Question 1

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." If Z made the guarantee in writing, and signed the document, the guarantee would not be enforceable until X defaulted on a demand for payment by Y.

Accepted Answer

The guarantee is a secondary obligation, meaning Z's promise to pay is contingent upon X's failure to pay. Therefore, it becomes enforceable only after X defaults on the payment.

Question 2

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." Z's promise would be unenforceable, unless it was made in writing and signed by Z.

Accepted Answer

Under the Statute of Frauds, certain types of contracts, including promises to answer for the debt of another, must be in writing and signed by the party to be charged (in this case, Z) to be enforceable.

Question 3

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. Ravi may successfully plead the Statute of Frauds as a defence.

Accepted Answer

The answer of Ravi, an art collector, had been made...

Question 4

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The verbal agreement is unenforceable.

Accepted Answer

Verbal agreements can be enforceable, especially if there are witnesses to the agreement, as in this case where Ravi publicly accepted the offer. Contracts for the sale of goods over a certain value (which varies by jurisdiction but is often $500 or more) typically must be in writing to be enforceable under the Statute of Frauds; however, exceptions exist, such as when there is partial performance or admissions in court, or if the goods are specially manufactured. Since this scenario does not specify jurisdiction or provide details that would definitively invoke the Statute of Frauds, and given the public acceptance, it's incorrect to state categorically that the verbal agreement is unenforceable.

Question 5

Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. Joyce's promise does not have to be in writing to be enforceable.

Accepted Answer

Under the Statute of Frauds, a promise to answer for the debt of another must be in writing to be enforceable, unless it falls under an exception, which is not indicated in this scenario.

Question 6

Hrushka is the executor of her father's will. She does not want to liquidate any part of his stock portfolio at this time to pay off a large debt he owed Tom, because the market is very low right now and she would get a better price later in the year. Her verbal promise to Tom that she will repay him herself is unenforceable.

Accepted Answer

As an executor, Hrushka's personal promise to pay off her father's debt from her own funds, without a written agreement, is generally considered unenforceable due to the Statute of Frauds, which requires certain agreements to be in writing to be legally enforceable.

Question 7

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The verbal agreement is valid and enforceable if the witnesses testify in court that an agreement of purchase and sale was made.

Accepted Answer

Verbal agreements can be legally binding and enforceable, especially if there are witnesses to testify that an agreement was made, even in the context of buying and selling artwork.

Question 8

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." The contract of guarantee is subject to the Statute of Frauds.

Accepted Answer

The contract of guarantee is subject to the Statute of Frauds because it is a promise to answer for the debt, default, or miscarriage of another person, which requires a written agreement to be enforceable.

Question 9

Pashi promises, in an unsigned note, to give Neve, her daughter-in-law-to-be, the family jewellery and some share certificates worth $100,000 on the day she marries Pashi's son. If she does not do so, Neve can enforce the agreement since it is evidenced in writing and she, by marrying, gave Pashi consideration for her promise.

Accepted Answer

The agreement may not be enforceable because it lacks a formal contract element, specifically being unsigned, and consideration from Pashi's perspective might not be legally sufficient as marriage may not directly benefit her in a way that constitutes consideration in a contractual context.

Question 10

Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. Verity must first try to get the money from Al before approaching Joyce.

Accepted Answer

Verity Finance must first attempt to collect the debt from the primary borrower, Al, before seeking payment from Joyce, who is not the original debtor but has offered to pay if Al cannot.

Question 11

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. Ravi may successfully plead that his words were agreement in principle only.

Accepted Answer

Ravi's words were agreement in principle only because he did not intend to be bound by them until he had received legal advice.

Question 12

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." Z has made an offer to guarantee the payment of the debt of X.

Accepted Answer

Z's statement constitutes an offer to act as a guarantor for X's debt, meaning Z has promised to fulfill the payment obligations should X fail to do so.

Question 13

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to
A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. If A had given B $10 in cash as a deposit the agreement would be enforceable.
FALSE

Accepted Answer

The answer of In the presence of several witnesses, A...

Question 14

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to
A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. Assuming the verbal agreement is unenforceable, the contract would still exist.
TRUE

Accepted Answer

The Statute of Frauds requires certain types of contracts to be in writing to be enforceable. However, even if a verbal contract is unenforceable, it can still exist as a valid contract. In this case, the verbal agreement between A and B to purchase the farm is unenforceable due to the Statute of Frauds. However, the contract still exists as a valid contract, and A can sue B for breach of contract.

Question 15

Mr. Guimond was teaching his son, Jacques, to drive in the family car when Jacques failed to apply his brakes soon enough and hit the car in front, causing considerable damage. Mr. Bouchard, the driver of the other car, should get Mr. Guimond's promise to pay for his repairs in writing or it will be unenforceable.

Accepted Answer

Under the Statute of Frauds, agreements involving the payment of another person's debt (suretyship) must be in writing to be enforceable.

Question 16

Lev and Drew have been negotiating verbally and in writing concerning the purchase by Lev of a number of items manufactured by Drew's company. Lev insists that they have only reached the stage of having an agreement in principle but Drew says they have a binding contract. If one of the terms they agreed upon verbally was that they would execute a written contract, the court will hold that a contract does exist.

Accepted Answer

If the parties agreed that a written contract would be executed, it indicates that they did not intend to be bound until the written contract was signed, suggesting no binding contract exists yet.

Question 17

Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. Joyce's promise is called an indemnity.

Accepted Answer

Joyce's promise is considered a guaranty because she is agreeing to fulfill the obligation if Al fails to do so, not an indemnity which would involve compensating for loss or damage.

Question 18

Ravi, an art collector, had been made a standing offer by a gallery to purchase one of his paintings for $150,000. At shows and luncheons of the art community he had previously rejected the entreaties, knowing the painting to be worth at least twice as much. On the latest occasion of a luncheon at which Ravi was to deliver an art commentary to the guests, the gallery made its offer once more. To himself, Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate. In the course of his speech, he acknowledged and accepted the offer. Two days later, Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation, and no tax deduction for such a "donation" could be expected. Ravi then refused to sell the painting to the gallery. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, the gallery sued Ravi for breach of contract, and for a decree of specific performance to compel Ravi to sell it the painting. The gallery can successfully answer all of Ravi's case by raising the parol evidence rule.

Accepted Answer

The parol evidence rule prevents the introduction of evidence of prior or contemporaneous negotiations and agreements that contradict, modify, or vary contractual terms if the written contract is intended to be a complete and final expression of the parties' agreement. However, it does not apply to situations where a party is misled or there is a misunderstanding about a fundamental aspect of the agreement, such as the charitable status of the buyer in this case. Ravi's misunderstanding about the tax implications of the sale could be argued as a basis for invalidating the agreement due to a mistake or misrepresentation, rather than a situation where the parol evidence rule would bar his defense.

Question 19

In the presence of several witnesses, A verbally agreed to purchase B's farm for $175,000. The next day, B changed his mind, and refused to sell the farm to
A. On the strength of the verbal agreement of purchase and sale made in the presence of witnesses, A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm. B may successfully plead the Statute of Frauds as a defence.
TRUE

Accepted Answer

The Statute of Frauds requires certain contracts, including those for the sale of land, to be in writing to be enforceable. A verbal agreement, even with witnesses, does not satisfy this requirement.

Question 20

Joyce's son, Al, borrowed money from Verity Finance. He lost his job last month and has not made the latest payment on the debt. When Verity's collections department telephones, Joyce answers the phone. She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss. If Verity, without Joyce's knowledge, extends the time Al has to make the payments but increases the interest rate by ½%, because he explains about his job loss, they could no longer enforce Joyce's promise, regardless of whether or not it was in writing and signed by her.

Accepted Answer

Joyce's promise to pay Al's debt is considered a surety, which is contingent upon the original terms of the contract between Al and Verity Finance. If Verity unilaterally alters the terms of the agreement with Al (such as extending the payment period and increasing the interest rate), without Joyce's consent, her promise can be voided because the original contract she agreed to guarantee has been materially altered.

Quiz 10: The Requirements of Form and Writing

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." The contract of guarantee is subject to the Statute of Frauds.

X wished to purchase a motor vehicle from Y on credit, but X was unemployed, and Y was hesitant to sell to him for that reason. Z, who was quite wealthy, said to Y: "Sell X the automobile on credit, and if X does not pay you, I will." Z has made an offer to guarantee the payment of the debt of X.