CHAPTER 6

Which of the following is not an example of an illegal performance of a lawful contract? A person agrees to paint a house but uses a nonconforming color in an historic residential district. A person contracts to post harmful lies about another on social media. A person contracts to deliver pizza and speeds to get it there on time. A person contracts to clean up after a town event and does it after town curfew. A person contracts to pick up a business's trash and then dumps it in the ocean.

B

A voidable contract A)is not legally binding. B)has legal effect but either party can end the contract. C)has legal effect, but one party may end the contract. D)can be enforced against anyone. E)is not legally binding, but the parties can agree to continue to perform.

C

Contracts that are illegally formed or illegally performed can still be enforced by the courts. In both cases, the courts can remove or sever one or more of the offending sections of the contract, leaving the rest of the contract as valid and enforceable. Which of the following is incorrect? The court must consider whether one party would be given an unjustified windfall. The court must decide whether the parties entered into the agreement for an illegal purpose or with an evil intention. The court must decide whether the public policy of enforcing valid contracts would be subverted by severance. The court must consider the relative bargaining positions of the parties and their conduct in reaching the agreement. The court must decide whether the illegal contract is a valid contract that could be subverted by severance.

E

Hubert is having difficulty paying his bills. He has decided to assign himself into bankruptcy. Which of the following is incorrect? Bankruptcy has an effect on Hubert's contractual capacity. Hubert has limits on his financial affairs while he is in bankruptcy. Persons dealing with Hubert should be careful. Hubert could instead be forced into bankruptcy by a court order. Once discharged from bankruptcy, Hubert will still have legally limited contractual capacity.

E

Choose the incorrect statement from the definitions below. A formal contract is one that is sealed by the party to be bound. A parol contract is a probationary agreement. A simple contract may be oral or written but is not under seal. An implied contract is inferred from the conduct of the parties. An express contract is one in which the parties have expressly stated their agreement, either orally or in writing.

B

The nature of a contract does not include which of the following?... The nature of a contract does not include which of the following? a) The freedom of contract law from statutory regulation except in some specialized areas b) The freedom of contracting parties to enter into any legal contractual agreement c) The freedom of parties to agree to terms that meet their legal requirements d) The freedom of parties to define their own contractual liabilities and rules e) The freedom of one party to leave a bilateral contract if that person wishes

B

A gratuitous promise is a legal obligation to do what is promised. binding since there is consideration on both sides. a gift that creates contractual obligations. a promise where there is no legal obligation created because only one of the parties is getting something. an arrangement that the courts will enforce.

D

A valid acceptance must be A)given within 24 hours of the offer. B)in writing. C)communicated through words. D)unconditional. E)contain all essential conditions.

D

A friendly foreign government attempting to enter an ordinary commercial transaction in Canada can only be bound if the that country's governing bodies explicitly approve the transaction. is treated as a minor in terms of capacity. does not have the capacity to be bound by contract. can only be bound by contracts in the best interest of both parties. now has no capacity issue.

E

People sometimes say few or no words when entering into a contract. Choose the true statement below if Natalie is talking on her cell phone while standing in line at her favourite coffee shop but the barista knows that Natalie always orders a caffè latte. This is not an example of an implied contract because a history of past contracts is irrelevant. This is an example of an express contract because Natalie always orders the same type of coffee. If Natalie, in fact, wanted a cappuccino this time but was given a caffè latte after she continued to talk on her cell phone, she does not have to pay. This is an example of an unenforceable contract because Natalie didn't sign a written contract when buying the coffee. This is a valid contract if it can be proved that past conduct showed an implied agreement on this occasion.

E

The amount a person merits to be paid for goods or services provided to the person requesting them is known as A)past consideration. B)gratuitous promise. C)document under seal. D)promissory estoppel. E)quantum meruit.

E

Mark is setting up a green energy consulting business. He sends out advertising brochures to all local area businesses. Lydia of Edmonton Solar Ltd. replies to Mark's ads and invites Mark to submit a proposal to Edmonton Solar Ltd. for a new marketing plan. Mark incurs some considerable expense and takes three weeks to complete the proposal. After submitting the proposal to Lydia, Mark reads in a blog that Edmonton Solar Ltd. awarded an exclusive marketing contract to another firm. Based on these facts, which of the following is true? The invitation by Lydia is merely an invitation to treat and not an offer to make a contract. The court can infer an implied contract. The invitation by Lydia shows a consensus to form a contract. The parties have agreed to all the required elements of a contract. Lydia will have to pay Mark something for his effort.

A

Promissory estoppel A)cannot be used by the plaintiff. B)removes the need for the plaintiff to show there was consideration to enforce the contract. C)cannot be used by the defendant. D)can only be used if the promise was in writing. E)is not a valid legal principle.

A

The law says that consideration need not be adequate or fair. In which of the following examples do the courts make exceptions to this rule? Contracts involving fraud, undue influence, and capacity issues Contracts involving an illegal purpose Contracts involving drunks, insane persons, and businesspersons Contracts involving a valid purpose Contracts involving gratuitous promises, undue influence, and capacity issues

A

What is the legal effect of illegal agreements? The agreement is considered void from its inception. One of the parties to the agreement must seek a declaration that the agreement is void. Until then, third parties may gain rights arising out of the agreement. A void agreement has the same effect as an unenforceable agreement. Void agreements may allow remedies for persons who have no notice of the void nature of the agreement. A void agreement has the same legal effect as a voidable contract.

A

A business hires a contractor to build a new office building. Local regulations require that any builder register with the town thirty days before work begins and pay a deposit. The contractor registers and pays the deposit and begins work twenty-nine days later. When the building is complete, the business refuses to pay and the contractor sues. The business states the contract was illegally performed (and so unenforceable) because of contractor's failure to follow the local regulation. Can the court enforce the contract? Yes, because the illegal act was only a procedural violation No, because the illegal act was essential to the contract Yes, because the business knew about the illegal act and did not correct it No, because the illegal act made the contract void Maybe, but only if the regulation itself states a different punishment for its violation

A

A illegal contract involves behaviour against the law or public policy. is a binding legal agreement. is a contract performed in an illegal manner. can be enforced by either party. involves the commission of a crime.

A

A merchant's exaggerated claim about a product could result in a breach of contract claim if a reasonable person would have taken the claim seriously. the statement caused the customer to purchase the item. the customer does not like the product after purchase. the statement turned out to be false. a reasonable person would have believed the statements were just an overblown sales pitch.

A

A unilateral contract is A)when the price paid for the offeror's promise is the act done by the offeree. B)the price for which the promise (or act) of the other is bought. C)when the price paid for each party's promise is the promise of the other. D)a promise made without bargaining for or accepting anything in return. E)the price for which a gratuitous benefit was previously conferred on a promisor.

A

In order for the contract to be set aside, which of the following is false with regards to a person claiming insanity? The person must choose to repudiate the deal. The person must seek repudiation shortly after sanity returns. The person must have had no understanding of what the deal was about. The person must seek repudiation within the statute of limitations for drunkenness of one year. The person must have been known to be insane by the other person.

D

Dave is a daredevil. He performs at conventions and circuses. Recently, he agreed to levitate 1 m above ground for 15 minutes in exchange for $10 000. Which of the following is the reason why this contract is void? If there is evidence of Dave's mental disability, the contract is void. Nothing is in writing, so the agreement is void. If performance on Dave's part is impossible, then his consideration is invalid. If Dave can actually perform the stunt, then he can charge more than $10 000. If the price Dave has charged is inadequate to cover his expenses, the contract is void.

C

Zack is looking to get a new car. Anna works at a car dealership. Anna offers to let Zack drive away with the new car for $200 per month. Zack orally agrees. Zack pays $200 and drives away in the car. Zack believes he has bought the car while Anna believes she has leased him the car. Is this a valid contract? A)Yes, because Anna got $200 and gave Zack a benefit in return (the car) B)No, because Anna and Zack did not have a common understanding of the terms of the agreement C)No, because the contract was not in writing D)Yes, but only if Zack would have leased the car for the same monthly payment E)Yes, because the parties agreed on a price and Zack paid it

B

Can an agreement to settle out of court have valid consideration? A)No, because the party who would have won at trial gained no benefit from the settlement B)Maybe, but only if the settlement required both parties to pay money to the other C)Yes, because both parties gave up their right to be heard by the court D)Yes, because parties are free to make any contract terms they bargain for E)No, because the party who would have lost at trial gained no benefits from the settlement

C

Can parties create an agreement that is not legally binding? No. All contracts are binding on the parties if the contract is valid. Yes, but only if the contract was not enforceable for another reason Yes, if the contract clearly states the parties do not intend to be bound or if a reasonable person would think the agreement is not binding. Yes. Parties can always assume a contract is not legally binding if that is their intent. No. A contract must be legally binding to have valid consideration.

C

Mavis has promised to buy Susan's car for $5000, but she made no down payment or deposit. Susan took her car off the market. Mavis then lost her job. She now can't afford a car and does not need one. Choose the correct statement. Since Mavis lost her job, her promise to pay is no longer an enforceable promise of consideration. Since no money was paid, there is no binding contract. There is valid consideration on both sides. Since there was no deposit, Mavis can change her mind unilaterally. Susan's promise to sell her car is not consideration because only money is consideration.

C

What is the difference between an illegal contract and a contract performed illegally? An illegal contract is a contract to commit a crime and an illegally performed contract is one where each party acted illegally. An illegal contract is never enforceable and an illegally performed contract is always enforceable. An illegal contract cannot be enforced and an illegally performed contract can be enforced if doing so does not violate public policy. There is no practical difference between these two types of contracts. An illegal contract is enforceable if not against public policy and an illegally performed contract is never enforceable. Submit

C

What type of contract must a minor repudiate within a reasonable time after becoming an adult in order to avoid obligation? ` A contract made within one month of the age of majority A contract involving another minor A contract for land A minor is never required to repudiate a contract after becoming an adult to escape obligation. A contract for necessities

C

Which of the following is essential for the existence of a contract? A)A clear, identifiable offer B)A written agreement C)Mutual understanding D)A clear, specific acceptance E)A stated commitment to be bound by the agreement

C

Which of the following is incorrect about the doctrine of part performance? The acts relied upon by the courts must be unequivocally related to the alleged contract. Its application makes an otherwise unenforceable contract enforceable. The doctrine applies only if it is the defendant who has performed a portion of the contract. It applies only to contracts concerning land. It limits the effect of the Statute of Frauds.

C

Which of the following is not true regarding contracts and an intoxicated person? A person must pay for necessities purchased while intoxicated. A person is liable for a contract made while very intoxicated if there is no way the other party could have known he or she was intoxicated. A person never has to pay for items purchased while intoxicated. Repudiation must occur as soon as the person becomes sober to be valid. A person is liable for contracts made while slightly intoxicated.

C

Which of the following may not result in a contract? Mailing of an acceptance to an offer made through the mail, where the acceptance is never received by the offeror Accepting a contract through the mail where the offer, open for a week, was made in person Mailing of an acceptance to an offer made through the mail, where the offer was communicated by email Accepting a counter-offer Mailing of an acceptance to an offer made through the mail, where the acceptance is mailed before a letter revoking the offer is received

C

Sean, 17, purchased a winter coat on credit. He subsequently makes no payments on the coat. Can the seller successfully sue Sean for the debt? Yes, because the coat is considered a non-necessity since it is needed to keep Sean warm No, because the coat is considered a necessity since it is needed to keep Sean warm No, because the coat is considered a non-necessity since it is needed to keep Sean warm Yes, because the coat is considered a necessity since it is needed to keep Sean warm Yes, because Sean has used the coat for a number of months

D

Which of the following is incorrect about consideration? In cases where the principle of quantum meruit applies, there is no need to agree to a specific rate of consideration. The common law says that, generally speaking, consideration need not be fair. An extension of time is a valid form of consideration. In a unilateral contract, the promisee must communicate acceptance before performance. An act of not doing something may be valuable consideration.

D

Which of the following is incorrect with respect to the capacity to enter into contracts? A bankrupt person has limited contractual capacity. The property (such as a car) of some Aboriginal persons on a reserve may not be seized by a bank to satisfy a judgment. Trade unions may have restricted contractual capacity. After a bankrupt debtor receives discharge, his legal capacity continues to be limited to enter contracts. Women have the same legal capacity to enter into contracts as men.

D

Which of the following would be part performance? Payment to a landowner in settlement of a nuisance claim Payment to a house builder Payment for installation of a satellite dish on a house roof Payment of a deposit for the purchase of a house in Vancouver A home buyer attending a realtor's open house Submit

D

A seal replaces which of the following essential elements of a contract? A)Acceptance B)Capacity C)Intention to create legal relationships D)Offer E)Consideration

E

Agreements to complete an existing legal obligation under a contract have a problem with consideration. Which of the following is the best reason for this rule? A public duty may be a gratuitous promise. If one person has an existing obligation to the other person in a contract, a subsequent agreement is illegal. Modifications to an existing agreement require only the parties' agreement. Gratuitous promises mean that there is an exchange of consideration. If one person promises to pay more for completion of a contract, the promise may be gratuitous.

E

Mabel earns a salary by working a full-time job at an advertising firm. Her hours of work are flexible, and she often works on weekends so that she can leave work early and pick up her children from school. Recently, her boss received a compliment from the firm's biggest client, concerning work that Mabel did two months ago. Her boss went to tell Mabel immediately and promised her a 10 percent bonus in recognition of that work. One month later, Mabel still has not received the bonus. Which of the following correctly describes Mabel's legal right to the bonus? a) There is not enough information to make a decision. b) The great work that Mabel did is consideration for the bonus and is therefore a legal debt owed to Mabel. c) Mabel should send an invoice for the bonus because her boss has to pay it. d) Mabel can continue to do great work and will get the bonus for her future work. e) Mabel's bonus is a promise supported by past consideration and therefore she has no legal right to the bonus.

E

Performer orally contracts with a venue to do four shows. The agreement states the shows will be no less than three months apart and the first show will occur four months from today. The venue will pay Performer half of all sales. Is this an enforceable contract? No. The contract involves a significant amount of money so it requires a written contract. Yes. An oral contract is always enforceable. No. Oral contracts are not enforceable. Yes. Since the contract does not involve land or goods, it does not require a written contract. No. The contract cannot be performed in one year so it requires a written contract.

E

Which of the following is a valid subject-to clause? a) Subject to the parties discussing the amount of property to be sold b) Subject to the seller's lawyer finding the offer satisfactory c) Subject to the consideration being fair d) Subject to the parties agreeing on a price e) Subject to the sale of the buyer's home

E

Which of the following statements is false? Unless there are exceptional circumstances that justify the court's intervention, such as infant contracts or situations of unequal bargaining power, the court should not interfere in the setting of the contract's consideration. Freedom of contract implies freedom to set the amount of consideration. Value of consideration is best assessed by the persons making the bargain. Courts do not wish to second-guess why businesspeople made the bargain that they did. Value of consideration is best assessed by a judge.

E