a 82 year-old, sometimes acts unreasonably, as Faye knew when the parties signed the contract.
E)Tajesh is not a citizen of Canada, and the contract was made in this country.

Question 59

Napoleon wanted to borrow money from the Bank of Winnipeg.The bank, however, was not entirely convinced that he would be able to repay the debt.It therefore wanted some assurance from Napoleon's friend, Josephine, that she would repay the loan if Napoleon did not.Which of the following statements is most likely to be TRUE?
A.If it was not evidenced in writing, Josephine's promise will certainly be enforceable if it was a guarantee, but it may not be enforceable if it was an indemnity.
B.If Josephine's promise must be evidenced in writing in order to be enforceable, the bank may be able to satisfy that requirement by combining several documents, even if those documents do not refer to each other.
C.If Josephine's promise is not evidenced in writing, and if such writing is required by statute, then neither Josephine nor Napoleon needs to repay the loan.
D.If Josephine's promise must be evidenced in writing in order to be enforceable, then the contract will be unenforceable unless both Josephine and the bank sign the relevant document.
E.If Josephine's promise is properly classified as an indemnity, then the bank cannot demand payment from her unless Napoleon has first refused to pay.

Question 60

Which of the following is TRUE?

A)A transaction may be unconscionable only if an inequality of bargaining power between the parties results in an improvident bargain for the weaker party.
B)A transaction can be unconscionable only if the bargain is not improvident.
C)A transaction can be unconscionable only if the presumption of unconscionability is rebutted.
D)A transaction can be unconscionable only if a fiduciary duty exists between the parties.
E)Any contract in which a large company enjoys a benefit over an individual consumer is an unconscionable transaction.

Question 61

In 1824, Justice Burrough said, "Public policy ...is a very unruly horse and once you get astride it you never know where it will carry you." In 1971, Lord Denning MR said that with a good judge "in the saddle, the unruly horse can be kept in control.It can jump over obstacles.It can leap the fences put up by fictions and come up on the side of justice." Explain what each judge meant in the above quote.State which judge, in your opinion, is correct.Substantiate your answer with a brief discussion of the relevant concepts from the text.

Question 62

From the perspective of risk management, what practices should be adopted by businesses transacting in jurisdictions that have a Statute of Frauds?

Question 63

Charlie has bipolar disorder (also known as manic-depression).Usually, medication helps to control her disorder.Lately, Charlie stopped taking her medication and started drinking heavily.During a manic (up) phase, she dressed in an elegant suit, went to a BMW dealership and signed a contract for the purchase of a new sports car.She financed the transaction by putting a large deposit on her credit card, and drove the car off the lot that same day.Charlie's family became very concerned.Describe the law as it pertains to Charlie's capacity to contract.What should Charlie do? What should the car dealer do?

Question 64

Contracts are part of private law.A key concept of private law is that parties are at liberty to create and define the legal obligations they owe to one another.Discuss whether you agree that judges should be able to step in and set aside certain transactions on the basis that they think an agreement is unjust.Does this interfere with the core concept of private law? Explain your answer.

Question 65

Define "fiduciary relationship" and provide an example.How would a business person who has a fiduciary relationship best conduct a transaction so as to avoid legal problems?

Question 66

What is the difference between voidable and enforceable contracts? Provide an example of each in the context of whether a minor has the capacity to contract.

Question 67

How should your business manage risk when contracting with an unincorporated association?

Question 68

Tinh agrees to purchase a block of land that Ed plans to sever from his property.Tinh pays a large cash deposit to Ed, the closing date is set for six months away, and they shake hands on the deal.Ed falls on hard times and he realizes he cannot subdivide his land since he cannot afford to lose any equity or the bank will foreclose on his mortgage.On the agreed closing date, he sends Tinh an email to back out of the deal.Worse still, Ed lost the cash deposit at the horsetrack, and cannot afford to pay Tinh back.Ed feels terrible and avoids Tinh's calls.Tinh sues Ed for breach of contract and specific performance.How will the Statute of Frauds be applied in this case? What is the legal effect of Tinh and Ed's deal?

Question 69

List three types of contracts that must be evidenced in writing in most jurisdictions.Provide one example of each.

Question 70

Elsa is a member of an active neighbourhood association.The association runs frequent community events, issues a monthly newsletter to residents, lobbies municipal government, and engages in fundraising.Recently, they have decided to create a staff position to coordinate their efforts.Their advisory committee has been discussing whether or not to incorporate.Outline how the association's ability to enter contracts in conducting its activities might impact its decision about incorporation.

Question 71

Ling is about to enter into a contract that will be carried out over the next year and a half.Is it safe for her to assume that the contract will not be enforced if it is not evidenced in writing in a jurisdiction where the Statute of Frauds applies?

Question 72

Explain the distinction between the effects of a mistake that prevents the creation of a contract and a mistake that renders the purpose or performance of a contract impossible.Provide an example of each.

Question 73

Outline three situations where a court might set aside a contract because of unfairness during bargaining.What are the requirements to prove each, and who has the onus to prove what in court?

Question 74

Rosa immigrated to Canada as a teenager.She worked her whole life to support her family and never received a formal education.While her spoken English is good, her ability to read English is limited.An elderly woman now, Rosa lives in a care facility.A representative of the facility presented her with several pieces of paper to sign.He said that they were simply standard forms that every resident had to sign.She took the forms and returned them signed the following week.Later, she mentioned to her son, Paulo that she had signed some forms, but had been too ashamed to admit that she could not read them.The forms required Rosa to give permission to the facility, evidenced by her signature, to make automatic withdrawals from Rosa's bank accounts.Rosa is not comfortable with this.Will Rosa be bound to her signature? Why? Describe the defence she is most likely to raise and explain whether it is likely to succeed.

Question 75

As part of a large multinational corporation, you are working on a deal to buy a small company from a group of young upstarts who will all benefit handsomely from the transaction.It is your custom to include a restrictive covenant in such contracts to prevent such young upstarts from directly competing with the company they just sold.Explain the approach taken by courts to covenants in restraint of trade and then provide an example of a restrictive covenant that is likely to be upheld if challenged in court, and an example of one that is likely to be struck down if challenged in court.