Deck 8: Factors Affecting the Contractual Relationship

Question 1

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

A) A statement of opinion can be a one-sided mistake.
B) The case law provides a remedy for a wildly exaggerated claim, such as "This is the best car ever built."
C) For fraudulent misrepresentation, the buyer could ask only for the equitable remedy of rescission.
D) 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.
E) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that the misrepresentation was true.

Answer 1

D

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) In some types of misrepresentation there are no remedies available.
C) For fraudulent misrepresentation, the buyer can be granted the equitable remedy of only rescission.
D) A misrepresentation can be made about a term of a contract and result in an award of rescission and/or damages.
E) 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.

Answer 2

D

Question 3

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

A) A party to a contract for services can assign both his contractual obligations and his contractual rights.
B) 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.
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) A statutory assignment is more difficult to enforce than an equitable assignment.

Answer 3

B

Question 4

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

A) Rescission is available as a remedy for misrepresentation only if it is innocent misrepresentation.
B) A misrepresentation can be a true assertion of fact that induces (persuades) the party to contract.
C) Damages as a remedy are not available where the misrepresentation becomes part of the contract.
D) 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."
E) The case law allows a remedy for an opinion given by a non-expert.

Question 5

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

A) 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.
B) Mr. Jones, without reliance on a salesperson, purchased a palm organizer from a store, thinking it ran the regular Windows operating system.
C) The parties signed a document that stated the consideration as $1,200 instead of the $1,100 that the buyer and seller had contracted for, but the buyer cannot prove the terms of the original contract.
D) 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.
E) 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.

Question 6

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) 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.
B) She can successfully use the plea of non est factum if there is evidence that she was careless when she signed the document.
C) If the lawyer were the daughter's husband, his advice would be seen as independent legal advice.
D) 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.
E) She can successfully use the plea of non est factum if she was not misled about the very nature of the document.

Question 7

Which of the following is an example of duress?

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

Question 8

Clive and Bill were not friends but worked in the same firm. Both worked with computers and had computers at home. They entered a contract in which Clive agreed to sell Bill his "Apple, printer, and a compatible word-processing program for $3,000." When Bill went to take delivery of goods, he realized that there had been a great mistake. He thought Clive was selling his Apple Macintosh. By "Apple" Clive meant his Apple IIe. Furthermore, unknown to both of them at the time of the contract, the program disk had been destroyed by some coffee accidentally spilled on it by a friend of Clive's wife. Bill refused to go through with the deal. On these facts, which of the following is true if Clive sues Bill?

A) With regard to the program disk, since all the elements of a contract exist offer, acceptance, consideration, etc. Bill must pay for it.
B) With regard to which computer is the subject matter of the contract, the court will determine which computer was meant to be sold by the seller and declare that one to be the subject matter of the sale.
C) Since the parties to the contract have a different understanding as to the subject matter of the sale, they can ask the court for rectification, that is, for the court to rewrite the contract.
D) With regard to which computer is the subject matter of the sale, the court will examine which interpretation is the more reasonable; if they are equally reasonable, that part of the contract, at least, will be void.
E) This is an example of caveat emptor and the purchaser has no remedy.

Question 9

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

Question 10

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

A) Assignments are modifications of the Privity of Contract Rule, since they do allow a 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) A statutory assignment is easier to enforce than an equitable assignment.
D) A party to a contract for services can assign both his contractual obligations and his contractual rights.
E) The assignor for value of a negotiable instrument may acquire better rights than the assignee has.

Question 11

Jones offers to sell Smith his car. Smith thinks Jones is selling his 2011 Toyota, and Jones thinks he is selling his 2009 Pontiac. This is an example of which of the following?

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

Question 12

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) The equitable remedy of rectification
C) Caveat emptor
D) Non est factum
E) The most reasonable interpretation of the terms.

Question 13

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) If a seller persuades a person to buy something by a innocent misrepresentation, the buyer could ask for rescission and damages for the tort of deceit.
B) 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.
C) 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.
D) Independent legal advice given to a person is good evidence of undue influence.
E) Where, a written document embodies the the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification.

Question 14

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 Macintosh clone. Paul paid $900 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 interface 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) Paul could sue for damages due to an innocent misrepresentation.
B) Only Keri has a remedy because she had been fraudulently misrepresented.
C) Paul could sue for rescission because of the misrepresentation.
D) Keri could sue for damages due to a misunderstanding.
E) The court would rescind Paul's contract only with proof that the seller knew his statement was false.

Question 15

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

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

Question 16

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 Mary had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was that of Sally.
C) Sam bought three gallons of paint, but found he had made a mistake; two would have been sufficient.
D) 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.
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 17

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

A) 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 that function.
B) Sarah bought three rolls of wallpaper, but found she had made a mistake; two would have been sufficient.
C) 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.
D) Carson and Leno had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was that of Leno.
E) Barry and Mary contracted for the sale and purchase of a boat for the price of $1,200. When the contract was written up the price was incorrectly stated as $1,700.

Question 18

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) Novation refers to the voiding of the original contract and substituting another.
D) An exception to the doctrine of privity of contract is a contract selling a car.
E) An equitable assignment is easier to enforce than a statutory assignment.

Question 19

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 plea, if any, would be used to defend against her action on the cheque?

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

Question 20

Len's new secretary came in and asked him to sign four letters that she 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 her bank, and when her 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) He may be able to avoid his obligation on the cheque on the basis of unconscionability.
B) He would be obligated to honour the cheque no matter how careful he was.
C) Even if he was careless, he will not have to honour the cheque.
D) He may be able to avoid his obligation on the cheque on the basis of duress.
E) He may be able to avoid his obligation on the cheque on the basis of non est factum.

Question 21

Jenny went to the store and asked to see an AM-FM clock radio with a tape deck. The salesman brought out a clock 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 clock had all the features that she wanted, because it did not have an AM band. Which of the following is true?

A) Jenny would only have a remedy for breach of contract namely, the clock did not have an AM band because none of the other statements was about the radio itself.
B) The equitable remedy of rescission is available only if Jenny were able to restore the clock to the seller.
C) The statements of the salesman are fraudulent only if the salesman knew they were false.
D) Jenny could obtain the remedy of rescission only if the statements made to induce her to contract were fraudulent.
E) Jenny could return this clock to the seller only if she could prove undue influence.

Question 22

It came to your attention that your great-grandmother had signed a contract pursuant to which she would be paying $5,000 for an electronic organ that retails in reputable stores for $3,000. 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) Both unconscionability and misrepresentation
B) Non est factum
C) Undue influence only
D) Misrepresentation only
E) Unconscionability only

Question 23

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

A) A written instrument, because of an obvious mistake, does not embody the unchanged terms of an original oral agreement.
B) The defendant has a justifiable defence of non est factum.
C) 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.
D) 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.
E) The contract is one requiring "utmost good faith."

Question 24

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

A) 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.
B) 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.
C) Joe bought pizzas, but after eating one he realized that purchasing them was a big mistake.
D) After some negotiation, Paul accepted Monafo's offer to sell him the painting for $5,000. When the contract was put in writing, the price was incorrectly stated as $500. Monafo could prove the terms of the oral contract.
E) 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 burnt.

Question 25

The longer Adolph stayed on this job, the more he hated it. He thought the 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 the boss for his signature. The 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 $1,000 in consideration for services rendered. The boss was not careless, but couldn't read the papers. What plea or argument, if any, could the boss use to avoid paying on the promissory note?

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

Question 26

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

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

Question 27

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 a remedy for breach of contract, but no remedy for other statements that merely persuaded it to enter the contract.
B) Had the office supply store sent the right machine, the agency would have had no remedy.
C) This is a "buyer beware" situation and the buyer has no remedy.
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) The agency would have to keep the machine, but could sue the seller for damages for the tort of deceit.

Question 28

A computer salesman innocently misrepresented a fact about a Macintosh 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 refused to take it back, the customer would ask the court for which equitable remedy?

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

Question 29

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

A) The seller of goods has made an innocent misrepresentation that persuaded the buyer to buy.
B) The seller made a fraudulent misrepresentation that induced the buyer to buy.
C) The parties to a contract disagree as to the meaning of a term in their contract.
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 30

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

Question 31

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 court could not award the equitable remedy of rescission if evidence showed that Mrs. Sharp really believed the invoices were accurate.
B) The court could award the equitable remedy of rescission if the evidence showed she had fraudulently misrepresented the costs.
C) The court could terminate the contract for breach of contract if the accurate statement of costs and profit were essential terms of the contract.
D) 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.
E) The cause of action could be for the tort of deceit, if there was evidence that Mrs. Sharp intended to deceive them.

Question 32

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

A) 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.
B) 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.
C) The parties signed a document that stated the consideration as "$1,100" 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 the offer by Sidhu, who was selling a "computer program," but learned that they had different understanding of what program was meant. The court cannot say that one interpretation is better than the other.
E) 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.

Question 33

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

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

Question 34

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) Evidence of misrepresentation will not be admissible because of the parol evidence rule.
B) To interpret express terms, the courts will look first to the plain meaning of the term (e.g., the dictionary meaning.)
C) The court will do its best to give effect to the intention of the parties.
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) 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.

Question 35

The contract for the Surrey 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 been in writing.
D) The misrepresentation must have been made recklessly or wilfully.
E) The misrepresentation must have induced the party to enter the contract.

Question 36

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 nor 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 has 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 duress by Johnston, Mr. and Mrs. H will not have to honour the mortgage.
C) 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.
D) If Mr. and Mrs. H can show they didn't read the document, they will not have to honour the mortgage contract.
E) They will likely have to honour the mortgage contract even though they didn't read it.

Question 37

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 Next, Mr. Job's new firm. 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, 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 100 Gigabytes, Ross said this model had 250 Gigabytes. 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 40 Gigabytes. On these facts, which of the following is true?

A) 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.
B) Such misrepresentations could only result in contractual remedies, legal or equitable, but not in tort remedies.
C) 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.
D) Gary could be awarded the equitable remedy of rescission even if Ross, the salesman, honestly believed everything he said was true.
E) Only if Ross, the salesman, knew that all the statements he made were false could Gary get a remedy.

Question 38

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 buying 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 mistake, there is a presumption of mistake and she will automatically get out of the contract.
B) 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.
C) 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.
D) 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.
E) 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.

Question 39

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 a secretary to come in for four hours. He turned on his office TV. Just then his secretary 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 secretary. The secretary 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) He could avoid his obligation on the cheque on the basis of duress.
B) He could avoid his obligation on the cheque on the basis of unconscionability.
C) Because Len did not know what he was signing, he cannot be held liable.
D) Len's carelessness in failing to read what he was signing will likely defeat any claim of non est factum.
E) Undue influence would be his best defence on these facts.

Question 40

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) 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.
B) 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.
C) 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.
D) 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.
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 41

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) A presumption of undue influence doesn't mean the weaker party will automatically get her property back.
B) 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.
C) 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.
D) It would be easier for her to argue duress than undue influence.
E) 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.

Question 42

Able Company contracted to sell to Baker Company 400 barrels of chemical C for $1,200. Able Company assigned the entire $1,200 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. Unbeknown 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) The assignment to Mr. Long would fail to be a statutory assignment.
B) Mr. Long, the assignee, will receive $1,200 from Baker Company.
C) Mr. Long will receive part payment.
D) Mr. Long will receive nothing from Baker Company because nothing is owed to Able company.
E) Since Able Company has breached the contract, they pay compensation for the damages of both Baker Company and Mr. Long.

Question 43

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

Question 44

Randal embezzled $6,000 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 $3,500 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) Fraudulent misrepresentation
D) Non est factum
E) Mistake of law

Question 45

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 $2,000. After one month of work, when the work was half completed, Beth assigned the $2,000 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 $1,000 from Allen because only half the work was done when the assignment was made.
B) Charlie could receive only $1,000 from Allen because half of the $2,000 project was finished when he gave notice of the assignment to Allen.
C) Charlie gets $0 from Allen because one can assign contractual obligations but not contractual rights.
D) Charlie could receive $1,500, because when the contract was completed, that was all that was legally owed to Beth.
E) Charlie could receive $2,000 from Allen because that is the amount owed to Charlie and the amount assigned by Beth.

Question 46

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

A) 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.
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) Where undue influence is established, the resulting contract is voidable, not void.
E) 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.

Question 47

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

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

Question 48

A real-estate agent, Jones, was owed a $7,000 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 $7,000 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 $7,000 but later tried to void the agreement, she would argue which of the following?

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

Question 49

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 failed to read the mortgage agreement, the mortgage would be void on the basis of non est factum.
B) 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.
C) 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.
D) If she were influenced to sign the mortgage by her doctor and the mortgage benefited the doctor, the court would presume undue influence.
E) 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.

Question 50

Privity of contract applies in which of the following situations?

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

Question 51

Mr. Copperfield, a collector of movie memorabilia, bid $50,000 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) Breach of contract by Mr. Eisenberg
B) Unilateral mistake by Mr. Copperfield
C) Fraudulent misrepresentation by Mr. Eisenberg
D) Negligent misrepresentation by Mr. Eisenberg
E) Innocent misrepresentation by Mr. Eisenberg

Question 52

Mr. Zink hired Bruce Dorne to create a payroll program for his business. Bruce was to be paid $4,000 for the program. When Bruce was half-way finished, a creditor to whom he owed $2,000 pressed so hard for payment that Bruce assigned him $2,000 of the contract price, an amount he felt he had earned already. The creditor, Mr. Pressing, gave written notice that very day to Mr. Zink. On these facts, which of the following is true? (Read each statement separately.)

A) Mr. Zink must pay $2,000 to Mr. Pressing on the day that notice was given, because at that time Bruce had done half of the work on the $4,000 contract.
B) Mr. Pressing is entitled to $2,000 from Mr. Zink when the contract is completed, if at least that much is owed to Bruce by Zink at that time.
C) This assignment is a statutory assignment, not an equitable assignment.
D) This type of assignment is not recognized by the courts because it is an assignment of contractual obligations.
E) If Bruce bungled the assignment and the court determined that nothing was owed to him, Pressing could still get $2,000 from Zink.

Question 53

On September 1, Beeton contracted to sell $4,000 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 $4,000 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 $4,000 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 goods bargained for had perished before the parties had contracted for them, the court would hold the contract void.
C) The assignee would receive whatever the assignor had assigned to him, namely, the $4,000.
D) Because the assignment was made by Beeton to his bank in good faith, Cairns must pay the bank $4,000.
E) The time for determining the "equities between the parties" is always the time that notice of the assignment is given.

Question 54

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

A) A party to a contract for services can assign both his contractual obligations and his contractual rights.
B) 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.
C) Assignments are modifications of the privity of contract rule since they do allow a stranger to the contract to receive benefits from the contract.
D) A statutory assignment is easier to enforce than an equitable assignment.
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 55

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) 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.
C) 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.
D) An exception to the doctrine of privity of contract is a contract granting an interest in land.
E) A statutory assignment is easier to enforce than an equitable assignment.

Question 56

The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr. Takemori for $2,000. The co-op assigned, in writing, its contractual right to receive the $2,000 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 will receive part payment from Takemori.
B) The Royal Bank will receive $2,000 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.
C) The Royal Bank, the assignee, will receive the $2,000 because it could prove privity of contract with Takemori.
D) Because of the conductor's negligence, the railroad will have to honour Mr. Takemori's contract with the Royal Bank.
E) The Royal Bank will receive nothing from Takemori, because Takemori owes nothing to the Co-op.

Question 57

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

A) 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.
B) The seller persuaded the buyer to buy the car by misrepresenting it as having just been serviced and passing the air care test. Neither had been done, but the seller honestly believed both had been done.
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) 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.
E) None of the above.

Question 58

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) If the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back.
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) A contract entered into because of a threat of violence is voidable at the option of the victim.
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) 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.

Question 59

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

Question 60

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

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

Question 61

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

Question 62

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

Question 63

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 allowed the request for rectification because one party had obviously made a mistake.
C) The Court allowed the request for rectification because the price difference was significant.
D) The Court denied a request for rectification because the appropriate remedy was rescission.
E) The Court denied a request for rectification because it was not clear both parties had the same intention.

Question 64

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

Question 65

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

A) Assignments are modifications of the Privity of Contract rule since they do allow a stranger to the contract to receive benefits from the contract.
B) A party to a contract for services can assign both his contractual obligations and his contractual rights.
C) A statutory assignment is easier to enforce than an equitable assignment.
D) The Privity of Contract Rule states that only the parties to the contract have rights and obligations under the contract.
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 66

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

Question 67

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

Question 68

In the case Whighton v. Integrity Inspections Inc., the plaintiff had retained the services of an inspector to check the condition of the building. The inspector had assured them that the home was in good condition. Upon moving in, the plaintiff discovered major problems in the home. What did the Court find?

A) The contract in question did not comply with the Statute of Frauds.
B) The contract in question was partly verbal and partly written.
C) There was negligent misrepresentation inducing a person to enter a contract, and the exculpatory clause did not apply.
D) The contract in question was not in English.
E) There were witnesses who testified under oath that the meaning of the intended agreement differed from what was written.

Question 69

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

Question 70

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 $3,000, part of his commission for having sold one of his waterfront properties. This morning he assigned to Sam, in writing, $3,000 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 breach of contract by Jepson with B.C. Packers.
B) This is an example of a frustrated contract.
C) Because of the frustration, Sam has no claim against either Jepson or B.C. Packers.
D) Despite the frustration, Sam can collect the $3,000 from B.C. Packers.
E) This is an example of a mistake causing the contract between Jepson and B.C. Packers to be void.

Question 71

In Dansway International Transport Ltd. v. Lesway and Sons Inc., a disagreement arose as to the time for payment and delivery, neither of which were stipulated in the contract. What did the Court do?

A) The Court implied the required terms into the agreement.
B) Because issues surrounding the time of payment were in question, the agreement failed for a lack of consideration.
C) The Court ordered rescission because the actual intention of the parties as to these terms was unclear.
D) Because even insignificant terms must be specified, the agreement was found to be void for a lack of consensus.
E) The Court severed the provisions in the agreement relating to payment and delivery.

Question 72

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

Question 73

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 admirable, and the Court ordered the plaintiff to pay costs.
C) The defendant's conduct was improper, but there is no remedy available to address such a mistake.
D) The defendant's conduct was equivalent to a fraud or a misrepresentation amounting to fraud, and the Court awarded damages in lieu of rectification.
E) 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.

Question 74

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 $800. 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; the stairs were worthless. On these facts, which of the following is true?

A) Mrs. Reid could successfully sue the manufacturer of the cement for breach of contract because the cement was not fit for its purpose.
B) Mrs. Reid could successfully sue only Silversteps Ltd. for breach of contract.
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 only Silversteps Ltd. for breach of contract or Warren for breach of contract but not both.

Question 75

Selling the contents of the house in preparation for a move to a condominium, Mr. Lotski sold an antique desk to a Mr. Rogers who paid by a cheque later returned N.S.F. (not sufficient 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) Rogers
B) Lotski
C) Lotski but he must pay compensation to Lee
D) Lee
E) Lee but she must pay compensation to Lotski

Question 76

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

Question 77

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; during the next rain the roof leaked as before. Which of the following is true?

A) If Tarr doesn't pay Fix, Fix could sue Ho directly for his pay because he worked on Ho's roof.
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) Ho could successfully sue only Tarr for breach of contract.
E) Ho could only sue Tarr because he is the one who did a poor job of the roof.

Question 78

Which of the following is false with regard to the law of contracts?

A) A party to a contract for services can assign both his contractual obligations and his contractual rights.
B) 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.
C) A statutory assignment is easier to enforce than an equitable assignment.
D) The assignee for value of a negotiable instrument may acquire better rights than the assignor had.
E) Assignments are modifications of the Privity of Contract Rule, since they do allow a stranger to the contract to receive benefits from the contract.

Question 79

Patrick paid the seller of a car with a worthless cheque. He then sold the car to an innocent person who paid him good consideration. Patrick 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 Patrick is voidable?

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

Question 80

Although Zlotnic had been in business a long time, he had been forced to borrow heavily in the last few years. When his debt reached the limit of his line of credit, $100,000, the manager of the Regal Bank called him in for a talk. Subsequently, Zlotnic sold his house for $250,000 to the Johnsons. He contracted to buy another from the Scotts. From the proceeds he anticipated receiving from the Johnsons, he assigned $200,000 to the Scotts, the purchase price of Scott's house, and assigned $50,000 to the Regal Bank to reduce his debt. The assignment to the Scotts was in writing; the assignment to the bank was not. The Scotts gave written notice of the assignment to the Johnsons on March 1, the day the money was owed to Zlotnic. Johnson verified the assignment and paid out the $200,000 to the Scotts. On March 2, the Regal Bank gave written notice of its assignment to the Johnsons. Unfortunately, at that time only $45,000 was owing to Zlotnic because the Johnsons had paid $5,000 to the Canada Revenue Agency for Zlotnic. On these facts, which of the following is true?

A) The bank has no claim since the Johnsons didn't owe Zlotnic the specified $50,000 at the time of the assignment.
B) Zlotnic needed the permission of the Johnsons, the debtors, before he could make any assignments.
C) The assignment to the bank is not enforceable because it was not in writing.
D) Regal Bank must take "subject to the equities" between Zlotnic and the Johnsons; i.e., it can't receive the whole $50,000.
E) The assignment to the bank is a statutory assignment.