Deck 6: Formation of Contracts

Question 1

Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his electric guitar. On Monday, October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocaster guitar for $400, the offer to be open until Friday noon, November 2. Jed told the store owner to send a letter of acceptance since he (Jed) would be away for a few days. The store owner examined his inventory and mailed a letter of acceptance on Thursday, November 1. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for breach of contract. Which of the following is true?

A) Sending a letter by mail was not a reasonable method of acceptance.
B) The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract.
C) The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner.
D) The offer was revoked before the store owner accepted.
E) The offer lapsed before the store owner accepted.

Answer 1

C

Question 2

Sarah wanted an antique lamp for the bedroom. While in a second-hand shop, she saw a lamp that she really wanted marked $100. She offered the owner $75 for it. He said "I'll take $95." She answered "$80!" He said, "Lady, you're pushing me a bit, aren't you? I'll take $90, that's it." She said "OK I'll pay $90 if you throw in this old 'Vote-for-Trudeau' button." He said, "Forget it, lady, my shop is closed," and asked her to leave. She said, "OK, I accept your offer of $95." He made no response. If she sues for breach of contract, which of the following is true?

A) There is no contract because his offer to sell for $95 lapsed after a reasonable time.
B) There is a contract because at one time he offered to sell the lamp for $95 and she accepted it.
C) There is no contract because his offers to sell the lamp for $95 and $90 were revoked and he didn't accept her offers.
D) There is a contract because he wanted to sell the lamp for $95 and she was willing to pay that much.
E) There is no contract because his offer to sell the lamp for $95 was rejected by counter-offer, and her offer to buy it for $95 wasn't accepted.

Answer 2

E

Question 3

In contract cases, the court generally

A) will rewrite an agreement for the parties if their existing agreement did not include all the essential terms.
B) will enforce all promises.
C) will require the recipient of a service to pay a reasonable price where it is determined that the agreed-upon price was too low.
D) attempts to punish the party in breach of the contract by imposing a sentence.
E) does not look to see if the bargain is fair.

Answer 3

E

Question 4

Which of the following is not an example of a contract?

A) An agreement not to sue someone for negligence in exchange for their promise to pay you a specified amount
B) A verbal agreement to work for someone starting next week
C) A verbal agreement for the sale of a car where neither the money nor the car has yet changed hands
D) An implied promise to pay for a meal when you order it
E) A written promise to give your husband a ring for Christmas

Question 5

Which of the following is an example of a unilateral contract?

A) C returns a lost dog and claims the $50 reward.
B) Joe promises to give Harry his old boat when he gets his new one.
C) Joe pays $50 for groceries at a grocery store.
D) Joe agrees to paint Sam's house for $500.
E) Sam orders a meal in a restaurant.

Question 6

Which of the following is an ingredient necessary to form a contract?

A) Fairness
B) Assignment
C) Privity
D) Exemption clauses
E) Capacity

Question 7

Franz bought a round trip ticket to Germany to visit relatives. Unfortunately, a week before flight time, he broke his leg. He offered his co-worker, Joe, the ticket for 80% of the full price, offer to remain open until 10:00 p.m. on December 15. Indicate to Joe which of the following is true with regard to the law of offer and acceptance.

A) If Franz sells to someone else, it is too late for Joe to accept the original offer.
B) A letter of acceptance is always effective when it is dropped in the mailbox.
C) If Joe makes a counteroffer of 50% of the full price, and Franz rejects the counteroffer, Joe can still accept the original offer.
D) To create a contract, an offer must be in writing.
E) Franz could revoke the offer anytime before acceptance, even before 10:00 p.m. on December 15.

Question 8

When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they promise to use the funds for their summer camping program, this is an example of which one of the following?

A) Promissory estoppel
B) When accepted by the club, a unilateral contract
C) Gratuitous promise
D) Inadequate consideration
E) When accepted by the club, a bilateral contract

Question 9

Mary bought a new Macintosh computer and advertised her old computer system for $1,500. Mr. Jones offered to pay $1,000. Mary said no, she wanted $1,500. Mr. Jones offered $1,250. Mary rejected that and said she wanted $1,500, but then said to him, "I withdraw my offer, I've decided to give it to school and apply for the tax benefit." Mr. Jones said, "All right, I'll accept your offer of $1,500." Which of the following is true?

A) There is a contract because at some point in time Mary was willing to sell and Mr. Jones was willing to buy the computer system for $1,500.
B) There is a contract, because once a seller makes an offer she cannot change her mind; she is bound to receive an acceptance.
C) There is a contract and Mr. Jones has to pay a reasonable price for Mary's old computer.
D) There is no contract because the last offer had lapsed.
E) There is no contract because Mary revoked the offer before Mr. Jones attempted to accept it.

Question 10

Which of the following would best satisfy the requirements for a good legal offer?

A) "I'll give you $1 for your new green bike."
B) On a flyer placed on your windshield: "We have the best offer in town! A mint 1956 Chevrolet for $20,000."
C) "I'll drive you to Seattle on Saturday."
D) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
E) "The purchaser will pay $1000 for one of the seller's laser printers, the exact model to be determined at a later date."

Question 11

Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is true?

A) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.
B) All methods of acceptance are effective upon receipt by the offeror.
C) Sending an acceptance by mail was not a reasonable method of acceptance in this situation.
D) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract.
E) In order for there to be a binding contract, there must be an offer and receipt of the letter.

Question 12

The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800. The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller, 5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking. Which of the following is true?

A) There is no contract because Lloyd's last offer had lapsed after a reasonable time.
B) There is a contract because at one point in the conversation Lloyd was willing to sell and the owner was willing to buy four trees.
C) There is no contract because Lloyd's last offer was revoked.
D) There is no contract because Lloyd's last offer had been rejected by a counter-offer.
E) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create legal relationship.

Question 13

Which of the following would best satisfy the requirements for a good legal offer?

A) On a flyer placed on your windshield):"We have the best offer in town! A mint 1956 Chevrolet for $20,000."
B) "I'll give you $1 for your new green bike."
C) "The purchaser will pay $1,000 for one of the seller's laser printers, the exact model to be determined at a later date."
D) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."
E) "I'll drive you to Seattle on Saturday."

Question 14

The postbox rule applies when which of the following means of communication is used?

A) Messenger
B) Telephone
C) Mail
D) Fax
E) Electronic mail

Question 15

Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of which of the following?

A) Unilateral contract
B) Gratuitous promise
C) Bilateral contract
D) Offer
E) Invitation to treat

Question 16

Which one of the following is enforceable?

A) An ad in the paper promises to pay $5 for the return of a lost ring, but the person who finds and returns the ring never saw the offer in the newspaper.
B) Mr. Baker was so sick of an old chair that, when Mr. Venson offered him $10 for it, he agreed (i.e., promised to sell it to him), although the market value of the chair was $80.
C) Mr. Ho promised to give his needy friend Mr. Jahn $100.
D) Ms. Jones promised to pay an additional $100 to Mr. Wood if Wood finished the existing contract on time, according to the terms of the contract.
E) Ms. Goode promised to send $10 to Mr. Paul, who kindly came and warned her when he saw a tow truck approach her car.

Question 17

Roberts has the chance to buy three adjacent city lots zoned "duplex." The most profitable return would be the building of four townhouses across the three lots, but that would necessitate getting permission from the city, and that procedure takes time. If Roberts buys a 60-day option from the seller of the properties for $400, which of the following is true?

A) By buying the option, Roberts has bought a period of time during which she must accept the land offer.
B) If Roberts does not exercise the option, she will get her $400 back because she didn't get what she was bargaining for.
C) If Roberts does not exercise the option during the option period, she can later force the seller to sell that property to her at that price.
D) The offer for the properties will expire before the end of the designated 60-day period, if another person offers a higher price.
E) The seller is bound by contract neither to sell the property to any other party nor to revoke the offer within the option period.

Question 18

An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $4 000!!! Pick it up today." This is an example of which of the following?

A) Offer
B) Invitation to treat
C) Unilateral contract
D) Bilateral contract
E) Gratuitous promise

Question 19

Which of the following is an offer as opposed to an "invitation to treat"?

A) A notice in the Toronto Star: "I will pay $100 to whoever finds and returns my lost female calico cat which answers to the name Marx."
B) A sweater displayed in the window of a shop with the price tag attached and showing.
C) An ad in a real-estate paper: "Best offer in Vancouver! 3 bedroom home in Kitsilano for only $350,000!"
D) A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January."
E) The display of goods on the shelves of Safeway.

Question 20

Indicate the correct statement about consideration.

A) Consideration is "the price for which the promise (or the act) of the other is bought."
B) The common law holds that consideration must be adequate to insure that contracts are fair bargains.
C) In a unilateral contract, the performance of the promisee provides no consideration to the promisor.
D) An altered course of action, e.g. forbearance, is not good consideration.
E) In a bilateral contract, the exchange of promises does not provide consideration for both parties.

Question 21

Which of the following is an offer as opposed to an "invitation to treat"?

A) A notice in the Toronto Star: "I will pay $100 to whoever finds and returns my lost female calico cat which answers to the name Marx."
B) A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January."
C) An ad in a real-estate paper: "Best offer in Vancouver! 3 bedroom home in Kitsilano for only $350,000!"
D) A sweater displayed in the window of a shop with the price tag attached and showing.
E) The display of goods on the shelves of Safeway.

Question 22

Ann was offered a job that would pay $20,000, that would provide for 18 days vacation after one year of employment, and that would begin one week after her graduation. She wrote back that she would accept the job, but that she would not begin until three weeks after graduation and needed at least a 21-day vacation after the first year of work. On these facts, which of the following is true?

A) Since she accepted the offer, there is a contract.
B) If she had not responded, there would have been a contract because silence is the standard form of acceptance.
C) There is no contract because an acceptance must be unconditional, and her counteroffer has not been accepted.
D) There is a contract as soon as she drops her letter in the mailbox.
E) She is still free to reconsider and take the original offer even after the prospective employer received her letter.

Question 23

An ad in the morning paper read: "Brand new 2011 Ford Focus $19,499. No payment until January 2012. We make your first payment." This is an example of which of the following?

A) Unilateral contract
B) Bilateral contract
C) Offer
D) Gratuitous promise
E) Invitation to treat

Question 24

Four days ago, Pete was reading the newspaper and saw the following: "Best offer in town! Zenith XX Laser Printer - $1,000! When he went to the store this afternoon and said he wanted one, they replied that they didn't have any left, nor could they get one. On these facts, which of the following is true?

A) Pete could sue them for breach of contract because he was accepting the offer in the newspaper.
B) The wording in the newspaper was merely an invitation to the public to do business, and no contract was formed.
C) The store had revoked the offer before he tried to accept.
D) The offer by the store had lapsed before he tried to accept.
E) Pete could sue for breach of an option contract.

Question 25

Sylvia had contracted with Produce Palace to sell her entire crop of elephant garlic (100 kilograms) and her entire crop of tomatoes (100 kilograms). On the day for delivery, Produce Palace took the garlic but not the tomatoes. In her effort to mitigate her loss, Sylvia called the owner of Val's Veggies and offered her the tomatoes at a reduced price with the words, "Let me know quickly; they are ripe and must be moved out today." That afternoon, Val sent Sylvia a letter accepting the offer. On these facts, which is the most likely outcome?

A) If the postbox rule does not apply, there would be a contract as soon as Val mailed the letter unless Sylvia had sold the tomatoes to someone else.
B) There is a contract between Sylvia and Val the moment Val dropped the letter of acceptance in the postbox.
C) There is a contract between Sylvia and Val the day the letter of acceptance was received by Sylvia.
D) There is no contract between Sylvia and Val because Sylvia had revoked the offer.
E) There is no contract between Sylvia and Val because the offer has probably lapsed before the acceptance was received by Sylvia.

Question 26

Martin offered to buy the property for $200,000, "offer to remain open until 5:00 p.m. on Thursday, January 21, 2011." Which one of the following situations will not cause the offer to end?

A) Martin sells the property to another party before the expiration of the period stipulated and before hearing from the offeree.
B) Insanity of the offeror before the offer is accepted
C) The offeree has not accepted and the stipulated time has expired.
D) Death of offeror
E) A counter-offer from the offeree

Question 27

If you pay $1000 for a 90-day option on property offered at $200,000, which of the following is true?

A) You have bought a 90-day period of time within which you may or may not accept the offer of the land.
B) The seller of the land can revoke the offer of the land any time before acceptance.
C) With the signing of the option agreement, you have entered into two contracts a contract for time and another for land.
D) If you do not exercise the option, you can get your $1000 back.
E) You have agreed that you will accept the offer of land within the 90-day period.

Question 28

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

A) A revocation is effective only when received.
B) An option is a contract in which one person is buying a period of time within which he may accept the offer contained within the option.
C) A counter-offer ends an offer.
D) An important criterion for determining the place of the contract is the place where the acceptance is effective.
E) A newspaper notice offering to pay a reward for the return of lost kittens is an invitation to treat.

Question 29

An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $1,000!!! Pick it up today." This is an example of which of the following?

A) Gratuitous promise
B) Offer
C) Unilateral contract
D) Bilateral contract
E) Invitation to treat

Question 30

Mr. Goode, a neighbour of your parents, offered to sell you his house for $200,000, a bit below market value. You are definitely interested but would like to see if your employment contract will be renewed and to check about financing. Mr. Goode says that he'll hold the offer open for you until May 1, 2011. On these facts, which of the following is false?

A) Mr. Goode will be bound to hold it open if you offer and he accepts your offer to wash his car every Saturday morning for two months in exchange for his promise to hold it open.
B) Mr. Goode's promise to hold it open is sufficient; the offer is safe until May 1, 2011, when it will expire.
C) Mr. Goode will be bound to hold it open if you pay him and he accepts some money to hold it open until that date.
D) If you buy an option to buy a house, you still don't have to buy the house.
E) Mr. Goode will be bound to hold it open until that date if his promise to do so was written and under seal.

Question 31

The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800. The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller, 5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking. Which of the following is true?

A) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create legal relationship.
B) There is no contract because Lloyd's last offer had lapsed after a reasonable time.
C) There is a contract because at one point in the conversation Lloyd was willing to sell and the owner was willing to buy four trees.
D) There is no contract because Lloyd's last offer was revoked.
E) There is no contract because Lloyd's last offer had been rejected by a counter-offer.

Question 32

Roberts has the chance to buy three adjacent city lots zoned "duplex." The most profitable return would be the building of four townhouses across the three lots, but that would necessitate getting permission from the city, and that procedure takes time. If Roberts buys a 60-day option from the seller of the properties for $400, which of the following is false?

A) If Roberts does not exercise the option, she will get her $400 back because she didn't get what she was bargaining for.
B) By buying the option, Roberts has bought a period of time during which she may or may not accept the land offer.
C) The offer for the properties will expire at the end of the designated 60-day period.
D) If Roberts does not exercise the option during the option period, she cannot later force the seller to sell that property to her at that price.
E) The seller is bound by contract neither to sell the property to any other party nor to revoke the offer within the option period.

Question 33

Jon was developing a computer program for use by owners of track clubs, which would aid them in keeping records of the members, their runs, times, injuries, etc. Eager to finish the program, Jon, in Edmonton, called his friend Sam, in Calgary, and offered him $4000 to help: five hours a working day, five days week, for five weeks. Sam said that he would have to think about it. Jon told Sam that he was eager to get going, but that he would hold the offer open until Friday, February 6, 2011, at noon. Which of the following is true? (Read each separately.)

A) If Sam accepts by phone within the time specified in the offer, the place of contract would be Calgary.
B) If Jon goes ahead and hires Betsy from Edmonton at noon on February 3, it would be too late for Sam to accept.
C) If Jon revokes his offer before Friday noon, Sam could sue him for breach of contract because he promised to hold it open.
D) If Sam wants to ensure the promise to keep the offer open until noon, February 6, he should give Jon some consideration (that is, allow him to purchase an option).
E) If the court held that acceptance by mail was reasonable in the circumstances, if Sam accepts by mail the place of contract is Edmonton.

Question 34

Bob in Burnaby called Ed in Toronto and offered to sell him 40 kilograms of smoked salmon at $15 per kilogram. He requested that Ed phone him back by noon the next day. That way, Bob could offer it to someone else if Ed wasn't interested. Instead of phoning, Ed sent a letter of acceptance, in which he said that he would have his agent pick up the fish. On these facts, which of the following is false?

A) Although a response by phone was requested, a response by mail would be effective if received before noon the next day.
B) The place of formation of the contract, if there was one, was Toronto if the use of the mails was reasonable.
C) If using the mail was unreasonable, the acceptance was effective when it was mailed.
D) The place of formation of the contract, if there was one, was Burnaby if the use of the mails was unreasonable.
E) If using the mail was unreasonable, the acceptance could not be effective until it was received.

Question 35

Jones was a caterer; Smith was a florist. Jones won a contract to provide a banquet for a convention of florists. He wanted to decorate the hall with flowers. He sent a letter to Smith describing what he wanted and asked for a price quote. Smith responded by a letter dated January 5, offering to supply the flowers for $5,000. Jones received the letter on January 10 and responded on the same date saying his price was too high and that he would pay $4,500. While that letter was in the mail but before it had been received by Smith, Jones learned that the convention was on artificial flowers and the organizers wanted no real flowers on display. On January 13, Jones quickly sent another letter telling Smith to ignore the letter of January 10 and that he wouldn't need any flowers at this time. This letter of the 13th was received on the 18th. Smith had received the letter of January 10 on January 15 and sent his letter of acceptance on the same day, and he had placed orders to his suppliers for the flowers. The letter of acceptance was received by Jones on January 20. Which of the following is true?

A) If the postbox rule does not apply, there is a binding contract.
B) The postbox rule is irrelevant; there is no contract simply because Jones can't use the fresh flowers.
C) If the postbox rule does apply, there is a binding contract.
D) If the postbox rule applies, there is no contract because the letter of revocation was mailed before the letter of acceptance.
E) Jones's offer in the letter of January 10 lapsed before acceptance.

Question 36

Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his electric guitar. On Monday, October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocaster guitar for $400, the offer to be open until Friday noon, November 2. Jed told the store owner to send a letter of acceptance since he (Jed) would be away for a few days. The store owner examined his inventory and mailed a letter of acceptance on Thursday, November 1. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for breach of contract. Which of the following is true?

A) The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract.
B) The offer lapsed before the store owner accepted.
C) The offer was revoked before the store owner accepted.
D) Sending a letter by mail was not a reasonable method of acceptance.
E) The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner.

Question 37

If an offer is made by mail and an acceptance by mail is requested, when does a letter revoking the previous offer actually take effect?

A) Never. A revocation must be done in person.
B) At the time that it is received, if before acceptance
C) At any time before actual performance of the contract has begun
D) At any time before a letter of acceptance is received by the offeror
E) At the time that it is posted

Question 38

Which one of the following will not end an offer?

A) The offeror sells the goods being offered to someone else.
B) The offer is said to be open for 3 weeks and the 3 weeks expire.
C) The offeror dies.
D) The offeree makes a counter offer.
E) The offeror communicates a revocation of the offer.

Question 39

If an offeror makes an offer that states, "This offer to be open until noon tomorrow," which of the following does not, in law, end the offer?

A) An inquiry by the offeree
B) Revocation of the offer by the offeror before the time specified, i.e., before "noon tomorrow"
C) Lapse of the offer at the time specified
D) The insanity of the offeror
E) A counter-offer by the offeree

Question 40

Which of the following is correct with respect to the operation of the postbox rule?

A) If the postbox rule applies, the acceptance is effective at the point of mailing.
B) For the postbox rule to apply, the offer must be made by mail.
C) For the postbox rule to apply, the offeror must make that clear when the offer is made.
D) If the postbox rule applies, an acceptance must be communicated and heard by the offeree before it is effective.
E) If the postbox rule applies, the only way for an acceptance to be effective is to send it by mail.

Question 41

XYZ company, a distributor of auto parts, is in debt to the bank for $35,000 due on February 25, 2012. The company is having difficult times and wants to negotiate with the bank to pay only $33,000 as payment in full. With these facts in mind, which of the following statements of the law is false?

A) So long as they don't take the money, the bank can still sue for the entire amount.
B) At common law, if the bank accepted the $33,000 as payment in full, even absent additional consideration, it could not later sue for the remainder because such promises are always binding.
C) If the company obtained from the bank the bank's promise to forgive the $2,000 under seal, the bank could not later sue for the remainder.
D) In some jurisdictions, a statutory provision provides that the creditor who accepts less than full payment as payment in full cannot later sue for the remainder.
E) If the bank agrees to accept the $33,000 as payment in full if paid early, by February 15, and the company does as requested, the bank could not later sue for the remainder because the company gave good consideration for the bank's forgiveness of the debt.

Question 42

The postbox rule applies when which of the following means of communication is used?

A) Telephone
B) Electronic mail
C) Mail
D) Fax
E) Microsoft Instant Messenger

Question 43

Read the following and indicate which agreement would not be a binding contract because of a problem with the requirement of consideration. Assume all the other requirements for a binding contract have been met.

A) Mary promised in writing and under seal to give Planned Parenthood a donation of $100.
B) John, late for work, found his car battery was dead. He flagged down a passing truck and told the driver he would pay him $8 if he would agree to do him the favour of jump-starting the car. The driver of the truck agreed.
C) Mr. Kooner sold a farm valued at $190,000 to his nephew for only $50,000.
D) Len agreed to sell and Karen agreed to buy four of Len's records for "some money."
E) Peter agreed to pay Ace Computers Ltd. $50 above the contract price if the company would have his new computer ready ten days earlier than the date specified in the original contract.

Question 44

Indicate which of the following is the correct statement about the effect of promissory estoppel on a promisor.

A) Promissory estoppel has no effect on a promisor because it only relates to statements of fact, not promises.
B) When a victim relies on the promise and suffers injury, he can sue the promisor for compensation even where no consideration has been given in return for that promise.
C) Promissory estoppel must be distinguished from equitable estoppel.
D) Promissory estoppel can be used as a defence only against a promisor who reneges on his promise.
E) Promissory estoppel is known as injurious reliance in the United States and has the same effect in both American and Canadian law.

Question 45

With regard only to the requirement of consideration, which one of the following would be a binding contract?

A) A promise to give $10 exchanged for a promise to give a can of pop
B) A promise by Mr. Brent to pay $25 to John who found and returned Brent's wallet, which Brent didn't even know he had lost until John delivered it
C) An agreement between a contractor and a homeowner that the owner would pay an additional $1,000 if the contractor would complete the existing contract according to all its terms
D) A promise by Tom to drive a co-worker to Timmins, Ontario
E) A written promise, but not under seal, to give John $50 on Saturday

Question 46

Which of the following shows the use of the doctrine of promissory (equitable) estoppel?

A) A defendant can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive the defendant some of his obligation.
B) Ralph told Mary that he would give her his old boat. If he doesn't, Mary could use the doctrine to force him to do so.
C) If Ho requests services from Jones and there is no mention of price, if Ho doesn't pay Jones, this doctrine can be used to force Ho to pay a reasonable amount.
D) If Nancy accidentally ran her car over her neighbour's bushes, she could use the doctrine as a defence.
E) This doctrine can be used by a plaintiff to enforce a written promise signed and sealed (i.e., a seal has been affixed next to the signature of the promisor).

Question 47

Which of the following shows the use of the doctrine of promissory (equitable) estoppel?

A) If Lam requests services from Jones and there is no mention of price, if Lam doesn't pay Jones, this doctrine can be used to force Lam to pay a reasonable amount.
B) George wants to force Elaine to honour her promise to pay him $2. After he paid for a video they watched, she was so moved by the movie she said she would pay half the cost.
C) This doctrine can be used by a plaintiff to endorse a written promise signed and sealed (i.e., a seal has been affixed next to the signature of the promisor).
D) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee relied on that promise.
E) George told Hans that he would give him his printer. If he doesn't, Hans could use the doctrine to force him to do so.

Question 48

Which of the following could not be used as consideration?

A) 50 cents
B) A promise to deliver three tons of steel
C) A promise to give up a legal right
D) A kilogram of green beans
E) Work that was done in the past

Question 49

Joe contracted with Sam, agreeing to pay Sam $400 if Sam would build him a bookcase. The essential terms included the type and quality of the wood, the dimensions, and the date of completion February 14, 2012. The work went more easily than expected and Sam said to Joe, "If you pay me another $50, I will have this finished and be out of here by February 8." Joe agreed. If the bookcase were done to specifications by the 8th, but Joe refused to pay anything, Sam would be entitled in law to

A) nothing.
B) only $50.
C) $400 plus damages.
D) $400.
E) $450.

Question 50

George contracted with Bob to have a racing bike modified for him to be delivered on February 20, 2011, for a race on February 22. The price for the modification was agreed on $100. About February 10, George became nervous about the bike being finished on time and went to see Bob. Bob said that he was very busy, but if he really wanted to be sure that it would be finished on time, George would have to pay him an extra $25 so he could pay his employees overtime. George agreed and Bob completed the modifications as requested, on time. How much does George legally owe?

A) Only $100 because Bob had an existing duty to modify the bike and the price was settled.
B) $25 because past consideration is no consideration.
C) A reasonable amount only.
D) $100 plus whatever it cost for the overtime.
E) $125 because Bob gave consideration for George's promise to pay the additional $25.

Question 51

Although the contract called for the delivery of three manuals, the writer had put so much effort into the first two that the buyer agreed to pay the whole contract price, $3,000, for the two instead of the three manuals. Which of the following stops the buyer from later suing the writer for breach of contract and demanding the completion of the third manual?

A) No consideration given by the writer
B) He only has to pay a reasonable price for the work done.
C) Promissory (equitable) estoppel
D) Doctrine of quantum meruit
E) He doesn't have to pay anything because the job was not completed, and so he can even get back what he paid.

Question 52

Berman made a documentary on the life of musician Artie Shaw. Shaw was cooperative and gave her permission to use certain songs if she received proper permissions from the copyright holders. The cost of the film was funded by her own savings, a private investor, the Canada Council, the Ontario Arts Council, and deferred salaries and material costs. In March of 1987 the film won an academy award as the best feature documentary for 1986. In November of 1987 Shaw's lawyer contacted Berman's lawyer: "... This letter states that Artie Shaw has a 35% profit participation in the motion picture... ." Which of the following accurately sets out the legal position of the parties?

A) A public celebrity has the right to prevent this kind of exploitation if Berman refuses this demand.
B) The court will award Shaw a reasonable profit because it is fair.
C) The court will imply an agreement to this effect between the parties.
D) Shaw has no claim since there was no such agreement.
E) Shaw has a right to this share because the movie is about him.

Question 53

The owner of a large restaurant wanted four large pots of flowers in front of the restaurant. Laura, a landscaper, submitted her offer: four large pots with flowers for $800. The owner said he would pay $600 for that. Laura said, "For $600, I'll provide four smaller pots with flowers." The owner said, "$600 for the smaller pots with flowers plus an arrangement for the front desk." Laura said, "Forget it," and started to leave. The owner said, "All right, I'll accept your offer of $600 for the four smaller pots with flowers." Laura didn't answer; she just got into her truck and drove off. On these facts, which of following is true?

A) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create a legal relationship.
B) There is no contract because Laura's last offer was revoked.
C) There is no contract because Laura's last offer had been rejected by a counter-offer, and the owner's offers had been rejected or were not accepted.
D) There is a contract because at one point in the conversation Laura was willing to sell and the owner was willing to buy four smaller pots with flowers for $600.
E) There is no contract because Laura's last offer had lapsed after a reasonable time.

Question 54

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

A) To form a contract, there must be an offer that is accepted unconditionally.
B) A contract is unenforceable if it is required to be evidenced in writing under the Statute of Frauds and is not.
C) The parties to a contract can always go to court and have the court declare a contract void if the consideration is not adequate, i.e. fair, even if there is no evidence of fraud, duress, undue influence, or mental incapacity.
D) A contract for a $50,000 boat does not have to be evidenced in writing to be a valid contract.
E) An exchange of promises can be consideration adequate to form a contract.

Question 55

X contracted with Z. X promised to pay $500; Z promised to build a cabinet to hold X's DVD's. The essential terms included the type and quality of the wood, the dimensions, and the date of completion February 13, 2011. The work went more easily than expected and Z said to X, "If you pay me another $85, I will have this finished and be out of here by February 10." X agreed. If the cabinet was done to specifications by the 10th, but X refused to pay anything, Z would be entitled in law to

A) $585.
B) only $85.
C) a "fair price."
D) $500.
E) nothing.

Question 56

If you owe Mr. Storr $900 for goods received and Mr. Storr agrees to take $800 in full satisfaction of the debt, which of the following is true?

A) At common law, such a one-sided promise is always binding and Mr. Storr could sue for the remaining $100.
B) Many jurisdictions have passed legislation preventing Mr. Storr from suing you for the difference if he actually takes the $800.
C) The issue of consideration is irrelevant when dealing with satisfaction of a debt.
D) Under these circumstances, you only have to pay a reasonable price for the goods.
E) Even if you take the $800 to him, Mr. Storr can later sue you for the $100 on the principle of quantum meruit.

Question 57

Which of the following statements is correct with respect to the law of consideration?

A) For a contract to be binding something valuable must have changed hands. This consideration may have been paid before the agreement (past consideration) or at the time of the agreement (present consideration), but future consideration is no consideration.
B) Without consideration or a seal, there can be no contract.
C) The amount of consideration to be paid in a contract must be reasonable (that is, fair) from the point of view of each party.
D) Consideration must have some value but need not be specific.
E) Consideration need not be specific, just so both parties got something out of the deal.

Question 58

The ad in the Real Estate Weekly read: "Best offer in Toronto! 3-bedroom home in the Annex for only $300,000!" This is an example of which of the following?

A) Bilateral contract
B) Unilateral contract
C) Legal offer
D) Invitation to treat
E) Gratuitous promise

Question 59

Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is false?

A) In order for there to be a binding contract, there must be an offer and an acceptance.
B) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.
C) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract.
D) Sending an acceptance by mail was a reasonable method of acceptance in this situation.
E) Not all methods of acceptance are effective upon receipt by the offeror.

Question 60

An agreement for the purchase and sale of property included the following words: "Subject to the purchaser obtaining satisfactory financing by 5 p.m. on Friday, February 22, 2011." If the court held that this subject-to clause was so vague that "the entire contract was void for uncertainty," this would mean that

A) the contract was in existence but could not be enforced.
B) the contract was in existence but one party has the right to repudiate the contract.
C) the contract was never in existence.
D) the court will impose a reasonable alternative for the term in question.
E) the contract is in existence but the court will not do anything to help the parties.

Question 61

What did the Court decide in Entores Ltd. v. Miles Far East Corp.?

A) Because fax machines are becoming more popular, the Court created a new rule known as the fax rule exception.
B) Because of the postbox rule, there is no need to specify a method of acceptance in contractual negotiations.
C) Because the postbox rule is archaic, it should be abolished in its entirety.
D) Because telex was instantaneous, there was no need to extend the postbox rule exception to that form of communication.
E) Because mail is the most common form of communication, the postbox rule does not need to be extended to telegrams.

Question 62

In Martel Building Ltd. v. Canada, what did the Supreme Court of Canada decide?

A) There is no requirement that bidders be treated fairly, as caveat emptor applies.
B) In a call for tenders, there can be no discretion.
C) A call for tenders is an invitation to treat which carries with it no legal status.
D) In a call for tenders, standard form contracts must always be used.
E) A call to tender is an offer to contract and a binding contract may arise when a bid is submitted.

Question 63

In Lanca Contracting Ltd. v. Brant (County) Board of Education, what was the issue facing the Court and what did the Court decide?

A) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be, but only if the acceptance were communicated in writing.
B) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be.
C) The Court had to decide whether a bid could result in a binding contract, and the Court decided it could not be.
D) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided it had been.
E) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided that only actual notice could ever suffice.

Question 64

Which of the following is not correct with respect to the adequacy of consideration?

A) Need not be present if the agreement is under seal
B) Must be of some value; love and affection are not enough
C) Existing duty: a change in the contract requires new consideration
D) Need not be legal if both parties clearly consent
E) Need not be fair, unless there are extenuating circumstances, i.e., insanity or fraud

Question 65

As property manager of a 15-unit apartment block, you receive rent payments on the first of every month from each tenant. Mrs. Lone, in apartment 105, whose rent is $500 per month, lost her job and was in dire financial difficulties. You agreed to take only $400 per month. For the last ten months, she has paid only $400 a month, but you have learned that for 4 months she has had a new and even better-paying job. You are angry that she failed to tell you this and you want to sue her for the entire amount of back rent ($1,000). Which of the following arguments could she use most effectively against you?

A) Breach of contract
B) Undue influence
C) Duress
D) Promissory estoppel
E) Mistake

Question 66

The decision in Zynik Capital Corp. v. Faris confirms

A) a Memorandum satisfies all the elements of a contract.
B) option agreements are, by their very nature, illegal.
C) a Memorandum is not a binding contract, as it is missing an essential term.
D) a Memorandum is sufficient to create a binding contract.
E) option agreements are, by their very nature, unenforceable.

Question 67

What was significant about the case of R. v. Commercial Credit Corp.?

A) It is one of the few cases where the postbox rule has been extended beyond communication by mail or telegram.
B) It confirmed that acceptance by post is always appropriate.
C) It abolished the postbox rule in Canada.
D) It determined that consideration is unnecessary in cases where consensus has been achieved in writing.
E) It determined that the postbox rule should be extended letters of revocation as well as letters of acceptance.

Question 68

In Gilbert Steel Ltd. v. University Construction Ltd., what did the Court find on the issue of consideration?

A) Because the Court will not look into the adequacy of consideration, a one-sided agreement is enforceable.
B) A one-sided agreement is, in law, a form of unilateral contract.
C) Because commercial parties dealing at arms' length were involved, a one-sided agreement is valid.
D) A one-sided agreement is not enforceable.
E) A one-sided agreement is only binding if its essential terms are reduced to writing.

Question 69

Anmool verbally agreed to build a deck for Nikki for $1,000 by the 15th of September, in time for a lavish backyard barbecue she was planning. On September 13th, Nikki became concerned at Anmool's lack of progress. Anmool told Nikki he would complete the deck on time, for an additional $200. Nikki agreed and Anmool completed the deck on time. Which of the following is correct?

A) Nikki owes Anmool $1,000; there is no binding obligation with respect to the additional $200 because Anmool had an existing duty to complete the deck on time.
B) Nikki owes Anmool $1,200, because that is what she agreed to, and such contracts are binding.
C) Nikki does not owe Anmool anything, because his lack of professionalism vitiated the contract.
D) Problems of consideration can be raised only in the commercial context, not when the parties involved are both individuals.
E) No legal obligations arise because the agreement is not in writing.

Question 70

Sam owed Joe $6,000 due January 12, 2012. On January 1st, Joe said he'd take $5,000 in full satisfaction of the debt if Sam paid him $5,000 on January 5th instead. Sam paid on January 5th. A week later, Joe wants to sue Sam for the $1,000 he (Joe) was legally owed. Which of the following is true?

A) Joe would win because they cannot change the original deal.
B) Joe would lose because early repayment constituted consideration to support the new arrangement.
C) Joe would lose because of the rule that past consideration is no consideration.
D) Joe would win because his forgiveness of the loan was gratuitous, i.e. unsupported by consideration.
E) Joe would lose because of the doctrine of quantum meruit.

Question 71

A contract is a single promise, made by one person to another, enforceable in court.

Question 72

Which of the following shows the use of the doctrine of promissory (equitable) estoppel?

A) Val told Jim that she would give him her printer. If she doesn't, Jim could use the doctrine to force her to do so.
B) This doctrine can be used by a plaintiff to enforce a written promise that has been signed and sealed (i.e., a seal has been affixed next to the signature of the promisor).
C) George rented a video and watched it with Elaine. She thought the movie was great and said she'd pay half the rental price. George could use the doctrine to force her to pay as she promised.
D) Lam contracted to supply Jones with steel. Before the steel was delivered, Lam's supplier increased the price. Lam could use the doctrine to force Jones to pay more to Lam.
E) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee relied on that promise.

Question 73

You owe Mr. Store $900 for goods received and want him to take $800 in full satisfaction of the debt. Which of the following is false?

A) If he agrees with you and does take the $800, even if it is paid early at his request, he can still later sue you for the $100 forgiven. His promise not to demand the $100 from you was a gratuitous promise and therefore not binding.
B) If he actually takes the $800 in full satisfaction of the debt, statute law in many jurisdictions prohibits him from suing you for the $100.
C) If you pay the $800 before the actual due date in consideration for his taking this as full payment, he cannot sue for the other $100.
D) If Mr. Store agreed to take the $800 as full payment, but before taking it changed his mind, he would be entitled to the entire $900.
E) If Mr. Store agreed to take the $800 as full payment in exchange for your promise to sweep the floor of his store, he cannot sue for the $100.

Question 74

In Bawitko Investments Ltd. v. Kernels Popcorn Ltd., what did the Court of Appeal hold?

A) A handshake is of no force or effect unless it accompanies a written agreement.
B) A handshake "seals the deal", even if essential provisions have not been determined.
C) A "contract to make a contract" is not a contract at all.
D) A "contract to make a contract" is enforceable at law.
E) Oral agreements do not constitute contracts within the meaning of legislation.

Question 75

Which of the following is correct with respect to consideration?

A) It must be specific.
B) It must be reasonable.
C) It is to compensate for an act that happened in the past.
D) At least some money must be involved.
E) It is binding even though a duty to so act already exists.

Question 76

Only the person or group to whom an offer is made can accept it.

Question 77

Why is the case of Dickinson v. Dodds important?

A) It says that property can be sold to two different purchasers.
B) It determines that offers, once made, can never be revoked.
C) It clarifies that when an offeror says an offer will remain open, it must remain open.
D) It illustrates the nature of an offer.
E) It confirms that contracts must be in writing to be valid.

Question 78

Which of the following statements is correct with respect to promissory estoppel (equitable estoppel)?

A) Promissory estoppel means that Donna cannot revoke her offer where she has promised to hold it open for a specific period of time.
B) Where Able requests services from Cain, the doctrine of promissory estoppel requires a reasonable price to be paid even where no specific amount was agreed.
C) Where Barbra relies on Raylene's promise and suffers a loss, Barbra can sue Raylene for compensation even though the promise is gratuitous.
D) Where Hank and Jim have a contract and Hank releases Jim from part of Jim's obligation, Jim can use that release, even though it was given without consideration, as a defence if Hank sues for breach of contract.
E) Promissory estoppel refers to the principle that, where a document is in writing and under seal, it is enforceable even where there is no consideration.

Question 79

A formal contract is one that is signed and sealed.

Question 80

"Quantum meruit" means

A) "to stand on decision".
B) "as much as deserved".
C) "a shield but not a sword".
D) "the ultimate freedom to contract".
E) "a meeting of the minds".
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.