Question 1

Why would a lawsuit be considered the least favourable choice of remedy for non-performance in a contractual business relationship?

Accepted Answer

A)   The court's remedy will focus on the parties' economic realities.
B)   The court will limit its remedy to focus on the specific disputed transaction.
C)   The court will direct its decision strictly to the finding of the correct answer.
D)   The court's decision will focus on the parties' best business options. B

Question 2

Explain how the operation of contract law makes it possible for the wheels of commerce to turn efficiently and effectively.

Accepted Answer

Contract law makes it possible for each party to actually rely on commitments made by the other. As a result, they can plan their business affairs. If either fails to honour its commitments, the court will order the payment of compensation in the amount that the innocent party has lost as a result. Hence, the innocent party has not exposed itself to the risk of loss by making the commitments that it made.

Question 3

A year ago, you negotiated a contract with a supplier on behalf of your company. The contract was broken six months ago, and the supplier is about to commence legal proceedings for the breach. Can you personally be held liable for the losses resulting from the breach? Explain.

Accepted Answer

You can't be sued by the supplier for breach of the contract because you were acting on behalf of your employer, and the contract is actually between it and the supplier. However, you may be liable to your employer for the losses it sustains as a result of the lawsuit! If, for example, your employer had not given you authority to act for it for purposes of entering this contract, your employer could sue you for breaching the terms of your employment contract by binding it to the supplier contract: your employer sustained the loss as a result of your breach of the contract you have with it.

Question 4

Which of the following is a good reason to use a contract as opposed to having a casual understanding?

Accepted Answer

A)   Casual understandings require lengthy negotiations and time to perform.
B)   All contracts typically involve arrangements that are unlikely to be repeated.
C)   Casual understandings are casually conducted and completed instantly.
D)   All contracts are subject to the same set of compulsory legal rules.

Question 5

Most Canadian jurisdictions require contracts regarding interests in land to be in written form.

Accepted Answer

A) True 
 B)False

Question 6

In reaching his or her decision regarding a contractual dispute, a judge will always apply the objective standard test.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following has the greatest influence on creating the flexible relationship that exists between contract law and economic reality?

Accepted Answer

A)   Contractual obligations must be performed or compensation paid for non-performance.
B)   Courts assess the fairness of the contract terms chosen by the parties.
C)   A party's need for judicial assistance or judicial intervention must be justified.
D)   Parties must be responsible for themselves and work to maximize self-interest.

Question 8

If someone has suffered a legal wrong, he or she should automatically sue the wrongdoer.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a defining characteristic of the principle of equality of bargaining power?

Accepted Answer

A)   Judicial assistance is readily available to all disadvantaged parties to a contract.
B)   It is applied to adjust the terms so that the contract is fair and then enforces it.
C)   It is applied to reject unfair contracts and return the parties to their prior positions.
D)   It generally applies regardless of some distinct advantage favouring one party.

Question 10

Traditionally, contract law focuses its attention on the need to preserve long-term business relationships.

Accepted Answer

A) True 
 B)False

Question 11

Alberta Carr, in his well-known article published in the Harvard Business Review, encouraged businesspeople to break the law to seek advantage in business negotiations.

Accepted Answer

A) True 
 B)False

Question 12

Two accomplished software developers want to combine their talents on a lucrative project offered by a large document storage firm. The developers will have their agreed roles and responsibilities incorporated into a formal contract to be prepared by their respective lawyers. Which of the following is a valid representation of the legal significance of the relationship between the parties that will be evidenced by the contract?

Accepted Answer

A)   Each party will get exactly what it bargained for.
B)   There has been a deliberate meeting of the minds.
C)   Some of the parties to a contract can be sued under it.
D)   No element of coercion exists between the contracting parties.

Question 13

Identify and briefly explain the legal rules that apply to a commercial relationship between a for-profit figure skating club and the skating instructors it has contractually hired for the current fiscal year. Identify the methods available to these parties for resolving disputes that may arise, including which method is the least expensive and which is recommended as a last resort and the procedure that method entails.

Accepted Answer

The answer of Identify and briefly explain the legal rules...

Question 14

An incomplete agreement is not contractual because its content is not sufficiently comprehensive.

Accepted Answer

A) True 
 B)False

Question 15

Fatima needs to copy and bind five sets of legal submissions with beige covers, but none are left in the supply cabinet. The office manager offers to reimburse Fatima for the cost of the covers and buy her lunch from petty cash if she will dash to the nearby office supply store to buy them. Fatima agrees. What is the nature of the arrangement negotiated between Fatima and the office manager?

Accepted Answer

A)   a formal accord
B)   an informal business arrangement
C)   a haphazard promise
D)   a binding agreement

Question 16

Identify and briefly describe the objectives that owners and managers should keep in mind when dealing with a customer who is attempting to expand or restrict an existing contract.

Accepted Answer

The answer of Identify and briefly describe the objectives that...

Question 17

When hearing a case, the court will generally assume equality of bargaining power, even though it is not always a valid assumption.

Accepted Answer

A) True 
 B)False

Question 18

In a strictly legal sense, which of the following is synonymous with the reasonable person test?

Accepted Answer

A)   an objective standard
B)   the degree of bargaining power
C)   a subjective standard
D)   an agreement on essential terms

Question 19

What types of employees should a company's head of risk management choose when putting together a negotiating team?

Accepted Answer

A)   executives with highly developed abilities to deceive when necessary in order to secure a favourable agreement
B)   experienced individuals who want to win and are willing to bluff and bluff hard to have a successful career
C)   individuals with adequate legal knowledge for the negotiation of an enforceable contract that meets needs and protects interests
D)   individuals who know the game and are not shy in demonstrating a complete lack of ethical standards

Question 20

Matt purchases a car for his son from an auto dealership. A week later, his son discovers a defect that renders the car unsafe. The defect is one that a court would consider to be a breach of contract. What legal recourse is available to remedy this problem?

Accepted Answer

A)   The court's resistance to imposing ethical business standards leaves no recourse.
B)   Matt may commence a lawsuit against the dealer for breach of contract.
C)   Matt's son may file a lawsuit against the auto dealer for breach of contract.
D)   Mat's son can sue the manufacturer of the car for breach of contract.

Exam 5: An Introduction to Contracts

Why would a lawsuit be considered the least favourable choice of remedy for non-performance in a contractual business relationship?

Explain how the operation of contract law makes it possible for the wheels of commerce to turn efficiently and effectively.

A year ago, you negotiated a contract with a supplier on behalf of your company. The contract was broken six months ago, and the supplier is about to commence legal proceedings for the breach. Can you personally be held liable for the losses resulting from the breach? Explain.

Which of the following is a good reason to use a contract as opposed to having a casual understanding?

Most Canadian jurisdictions require contracts regarding interests in land to be in written form.

In reaching his or her decision regarding a contractual dispute, a judge will always apply the objective standard test.

Which of the following has the greatest influence on creating the flexible relationship that exists between contract law and economic reality?

If someone has suffered a legal wrong, he or she should automatically sue the wrongdoer.

Which of the following is a defining characteristic of the principle of equality of bargaining power?

Traditionally, contract law focuses its attention on the need to preserve long-term business relationships.

Alberta Carr, in his well-known article published in the Harvard Business Review, encouraged businesspeople to break the law to seek advantage in business negotiations.

An incomplete agreement is not contractual because its content is not sufficiently comprehensive.

Identify and briefly describe the objectives that owners and managers should keep in mind when dealing with a customer who is attempting to expand or restrict an existing contract.

When hearing a case, the court will generally assume equality of bargaining power, even though it is not always a valid assumption.

In a strictly legal sense, which of the following is synonymous with the reasonable person test?

What types of employees should a company's head of risk management choose when putting together a negotiating team?

Matt purchases a car for his son from an auto dealership. A week later, his son discovers a defect that renders the car unsafe. The defect is one that a court would consider to be a breach of contract. What legal recourse is available to remedy this problem?