Question 1

What is the term used to describe a claim that results in a court declaring a contract void because a party is unaware of the nature of the contract?

Accepted Answer

Non est factum

Question 2

An assignee can be in no better position than was the assignor.

Accepted Answer

A) True 
 B)False  True

Question 3

Explain why agency is not really an exception to the privity rule.

Accepted Answer

When an agent acts on behalf of a principal in creating a contractual relationship with a third party, the contract is between the principal and the third party. The agent is merely a go-between who is able to establish privity between the principal and the third party.

Question 4

Explain what is meant by a "constructive trust."

Accepted Answer

The answer of Explain what is meant by a "constructive...

Question 5

Explain what is meant by "privity of contract."

Accepted Answer

The answer of Explain what is meant by "privity of...

Question 6

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"?

Accepted Answer

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

Question 7

For a contract to be unconscionable, it is necessary that the victim was particularly vulnerable and that the bargain was unfair.

Accepted Answer

A) True 
 B)False

Question 8

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 house 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 $5000 to the Canada Revenue Agency for Zlotnic. On these facts, which of the following is true?

Accepted Answer

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

Question 9

Explain what is meant by a "statutory assignment."

Accepted Answer

The answer of Explain what is meant by a "statutory...

Question 10

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.?

Accepted Answer

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

Question 11

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?

Accepted Answer

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

Question 12

According to Braut v. Stec, what is the Courts' position when one enters into a contract where a claim is made that a bargain is unconscionable?

Accepted Answer

A)   There is an automatic presumption of undue influence due to the relationship of the parties.
B)   A close relationship between business associates prevents a finding of unconscionability.
C)   When one party lacks the intellect to enter into a contract, the contract continues to be binding on both parties.
D)   A presumption of fraud is raised when there is an inequality in the position of the parties due to the ignorance of the weaker party.
E)   Because a party to the contract is an uneducated immigrant, the contract is voidable.

Question 13

Explain what is meant by unjust enrichment.

Accepted Answer

The answer of Explain what is meant by unjust enrichment....

Question 14

Undue influence takes place when one person uses violence to force another to enter into a contract.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

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

Question 16

What is the significance of an assignment qualifying as a statutory assignment?

Accepted Answer

The answer of What is the significance of an assignment...

Question 17

What is the significance of determining that the misrepresentation was negligent rather than innocent?

Accepted Answer

The answer of What is the significance of determining that...

Question 18

To avoid a contract on the basis of non est factum, the mistake must have gone to the entire nature of the agreement, not just some aspect of it.

Accepted Answer

A) True 
 B)False

Question 19

The victim of fraudulent misrepresentation retains the right to have the parties to the contract returned to their original positions but not to be reimbursed for any out-of-pocket expenses.

Accepted Answer

A) True 
 B)False

Question 20

Discuss how privity of contract affects the position of people who are not parties to a contract. In your discussion, include an examination of the Supreme Court decision in London Drugs Ltd. v. Kuehne & Nagel International Ltd.

Accepted Answer

The answer of Discuss how privity of contract affects the...

Exam 8: Factors Affecting the Contractual Relationship

What is the term used to describe a claim that results in a court declaring a contract void because a party is unaware of the nature of the contract?

An assignee can be in no better position than was the assignor.

Explain why agency is not really an exception to the privity rule.

Explain what is meant by a "constructive trust."

Explain what is meant by "privity of contract."

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"?

For a contract to be unconscionable, it is necessary that the victim was particularly vulnerable and that the bargain was unfair.

Explain what is meant by a "statutory assignment."

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.?

According to Braut v. Stec, what is the Courts' position when one enters into a contract where a claim is made that a bargain is unconscionable?

Explain what is meant by unjust enrichment.

Undue influence takes place when one person uses violence to force another to enter into a contract.

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

What is the significance of an assignment qualifying as a statutory assignment?

What is the significance of determining that the misrepresentation was negligent rather than innocent?

To avoid a contract on the basis of non est factum, the mistake must have gone to the entire nature of the agreement, not just some aspect of it.

The victim of fraudulent misrepresentation retains the right to have the parties to the contract returned to their original positions but not to be reimbursed for any out-of-pocket expenses.

Discuss how privity of contract affects the position of people who are not parties to a contract. In your discussion, include an examination of the Supreme Court decision in London Drugs Ltd. v. Kuehne & Nagel International Ltd.