Deck 5: Making Enforceable Business Agreements

Question 1

Which of the following contracts does NOT have to be in writing to be valid?

A)the sale of a $200,000 painting
B)a third party guarantee of another person's debt
C)a marriage contract
D)a 4 year lease of an apartment
E)all of the above must be in writing to be valid

Answer 1

A

Question 2

Seth, a very mature looking 16 year old, against his parents' wishes, bought a motorcycle for $3,000 from Mike's Bikes. The contract called for 12 monthly payment of $250. After three months, Seth decided to cancel the contract. Which of the following statement is TRUE?

A)Seth's parents will be responsible for the balance of the payments.
B)Seth must return the motorcycle and is then entitled to a full refund of his money.
C)Seth must honour the contract because Mike honestly believed him to be over the age of majority at the time the contract was made.
D)Seth must return the motorcycle and is entitled to a refund of his money subject to some reasonable rental payment for the time the motorcycle was used.
E)Seth may not cancel the contract because he has used the motorcycle for three months.

Answer 2

D

Question 3

Which of the following contracts MUST be in writing to be legal?

A)a sale of a $50,000 car
B)a two year lease of a photocopier
C)an office pool to buy lottery tickets
D)a sale of a condominium
E)all of the above contracts must be in writing to be legal

Answer 3

D

Question 4

Which of the following statements is TRUE?

A)A minor can never make a contract.
B)Parents are liable for their children's contracts.
C)A minor can make a contract for necessities (necessaries).
D)If an adult honestly believes a minor is over the age of majority, the contract is binding on the minor.
E)If a minor pays the contract price in full, the contract is valid.

Question 5

Which of the following contracts would be illegal in Ontario?

A)the TD Bank charging a risky customer 64% annual interest rate on a 3 year $20,000 car loan
B)Money Mart charging an unemployed man 320% annual interest rate on a 2 week $300 loan
C)the Royal Bank charging an illegal immigrant 50% annual interest rate on a 2 year $10,000 loan
D)Money Mart charging an unskilled woman 500% annual interest rate on a 3 week $600 loan
E)All of these contracts would be illegal in Ontario

Question 6

Which of the following is NOT a necessary element in forming a contract?

A)Consideration
B)Legality
C)Fairness
D)Capacity
E)Consensus

Question 7

Which of the following statements is FALSE? Pay day loans

A)usually involve small loans for short periods of time
B)require some companies to guarantee their employee's loans until their next pay cheque is issued
C)can legally exceed criminal code maximum interest rate limits
D)are regulated by provincial laws
E)can legally charge interest rates in excess of 500% in some parts of Canada

Question 8

Which of the following contracts are void for illegality?

A)A contract to falsely testify in court that the accused was with you when he allegedly committed the crime.
B)A contract to provide sexual services for money
C)A contract to knowingly sell electrical machinery that is not CSA approved
D)A contract that charges an annual interest rate of 65%
E)All of the above

Question 9

Which of the following statements is FALSE?

A)most contracts should be in writing to avoid later conflicts
B)office lottery pools require a written contract to create valid legal rights
C)a contract for the ownership of a time-share condominium must be in writing to be valid
D)contract for the sale of a boat does not have to be in writing to be valid
E)even if both sides in a contract agree to all the terms, a court may rule the contract is illegal

Question 10

Which of the following statements about minors' contracts is TRUE?

A)Food is always a necessity (necessary).
B)If a minor buys a necessity (necessary)and overpays, there is nothing the minor can do about it.
C)If a student is a minor when taking out a student loan, she won't have to pay it back, but her parents might.
D)If a minor signs a contract for a cell phone, the courts will not let the minor out of the agreement.
E)None of the above

Question 11

Which of the following statements is FALSE?

A)a contract for the sale of a house must be in writing to be valid
B)most contracts must be in writing to be valid
C)a mortgage on a condominium must be in writing to be valid
D)it is always a good idea to put a contract in writing even it is not a legal requirement
E)on-line contracts are legally valid contracts

Question 12

Karl worked for Gravo Inc. and over 5 years he always put money into the weekly office lottery pool. One day when Gina was collecting the money to purchase the lottery tickets that week she asked Karl for his $5.00 contribution. Karl told Gina he left his wallet at home that morning and asked her to put in $5.00 for him and he would pay her back. Gina agreed. Gina collected money from the other 8 regular lottery players in the office and she bought 10 lottery tickets. When the winning number was drawn the Gravo workers had the winning ticket worth $20 million. Karl was excited as he thought he had just won his one -tenth share worth $2 million. The other 9 workers said Karl was not entitled to any money as he had not contributed that week. If Karl goes to court to get the $2 million he claims most likely a court would

A)rule Karl will get no money as there was no written contract
B)rule Karl will get no money as he did not put in the $5.00 that week
C)require Karl prove beyond reasonable doubt he a valid contract with Gina to get the $2 million
D)rule Gina owes Karl $2 million but not the other 8 workers in the office pool
E)require Karl prove on the balance of probabilities he had a valid contract with Gina to get the $2 million

Question 13

Mr. Jones agrees to buy a tractor from Monster Tractor Ltd. With Monster's consent, he backdates the contract and the cheque so he can claim the expense in the previous tax year. Monster is late in delivery, so it agrees to pay interest on the purchase price until Jones receives the tractor. After delivery, Monster refuses to pay the interest, and Jones sues. Which of the following statements is TRUE?

A)The contract is enforceable. Its purpose was to buy and sell a tractor, and there is nothing illegal about that.
B)The contract is enforceable. There was an illegal purpose to the original agreement, but it had nothing to do with the agreement to pay interest.
C)The contract is enforceable. While it is true that Jones was attempting to cheat on his taxes, and Monster was knowingly assisting him, as between the two of them one is no better than the other.
D)The contract is unenforceable. There was an illegal purpose to the original agreement, to cheat Revenue Canada so it also made the agreement to pay interest unenforceable.
E)Both B and C

Question 14

Jessica was visibly drunk when she went into a local store and an aggressive salesman saw she was drunk and got Jessica to sign up for an expensive 2 year cell phone plan. Jessica used the phone for a week and then knew she couldn't afford it. She went to the store and said she wanted to cancel the contract because when she made the contract she was drunk. Most likely a court would rule that

A)the contract is void as Jessica was drunk at the time she made the contract
B)the contract is void as Jessica lacked the capacity to contract
C)the contract is void because the salesman knew Jessica was drunk when she made the contract
D)All of the above
E)the contract is valid and if Jessica does not pay she will be liable for breach of contract

Question 15

Chelsea Bridge is 16 years old, but looks 21. She buys an expensive television for $2,000 on credit, telling the salesperson that this is her 21^st birthday present to herself. The salesperson honestly believes her. She makes two payments of $100 each, and then can't pay any more. The store sues her for the balance owing. Which of the following is TRUE?

A)Because Chelsea looks over 21, the contract is enforceable against her.
B)Because Chelsea lied about her age, the contract is enforceable against her.
C)The contract is not enforceable against Chelsea because she is a minor.
D)The contract is enforceable only in the province of Quebec.
E)Both A and B

Question 16

Arnie Stoltz, a 16-year-old living in British Columbia, had had enough of high school. He approached Suzanne Vegan, a 55 year old master chef, to teach him how to be a chef. Suzanne charges $10,000 a year for the two year training program and agreed to allow Arnie to pay her the full amount one year after he completed the program. When Suzanne called on Arnie a year after he completed the training to collect the money, Arnie said he wouldn't pay a cent because he had been a minor when he signed the contract. Which of the following statements best describes Suzanne's legal position in this matter?

A)Arnie must pay because he is no longer a minor.
B)Arnie must pay because a minor must honour a contract for necessities (necessaries).
C)An apprenticeship contract is considered a necessity (necessary)and can be enforced against Arnie.
D)If Suzanne proves the apprenticeship contract was beneficial to Arnie he will have to pay a reasonable price for it.
E)Suzanne must only prove the apprenticeship contract was to Arnie's benefit to get her money

Question 17

Which of the following is TRUE?

A)A contract with a mentally incompetent person is always enforceable.
B)A mentally incompetent person can only get out of a contract if the other party knew, or should have known, of the incompetency at the time of entering into the contract.
C)The law of capacity applies to drunkenness as well as mental incompetency.
D)A person who is using illegal drugs at the time they made a contract cannot use that as a reason to get out of a contract they have made
E)Both B and C

Question 18

Which of the following statements about contract law is TRUE?

A)Anyone can make a contract.
B)A person can make a contract to do anything.
C)Every agreement is a contract.
D)Standard form contracts are regularly used by businesses and consumers.
E)All of the above.

Question 19

Bob Gates, aged 16, looks 19. He is also mentally incompetent, but it is not obvious that he is. Bob buys a top of the line computer from a salesperson, who has no idea that he is under age and incompetent. Bob paid $3,800 cash for the computer. On what grounds can Bob cancel the contract?

A)Mental incompetency alone
B)Because he is a minor
C)Because he paid cash for the computer
D)Both A and B
E)A, B and C

Question 20

Mark was visibly drunk when he went into a local store and an aggressive salesman saw he was drunk and got Mark to buy a new expensive stereo system. The next day when Mark became sober he realized he could not afford it so he went to the store and said he wanted to cancel the contract. As a result a court would rule that

A)the contract is valid and if Mark does not pay he will be liable for breach of contract
B)the contract is void as he cancelled within the 10 day cooling off period
C)the contract is void as Mark lacked the capacity to contract
D)the contract is void as Mark was drunk at the time he made the contract
E)both C and D

Question 21

On Monday Troy agrees to sell his computer to Kim for $2,000 if she accepts by noon on Wednesday. On Tuesday Kim phones Troy and says, "I'll give you $1,500 for it." Troy says no. On Wednesday at 11:00 a.m. Kim phones and says, "Okay, I'll take your computer for $2,000." Troy says, "Sorry, I just sold it to Natasha." Which of the following statements is TRUE?

A)The offer was open until Wednesday at noon so Troy can be successfully sued by Kim
B)The response "I'll give you $1,500 for it." cancelled Troy's offer
C)Natasha can be sued by Kim to recover the computer
D)Both A and C
E)None of the above

Question 22

On Monday, Rod said to Tanya that she could buy his car for $5,000. Tanya said that she'd like a few days to think it over. Rod answered that he would hold the car for her until Friday. When Tanya turned up at Rod's home on Friday, Rod told her he'd sold the car to Lenny on Thursday for $5,250. Now Tanya wants to sue. Will she be successful?

A)Yes, because Rodney promised not to sell the car till Friday.
B)Yes, because Tanya had conditionally accepted Rodney's offer
C)No, because Tanya gave no consideration for the promise to hold the car until Friday.
D)No, because the agreement to hold the car until Friday was not put in writing.
E)No, because Leroy made a better offer.

Question 23

Ron owned and operated a pet shop in the city of Winnipeg that specialized in the sale of exotic birds. Grant offered to purchase Ron's Pet Shop for $20,000. One term of the purchase contract required Ron not to open another pet shop or deal in the business of buying and selling exotic birds within the province of Manitoba for a period of 10 years. Which of the following statements is TRUE?

A)A contract containing a clause of this nature is presumed to be against public policy and unenforceable.
B)The presumption of unenforceability for a clause of this nature can be overturned if the restrictions put on Ron are proven to be against city by-laws.
C)Ron must have some special skill or represent major potential competition to new business - and the restrictions must be reasonable - for the presumption that the clause is against public policy to be overturned.
D)Both A and B
E)Both A and C

Question 24

Which of the following is normally considered an essential term of a contract?

A)The subject matter
B)The price
C)The terms of payment
D)Both A and B
E)All of the above

Question 25

Dorothy Rache listed her house for sale at $200,000. Linda Bugowski presented her with the usual real estate agreement form with a purchase price of $180,000. Dorothy crossed out the $180,000 and replaced it with $190,000. Linda initialed the changes and added "plus the drapery". In legal terminology:

A)The listing of the house for sale is called an offer.
B)The return of the agreement by Dorothy with the purchase price changed to $190,000 is called an offer.
C)The initialing of the change by Linda and the additional drapery clause is an acceptance.
D)Both B and C
E)None of the above

Question 26

Which of the following statements is TRUE?

A)A "sign back" is called a counter-offer in law.
B)When a seller signs an offer submitted by a purchaser, this is called acceptance.
C)An option is simple another term for offer.
D)Both A and B
E)All of the above

Question 27

A house is listed for sale. In the law of contract, this listing is called:

A)An exposure for sale.
B)A capacity
C)An offer
D)A brokerage
E)An invitation to treat

Question 28

Ravi makes an offer to buy Abdul's house. The offer is conditional upon Ravi arranging financing. Before the offer expires, Ravi finds another house more to his liking. He makes no effort to arrange financing for Abdul's house. Can Abdul sue Ravi for breach of contract?

A)No. The offer was conditional on Ravi obtaining financing, and he didn't.
B)No. The condition could have been waived, but it wasn't.
C)Yes. Ravi was obliged to make a good faith attempt to fulfill the condition, and clearly he didn't, so he cannot rely on the condition not being met.
D)Yes. This condition was against public policy and therefore Ravi could not rely on it.
E)Yes. Abdul waived the condition, so Ravi cannot rely on it.

Question 29

Shares in Bonanza Inc. are trading at $100 per share on January 20. Gordon Gecko purchases a 10 day option for $1,000, to buy 50 shares of Bonanza at $100. Which of the following statements is FALSE?

A)On January 30, shares in Bonanza are $120. If Gecko exercises his option, he will have broken even.
B)On January 30, Bonanza has gone down to $80. Gecko does not exercise his option. He has lost $1,000.
C)There is no change in the price of the shares between January 20 and 30. If Gecko exercises his option, he will have broken even.
D)There is no change in the price of the shares between January 20 and 30. Gecko declines to exercise his option. He has lost $1,000.
E)Both C and D

Question 30

In the case of UBS Securities Canada v. Sands Brothers Canada, the court held that:

A)There was not an enforceable agreement because the agreement to sell the shares was not in writing.
B)There was not an enforceable agreement because some terms were expressly left to be decided later.
C)There was not an enforceable agreement because there was no consideration.
D)There was an enforceable agreement because all the essential terms were included.
E)There was not an enforceable agreement because the price of the shares had changed significantly after the initial offer to purchase was made

Question 31

The test the courts use to determine if the parties had actually made a binding contract even though the agreement was badly written and some non-essential terms were missing is

A)the reasonable person test
B)the objective reasonable bystander test
C)a subjective test
D)the Red Pencil test
E)a consideration test

Question 32

Which of the following will NOT end an offer to sell a car?

A)The offeror dies.
B)The notice says the offer is open for two weeks and the two weeks expire.
C)A counter-offer is made
D)The car is destroyed in a car accident
E)All of these events can end an offer to sell a car

Question 33

Franklin offered to sell his text book to Delia for $40.00 and told her he wanted an answer by Friday. Which of the following must Delia do to ensure that Franklin will have the book on Friday afternoon if she decides to buy it?

A)Confirm the arrangement with Franklin to make sure they both understand it is to be kept open until Friday.
B)Have Franklin commit his offer by writing it on paper and signing it.
C)Give Franklin something to keep the offer open until Friday.
D)Commit to a specific time and place at which to meet Franklin to give him an answer.
E)Have Franklin repeat his offer before a witness.

Question 34

Cliff agrees with Sarah to extend the closing date of the purchase of his house for one week. Sarah agrees to pay Cliff $1,000 for this extension. This extension term is called:

A)an offer.
B)an option
C)a conditional term
D)an acceptance
E)an extension offer

Question 35

Ted offers to sell his car to Frank for $3,000 cash, offering to deliver the car in two days. Frank responds, "It's a deal, here's a thousand now and I'll pay the other $2,000 in a week." In this situation, which of the following applies to Ted?

A)He has a binding contract as a result of Fred's acceptance.
B)His offer was rejected by Frank.
C)He must decide whether to accept Frank's counter-offer
D)He must decide whether to accept Frank's conditional offer.
E)Both B and C

Question 36

To be enforceable, an agreement that restricts a person's right to earn income must be:

A)Necessary to protect the business
B)Restricted to a one mile radius
C)Not against the public interest
D)Both A and C
E)All of the above

Question 37

Paul agrees with William (who accepts)to purchase William's house if Paul can arrange a mortgage for $250,000 in 30 days. The term regarding the mortgage arrangement is called:

A)An option to purchase.
B)An offer to purchase.
C)A conditional term
D)A real estate tender
E)A counter-offer

Question 38

Dorothy Rache listed her house for sale at $200,000. Linda Bugowski presented her with the usual real estate agreement form with a purchase price of $180,000. Dorothy crossed out the $180,000 and replaced it with $190,000. Linda initialed the changes and added "plus the drapery". In legal terminology:

A)The listing of the house for sale is called an invitation to treat.
B)The return of the agreement by Dorothy with the purchase price changed to $190,000 is called a counter-offer.
C)The initialing of the change by Linda and the addition of the drapery clause is an acceptance.
D)Both A and B
E)All of the above

Question 39

Diane Leblanc is shopping at Metro in the middle of February and sees a sign saying that raspberries are only $1.29 a package. She is very pleasantly surprised. She takes two packages to the cash, where the cashier informs her that the sign was a mistake and that the price is actually $4.79. Which of the following is correct?

A)Diane has offered to pay $1.29 for the raspberries but Metro (through the cashier)has not accepted her offer. There is no contract.
B)The display of the raspberries with a sign indicating their price is an invitation to treat. It is only the first stage in the bargaining process leading to a contract.
C)Although logically Metro has made an offer to sell the raspberries for $1.29, because of the likelihood of errors like this being made, the law makes an exception for retailers and says that it has not.
D)Both B and C
E)All of the above

Question 40

The best synonym for "consensus" is the following

A)Consideration
B)Convenience
C)Agreement
D)Stare decisis
E)Negotiation

Question 41

Which of the following statements is FALSE? An option

A)is used to keep an offer open to a specific date
B)is a counter offer
C)usually involves the payment of money
D)prevents an offer from being revoked
E)is frequently used by people who want the opportunity to buy shares in a company at a specific price for a certain period of time

Question 42

In the law of contract, consideration means:

A)Courtesy
B)Respect
C)Performance
D)Discharge
E)Value

Question 43

Which of the following factors will NOT be relevant to a court's determination of whether a contractual provision which places restraints on the ability of an employee to open up a rival business to that of the employer is valid?

A)Whether the restraint is against the interests of the public
B)That the restraint clause is necessary to protect the business
C)Whether the employee has received independent legal advice prior to agreeing to the restriction
D)Whether the restrictions on time etc. are no greater than are needed to protect the business
E)All of the above are relevant considerations.

Question 44

Which of the following actions does NOT constitute an 'offer'?

A)A homeowner advertises his house for sale with an asking price of $450,000
B)A customer selects a grocery item from a shelf and presents her credit card to the cashier as payment for it
C)A person places an ad on Kijiji to sell a motorcycle for $3,800
D)A storeowner displays cheese for sale with a price tag of $4 per package
E)All of the above are valid offers

Question 45

Which of the following does NOT have a cooling off period in Ontario? A contract for

A)dance lessons
B)luggage made by a door-to door salesperson
C)a time-share condominium
D)a pre-paid funeral
E)a used car

Question 46

Which of the following statements is TRUE?

A)If no time limit is set an offer expires within a reasonable amount of time
B)A failure to reject an offer is in law an acceptance.
C)Merely clicking on the "I accept" button of an offer made by computer is binding acceptance.
D)Once the offeree has made a decision to accept an offer, there is a binding contract.
E)An oral acceptance is valid in an agreement to purchase real estate

Question 47

Maja was hired by a print shop to create a series of four advertisements to be used in its marketing campaign. Maja was to receive $2,000 for her work. The shop was so satisfied with the first three advertisements that it agreed to pay Maja the entire $2,000 for those three. Elated, Maja immediately booked a trip to Paris. The print shop later decided it shouldn't have been so generous and brought an action against Maja for breach of contract and demanded the completion of the fourth advertisement. What is Maja's best defence?

A)The Statute of Frauds.
B)Promissory estoppel
C)Lack of intention
D)No consideration
E)Bad faith

Question 48

Legislation in some provinces has made changes to contract law for the benefit of the consumer. Which of the following is an example of a consumer protection law?

A)The provisions for electronic (i.e., by computer)acceptance of an offer.
B)The banning of negative option marketing - i.e. the practice of making a consumer "opt out" of a contract.
C)The enactment of a cooling off period, allowing a purchaser to back out of a contract if he changes his mind within a specific period of time
D)Both B and C
E)All of the above

Question 49

Tom Shanks sign a contract to make a film for GMG Pictures for $20,000,000. The contract was not under seal. Part way through filming, he gets an offer to make another film for even more money, but production is starting immediately. He tells GMG he requires another $2,000,000 to complete their picture, or he'll walk. Is GMG legally bound to pay?

A)Yes. GMG cannot rely on their promise to pay $20,000,000. That is past consideration.
B)Yes. Preventing Shanks from taking the other job is restraint of trade.
C)Yes. Because the contract was not under seal, the consideration flowing from GMG was not valid.
D)Yes. Shanks can rely on the doctrine of detrimental reliance: he relied, to his clear ability to make another picture.
E)No. Shanks was given consideration to make the picture for GMG and has no right to demand more money now.

Question 50

In which of the following scenarios would the contract likely NOT be enforced against the minor involved?

A)Janice, a minor enrolls in a cosmetology school and signs a tuition fee payment agreement
B)Samantha, a minor buys grocery items from the local supermarket
C)Jasper a minor buys clothing from the Gap for college
D)Toby a minor, buys a sports car from Thunder Motors Limited.
E)Kyle, a minor and renowned hobbyist, signs up for sky-diving lessons and promises to pay the relevant fees in installments

Question 51

Laura was employed by Style Unlimited a noted fashion house in Toronto as a fashion stylist. Her contract of employment with the company provided that upon leaving the employment, she is prohibited from opening up a rival business for the next ten years in any part of Canada. Laura has recently moved to Vancouver and plans to open up her own fashion company. Which of the following is correct?

A)The restraint will only be enforced if Style Unlimited can prove that Laura received independent legal advice prior to agreeing to it.
B)The restraint will be strictly enforceable against Laura unless she can prove that it is not in her best interests.
C)A court will likely find the restraint unreasonable
D)Laura can be restrained from opening up her own business
E)The restraint will not be enforceable against Laura unless Style Unlimited can show that it is in its best interests.

Question 52

Which of the following statements is TRUE?

A)If acceptance is communicated by letter, then it occurs as soon as the letter is properly posted, provided it was reasonable to use mail in the circumstances.
B)If acceptance is communicated by fax, then it occurs as soon as the fax is transmitted.
C)If acceptance is communicated by e-mail, then it occurs as soon as the email is transmitted.
D)Both A and B
E)All of the above.

Question 53

A company sells a software package to a purchaser. The package contains a licence agreement, which the purchaser does not see until she has paid for and received the package. The agreement, however, states that the purchaser may return the package if she does not accept the terms of the licence. If the purchaser keeps the software, is she bound by the terms of the licence agreement?

A)No. The seller has not given any consideration for the buyer's promise to be bound by the agreement.
B)Yes. Although there has been no consideration, the provision allowing return of the goods creates an exception recognized by the law to the requirement for consideration.
C)No. The seller cannot unilaterally impose terms on the purchaser. The seller did not agree to the licence agreement when she purchased the package.
D)The answer depends on the adequacy of the consideration which a court would find was given.
E)The answer depends on whether the case is characterized as governed by the skrink-wrap rule or the click-wrap rule.

Question 54

Which of the following statements is TRUE? In Ontario there is a cooling off period

A)for any consumer contract
B)of 10 days for a purchase of a new house
C)of 10 days for a fitness club membership
D)of 10 days for a pay day loan for $300
E)All of the above

Question 55

Which of the following contracts will likely be enforced by the courts?

A)a contract to lease a basement apartment in an area that does not allow basement apartments
B)a contract to distribute child pornography
C)a contract to provide services to a terrorist organization
D)a $500 pay day loan in Ontario that charges a 400% annual interest rate
E)None of the above contracts would be enforced by the courts

Question 56

Which of the following statements is FALSE with respect to contracts?

A)The parties to a valid contract must have the legal capacity to contract
B)Each party to the contract must offer consideration
C)The purpose of the contract must not be for an illegal object
D)Each party to the contract must have a serious intention to create a contract
E)All of the above

Question 57

Mary, an illegal immigrant, orally agrees to pay Michael $10,000 for him to marry her so that she can stay in the country. If Michael sues to enforce the promise, which of the following will be TRUE?

A)Michael will not be able to enforce the agreement unless he can show that he has performed his side of the bargain
B)The agreement is unenforceable
C)The agreement is fully enforceable
D)The agreement will only be enforceable if Michael can use independent witnesses to prove the existence of the contract.
E)As the agreement was made orally it is not enforceable.

Question 58

What is the legal effect of a counteroffer?

A)It destroys the original offer
B)It imposes new terms into a contract:
C)It is an act of repudiation of a contract
D)It is an act of acceptance of an existing offer
E)It creates a secondary offer

Question 59

Which of the following is NOT a relevant consideration in a court's decision to void a contract made with a mentally incompetent person?

A)That the impairment was so serious so that the person did not understand the nature and consequences of his actions.
B)That the contract is not one for necessities
C)That the other party knew of the impairment at the time the contract was made
D)That the agreement was cancelled within a reasonable time by the drunk or mentally incompetent person.
E)That the price paid under the contract was high

Question 60

Sarah agrees with her sister Anna that if she wins the lottery this week, she will share the prize with her. In exchange, Anna makes dinner that night. Which of the following statements is TRUE?

A)This is a contract, and there is a presumption that parties to a contract intend to be bound by it.
B)Because this is a contract between family members, there is also a contrary presumption that the parties did not intend to be bound.
C)If Sarah wins the lottery and refuses to give Anna half, Anna will have to show that a reasonable person in her position would have believed that Sarah intended to be bound by her promise.
D)Both A and C
E)All of the above

Question 61

In which of the following instance will a contract not supported by consideration be enforceable? When the contract

A)gives a benefit to a child
B)concerns a sum of money in excess of $5000
C)is made under seal
D)concerns a sum of money in excess of $10,000.
E)parties have the requisite intention to create legal relations

Question 62

What is a gratuitous promise?

A)a promise for which no consideration has been given
B)a promise which concerns an illegal subject matter
C)a promise which concerns a subject matter contrary to public policy
D)a promise for which inadequate consideration has been given
E)a promise made to give a tip to a waitress at a restaurant

Question 63

A legal contract is any agreement that the parties have consented to perform.

Question 64

It is illegal for a company to charge an annual interest rate of 65% to a customer on a $40,000 loan payable over 5 years.

Question 65

Most contracts have to be in writing to be valid.

Question 66

An offer can only be accepted by words or in writing but never by conduct.

Question 67

Which of the following statements is FALSE?

A)Future consideration can be valid consideration.
B)Past consideration is not valid consideration.
C)A contract that is sealed satisfies the courts concern for consideration
D)Each party to a contract must receive consideration of equal or similar value.
E)Consideration can be in the form of goods, services or money.
TRUE/FALSE QUESTIONS

Question 68

Contracts made by minors can be enforceable in certain situations.

Question 69

A pay day loan contract in Toronto that charges an annual interest rate of 500% is legal.

Question 70

When can an offer be withdrawn or revoked?

A)No less than 10 days after it has been communicated to the other party
B)No less than 5 days after it has been made
C)No less than 10 days after it has been made
D)At any time before it has been accepted
E)At anytime

Question 71

Which of the following statements is TRUE?

A)All claims by companies in their ads create legally binding contracts
B)Courts initially presume agreements between family members are valid contracts.
C)A seal on a contract can make it legal even if the contract is against public policy.
D)Some ads by companies are just "puff" and do not create a legally binding contract
E)Parents are usually liable for contracts that their children created.

Question 72

A contract can never be enforced against an intoxicated person.

Question 73

In which of the following cases, will the presumption of no intention to create legal relations arise?

A)an agreement for the sale of a motor car entered into by two brothers
B)an agreement for the sale of a house entered into by two life long best friends, both of whom are realtors.
C)An agreement for the sale of a painting entered into between two sisters
D)a lease agreement entered into between a mother and her son
E)All of the above

Question 74

The parties to a contract are free to reverse many of the common law rules concerning
contracts by incorporating specific terms into their agreement.

Question 75

Lou Greenidge made an offer to buy a house from Tony Umberto conditional on his being able to arrange financing. Shortly after making the offer, Lou began to regret his decision and so made no attempts to seek the financing. On the day that the conditional offer expired, Lou advised Tony that he had been unable to obtain the financing and so there was no longer a valid agreement. Which of the following is correct?

A)Lou did not take reasonable steps to arrange the financing
B)The agreement will be enforceable against Lou
C)Lou had an obligation to act in good faith in seeking to arrange the financing
D)B and C
E)All of the above

Question 76

Agreements to share the winnings of an office lottery pool must be in writing to be legal.

Question 77

A court that restricts a former employee from working in the same industry for a 5 year would probably be against public policy and therefore unenforceable

Question 78

A contract for the purchase of a condominium must be in writing to be valid.

Question 79

When can an offeror who has promised to keep the offer open to a specific date, be able to validly withdraw their offer before that date?

A)The offeror gives a reasonable explanation for his decision to withdraw the offer
B)At any time so long as the other party had not paid for an option to keep it open
C)They would not be allowed to just withdraw the offer
D)The offeror does not intend to make a new offer concerning the same subject matter to any other person for a greater consideration
E)They can only withdraw it if a reasonable time has passed or a set date was set to revoke the offer

Question 80

Oral contracts are not enforceable unless independent witnesses can give evidence about
the agreement.