Deck 9: Termination and Enforcement of Contracts

Question 1

Which of the following is a distinguishing feature of force majeure clauses?

A) They are rarely enforced by the courts.
B) They allow parties to decide whether a particular event amounts to frustration.
C) They can be used to force parties to mitigate their damages.
D) They ensure parties are liable in the event of frustration.

Answer 1

B

Question 2

Which of the following is a distinguishing feature of a "condition" in a contract?

A) It is a minor term that,if breached,gives the innocent party the right to sue for damages.
B) It is a term in a contract that cannot be easily classified as major or minor.
C) It is a term in a contract that,if breached,will entitle the innocent party to the remedy of specific performance.
D) It is a major term that,if breached,gives the innocent party the right to terminate the contract and sue for damages.

Answer 2

D

Question 3

Which of the following is a distinguishing feature of the vicarious performance of contractual obligations by an employee at the direction of the employer?

A) The doctrine of frustration of contract protects the employee from employer bad faith.
B) The doctrine of frustration of contract will hold the employee liable for certain acts.
C) The doctrine of privity of contract bars the employee from suing or being sued.
D) The doctrine of privity of contract bars the employer from suing or being sued.

Answer 3

C

Question 4

A senior partner delegated the drafting and filing of a statement of claim to a first-year lawyer employed by the firm.The first-year lawyer erroneously sued the wrong parties.How will the law assign responsibility for the obligation with regard to the quality of the work performed?

A) The employer will be held responsible in law for the incompetent performance.
B) Both parties will be jointly held responsible for their combined incompetence.
C) The law will hold each party proportionately responsible for the incompetence.
D) The employee will be held responsible in law for the incompetent performance.

Question 5

Albert entered into a contract under the name of one of his corporations.After consulting with his accountant regarding tax implications,he asked,and the other party agreed,to change the name of the company in that contract.What has transpired with respect to the contract between these parties?

A) amendment
B) novation
C) assignment
D) substitution

Question 6

An employee of Topit Construction Ltd.was careless when installing a furnace in a client's home,and the client suffered significant damage to their home as a result.What legal rights might the client have against Topit's employee in these circumstances?

A) the right to sue for breach of contract and negligence
B) the right to sue for breach of contract but not negligence
C) the right to sue for negligence but not breach of contract
D) The customer may sue only Topit and not Topit's employee.

Question 7

What will readily allow the judge to make a determination when a court is asked to determine whether the termination of a contract amounts to termination by performance?

A) the determination of the nature of the contract
B) the oral evidence given by each of the parties
C) the reasonableness of unforeseeability of an event
D) the factual circumstances of subsequent events

Question 8

Why did the Supreme Court of Canada grant leave to hear the case of London Drugs Limited v.Kuehne & Nagel International Ltd.(1992),97
D)L.R.(4th)261 (S.C.C.)?

A) to restrict employee liability relative to the doctrine of privity of contract
B) to ensure employee exclusion clauses are no longer recognized by the lower courts
C) to restrict employee liability relative to the doctrine of vicarious liability
D) to ensure employer exclusion clauses are no longer recognized by the lower courts

Question 9

Shadow Awning Inc.'s employee attended a client's home to install an awning over a window.What has just occurred?

A) novational performance
B) substitutional performance
C) assigned performance
D) vicarious performance

Question 10

A flood will require mining operations to cease for at least six months.How would a force majeure clause affect the legal status of the miner's obligations relating to its existing supply contracts?

A) non-performance of the contract will be excused without liability
B) the innocent party will have the right to terminate and sue for breach
C) performance obligations will be suspended until a specified event occurs
D) the innocent party will have the right to sue for damages for breach

Question 11

Donelle agreed to rent her cottage to Juan for the first two weeks of June.Juan paid Donelle the rent due on May 29 by certified cheque.On the last day in May,a forest fire burned the cottage to the ground.What is the role of the doctrine of frustration with respect to the status of the contract?

A) It applies because Donelle has breached the contract.
B) It is not applicable; performance can be postponed.
C) It applies,as performance is no longer practical.
D) It is not applicable; the settled amount has been paid.

Question 12

Leslie offered to pay Murray $100 a day to show her dog in an upcoming three-day competition.Murray accepted and showed the young male dog,winning best of breed during each day's competition.Leslie paid Murray $300.What is the present status of their contractual arrangement?

A) The contract has been terminated by performance.
B) The termination of the competition frustrated the contract.
C) The payment of the settlement ended the contract.
D) The contract terminated by agreement of the parties.

Question 13

What term is used to describe damages that are intended to provide the plaintiff with the monetary equivalent of performance?

A) restitution damages
B) punitive damages
C) innominate damages
D) expectation damages

Question 14

In what way did the Supreme Court of Canada's decision in London Drugs Ltd v.Kuehne and Nagel International Ltd.[1992] 3 SCR 299 impact the law of privity?

A) by extending the situations in which privity prevents the enforcement of contracts by non-parties
B) by preventing the enforcement of force majeure clauses in the absence of privity
C) by holding that exclusion clauses negotiated by employers also protect employees from liability
D) by creating an insurance exception to the doctrine of privity

Question 15

Rumie paid a $5000 retainer to a lawyer to commence a lawsuit on her behalf.After rendering two $1000 accounts for research,the lawyer advised the claim was too small for him to attend to.He recommended another lawyer to Rumie.How does the law allow Rumie to proceed?

A) She must forfeit the full retainer and hire a different lawyer.
B) She must treat the contract as ended and sue for breach.
C) She must sue the lawyer to recover the balance of the retainer.
D) She must retain the lawyer that has now been recommended.

Question 16

Which of the following would disentitle a wronged party to the remedy of specific performance of the contract?

A) The wrongful party refused to perform its obligations.
B) The item in question is unique.
C) The event giving rise to the breach was not foreseeable.
D) The wronged party has delayed seeking a remedy.

Question 17

Valiant Construction Inc.has assigned its contractual right to payment from one of its customers to ABC Lumber Ltd.in order to satisfy its debt to ABC.Which of the following statements is correct?

A) Valiant Inc.is now released from its obligations to its client.
B) This arrangement must be consented to by Valiant's client in order to be legally enforceable.
C) This arrangement is valid even without the consent of Valiant's client.
D) ABC is liable to fulfill the contract in the event Valiant fails to do so.

Question 18

Two financial institutions unknowingly advanced loans in exchange for an assignment of rents on the same apartment building.The tenants were served with notice of the assignment by one financial institution immediately,the other served notice one week later.With respect to the payment of the rents under the assignments,what advice would a lawyer give to the tenants?

A) Payment of the rents by the tenants is payable to the landlord.
B) Priority ranking is delegated in the order notice was effected.
C) Priority ranking is delegated to the first party to advance the loan.
D) Payment of rents must be made to the assignor of the rents.

Question 19

What is the definition of the legal term "assignment"?

A) the substitution of parties or replacement of one contract with another
B) the right to a remedy for breach when a party has sustained a loss
C) the transfer of contractual rights from one party to someone else
D) the transfer of a contractual right by an assignee to an assignor

Question 20

What is the traditional view regarding non-pecuniary damages in the context of contract law?

A) They are recoverable unless the plaintiff has failed to mitigate.
B) They should be awarded in cases of malicious,oppressive,and high-handed conduct.
C) They are regarded as a natural consequence of a contract breach.
D) They are regarded as unusual.

Question 21

Which of the following statements is correct regarding the duty of the plaintiff to mitigate his or her damages?

A) The duty to mitigate is no longer part of the law of Canada.
B) The plaintiff is relieved of the duty to mitigate if the case involves a breach of a major term of the contract.
C) Everyone who suffers a breach of contract has a duty to mitigate.
D) A party will be relieved from the duty to mitigate if it will require a cash outlay.

Question 22

In which of the following situations might a court be inclined to grant an injunction?

A) where the contract contains a promise not to engage in specified activities
B) where the plaintiff does not have "clean hands"
C) where the plaintiff is undeserving of damages
D) where the court wishes to force a party to complete their performance of the contract

Question 23

Which of the following would a court consider the common law duty to mitigate to be imposed upon?

A) the assignee to a contractual agreement
B) the party causing a contractual breach
C) the party affected by contractual breach
D) the third party unaffected by the breach

Question 24

Dana has received a cheque from Storage4U Ltd.compensating her for the theft of her stored property.What type of damages has Dana been compensated for?

A) pecuniary damages
B) non-pecuniary damages
C) punitive damages
D) special damages

Question 25

Which of the following possibilities would a party considering the non-performance of a contract weigh?

A) the actual anticipated gains versus the likely cost of breach
B) the moral cost to society of unethical commercial activity
C) that actual moral cost balanced against the economic gains
D) the ethical cost to the essential functioning of business

Question 26

Although Maybelle's insurance excluded coverage for jewelry loss,her insurer mistakenly sent her a cheque to compensate her for the loss of an expensive piece of jewelry.What legal doctrine might the insurer use to recover the money that was mistakenly paid to Maybelle?

A) frustration
B) the duty to mitigate
C) unjust enrichment
D) misrepresentation

Question 27

In the case of Fidler v.Sun Life Assurance Company of Canada,[2006] 2 S.C.R.3.,the Supreme Court of Canada rejected the traditional view that damages for mental distress should be tightly controlled and exceptional and asked instead,"What did the contract promise?" Which of the following represents the answer the court arrived at with respect to that question?

A) Damages arise from lack of provision of a psychological benefit.
B) Damages arising from mental distress should be tightly controlled.
C) Damage awards should be a benefit of a personal nature.
D) Damages arising from mental distress should be exceptional.

Question 28

In order to avoid having a court impose a classification of a contractual obligation as an innominate term,which of the following actions would be appropriate?

A) Ensure that all contractual obligations are clearly described in the contract.
B) Avoid the use of ambiguous language that leads to erroneous assumptions.
C) Avoid the use of contractual promises that hold less significance or importance.
D) Clearly set out the consequences of the breach at the time the contract is created.

Question 29

Which of the following would give rise to the ability of one party to terminate a contract and bring an action for damages?

A) breach of an express term of the contract
B) breach of an innominate term of the contract
C) breach of a warranty of the contract
D) breach of a condition of the contract

Question 30

Which of the following is a distinguishing feature regarding the common law remedy of punitive damages?

A) It is an award of an equitable remedy of punitive damages.
B) It represents every adverse consequence following actionable breach.
C) It is a damage award arising from a unique actionable wrong.
D) It represents an award for reasonably foreseeable damages.

Question 31

What must be used as the determining factor upon which a court will rely to settle a dispute involving the classification of a contractual term?

A) the conditions specified in the contract
B) the warranties set out in the contract
C) the implied terms relevant to the contract
D) the intentions of the contractual parties

Question 32

Among other things,Genevieve received an award from the court relating to her inability to sleep for 14 months following the collapse of the roof covering a newly built addition to her home.What is the nature of this portion of Genevieve's award?

A) non-pecuniary general damages
B) pecuniary expectation damages
C) punitive damages for intangible loss
D) punitive damages for tangible losses

Question 33

Aaron's $175 000 a year employment contract was terminated without notice or compensation two years before it was to expire.Within six months,he was able to secure a position under a one-year contract paying an annual consideration of $90 000.What could you reasonably expect a judge to award to Aaron for damages for wrongful termination?

A) $70 000
B) $85 000
C) $175 000
D) $260 000

Question 34

A lawyer was negligent in his duties,causing his client to lose her entitlement to ongoing support she needed and was legally entitled to receive.The error remained unresolved,and the client,unable to meet her mortgage commitments,went into foreclosure six months later.In these circumstances,why would the client's new lawyer commence an action including the damages relating to the foreclosure?

A) They are a special consequence of the breach.
B) There was no exclusion clause in the retainer agreement.
C) The degree of suffering is sufficient to warrant compensation.
D) They are a natural consequence of the breach.

Question 35

Newtown Meats Ltd.failed to deliver a restaurant's order for ground beef,forcing the restaurant to find another supplier.Unfortunately,the substitute product was contaminated,and now the restaurant is being sued by customers who became ill.Can Newtown be sued by the restaurant for the damages it must now pay its customers?

A) No,because the damages would be considered too remote.
B) No,because Newtown was not negligent.
C) Yes,because the damages would not have arisen had Newtown met its contractual obligations.
D) Yes,because the restaurant is entitled to expectation damages.

Question 36

Howard received $12 000 of the $39 000 price for his rare,impeccably maintained antique 1976 Jaguar XL from Wyn.Wyn will be able to add the Jaguar to her classic car collection upon payment of the balance,due 30 days from the signing the contract.Prior to that date,Philip paid Howard $45 000 outright in exchange for the Jaguar.What amount of damages could you be reasonably certain of a court awarding to Wyn?

A) $6000
B) $12 000
C) $18 000
D) $45 000

Question 37

Fatalia is a party to a contract with Juno.She has initiated a claim for damages arising from breach relating the quality of workmanship.What type of breach is involved?

A) breach of innominate term
B) fundamental breach
C) breach of warranty
D) breach of condition

Question 38

Within each provincial jurisdiction,a beneficiary under an insurance contract is entitled to sue under that contract even though the contractual arrangement is between parties other than the beneficiary.How is this legally possible?

A) legislation limiting application of exclusion clauses in life insurance contracts
B) common law reclassification of the application of the doctrine of privity
C) legislative amendment to modify application of the doctrine of privity
D) common law limiting application of exclusion clauses in life insurance contracts

Question 39

A party to a contract erroneously acted on an assumption involving breach of an innominate term.That party is itself now being sued for breach.What was the erroneous action taken by this party?

A) the initiation of a claim for damages
B) the repudiation of the contract
C) an incorrect application of a warranty
D) a delay of performance of obligations

Question 40

What is the definition of an "anticipatory breach"?

A) a breach that occurs purely for ethical reasons
B) a breach that occurs purely for economic reasons
C) a breach that occurs at the time of founding the contract
D) a breach that occurs before the date for performance

Question 41

What legal remedy is applied in circumstances where a court orders a party to refrain from acting in a specific manner?

A) injunction
B) interlocative injunction
C) specific performance
D) rescission

Question 42

Both parties to the original contract must agree to an assignment for it to be enforceable.

Question 43

Which of the following is synonymous with the phrase "a party who seeks equity must come with clean hands"?

A) doctrine of probabilities
B) rules of equity
C) duty to mitigate
D) doctrine of frustration

Question 44

Unlike damages in tort law,damages in contract law usually seek to restore the parties to their original position.

Question 45

A person claiming frustration must establish that the event arose without either party's fault.

Question 46

Under common law,an individual improperly fired from their employment has a duty to their former employer to try to find a replacement job as quickly as possible.

Question 47

A warranty is a minor term of the contract and entitles the innocent party to rescission and damages.

Question 48

A breach can have the effect of terminating a contract.

Question 49

Novation of a contract will result in the termination of the original contract.

Question 50

A court has refused to order specific performance owing to the effects it would have on a third party.What would the defendant's lawyer most likely identify as the circumstances that gave rise to the court's refusal?

A) the impossibility to enforce an employment contract
B) improper behaviour on the part of the defendant
C) improper imposition of severe hardship
D) improper delay on the part of the defendant

Question 51

Under the common law test for remoteness,damages are not generally considered reasonably foreseeable where any unusual circumstances were communicated to the offending party at the time the contract was formed.

Question 52

What is the legal term for a remedy in which the court utilizes its jurisdiction to order an injunction for a stated period of time?

A) specific injunction
B) interim injunction
C) temporary injunction
D) interlocutory injunction

Question 53

A clause that excludes or limits liability even for a profoundly serious breach of contract is unenforceable,if it is unconscionable or would be unfair or unreasonable.

Question 54

Which of the following remedies would a court most likely award to restore parties to their original pre-contractual positions?

A) contractual rescission
B) injunctive performance
C) interlocutory performance
D) restitutionary quantum meruit

Question 55

A creditor has assigned a debt to a collection agency.As an assignee,the collection agency is not a party to the original contract and is therefore barred under the doctrine of privity from acquiring any rights to own the debt under it.

Question 56

Either party can decide to terminate a contract at any time.

Question 57

An assignee is entitled to collect the debt owed under a contract despite not being involved in the creation of the contract that produced the debt.

Question 58

When a contract is terminated through performance,the commercial relationship between the parties comes to an end.

Question 59

An assignee's rights can be no greater than the assignor's rights.

Question 60

Which of the following accurately describes the legal position of the plaintiff in a case of anticipatory breach of the contract by the defendant?

A) The plaintiff cannot sue until the defendant actually breaches the contract.
B) The plaintiff's only remedy is to seek an injunction.
C) The plaintiff will not be permitted to sue for damages and may only sue for specific performance.
D) The plaintiff can sue for damages immediately.

Question 61

Recovery for non-pecuniary damages is not possible in contract law.

Question 62

Explain what is meant by the phrase "everyone who suffers a breach has a duty to mitigate."

Question 63

Buildco Ltd.entered into a contract that contains a clause limiting Buildco's liability for any breach of the contract.Buildco's employees performed its obligations negligently and have caused harm to the other party as a result.Are the employees protected by the clause that limits Buildco's liability? Explain.

Question 64

An assignment requires the consent of all of the contracting parties.

Question 65

Explain the concept of privity,and provide two examples of exceptions to this legal doctrine.

Question 66

Lelainy and Trax Green hired Jamey,owner of WeBuild4U Inc.,to construct their new family home.Construction is underway,but the Greens have decided they would like to modify the contract by upgrading to marble countertops throughout the home.Identify and briefly explain how the Greens should proceed and what the traditional common law approach will require of them in order to ensure contractual enforceability.Identify any common law jurisdiction whose court has taken a modern approach to these contractual circumstances and briefly explain what that approach entails.

Question 67

Identify and briefly described the type and circumstances under which punitive damages are to be awarded as firmly established by the Supreme Court of Canada in the case of Whiten v.Pilot Insurance Co.(2002),209 D.L.R,.(4th)257 (S.C.C.).

Question 68

Explain why a court may deny the remedy of specific performance where it is satisfied that there has been improper behaviour by the plaintiff.Identify and provide two examples of the rules that are applicable in these particular circumstances and explain briefly the meaning both of those rules imply.

Question 69

What four requirements must be met in order for a contract to be terminated by frustration?

Question 70

The courts are reluctant to allow a breaching party to rely on the protection of a limited liability clause when the breach is severe and undermines the foundation of the contract.

Question 71

The remedy of rescission is not available if the plaintiff does not bring an action seeking rescission within a reasonable time.

Question 72

Both contractual rights and contractual obligations can be assigned.

Question 73

What is an assignment,and in what ways are assignments of rights and obligations limited in contract law?

Question 74

If neither party has performed its obligations under a contract when a frustrating event occurs,they are both left where they were before the contract was formed.

Question 75

Identify four situations in which the equitable remedy of an order for specific performance may not be available.

Question 76

What four things must generally be shown on the balance of probabilities in order for a party to succeed in an action for breach of contract?