BLaw Chp 4

26. Terms that are warranties in some contracts may be conditions in others.

True

22. Courts interpret insurance coverage provisions strictly, limiting coverage whenever possible.

False

9. If offers are made to several parties simultaneously, and all are accepted, only the first acceptance creates a binding contract.

False

19. Any condition subsequent must be fulfilled before the contract is legally binding.

False

35. Which of the following is not an essential element of a contract? a. presumption b. consideration c. legality d. offer and acceptance

A

58. A court order that requires the parties to carry out a contract in accordance with its terms is referred to as a. specific performance. b. vicarious performance. c. interlocutory. d. alternative methods of performance.

A

2. Breach of contract is a tort.

False

12. Promissory estoppel is the principle that a one-sided promise is not a binding contract.

False

1. A contract is an agreement between two or more parties and must be in writing to be enforceable by law.

False

11. A contract made under seal does not require consideration.

True

14. The parol evidence rule states that if a contract is in writing and the language of the contract is clear, a court will not look beyond the contract itself to interpret, alter, or contradict its terms.

True

15. Contracts within particular industries tend to contain similar or identical terms because these terms have proven, over time, to be expedient for businesses.

True

20. A contract may require a deposit of a fixed amount or a percentage of the total contract price.

True

10. Consideration means that the parties must be thoughtful of each other's point of view, or there is no meeting of the minds.

False

13. An agreement to do something illegal is only unenforceable against the party who commits the illegal act.

False

17. Standard contracts usually provide for payment before delivery of the product or service.

False

24. A choice of law clause determines the place where litigation will occur.

False

25. An unintentional breach of contract is negligence.

False

29. If a party's position is that a contract is unenforceable, the party must seek a declaration from the court.

False

31. Parents are held accountable for the contracts entered into by their minor children.

False

33. Breach of a contract should always be addressed in some manner, not simply ignored.

False

6. A counteroffer revokes an offer only when this is a specified term of the counteroffer.

False

8. Acceptance by regular mail occurs when the letter arrives at its destination, regardless of whether it is opened and read.

False

16. Standard form contracts are just as enforceable between businesses as contracts that result from extensive negotiations.

True

18. Some contracts permit termination of the agreement if one party provides a specified amount of notice to the other.

True

21. The extent of the limitation of liability provided by a disclaimer clause depends on the wording of the clause.

True

23. An indemnity clause cannot be so broadly worded that it protects a party against its own wrongdoing or negligence.

True

27. Punitive damages are intended to penalize the breaching party rather than compensate the non-breaching party.

True

28. An interim injunction may be granted if there is a serious issue to be tried, irreparable harm will result if the injunction is not granted, and the non-breaching party will suffer higher harm if the injunction is not ordered.

True

3. Much of the law that applies to contracts is common law.

True

30. Whether a misrepresentation was made innocently, negligently, or fraudulently affects the remedies available.

True

32. To void a contract for incapacity, the person claiming incapacity must prove that incapacity at the time of entering into the contract and that the other person was aware of it.

True

4. There is a presumption that the parties to a business agreement intended to form a binding contract.

True

38. Party A makes an offer to Party B. Party B makes a counteroffer. Party A rejects the counteroffer. Party B accepts the original offer. Has a contract been formed? a. Yes, because Party B never rejected the original offer. b. Yes, because Party A never revoked the original offer. c. No, because the original offer has lapsed. d. No, because the original offer is no longer open after Party B's counteroffer.

D

39. The rules that courts apply in resolving disputes about the formation and timing of contracts does not include: a. Acceptance by mail occurs when the party who extends the offer receives the acceptance in the mail. b. Acceptance requires verbal or written confirmation, and cannot be communicated by action alone. c. Acceptance may be communicated in any form to create a contract, even if a specified form of communication is stated in the offer. d. all of the above

D

40. It is important for all business people to know about contract law because a. contract law governs disputes. b. contracts can clarify your business dealings. c. contracts can help you avoid surprises. d. all of the above

D

43. If a contract is in writing and the language of the contract is clear, a court will not look beyond the contact itself to interpret, alter, or contradict its terms. This is in keeping with the a. specific performance rule. b. express term rule. c. rules of construction. d. parol evidence rule.

D

44. Which of the following is not true about standard form contracts? a. They are less enforceable than contracts that are a product of extensive negotiations. b. A web-based contract is just as enforceable, even though its terms and conditions are more difficult to access than if it existed in printed form. c. Standard form contracts between businesses are held to a stricter standard than contracts between businesses and consumers. d. all of the above

D

45. Which of the following is an example of a situation in which a court may imply contractual terms? a. business effectiveness b. obvious omission c. custom within an industry d. all of the above

D

49. A disclaimer clause in an agreement a. excuses a party from their contractual obligations under certain circumstances. b. directly affects the scope of the coverage or services that are the subject of the agreement. c. requires one of the parties to pay for any losses that the other party may incur as a result of claims related to the contract. d. limits the amount of damages that parties are required to pay for a breach.

D

52. If your business is sued in a foreign country, and your contract contains a venue clause stating that British Columbia is the appropriate place to resolve any disputes, a. any foreign judgment against your business will be ineffective. b. the other party's lawsuit in the foreign country will automatically be prevented. c. you may ignore the lawsuit in the foreign country. d. the foreign judgment may be enforced in Canada.

D

60. The doctrine of mistake may applies where a. a party did not freely consent to the terms of the agreement. b. a simple mathematical error has occurred in the agreement. c. a party did not fully read or understand the terms of the agreement. d. the agreement has become essentially and radically different from what was understood.

D

5. Disputes arise where one party believes that a deal is final, while the other party believes that the deal is still being negotiated.

True

7. Depending on the terms of the contract, acceptance can be communicated orally, in writing, electronically, or by action.

True

47. The purpose of a liquidated damages clause is to quantify, in advance of the problem, a. the compensation for a specified breach of contract. b. the penalty for a specified breach of contract. c. the rights and obligations of the parties in the event that one of them terminates the agreement. d. the compensation for unforeseeable damages.

A

48. A business person may want to include a condition precedent in a contract to avoid being bound to a contractual obligation a. without knowing something essential to the contract is available or has occurred. b. if a particular circumstance arises. c. in the event the other party's performance falls below a specified standard. d. with a sales representative if the sales representative fails to meet sales targets.

A

57. A breaching party is not required to pay for losses that the non-breaching party could have avoided with reasonable efforts. This is because of a. the duty to mitigate. b. a disclaimer clause. c. an exclusion clause. d. indemnity.

A

59. If a party relied on a false statement of fact in entering an agreement, and that misrepresentation was negligent, the deceived party may be entitled to a. rescission of the contract and monetary damages. b. only rescission of the contract. c. only monetary damages. d. neither rescission of the contract, nor monetary damages.

A

55. A business's contractual obligations are fulfilled by people who the business employs or retains. This principle is referred to as a. limitation of liability. b. indemnity. c. vicarious performance. d. specific performance.

C

56. If a contract is silent about breach and its consequences and a damages claim ends up in court, the judge determines the quantum of damages a. that would be sufficient to put the non-breaching party back in its position when the contract was made. b. to the extent that damages were foreseeable. c. both a. and b. d. neither a. or b.

C

34. Which of the following is not true of a contract? a. A contract is an agreement between two or more parties that is enforceable by law. b. A contract always involves an agreement; likewise, every agreement is a contract. c. Parties are expected to live up to the obligations they assume under a contract. d. A contract may be formed by the interaction of electronic agents.

B

36. Which of the following is not a way an offer may expire? a. counteroffer b. frustration c. revocation d. lapse

B

51. The parties to a contract in Alberta have agreed to apply British Columbia law there to settle their differences. This may be done with a a. venue clause. b. governing law clause. c. both a. and b. d. none of the above

B

53. A caterer that is contracted to supply lobster for a charity gala relies on a standing order from its regular supplier. There is an unexpected shortage of lobster, so instead of lobster, the caterer substitutes crab legs. This may be considered a. an intentional breach of contract. b. an unintentional breach of contract. c. both a. or b. d. neither a. or b.

B

54. Once a contract ceases to exist, the parties' contractual obligations cease to exist as well. This may happen if there is a breach of a. warranty. b. condition. c. either warranty or condition. d. both warranty and condition.

B

61. Where there is a special relationship between the parties that is unbalanced in terms of power, there is a presumption of a. duress. b. undue influence. c. unconscionable agreement. d. misrepresentation.

B

62. Business people should be aware when dealing with young entrepreneurs that a. parents may be held accountable to fulfill their child's contractual obligations. b. being a minor is a form of legal incapacity. c. there is a presumption of undue influence. d. there is a presumption of unconscionable agreement.

B

37. According to the revocation rule, the party who extends the offer is entitled to revoke the offer a. unless there is included a promise to remain open for a particular amount of time. b. only before the stated deadline. c. at any time before it is accepted. d. never, because the offer is legally binding.

C

41. Written contracts are usually preferable to oral contracts because a. they provide proof of the parties' agreement in the event of a dispute. b. they provide the parties with a record of their rights and obligations. c. both a. and b. d. neither a. or b.

C

42. Which of the following is not one of the rules of construction used in interpreting disputed contracts? a. Interpret the contract against the drafter. b. Determine the parties' intentions. c. Look beyond the contract to interpret clear terms. d. Apply an objective test.

C

46. A contractual term that specifies the quality of the good a. guarantees that the supplier will deliver satisfactory goods. b. is not necessary when the buyer can rely on the assumption that the goods will be supplied as expected. c. gives the buyer recourse against the supplier for breach of contract in the event that the goods are substandard. d. all of the above

C

50. Frustration of contract occurs when a. a significant and unanticipated event that is beyond the control the parties and prevents them from carrying out the terms of the contract. b. performance of a party's obligations becomes too onerous or expensive. c. performance of a contract according to its original terms becomes impossible or radically different from what the parties intended. d. parties fail to express their contractual intentions within the written terms of their agreement.

C