Question 1

In a jurisdiction other than B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with the contract. Mr. Seller argued that he was not in breach, that the contract had been frustrated. The computer was destroyed by water when a careless driver knocked over a fire hydrant outside the warehouse holding the computer. No deposit had been paid. The court held that the contract was frustrated. Based on this ruling, how does the court handle the situation?

Accepted Answer

A)   The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system.
B)   Buyer will succeed against Seller for damages because the court will treat it as if were an anticipatory breach.
C)   The court will look at the costs incurred and any payments made, and will apportion the losses between the parties.
D)   The court will treat the contract as if there were a common mistake about the existence of the subject matter.
E)   Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract. A

Question 2

Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach?

Accepted Answer

A)   If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay.
B)   The victim of a breach can recover damages even for the loss he could have avoided if he had tried to.
C)   If the court holds that a contract has been ended by frustration, the damages awarded by the court will be the same as if the contract was ended by a breach.
D)   An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract.
E)   A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable. D

Question 3

To what does the "construction approach" refer?

Accepted Answer

In situations of fundamental breach, a way to ascertain the meaning of a written contract.

Question 4

What is the three-part test for determining if novation has occurred?

Accepted Answer

The answer of What is the three-part test for determining...

Question 5

A breaching party is responsible for all lost profits flowing from a breach of contract.

Accepted Answer

A) True 
 B)False

Question 6

Tufts and McDougal were having an argument about the law regarding performance of a contract. Which one of the following statements of theirs is correct?

Accepted Answer

A)   If Jed shows up with cash for the mechanic on the day and at the place designated in the contract, and the mechanic refuses to take it for some reason, Jed doesn't ever have to pay him.
B)   If Joan owes a $500 debt due on a specific date, she doesn't have to pay until the creditor seeks her out for payment.
C)   If Roscoe tries to deliver lumber to Jed in accordance with their contract and Jed doesn't take delivery of it, Roscoe can sue Jed for breach of contract without ever trying to deliver it again.
D)   If Jed has to pay $500 to his mechanic, he can pay the whole debt in dimes and the mechanic has to take them.
E)   If Jed owes the mechanic $500, a cheque is as good as cash in law even if the mechanic said he wouldn't take a cheque.

Question 7

When an outside, unforeseen event interferes with the performance of a contract, and there is some other way to fulfill the contract, performance is required.

Accepted Answer

A) True 
 B)False

Question 8

In all but one of the following situations, the contract is frustrated. Identify the exception.

Accepted Answer

A)   On December 1, Pak contracted to buy Scott's horse. Delivery day was set for December 10. On December 8, the horse contracted rabies and had to be destroyed.
B)   Dubocovich had contracted to supply a health-food store jars of Melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery the government banned the sale of Melatonin so that it could be properly tested under government auspices.
C)   Issacs contracted to sing at the your club on March 10, but that morning the club was destroyed by lightning.
D)   Ed, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down.
E)   You agree to paint Joe's house on the following Tuesday, and on the Monday before, through no fault of either party, it is destroyed by fire.

Question 9

The case of Sail Labrador Ltd. v. Challenger One (The) involved an option to purchase and a breach of a contract that was inconsequential and immediately corrected. What did the Supreme Court of Canada hold?

Accepted Answer

A)   The contract had been substantially performed and the option was still available.
B)   The breach, although minor, rendered the contract unenforceable.
C)   No breach can be considered inconsequential at law.
D)   The contract had not been perfectly performed, so the contract was void.
E)   The breach, although minor, rendered the contract voidable at the option of the non-breaching party.

Question 10

Which one of the following statements accurately describes the operation of a condition precedent?

Accepted Answer

A)   This is a term in a contract that must be met before the contract becomes fully operational.
B)   This is a term in the contract that provides for the cessation (ending)  of the parties' obligations upon the occurrence of some particular event.
C)   There is no such thing recognized in the common law.
D)   This occurs when one party shows up at the right time and place ready, willing, and able to carry out his obligations under the contract.
E)   This occurs when some event that the parties have not anticipated makes performance radically different from what they agreed to.

Question 11

For a contract to be ended by agreement, there must be consideration as well as agreement on both sides.

Accepted Answer

A) True 
 B)False

Question 12

Legal tender in Canada consists of government-produced coins and bills of any amount or quantity.

Accepted Answer

A) True 
 B)False

Question 13

Discuss the equitable remedies that were developed in contract law and why they were necessary.

Accepted Answer

The answer of Discuss the equitable remedies that were developed...

Question 14

All rules of contract formation apply when parties agree to discharge a contract.

Accepted Answer

A) True 
 B)False

Question 15

An agreement to end a contract, with extra consideration to be supplied by the party benefiting from the discharge, is known as ________.

Accepted Answer

The answer of An agreement to end a contract, with...

Question 16

What is the result of a repudiation?

Accepted Answer

The answer of What is the result of a repudiation?...

Question 17

Sam agreed to purchase and Joe agreed to sell a brand new Chrysler 300M that was displayed in "Joe's Fine Cars" showroom. But instead of delivering it to Sam, Joe sold it to another customer who offered him more money. Which of the following is the appropriate remedy in these circumstances?

Accepted Answer

A)   No remedy
B)   Rescission
C)   Injunction
D)   Specific performance
E)   Damages

Question 18

Explain how a contract can be discharged by agreement.

Accepted Answer

The answer of Explain how a contract can be discharged...

Question 19

Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance.

Accepted Answer

A)   Not pay Robinson until Robinson came for it.
B)   Pay Robinson on time but pay it all in dimes.
C)   Pay him on time in $5 bills.
D)   Pay him on time but with a cheque.
E)   Deliver the money to his house instead of to his office at 3:00 a.m. on the due date.

Question 20

If a contract states that the contract is "subject to the purchaser obtaining financing for $10,000 at 8% by 5:00 p.m. Friday, March 11," it means that

Accepted Answer

A)   there is a contract whether the purchaser gets the financing or not, because the statement is just a statement of intention and doesn't affect the contract.
B)   the obtaining of financing is a condition subsequent and ends the contract.
C)   if the purchaser does not obtain the financing, the contract is frustrated.
D)   if the purchaser does not obtain the financing, he is in breach of contract.
E)   if the purchaser does obtain the financing and properly notifies the seller, the contract is then in full force and effect.

Exam 9: The End of the Contractual Relationship

Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach?

To what does the "construction approach" refer?

What is the three-part test for determining if novation has occurred?

A breaching party is responsible for all lost profits flowing from a breach of contract.

Tufts and McDougal were having an argument about the law regarding performance of a contract. Which one of the following statements of theirs is correct?

When an outside, unforeseen event interferes with the performance of a contract, and there is some other way to fulfill the contract, performance is required.

In all but one of the following situations, the contract is frustrated. Identify the exception.

The case of Sail Labrador Ltd. v. Challenger One (The) involved an option to purchase and a breach of a contract that was inconsequential and immediately corrected. What did the Supreme Court of Canada hold?

Which one of the following statements accurately describes the operation of a condition precedent?

For a contract to be ended by agreement, there must be consideration as well as agreement on both sides.

Legal tender in Canada consists of government-produced coins and bills of any amount or quantity.

Discuss the equitable remedies that were developed in contract law and why they were necessary.

All rules of contract formation apply when parties agree to discharge a contract.

An agreement to end a contract, with extra consideration to be supplied by the party benefiting from the discharge, is known as ________.

What is the result of a repudiation?

Sam agreed to purchase and Joe agreed to sell a brand new Chrysler 300M that was displayed in "Joe's Fine Cars" showroom. But instead of delivering it to Sam, Joe sold it to another customer who offered him more money. Which of the following is the appropriate remedy in these circumstances?

Explain how a contract can be discharged by agreement.

Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance.

If a contract states that the contract is "subject to the purchaser obtaining financing for $10,000 at 8% by 5:00 p.m. Friday, March 11," it means that