Question 1

A makes a contract under which B Company is to repair and repaint A's pier.Under the contract,A has the right to specify the materials to be used.B Company induces A to specify the use of a particular paint that it made,giving A assurances of its quality.The paint is supplied by B Company,but it is found to be unsuitable,and A has to spend $40 000.00 to correct the matter.In a lawsuit by A against B,

Accepted Answer

B Company induced A to specify the use of a particular paint, giving assurances of its quality. This inducement of the quality of paint formed the consideration for the main contract to repair and repaint A's pier, creating a collateral contract. As the paint turned out to be unsuitable and A had to spend money to correct the matter, A can sue B Company for breach of contract.

Question 2

The plaintiffs were growers of oranges in Spain and the defendants were ship owners.The plaintiffs wished to export their oranges to England and shipped them to the defendants' vessel,relying on an oral promise by the defendants' agent that the vessel would sail straight to London.In fact,the vessel went first to Antwerp,so that the oranges arrived late in London and the plaintiffs lost a favourable market.When the plaintiffs claimed damages for breach of contract,the defendant owners relied on the bill of lading,which expressly allowed them to proceed "by any route whether directly or indirectly" to London.In this case,

Accepted Answer

C

Question 3

Allen was negotiating to rent a flat in Bob's house.During the negotiations,Allen told Bob that if he took the flat,he would have use of two basement rooms for the storage of his surplus furniture and also the use of the garden.Subsequently,a written agreement was drawn up for the lease of the flat that made no reference to either the storage rooms or the garden.In this case,

Accepted Answer

E

Question 4

A is employed by B as a truck driver.C is A's partner,and they go on deliveries together.One day,while backing up the truck,A drives negligently and injures C.C successfully sues B on the basis of vicarious liability.In a law suit by B against A,

Accepted Answer

The court will imply a term into A's contract of employment with B that A will take reasonable care and skill in the performance of his duties. This is because as an employee, A owes a duty of care to his fellow employee C, and B, as the employer, is vicariously liable for A's negligent acts. Therefore, it is reasonable for the court to imply such a term to ensure that A takes reasonable care and skill in the performance of his duties.

Question 5

What is a condition precedent?

Accepted Answer

A condition precedent is any set of circumstances or events that the parties agree must be satisfied or must happen before their contract takes effect. This means that the contract will only come into force if and when these conditions are met.

Question 6

A and B enter into a lease whereby A is to lease a unit in a plaza from B to be used as a retail men's clothing store.When the lease is drawn up and signed,it simply says that A is leasing the unit as a store.A now takes the position that he can have any kind of store and decides to rent out videos and DVDs,just like the Video and DVD store already in the plaza.In this situation,

Accepted Answer

The court will attempt to resolve the ambiguity in the lease agreement by looking into the intentions of both parties (A and B) and will permit evidence that shows what A intended to use the store for and that B leased the unit to A based on this understanding. This approach helps to clarify the ambiguous term "store" in the lease.

Question 7

An implied term is

Accepted Answer

An implied term is a term that is not expressed in the contract, but which the parties, as reasonable persons, would have included had they thought about it. This can be inferred from the circumstances surrounding the contract, the words used, and the conduct of the parties. It is not something that the court will ask the jury to consider implying, nor is it something that the promisor necessarily intended to include in the contract. The parties may not have specifically advised the court that a term could be implied, but it may be inferred by the court nonetheless.

Question 8

Mercantile Limited,a corporation in Toronto,enters into an agreement with Jackson to advance $300 000 to Jackson for the purchase of farming equipment.Jackson agrees to give Mercantile Limited a mortgage over his home as security for the advance of the money.The terms of the agreement contain an appraisal provision that the commitment to make the loan is subject to an appraisal of Jackson's home of at least $350 000.The appraisal provision is known as

Accepted Answer

A condition precedent is a contractual condition that must be met before the parties are required to perform their respective obligations. In this scenario, the agreement to advance the money is contingent upon an appraisal of Jackson's home being at least $350,000, making it a condition that must be satisfied before Mercantile Limited is obligated to provide the loan.

Question 9

A and B have just signed a written agreement for the purchase by A of B's house.During the negotiations,A made it clear to B that his purchase was conditional on A conducting a building inspection of house within five days of the date of the agreement,which was satisfactory to A.However,this condition is not included in the agreement.In this situation,

Accepted Answer

The condition of A conducting a building inspection within five days and it being satisfactory is a condition precedent to the agreement of purchase and sale. As it was a condition that had to be met before the agreement was even finalized, it can be presented as evidence even though it is not included in the written agreement. The parol evidence rule does not apply as it is not contradicting or varying the terms of the written agreement. The Statute of Frauds also does not apply as it only requires written proof of the agreement for the sale of land, which has been satisfied in this case.

Question 10

Michael Products Limited and Jensen Corporation enter into an agreement under which Michael Products Limited agrees to supply 20 tonnes of soap to Jensen Corporation.Jensen agrees to pay $20 000 for the product.The agreement includes a provision to the effect that the agreement is conditional of Jensen providing a letter from a bank,no later than two days after the execution of the agreement,that Jensen Corporation has the funds to pay for the goods.Three days after the signing of the agreement,Michael Products Limited has not provided the letter from the bank.Jensen Corporation can ________ because ________.

Accepted Answer

The agreement contains a condition which must be fulfilled within two days and since Jensen Corporation did not provide the letter from the bank within the stipulated time, the agreement becomes void. Hence, Jensen Corporation can walk away from the contract.

Question 11

In choosing between conflicting testimony,a court will

Accepted Answer

When faced with conflicting testimony, a court will seek corroboration from a third party if possible. If that is not possible, the court will base its decision on the credibility of the parties involved. This approach allows the court to make a well-reasoned decision based on the available evidence.

Question 12

A agrees to paint B's house.B then says to A,"If you paint my house,I'll give you $500.00." In this situation,

Accepted Answer

The statements collectively describe how the initial agreement to paint the house, which lacked a specified price, becomes a complete contract with the addition of the promise to pay $500. This promise serves as the consideration that transforms the initial agreement into a legally binding contract, making all the options correct in the context of contract formation.

Question 13

What is the parol evidence rule?

Accepted Answer

The parol evidence rule is a rule of contract law that prevents a party from introducing extraneous evidence (i.e. evidence outside of the written contract) to modify the terms of an agreement that is already embodied in a written document. This means that a party cannot introduce evidence of a prior agreement or statement that contradicts the terms of the written contract. The purpose of the rule is to ensure that the terms of a written contract are clear and that oral negotiations that occurred prior to the written agreement are not used to alter the final terms of the contract.

Question 14

A and B have been dealing together for 10 years,during which time A buys steel ingots from B.Throughout the 10-year period,A has always ordered the highest quality steel from B and B has delivered it.Last week,A ordered 1000 ingots of steel from B,but when he filled out the purchase order,A forgot to specify the highest quality of steel,and when the purchase order was received,B's employee delivered steel ingots of a lesser quality to A.A refuses the shipment,and B,whose business is suffering in a bad economy,finds himself forced to sue A.In this situation,

Accepted Answer

The court will look at the previous dealings of A and B and imply a term that B was to supply steel ingots of the highest quality. This is because the parties have a history of dealings and have established a consistent pattern of behavior where A always orders the highest quality steel from B, and B has always delivered it. This consistent pattern of behavior creates an implied term in the contract that the steel ingots to be delivered should be of the highest quality.

Question 15

Which of the following is NOT a usual source of implied terms?

Accepted Answer

Discussions prior to entering a contract may be used to clarify or supplement the express terms of the contract, but they would not usually be a source of implied terms. The generally accepted sources of implied terms are business efficacy, trade customs, and statutory requirements.

Question 16

A collateral contract is

Accepted Answer

A collateral contract is indeed a separate agreement made at the same time as the main agreement between the parties, but it is not included in the main written document. This allows for additional terms or promises that are not part of the main contract to be enforceable.

Question 17

When a person goes to court to have a provision of a contract interpreted,the court will

Accepted Answer

When a court is asked to interpret a provision of a contract, it will seek the most reasonable meaning that can be attributed to the words, based on the circumstances surrounding the contract. The court will consider the language used in the contract, as well as its context and purpose. The court will not typically ask a jury to determine the meaning, nor will it assign its own meaning to the words. While the court may consider the facts of the situation, it will ultimately rely on the language of the contract to determine its meaning. Similarly, while the court may ask the parties what they meant, this would not be the sole basis for its interpretation.

Question 18

A and B are negotiating a contract by faxes going back and forth between them.During their negotiations,they agree on the subject matter of the contract,the price,and the date of performance.However,both agree that once the negotiations are complete,a formal written contract will be prepared and signed.In this situation,

Accepted Answer

The answer of A and B are negotiating a contract...

Question 19

Which of the following is NOT true?

Accepted Answer

The parol evidence rule generally excludes evidence of prior or contemporaneous oral agreements that contradict a written contract, but it does not exclude evidence of subsequent oral agreements. Therefore, statement D is not true as it incorrectly states that the parol evidence rule excludes evidence of oral contracts entered into after the written contract.

Question 20

A agrees to buy a share in B's invention for a certain sum on the condition that C first approves the invention.However,the written contract makes no reference to C's approval.C never gives his approval.B now sues A for the purchase price.In this situation,

Accepted Answer

The written contract explicitly states that C's approval is a condition for the contract between A and B. Therefore, C's approval is a condition precedent that must be fulfilled before the contract can come into existence. Since C never gives his approval, there is no valid contract between A and B, and B cannot sue A for the purchase price.

Quiz 10: The Interpretation of Contracts