Question 1

Ms. Sherbourne bought a candy bar costing 80 cents. She paid for it by presenting the storekeeper with a $5 bill. While this is not a legal tender, it is so customary to give change that the storekeeper would have to warn customers if he was only prepared to accept exact tender of the price of the goods.

Accepted Answer

In many places, it is customary for storekeepers to provide change for larger bills, even if the exact amount is not tendered, unless otherwise stated.

Question 2

Cecilia agreed to buy an antique Japanese sword from Andrew. After the contract is formed but before Andrew delivers the sword or Cecilia pays any money to him, the government passes a law that makes it a crime to buy a sword other than a fencing foil. Since the contract was made before the law was passed, it is not frustrated.

Accepted Answer

The contract is frustrated because the new law makes the performance of the contract illegal, regardless of when the contract was formed.

Question 3

Julian decides that he would like the house being built for him, under contract with Porter Developers, to have a blue tile roof instead of a red tile roof. The two kinds of tile are equally available and are the same price, and no roofing of the house has yet been done. Porter alleges that this is a material alteration of the terms of the contract, since the roof is one-tenth of the value of the house, and that, therefore, it cannot be done without their agreement to the change, which they will only give for a further payment of $5,000. They are right.

Accepted Answer

Changing the color of the roof tiles, when both options are equally available and priced, and no work has been done yet, typically would not be considered a material alteration of the contract terms. A material alteration fundamentally changes the obligations, rights, or remedies under a contract. A change in color, without additional cost or impact on the availability, generally does not meet this criterion.

Question 4

Lucas offered to purchase Baker's snowmobile if he could arrange a loan with the bank for the funds. Lucas and Baker signed a written purchase agreement which did not mention the fact that Lucas did not have the necessary funds in his possession. The proviso "if he could arrange a loan with the bank for the funds" would be a condition precedent.

Accepted Answer

A condition precedent is an event or state of affairs that must occur before a duty to perform a promise in a contract arises. In this case, Lucas's ability to arrange a loan with the bank for the funds before the purchase agreement becomes binding is a condition precedent.

Question 5

Damian and Raja agree in writing that Raja will buy Damian's cottage. If Raja changes her mind and refuses to buy the cottage, Damian can get specific performance provided he can prove that he tried to transfer the title deed to the property on the closing date and Raja would not accept it.

Accepted Answer

Specific performance is a legal remedy in contracts where the court orders the breaching party to fulfill their obligations as per the contract, often used in real estate transactions where monetary damages are insufficient.

Question 6

Lucas offered to purchase Baker's snowmobile if he could arrange a loan with the bank for the funds. Lucas and Baker signed a written purchase agreement which did not mention the fact that Lucas did not have the necessary funds in his possession. If the bank refused to lend Lucas the money, the contract would be enforceable against Lucas.

Accepted Answer

The contract between Lucas and Baker is contingent upon Lucas obtaining financing from the bank. If Lucas cannot secure the loan, the condition precedent (obtaining the loan) is not met, and therefore, the contract cannot be enforced against him for failing to purchase the snowmobile.

Question 7

Gavin is in the business of local transport of goods, as well as running a rural bus service. He contracts for a delivery van from his local truck dealer, but before the dealer places the order with the manufacturer, Gavin amends the order to request the minibus model of the delivery van. Gavin and the dealer have created a new contract that replaces the prior one.

Accepted Answer

By amending the order to request a different model, Gavin and the dealer have mutually agreed to modify the terms of their original agreement, effectively creating a new contract that supersedes the prior one.

Question 8

Imperfect tender, also referred to as imperfect performance, does not represent a breach of contract.

Accepted Answer

Imperfect tender or imperfect performance refers to a situation where the goods or services provided do not fully meet the specifications or requirements outlined in a contract, which can be considered a breach of contract.

Question 9

Kirk entered into a contract with Yemmi to haul gravel in his large tandem truck from Yemmi's gravel pit to a building site some five kilometres distant, at $60 per load. Before Kirk was to begin performance, his truck was destroyed in a serious traffic accident. Kirk need not perform the contract, as the contract was frustrated by the destruction of the truck.

Accepted Answer

The destruction of Kirk's truck, which was essential for performing the contract, constitutes a frustration of the contract because it makes performance impossible through no fault of either party.

Question 10

Kirk entered into a contract with Yemmi to haul gravel in his large tandem truck from Yemmi's gravel pit to a building site some five kilometres distant, at $60 per load. Before Kirk was to begin performance, his truck was destroyed in a serious traffic accident. If Kirk deliberately destroyed his truck, Yemmi can insist that he perform the agreement or compensate Yemmi for any loss that might result from Kirk's non-performance.

Accepted Answer

If Kirk deliberately destroyed his truck, it would be considered a willful breach of contract, allowing Yemmi to seek specific performance or damages for the losses incurred due to Kirk's non-performance.

Question 11

Sangster and Williams enter into a verbal contract with each other. They later decide to put it in writing. This is a substituted agreement.

Accepted Answer

A substituted agreement occurs when the original contract is replaced with a new one. Simply putting a verbal contract into writing does not constitute a substituted agreement; it is merely documenting the existing terms.

Question 12

A judgment by Mr. Justice Exx for the plaintiff Wy, in his suit against Zedd for breach of a condition of a contract, has the effect of discharging the contract, so that Wy has no further obligations under it, and substitutes the terms of the judgment for the terms of the contract, which Zedd must then perform.

Accepted Answer

A judgment for breach of contract typically discharges the original contract and replaces it with the court's judgment, which outlines the new obligations that the breaching party must fulfill.

Question 13

The case of Turney et al. v. Zhilka accurately describes the state of the law in Canada with respect to the effect of conditions precedent.

Accepted Answer

The case of Turney et al. v. Zhilka is a leading Canadian case that addresses the effect of conditions precedent in contract law, establishing that such conditions must be fulfilled for the contract to become binding.

Question 14

Joe sold a barn full of hay to Sheila but, before Sheila could transfer it to her own barn, a hurricane blew the roof off Joe's barn, and that part of the hay that did not blow away was ruined by the torrential rains. The contract is frustrated.

Accepted Answer

The contract is frustrated because an unforeseen event (the hurricane) has made it impossible to fulfill the contract as originally intended, without fault of either party.

Question 15

Kirk entered into a contract with Yemmi to haul gravel in his large tandem truck from Yemmi's gravel pit to a building site some five kilometres distant, at $60 per load. Before Kirk was to begin performance, his truck was destroyed in a serious traffic accident. If Kirk owned a fleet of trucks, and Kirk had a number of spare trucks, the doctrine of frustration would not apply to the case, and Kirk would be obliged to perform the contract.

Accepted Answer

The doctrine of frustration applies when an unforeseen event renders contractual obligations impossible to perform. Since Kirk has spare trucks, he can still fulfill the contract, thus the doctrine of frustration does not apply.

Question 16

Damian and Raja agree in writing that Raja will buy Damian's cottage. On the date set for closing the sale, it is up to Raja to come to Damian to make payment of the purchase price, unless the contract says otherwise.

Accepted Answer

In a typical real estate transaction, the buyer is responsible for presenting payment to the seller on the closing date unless the contract specifies a different arrangement.

Question 17

The vast majority of contracts are discharged by operation of law.

Accepted Answer

The vast majority of contracts are discharged by performance, meaning that the contracts are fulfilled as agreed upon by the parties involved. Discharge by operation of law is less common and occurs in specific situations such as bankruptcy, the death of a party in certain contracts, or the occurrence of an impossibility to perform.

Question 18

The effect of a condition precedent is that the contract does not come into effect unless the condition is satisfied.

Accepted Answer

A condition precedent is a condition that must be fulfilled before a party's contractual obligation becomes binding. If the condition is not satisfied, the contract does not come into effect.

Question 19

Bronson signs up to join the army because the advertisements make it look like summer camp. Later, he changes his mind and shoots himself in the foot, so he won't have to go. This does not frustrate the contract, though the contract may be avoidable on other grounds.

Accepted Answer

Bronson's self-inflicted injury does not frustrate the contract because frustration requires an unforeseen event outside the control of the parties that makes it impossible to fulfill the contract. His actions, while potentially providing grounds for the contract to be voided on other bases (such as incapacity to perform), do not constitute legal frustration.

Question 20

Lucas offered to purchase Baker's snowmobile if he could arrange a loan with the bank for the funds. Lucas and Baker signed a written purchase agreement which did not mention the fact that Lucas did not have the necessary funds in his possession. If Baker claimed against Lucas for breach of the contract, Lucas could raise the agreement concerning the need for a bank loan as a collateral agreement, allowing him to avoid the contract.

Accepted Answer

A collateral agreement must be consistent with the main contract and not contradict its terms. Since the written purchase agreement did not mention the need for a bank loan, Lucas cannot use it as a collateral agreement to avoid the contract.

Quiz 13: Performance of Contractual Obligations