Question 1

Two weeks before Susan's 18^th birthday, her father gave her $3,000 to purchase a car. She chose a used car from the local dealer for $2,700, and having paid cash, drove the car home. After 300 kilometres the brakes needed considerable work. She felt that it might be more prudent to use her father's money as a start to savings for a new car. Accordingly, she returned the car and the keys to the dealer along with a letter that she was repudiating the contract. She had written the letter almost a week prior to her 18^th birthday but was unable to deliver the car and letter until three days after her 18^th birthday. The dealer refused to refund her money, and Susan was forced to bring an action to recover her funds. Discuss the issue of capacity and repudiation that arise in this fact situation.

Accepted Answer

The answer of Two weeks before Susan's 18^th birthday, her...

Question 2

Winston was an engineer of great repute in the field of fluid mechanics. Some years ago, he took out a patent on a general theory of how fluid moves through a particular shape of valve, and a patent on a unique valve specifically adapted for use in a nuclear reactor. He had formed a company that had produced this latter valve in the Canadian market and other countries which used Canada's CANDU reactor. After a number of years of successful business operations, Winston was approached by a group of investors interested in purchasing his company, and a deal was concluded. As part of the contract of purchase and sale, Winston sold the patent to the valve and agreed that he would not work in or carry on any other business manufacturing valves, nor would he engage in any other business that might compete in any way with the purchasers business for a period of ten years. The restrictions applied on a worldwide basis. Winston retired to Florida and after five restless years again became involved in the field of fluid mechanics, making designs for certain parts for nuclear reactors for submarines of the United States Navy. One particular part that he designed and built was based on the patented principles of his general theory, which he had never sold, and while it was similar to his former valve in many ways, a slight change had rendered it patentable in its own right. On learning of the multimillion dollar sales that Winston had effected to the U.S. Navy, the purchasers of his former business brought suit for his breach of the contract. With his new valve, Winston had generated profits of $5 million before the "ten-year waiting period" had expired and $10 million after the period had expired. Discuss the relevant issues of contract bearing on this case, the relevant aspects of business which would assist the court in determining damages, if any, and render your own decision.
A.C. 535.

Accepted Answer

The answer of Winston was an engineer of great repute...

Question 3

Nancy was the administrator of her deceased father's estate. Several years before he died, Wilbur, the father, had entered into a lease agreement with an oil exploration company. The company had leased the rights to explore and drill for oil on Wilbur's farm for a period of 20 years. About two years after entering into the lease, the oil company began drilling. According to the terms of the lease, the company was requested to pay Wilbur a basic monthly fee regardless of whether any drilling was underway, and regardless of the outcome of the drilling. In addition, Wilbur was to receive a substantial additional payment if any drilling proved to be profitable. For about six years before his death, Wilbur suffered from a mental illness that had impaired his ability to remember things. While he seemed generally lucid and aware of his actions in present time, he would be unable to remember events which had occurred only an hour before.
The oil company was not aware of Wilbur's illness at the time it entered into the lease. It became apparent, however, once drilling was underway as Wilbur did not seem to remember that the company had paid him extra amounts as the result of successful drilling. Nancy, who believes that the oil company can afford to pay more for the lease rights wishes to void the lease on the basis of her father's mental incapacity and renegotiate it herself. Discuss the legal principles she will rely upon and the response of the oil company. What would be the likely outcome of Nancy's challenge?

Accepted Answer

The answer of Nancy was the administrator of her deceased...

Question 4

In general, the courts are reluctant to place any impediment in the way of a person seeking employment. As a consequence, a restrictive covenant in a contract of employment will not be enforced unless serious injury to the employer can be clearly demonstrated.

Accepted Answer

Courts typically balance the employer's need to protect their legitimate business interests with the individual's right to work and earn a living. Therefore, a restrictive covenant (such as a non-compete clause) will only be enforced if it is deemed necessary to prevent serious harm to the employer's business, and if it is reasonable in scope, geography, and duration.

Question 5

The protection extended to a minor under the rules of contract may be used by a minor to perpetrate a fraud on an unsuspecting merchant.

Accepted Answer

The protection extended to minors under contract law is designed to shield them from exploitation and unfair dealings due to their lack of maturity and experience, not to enable them to commit fraud.

Question 6

The Indian Act recognizes First Nations bands as legal entities.

Accepted Answer

The answer of The Indian Act recognizes First Nations bands...

Question 7

At age 16, Smith was a promising young hockey player. He was drafted by the Fredericton Firebirds to play for their club, a junior team one step below the professional league. One year into the contract, the Firebirds terminated the contract and required all of their players to sign new four-year contracts. Smith was to receive $250 weekly, along with room and board and the flexibility to complete his high school studies. In return, Smith agreed to play only for Fredericton and gave them the right to trade him to any other team or terminate the contract at any time. On his 18^th birthday, Smith visited the general manager of the Firebirds, and repudiated his contract. Smith had received offers from the professional league, which promised him far greater instruction with superior coaching, as well as $200,000 per season. Smith felt that an early jump on a professional career was vital to him, considering the early retirement age of most hockey players. The general manager was upset with Smith and vowed to bring a suit against him if he signed with the professional league to set an example for the other players. Smith signed the contract with the professional team, and the general manager brought suit against him. Discuss the contractual issues raised in this case, and discuss in particular the issues of capacity, enforceability, and repudiation that bear in this instance. What aspects would a judge take into account in rendering a decision and why?

Accepted Answer

The answer of At age 16, Smith was a promising...

Question 8

Doug, the 17-year-old brother of a friend of yours, bought your old car from you three months ago to get him to and from his new job. He needed a car because there was no public transportation in that area. You agreed to let him pay in 36 monthly installments of $200, but he has paid you only once so far. Yesterday, you asked him to pay up and he told you he had spent all he had earned. When you told him you would have to take him to court, he said that an adult cannot sue a minor on a contract. Today, a tow truck left the remains of the car in your driveway; it had been so badly damaged in an accident that was Doug's fault that it was a write-off. A note on the windshield said "Your car doesn't run too well, but I won't sue. Let's call it quits. Best wishes, Doug." Under your contract he was to have insured the car, but he did not.
a. Discuss whether you have any recourse against Doug.
b. If Doug had bought the car, simply for normal driving, would your answer be any different, and why or why not?

Accepted Answer

The answer of Doug, the 17-year-old brother of a friend...

Question 9

Jolene, aged 16, is hired by the Sparkle Company, a costume jewellery manufacturer, to learn the design and manufacture of costume jewellery for the upscale market. Under the contract she signs, she will receive quite a low salary for the first three years, and then will be put on the regular pay scale once her apprenticeship is completed. After a year, her designs are being sought by stores in Europe and the U.S.A. The world's largest and most prestigious costume jewellery firm, located in Paris, wishes to hire her and pay her a fabulous salary as well as give her the free use of a large apartment in a very desirable neighbourhood in Paris. Jolene wants to accept the offer from the firm in Paris. Sparkle's management refuses to release her from her contract because her designs are building their reputation. "We taught her everything she knows," says the president of Sparkle. Discuss the positions of Sparkle and Jolene in these circumstances.

Accepted Answer

The answer of Jolene, aged 16, is hired by the...

Question 10

Don rented a small store from a landlord to carry on a business. Don stated that he was of legal age, 18, to carry out the deal when, in fact, he was only 17 years old. After a short period of time Don realized that his business plans were not working out and it would be in his best interest to return to school. By this time, the landlord was wondering why he had not received a cheque for Don's rent. When he confronted Don about this, Don informed him of his plans. The landlord told Don he would have to pay for the time he occupied the premises. Don said that he would not pay, and the landlord could not force him to pay because he was not of legal age and was insolvent. Discuss this situation using your knowledge of the law governing age of majority.

Accepted Answer

The answer of Don rented a small store from a...

Question 11

Any business firm or merchant that decides to enter into a contract with a minor assumes the risk (in the case of a contract for a non-necessary) that the minor might repudiate the agreement.

Accepted Answer

Contracts with minors for non-necessaries are generally voidable at the option of the minor, meaning the minor can choose to repudiate or cancel the agreement, leaving the business or merchant at risk.

Question 12

The legality of the subject matter of a contract determines its validity and enforceability. Legality is generally determined on the basis of public policy or public interest; any agreement contrary to these considerations may be illegal or void.

Accepted Answer

The legality of the subject matter is a fundamental criterion for determining the validity and enforceability of a contract. Contracts that violate public policy or are against public interest are considered illegal or void, as they do not comply with legal standards and societal norms.

Question 13

An agreement with a public official, whereby the official would use his or her position to obtain a benefit for the other party in return for payment, is both legal and enforceable.

Accepted Answer

Such an agreement constitutes bribery, which is illegal and unenforceable as it involves a public official abusing their position for personal gain.

Question 14

Jasmine wagered $10,000 on the tables at Las Vegas, where gambling is legal. She paid her gambling debt by a cheque drawn on her Ontario bank account, but immediately put a stop payment on the cheque when she got home where gambling is illegal. Our courts will not enforce the Nevada court's judgment for the casino owners.

Accepted Answer

Courts in jurisdictions where gambling is illegal may refuse to enforce gambling debts, even if they were legally incurred in a place where gambling is legal, like Nevada.

Quiz 9: Legal Capacity to Contract and the Requirement of Legality