Deck 14: The Effect of Breach

Question 1

Which of the following is NOT true about how a breach may occur?

A) Jack may breach a contract by failing to perform all his obligations.
B) Jack may breach a contract by tendering an actual performance that falls short of his promise.
C) Jack may breach a contract by expressly repudiating his liabilities.
D) Jack may breach the contract by acting in a manner that makes his promise impossible to perform.
E) Jack may breach a contract by calling James and advising him that he will be ten minutes late in arriving at the home of James to start painting the home.

Answer 1

E

Question 2

Jack purchases a train ticket Toronto. During the journey there is small fire and his luggage is destroyed. Jack approaches the owners of the train and requests some compensation for his loss. He is told that the company is not liable for such losses. The public relations person to whom Jack speaks draws Jack's attention to an exemption clause behind Jack's ticket. Which of the following is true about the effect of the exemption clause?

A) A court will say that the exemption clause is only effective if Jack was provided adequate notice of the clause.
B) A court will say that Jack signed the contract and so the clause is effective to bind him.
C) The court will impose punitive damages on the corporation to punish it for its unfair attempt to limit liability.
D) The exemption clause is not part of the contract between Jack and the corporation and so it is ineffective.
E) A court will say that the exemption clause is too broad and so is ineffective.

Answer 2

A

Question 3

Courts have generally held that an exemption clause

A) will exempt a party who seeks to rely on it from liability in all situations.
B) will not excuse a fundamental breach.
C) is acceptable in a unilateral contract.
D) is unacceptable in a bilateral contract.
E) can be relied upon against all breaches.

Answer 3

B

Question 4

A minor beach is

A) a breach of a minor obligation of the promisee.
B) a breach of a minor obligation of the promisor.
C) an insignificant breach by the defendant that is ignored by the plaintiff.
D) a breach that is so insignificant the courts will not interfere when there is a breach.
E) a breach of a non- essential term of the contract or of an essential term in a minor respect.

Question 5

An injured party cannot elect to treat a breach as discharging him or her from its obligations under a contract unless

A) the breaching party suffers financial loss.
B) the innocent party suffers financial loss.
C) it is of the whole contract or an essential part of the contract.
D) the the breaching party elects to treat the breach as discharging him or her from contractual obligations.
E) the breach causes physical injury.

Question 6

Exemption clauses are

A) strictly construed by the courts against the party that seeks to rely on them.
B) not used in contracts for the sale of goods.
C) not considered by courts.
D) strictly construed by the courts against the parties for whom they are drawn.
E) not used in employer- employee contracts.

Question 7

A breach will discharge a contract if

A) the breach is of the whole contract or an essential part of the contract.
B) the innocent party suffers significant financial loss.
C) the breach causes injury to the innocent party.
D) the breaching party decides to abandon its obligations under the contract as a result of the breach.
E) the injured party elects to treat it as discharging the contract.

Question 8

A warranty is

A) a guarantee contained in a contract regarding the performance of an obligation.
B) an essential term of a contract that guarantees the performance of an obligation.
C) a guarantee of performance given by one party to another.
D) a non- essential term of a contract.
E) a non- essential term of a contract that guarantees the performance of an obligation.

Question 9

A breach of contract may be criminal

A) when a party breaks a contract with the knowledge that the action will endanger human life.
B) when the contract between the parties is a criminal conspiracy or agreement to commit a crime.
C) when the promisor commits a criminal offence that is related to the contract.
D) when the parties to a contract enter into an agreement with a known criminal.
E) when the promisee commits a criminal offence that is connected to a contract.

Question 10

Jack agrees to paint the home of Jim. During the negotiations Jim leads Jack to believe that he is in some financial predicament and so cannot pay the full fee. Jack agrees to give him a discount because of his predicament. A few days before Jack is due to perform he learns from a source that Jim is a very wealthy man. Jack decides that because he has been tricked he will not honour his obligation to paint the home. He gives away all his tools and equipment and tells Jim that he cannot paint the home because his tools have been stolen. Jack's conduct is

A) a breach of contract because Jack's conduct renders performance impossible.
B) a breach of contract by implied repudiation.
C) not a breach of contract.
D) a breach of contract by express repudiation.
E) a breach of a condition.

Question 11

A clause that exempts a party from liability for failing to perform some or all of its contractual obligations is called

A) a liability exempting clause.
B) a collateral clause.
C) an exemption clause.
D) a limitation clause.
E) an exempting clause.

Question 12

A condition is

A) a term of a contract that must be fulfilled by the promisee.
B) a contractual obligation that must happen before another can take place.
C) a contractual event that must take place before another can happen.
D) a fundamental event that must be fulfilled before another can happen.
E) an essential term of a contract.

Question 13

The effect of the doctrine of substantial performance is that

A) where there is substantial performance a court will not entertain a suit for damages for breach of contract.
B) the promisor who has substantially performed a contract is entitled to damages.
C) where there is substantial performance, a court will entertain a suit for damages for breach of contract.
D) a promisee cannot seize upon a trivial failure of performance to avoid his or her obligations under a contract.
E) the promisee who has substantially performed a contract is entitled to damages.

Question 14

In situations where an exemption clause appears too be so broad as to shield the wrongdoer from liability,

A) the courts have determined that the clause is effective to protect the wrongdoer.
B) the courts have declared that the exemption clause amounts to an anticipatory breach of the contract.
C) the courts have declared the exemption clause to be void.
D) the courts have characterized the breach as a fundamental breach and have argued that the exemption clause does not cover a fundamental breach.
E) the courts have declared that the exemption clause is too broad and thus not part of the contract.

Question 15

Jack as a contract to deliver goods to Jim on June 2, 2003. On the morning of June 2, 2003, Jack tells Jim that he will not be able to deliver the goods as promised. This is

A) a warranty.
B) an express repudiation of the contract.
C) a minor breach.
D) an implied repudiation.
E) a rescission of the contract.

Question 16

Jack has a contract to deliver goods to Jim on June 2, 2003. On May 31, 2003, Jack calls Jim and advises him that he cannot deliver the goods on June 2, 2003. This is

A) an early breach
B) an anticipatory breach.
C) an early termination.
D) an implied repudiation.
E) a rescission.

Question 17

An exemption clause in a contract can protect a party from liability for:

A) breach of contract
B) damages
C) negligence
D) deliberate acts of employees
E) all of the above

Question 18

A breach of a minor term in a contract

A) does not entitle an aggrieved party to damages.
B) does not entitle an aggrieved party to abandon obligations under a contract.
C) amounts to a frustration of the contract.
D) will enable an aggrieved party to elect to treat the breach as discharging the contract.
E) amounts to a termination of the contract.

Question 19

A party who signs a contract will not be bound by an exemption clause:

A) that is not drawn to the party's attention
B) that is not under seal
C) that the party did not notice
D) that is surprising and onerous
E) when A and D apply

Question 20

Between the time when a contract is formed and the date of performance, a promisee is entitled to

A) notice of any intention on the party of a party to breach the contract.
B) notice of all conditions and warranties.
C) a continuous expectation of performance.
D) performance of the warranties.
E) notice of any anticipatory breach.

Question 21

Damages are not available for an anticipatory breach because the time for performance has not arrived.

Question 22

Courts have generally held that an exemption clause will not excuse a fundamental breach.

Question 23

Where an exemption clause is so broad that it protects a wrongdoer from liability, the courts have usually declared the breach to be a fundamental breach.

Question 24

A breach of a minor term will not discharge a contract, but a major major term that is broken in only a minor respect will discharge a contract.

Question 25

Which of the following is not true?

A) A breach of contract may be criminal when it is done with the knowledge that the action will cause mental distress to the other party.
B) A breach of contract may be criminal when it is done with the knowledge that the action will expose valuable property to damage.
C) A breach of contract may be criminal when it is done with the knowledge that the action endanger human life.
D) A breach of contract may be criminal when it is done with the knowledge that the action will deprive inhabitants of their supply of gas and power.
E) A breach of contract may be criminal when it is done with the knowledge that the action will cause bodily harm.

Question 26

Michael's Shop has a standard from contract that includes an exemption clause. Michael enters into an agreement with Jill. Jill signs the agreement without reading it because she says she trusts Michael. When Michael fails to perform his part of the agreement, Jill tries to sue. The court in considering the effect of the exemption clause, will most likely

A) require that experts provide it with a report on the effect of the clause.
B) apply the clause.
C) refuse to apply the court.
D) strictly construe the clause against Michael.
E) seek the opinion of Jill on how the clause will affect her.

Question 27

A breach can have the effect of terminating a contract. However, not every breach may discharge a contract.

Question 28

Where a court finds that a breach is a fundamental breach, an exemption clause will be treated as ineffective to excuse the breach.

Question 29

Exemption clauses are generally strictly construed against the party that is not seeking to rely on them.

Question 30

The doctrine of substantial performance says that there will be rescission if each party does not substantially perform its obligations under the contract.

Question 31

Michael's Shop has a standard form contract that includes an exemption clause. What must Michael do to ensure that the use of the exemption clause is accepted by a court as proper?

A) Michael must enter into a collateral agreement with any person regarding the clause.
B) Michael must not use the exemption clause. .
C) Michael must modify the clause.
D) Michael must bring the exemption clause to the attention of any person with whom he seeks to enter into a contract.
E) Michael must notify the court of his use of the exemption clause before he enters into the contract.

Question 32

A major breach amounting to a repudiation of a contract will only occur at the commencement of a contract and not later.

Question 33

Where a contract contains an exemption clause, and a party in breach seeks to avail itself of the clause, the courts will most likely permit the party in breach to shelter under the clause.

Question 34

What is an express repudiation?

Question 35

The problems created by a failure of performance, arise typically

A) when a party is notified of the other's failure to perform.
B) as the parties enter into a collateral contract.
C) when the promisee is about to perform.
D) when the agreement is executed.
E) only when the time for performance arrives or during performance.

Question 36

Where a person has a contractual obligation, he or she has to perform the whole obligation before being entitled to enforce the contract. He or she cannot perform part of the obligation and then seek to enforce the contract.

Question 37

Where the courts have been faced with an exemption clause that exempts a breach that is so serious that it defeats the whole purpose of the contract, the court, to prevent the party in breach from sheltering behind the exemption clause,

A) interpreted the contract without the exemption clause.
B) have required that the party in breach pay a fine.
C) have awarded damages to the aggrieved party.
D) have classified the breach as a fundamental breach
E) have classified the breach as an anticipatory breach.

Question 38

Which of the following is not true?

A) If a breach is of a fundamental term, the party not in breach is still bound but the party committing the breach may elect to discharge the contract.
B) A major term may be broken in only a minor respect.
C) If a breach is of a minor term, the contract is still binding on both parties.
D) Not every breach may distract a contract.
E) A party to a contract may breach it by acting in a way that makes performance impossible.

Question 39

If one party breaches a condition of a contract, the other party will generally be entitled to repudiate the contract.

Question 40

Which of the following is not a reason why exemption clauses are attractive?

A) They enable a supplier of goods and services to keep its prices low because there is no need to increase prices to cope with risk.
B) If the supplier is sued for damages. it can completely disclaim liability.
C) The supplier is able to enter into a contract with a third party.
D) If the supplier uses a standard form contract it will have an advantage over the other party because it can prepare the form to suit itself.
E) all of the above

Question 41

A party to a contract has a continuous expectation of performance. Explain.

Question 42

What is an anticipatory breach?

Question 43

Explain the ways in which a party to a contract may break the contract.

Question 44

Explain the attitude of the courts towards the use of exemption clauses.

Question 45

Describe why the doctrine of substantial performance is of practical importance?

Question 46

What is an exemption clause? Explain the attitude of the courts towards exemption clauses.

Question 47

Buildco Limited enter into a contract that has an exemption clause. Buildco's employees, during the course of constructing the home of Jack, fail to exercise care as a result of which the home is damaged and Buildco is liable to Jack. Will Buildco be able to rely on the exemption clause?

Question 48

Explain the notion of continuous expectation of performance.

Question 49

What is a fundamental breach, and how can it affect a contract?

Question 50

A party to a contract may break the contract in various ways. Explain.