Question 1

In which of the following would the court find that the contract is void (i.e., not a binding agreement)?

Accepted Answer

The contract in choice B is void due to the doctrine of mutual mistake, where both parties were unaware that the subject matter of the contract (the tanker of oil) had been destroyed, making the contract impossible to fulfill.

Question 2

In Moss v. Chin, Chin's insurer, ICBC, made an offer to settle a claim that was accepted by the public trustee representing Mrs. Moss. ICBC was not aware that Mrs. Moss had died in the interim. ICBC made a unilateral mistake and yet the Court ordered that the contract be rescinded. What was the rationale?

Accepted Answer

The answer of In Moss v. Chin, Chin's insurer, ICBC,...

Question 3

Mike is given a bottle of wine as a gift. Josh, a neighbour, sees it and recognizes it as a very rare bottle. Knowing that Mike doesn't drink, Josh offers him $300 for it, which he believes to be a fair price. Mike happily agrees. Later, when Josh is looking up the price of the bottle on eBay, he realizes that it is not a valuable bottle of wine at all. He had confused it with another vintage. Josh, who is taking a law class, wonders whether or not he could have the contract set aside. Which of the following statements is true?

Accepted Answer

Contracts can be set aside for reasons such as fraud, duress, undue influence, or if enforcing them would be unconscionable. A unilateral mistake, especially one not induced by the other party, typically does not render a contract voidable unless it would be unfair or unjust to enforce it.

Question 4

In AMJ Campbell v. Kord Products Inc., a comma was inserted into the contract with the effect that both "freight" and "rebates" would be deducted from the sale price, rather than simply "freight rebates." This resulted in a difference of price amounting to $759,000. What was the result?

Accepted Answer

The Court denied the request for rectification because it was not clear both parties had the same intention. Rectification is granted when there's evidence that both parties had a common intention that was not reflected in the written contract due to a mistake.

Question 5

In 978011 Ontario Ltd. v. Cornell Engineering Co., a businessman signed a contract without reading it. He later discovered it contained a provision with which he did not agree. What did the Court hold?

Accepted Answer

The Court refused to grant an equitable remedy to correct a mistake that the businessman himself had allowed, emphasizing the importance of reading and understanding a contract before signing it.

Question 6

Misgana ran into Tarja at their local gym. Tarja, it turns out, operated an art gallery that did custom framing and mounting. Misgana had some beautiful prints she wanted to have put into special frames and agreed to pay Tarja $400 to have this done. Tarja passed the task along to her new assistant, Shandy. Shandy used the wrong adhesive when mounting the prints, which meant they did not stick properly to the backing. Which of the following is true?

Accepted Answer

Misgana entered into a contract with Tarja, not Shandy. Tarja, as the business owner and the one who agreed to provide the service, is responsible for the actions of her employees, including any breach of contract. Misgana's legal recourse for the breach would be against Tarja, the party with whom she has a contractual relationship.

Question 7

When you went home for Thanksgiving dinner, your great aunt, now 80 years old, seemed very unhappy. You learned that she had just signed a contract to buy an expensive condominium in a retirement community. She had attended a real estate "seminar" with her friend. In trying to think of a way for her to get out from under this contract, you review mistake, duress, undue influence, and unconscionability. Which of the following is false?

Accepted Answer

The statement about mistake is false because there is no automatic presumption of mistake in contract law. To claim a contract is voidable due to mistake, the party must prove the existence of a mutual or unilateral mistake that is material to the contract, not that there is an automatic presumption of mistake.

Question 8

Kassem was a real estate agent with his own firm. Because his agency was new in a competitive field, he hired the company of Barrett and Barrett Ltd. to advise on an advertising strategy and to design ads for the newspaper and for brochures. Jack Barrett, senior employee, was handling the market research, and the employee Armstrong was doing the illustrations. When the work was complete, the ads went to press. Unfortunately, after the printing, it was discovered that in all the ads and in every brochure "Kassem" was spelled "Kassim." Armstrong had made the mistake in his copy. On these facts, which of the following is true?

Accepted Answer

Kassem entered into a contract with Barrett and Barrett Ltd., not with the individual employees. Therefore, his legal recourse for breach of contract is against the company itself, as it is responsible for the actions of its employees while they are performing work-related duties.

Question 9

A and B entered into a contract for the purchase and sale of three grams of cocaine. B delivered the goods, but A didn't pay. If B sued for payment, the court would not enforce the contract because of which of the following?

Accepted Answer

The contract involves the sale of an illegal substance (cocaine), making the object of the contract illegal. Courts will not enforce contracts that involve illegal activities.

Question 10

Mr. and Mrs. H were induced to sign a mortgage in favour of M Co. Ltd. by Johnston, a man living with their daughter. Johnston led them to believe that the document was an unimportant amendment to an existing mortgage, when in reality, it was a second substantial mortgage of their home. Neither read the document or questioned it. When the payments were in arrears, the mortgagee took an action for foreclosure (to take their home). Which of the following is correct with respect to the legal position of the parties?

Accepted Answer

Assuming there was consideration, they will likely have to honour the mortgage contract even though they didn't read it.

Question 11

Al sells gravel to Bob on credit, and Bob sells it to Chuck, an innocent purchaser. Then Bob runs away with the money, without paying Al. Who will get the gravel if the court holds that the contract between Al and Bob was "void"?

Accepted Answer

If the contract between Al and Bob is deemed "void" by the court, it means that legally, the contract is treated as if it never existed. Therefore, Al retains ownership of the gravel, as the transfer of ownership to Bob (and subsequently to Chuck) is invalidated.

Question 12

Mr. Ho talked with Mr. Tarr, who ran a business called Roscali Roofing. Mr. Ho agreed to pay Tarr $250 for the repair of his roof. In time, Gene Fix, Tarr's employee, came to Mr. Ho's and worked on the roof. Fix used the wrong material in the repairs, which made all his effort worthless, and during the next rain the roof leaked as before. Which of the following is true?

Accepted Answer

The contract was between Mr. Ho and Mr. Tarr (Roscali Roofing), not between Mr. Ho and Gene Fix, the employee. Therefore, Mr. Ho can only sue Mr. Tarr for breach of contract, as Tarr is responsible for the actions of his employees under the principle of vicarious liability.

Question 13

In Works v. Works, what was the result where one party was mistaken about something significant in the contract?

Accepted Answer

The Court may set aside a contract if it deems enforcement unfair or unjust due to a significant mistake, emphasizing the discretionary power of the court to ensure fairness in contractual obligations.

Question 14

Back in the days when people in Vancouver sold houses as houses and not for demolition, Mrs. Reid prepared her house for the market by contracting with Silversteps Ltd. to have her front steps replaced for the sum of $2800. Warren, an employee of the company, worked for days framing the stairs and pouring the concrete. Unfortunately, he had done the framing wrong and, in addition, the concrete mix was faulty, so all of his efforts were in vain, and the stairs were not useable. On these facts, which of the following is true?

Accepted Answer

Mrs. Reid's contract is with Silversteps Ltd., not with Warren or the cement manufacturer directly. Warren is an employee of Silversteps Ltd., and any issues with the work performed fall under the company's responsibility. Mrs. Reid does not have a direct contractual relationship with Warren or the cement manufacturer, so her legal recourse for breach of contract is against Silversteps Ltd. only.

Question 15

The equitable remedy of rectification is granted by the courts in which of the following situations?

Accepted Answer

Rectification is a remedy designed to correct mistakes in the written documentation of agreements, ensuring that the document accurately reflects the true agreement between the parties. It is specifically applicable when, due to a mistake, a written document fails to include a term or includes an incorrect term that the parties had actually agreed upon. This remedy does not apply to disagreements over the meaning of terms, misrepresentations (whether fraudulent or innocent), or situations where a person buys something they already owned.

Question 16

Lars Jepsen, a fisherman from Tofino, regularly sells his catch to packing plants in Steveston. His shipment had already left dock last Monday, but he didn't contract for its sale until yesterday. He sold this shipment for $10,000 to B.C. Packers. Jepsen still owes Sam $3000, part of his commission for having sold one of his waterfront properties. This morning he assigned to Sam, in writing, $3000 of the $10,000 owed under the contract with B.C. Packers. Unknown to Jepsen or B.C. Packers, at the time they made the contract, his transporter had gone down in a storm and all the cargo was lost. Jepsen had no insurance for loss of his boat. Which of the following is correct with respect to his legal position?

Accepted Answer

The answer of Lars Jepsen, a fisherman from Tofino, regularly...

Question 17

While selling the contents of his house in preparation for a move to a condominium, Mr. Lotski sold an antique desk to a Mr. Rogers, who paid by a cheque that was later returned N.S.F. (nonsufficient funds). Lotski later learned that Rogers had sold the desk to Mrs. Lee for cash, which he took and then disappeared. Who is entitled to the desk if the court holds that the first contract between Lotski and Rogers is voidable?

Accepted Answer

If the contract between Lotski and Rogers is voidable, Rogers had the right to transfer good title to a good faith purchaser for value, which in this case is Mrs. Lee. Therefore, Lee is entitled to the desk.

Question 18

Which of the following situations gives rise to the application of the equitable remedy of rectification?

Accepted Answer

Rectification is an equitable remedy designed to correct a written document that, due to a mistake, does not accurately reflect the true agreement or intention of the parties involved. Option D describes a situation where there is an obvious mistake in a written instrument that fails to reflect the terms of an original oral agreement, which is a classic scenario for the application of rectification.

Question 19

In Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., the defendant attempted to take advantage of a mistake made by the plaintiff. What did the Court hold?

Accepted Answer

The Court held that the defendant's conduct was equivalent to a fraud or a misrepresentation amounting to fraud, and awarded damages in lieu of rectification, recognizing the severity of the defendant's actions in attempting to exploit the plaintiff's mistake.

Question 20

Gomer paid the seller of a car with a worthless cheque. He then sold the car to an innocent person who paid him good consideration. Gomer took the money and left the country. The original seller found out who had the car and wanted it back. Who is entitled to the car if the court holds that the contract between the original seller and Gomer is voidable?

Accepted Answer

In cases where a contract is voidable and the goods have been passed on to an innocent third party who has paid consideration (meaning they have bought the goods without knowing the initial contract was voidable), the innocent third party generally obtains good title to the goods. This is because the law aims to protect innocent purchasers who act in good faith.

Quiz 8: Factors Affecting the Contractual Relationship

In which of the following would the court find that the contract is void (i.e., not a binding agreement) ?