Question 1

If a contract is not evidenced in writing this does not make it void under the Statute of Frauds; it is merely unenforceable. Explain this distinction.

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Question 2

What is an "executory contract"?

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Question 3

What must a person establish in order to escape contractual obligations on the basis on insanity?

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Question 4

How do the courts determine whether a customer should have taken an exaggerated claim seriously?

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Question 5

A requirement for the existence of an enforceable contract is that the parties have the legal capacity to contract. Which of the following is incorrect with respect to the law of incapacity?

Accepted Answer

A)  If someone contracts with an insane person but there was no indication of mental illness, the contract can be binding. 
B)  A contract by an insane person for necessities, such as food, is binding. 
C)  The law governing contracts with persons intoxicated by alcohol or drugs is the same as the law governing contracts with the insane. 
D)  If a mentally impaired person cannot avoid a contract on the basis of insanity, the court could still set the contract aside for being an "unconscionable" transaction. 
E)  If you knew that you were negotiating a new lease, but that you weren't being as effective as you wanted to be because you had been drinking, you can have the resulting contract set aside.

Question 6

When at war, what happens to contracts with residents of an enemy country if they are detrimental to Canada?

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Question 7

Zlotnik incorporated a company shortly after graduation. The company bought a truck and a computer. The company was short of operating capital so, through its agent Zlotnik, borrowed $10,000 from the bank. In consideration for its loan, the bank took, in addition to the company's promise to pay the bank both principal and interest, a security agreement on its truck and computer. The company made its payment each month without incident. Then the stock market took a tremendous fall, which caused the officer of the bank to call Zlotnik and ask him to guarantee the company's debt. The company was doing very well, so Zlotnik agreed to be guarantor of the debt. On these facts, which of the following is true?

Accepted Answer

A)  Because Zlotnik's promise is a guarantee and not an indemnity, he automatically becomes the legal person primarily liable on the debt; the company becomes secondarily liable. 
B)  Zlotnik's promise to guarantee the debt is unenforceable because it is not supported by any consideration flowing from the bank to Zlotnik. 
C)  Zlotnik's promise to guarantee the debt is ultra vires. 
D)  Zlotnik's promise to guarantee the debt is enforceable wholly on the grounds that the Statute of Frauds with its writing requirement has been repealed. 
E)  All guarantees and indemnities must be in writing and under seal to be binding.

Question 8

Joe was in a bar and saw his friend Sam. Sam had had a considerable amount to drink. Sam offered to sell Joe his Porsche automobile for only $15,000. Joe made sure to have Sam sign a written agreement to that effect. The next day, Joe went to pick up the car, but Sam didn't remember anything about it. Even when Joe showed him the written agreement signed by him, Sam refused to deliver the car. Joe sued. Which of the following correctly states the legal position of the parties?

Accepted Answer

A)  If Joe can show that there was no indication that Sam was drunk, even though Sam was completely incapacitated, he will be required to go through with the deal. 
B)  Sam just has to show he was legally intoxicated, and he will not be bound. 
C)  As long as Joe can produce the agreement in writing, there is nothing Sam can do to get out of the deal. Once Sam has signed the document, he is responsible for its contents. 
D)  Sam will not have to go through with the deal because no money has yet changed hands. 
E)  Being drunk is no excuse and the contract is binding.

Question 9

Explain the legal position of an infant who enters into a contract with an adult.

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Question 10

When the terms of an agreement make it impossible to perform the contract within one full year from the time the contract is entered into, there must be evidence in writing for it to be enforceable.

Accepted Answer

A) True 
 B)False

Question 11

The first Statute of Frauds was enacted in the USA in the 20th century.

Accepted Answer

A) True 
 B)False

Question 12

Lawer entered into a contract for the sale of his business, a barbershop, to Cutter. The contract provided that Lawer would not open up a similar business within 25 kilometres of the barbershop being sold. About two weeks after the sale, Cutter noticed a new barbershop opening across the street in brand-new facilities. When he learned that the owner of the new shop was the very Lawer who sold the business to him, he sued for breach of contract. Which of the following correctly indicates the legal position of the parties?

Accepted Answer

A)  The court needs to determine only that the distance of 25 kilometres is reasonable; if it does, the restriction is valid and Cutter will succeed. 
B)  Any attempt to restrict competition is illegal, and no matter how reasonable the terms are, the provision will be void. 
C)  The provision will be void as it is broader than necessary to protect the goodwill of the business. 
D)  If the restriction is illegal, the whole contract for the sale and purchase of the business is necessarily void and Cutter can return the barbershop for the return of the purchase price. 
E)  To determine whether or not the restriction is binding, the court asks only one question: does it reduce competition?

Question 13

Ted, a seventeen-year-old high school student, was hired to perform in four episodes of Gossip Gidget. To keep up with his schoolwork and gaming, he contracted with Mr. Tech of Technoland for a $2000 laptop computer. He agreed to pay $500 down and the balance by monthly payments of $250. Read each of the following separately and indicate which is true.

Accepted Answer

A)  If Ted doesn't make his payments, Tech can sue Ted's parents because parents are liable for the debts of their minor children. 
B)  This contract is void; therefore, Tech can repossess the laptop which is technically still his whether Ted makes the payments or not. 
C)  If this contract is in writing and Ted doesn't make his payments, Tech can sue Ted for breach of contract. 
D)  This contract is a legal contract enforceable by Ted. 
E)  This contract is a legal contract enforceable against Ted.

Question 14

Indicate under what circumstances parents are responsible for the contracts entered into by their children.

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Question 15

A contract that has been partially performed will be enforceable even though it is not in writing as required under the Statute of Frauds.

Accepted Answer

A) True 
 B)False

Question 16

Clem had wanted a piano for a long time. Although he was a minor, his mom gave him $300 and he took this with some savings and made a $500 down payment on a $3000 piano. The balance was to be paid over a three-year period. His mom signed the contract as a guarantor. Clem made the first three payments, but he damaged the piano trying to move it from the living room to his upstairs bedroom. He didn't have the money to get it fixed. He quit playing, lost interest, and quit making his payments. On these facts, which of the following is False?

Accepted Answer

A)  Although the contract is unenforceable against Clem, if he affirms the contract after he reaches the age of majority, the seller will be able to sue him for breach of contract. 
B)  Unless Clem affirms the contract or partly performs the contract after he reaches the age of majority, the seller cannot get any compensation from him. 
C)  If Clem's mother guaranteed the deal, she would be liable on her guarantee even if the contract were unenforceable against Clem. 
D)  Because Clem is an infant, he cannot sue the seller, even if the piano is defective. 
E)  Clem's mother will be liable on the guarantee only if it is in writing.

Question 17

Married women are no longer considered incapacitated in contract law.

Accepted Answer

A) True 
 B)False

Question 18

All contracts must be in writing to be enforceable.

Accepted Answer

A) True 
 B)False

Question 19

What is an indemnity?

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Question 20

"Where the Statute of Frauds applies and the requirement of writing is not met in an agreement between two parties, the contract is void." Discuss the validity of this statement.

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Exam 7: The Elements of a Contract: Capacity, Legality, and Intention

If a contract is not evidenced in writing this does not make it void under the Statute of Frauds; it is merely unenforceable. Explain this distinction.

What is an "executory contract"?

What must a person establish in order to escape contractual obligations on the basis on insanity?

How do the courts determine whether a customer should have taken an exaggerated claim seriously?

A requirement for the existence of an enforceable contract is that the parties have the legal capacity to contract. Which of the following is incorrect with respect to the law of incapacity?

When at war, what happens to contracts with residents of an enemy country if they are detrimental to Canada?

Explain the legal position of an infant who enters into a contract with an adult.

When the terms of an agreement make it impossible to perform the contract within one full year from the time the contract is entered into, there must be evidence in writing for it to be enforceable.

The first Statute of Frauds was enacted in the USA in the 20th century.

Indicate under what circumstances parents are responsible for the contracts entered into by their children.

A contract that has been partially performed will be enforceable even though it is not in writing as required under the Statute of Frauds.

Married women are no longer considered incapacitated in contract law.

All contracts must be in writing to be enforceable.

What is an indemnity?

"Where the Statute of Frauds applies and the requirement of writing is not met in an agreement between two parties, the contract is void." Discuss the validity of this statement.