Question 1

Contract law ensures that all parties concerned may rely on the terms included in the contract.

Accepted Answer

Contract law is designed to ensure that all parties involved can rely on the terms and conditions laid out in the contract. This includes establishing the rights and obligations of each party, creating legal enforceability for the agreement, and providing a framework for resolving disputes or breaches of the contract. Ultimately, the goal of contract law is to promote trust, fairness, and transparency in commercial transactions.

Question 2

A court has been asked to determine a matter involving a contractual dispute between two large corporations.Which of the following sequences of procedures will the judge apply to arrive at the court's decision?

Accepted Answer

The judge will first evaluate the terms of the contract and the conduct of the parties, and then apply the relevant law to arrive at a determination. This sequence ensures that the judge considers both the legal and contractual aspects of the dispute before making a decision. Option B is the most logical order to follow.

Question 3

When hearing a case,the court will generally assume equality of bargaining power,even though it is not always a valid assumption.

Accepted Answer

The court does tend to assume equality of bargaining power in cases, but this assumption may not always be valid.

Question 4

Where a manufacturer has been discovered to have knowingly produced and sold a defective product to the public,which of the following would offer the most favourable remedy for salvaging that company's business reputation?

Accepted Answer

Taking ownership of the problem and compensating affected customers would demonstrate accountability and a commitment to rectifying the situation. This could help restore trust and credibility with the public. Denying wrongdoing or trying to create confusion on social media would likely have the opposite effect and damage the company's reputation further. A public apology could also be beneficial in combination with compensation.

Question 5

Rachel has been laid off from her job and will be unable to meet all of her financial obligations if a new job does not materialize in six months.She canvassed the possibility of selling her home with several agents.One agent offered a reduced commission rate and a guarantee her home will sell within three months without a price reduction.Why should Rachel secure a formal contract based on her negotiations with this agent?

Accepted Answer

By securing a formal contract, Rachel will have legal grounds to sue the agent for breach of contract if they fail to perform as promised. This will provide her with a sense of security and assurance that the agent will do their best to sell her home within the promised timeframe, without requiring a price reduction. Option A is incorrect as the contract should protect both parties' interests, not just the agent's. Option B is not the best choice as the agent should be motivated to perform regardless of a formal contract due to their reputation. Option C is not relevant as the question does not mention anything about no-fault cancellation.

Question 6

With respect to a contractual business relationship,which of the following would most likely have the greatest influence in orchestrating the occurrence of an economic breach?

Accepted Answer

Deciding to secure greater profits through non-performance of an existing contract would be the most likely action to result in an economic breach of the contractual relationship. This goes against the principle of good faith and fair dealing, which is necessary in maintaining business relationships. Seeking methods of maintaining profits when entering into new business relationships, finding practical ways of interpreting contracts to arrive at higher profit margins, and taking an intractable position and forcing an ultimate favourable settlement may have some impact on the business relationship, but they are not necessarily indicative of a breach.

Question 7

In reaching his or her decision regarding a contractual dispute,a judge will always apply the objective standard test.

Accepted Answer

The objective standard test is a fundamental principle in contract law, which requires a judge to apply an objective, rather than subjective, standard in reaching a decision regarding a contractual dispute. This means that the judge will consider the language used in the contract, the circumstances surrounding the agreement, and the intent of the parties involved, rather than purely relying on their own personal beliefs or feelings.

Question 8

Which of the following factors would have the greatest degree of influence regarding a retailer's decision concerning the commencement of a lawsuit against a supplier for breach of a business contract?

Accepted Answer

The significance of the economic harm caused by the breach would likely have the greatest degree of influence as it directly affects the retailer's bottom line and financial stability. The other factors may also be important considerations, but the economic harm caused by the breach is likely the primary determining factor in whether or not to commence legal action.

Question 9

Vivian is the head of the risk management division of a large retail company entering negotiations to hopefully establish a long-term business relationship with a successful importer.When choosing her negotiating team,which of the following recommendations could Vivian reasonably be expected to suggest as criteria for that selection?

Accepted Answer

Vivian, as head of the risk management division, would want to prioritize protecting the company's interests and ensuring a legally enforceable contract. Option C suggests that the negotiating team should have adequate legal knowledge to negotiate such a contract. Options A, B, and D all prioritize unethical and potentially deceptive behavior, which would not be aligned with responsible risk management practices.

Question 10

Traditionally,contract law focuses its attention on the need to preserve long-term business relationships.

Accepted Answer

The answer of Traditionally,contract law focuses its attention on the...

Question 11

Where a court is asked to resolve a dispute involving parties that have reached an incomplete agreement,which of the following could you most reasonably expect a judge to determine as the outcome?

Accepted Answer

In cases of incomplete agreements, courts often find that there is no binding contract to enforce, as essential terms are missing. Therefore, they may decline jurisdiction to provide a remedy under contract law.

Question 12

An incomplete agreement is not contractual because its content is not sufficiently comprehensive.

Accepted Answer

An incomplete agreement lacks essential terms and thus cannot meet the requirements for a valid contract.

Question 13

Contract law principles will be applied by a judge to resolve disputes based on a contract,whether the parties were aware of those principles or not.

Accepted Answer

Contract law principles are a recognized legal framework that judges use to interpret contracts and resolve disputes between parties. Whether or not the parties are aware of these principles, they will be applied by the judge to the extent that they are relevant to the case at hand.

Question 14

If someone has suffered a legal wrong,he or she should automatically sue the wrongdoer.

Accepted Answer

Although a legal wrong may have been committed, it is up to the individual to decide whether or not to pursue legal action. It may not always be practical or desirable to sue the wrongdoer.

Question 15

A large greenhouse grower wanting to source a suitable organic liquid fertilizer contacted Organics.The grower is willing to pay a premium price for Organics' product.Accepting the order would mean Organics could not completely fill existing orders to its current customers.Organics desires the new business but wants to maintain its existing customer base.Which of the following strategies would provide Organics with the best possible solution to this problem?

Accepted Answer

Offering a price break on existing orders in return for varying quantity and delivery date allows Organics to maintain its current customer base while accommodating the new business opportunity.

Question 16

Individuals who negotiate a contract on behalf of their employer are bound to the contract along with their employer.

Accepted Answer

Individuals who negotiate a contract on behalf of their employer are acting as agents, and it is the employer (the principal) who is bound by the contract, not the individuals (agents), assuming the agents acted within the scope of their authority.

Question 17

In most instances,the rules governing contractual disputes are based on the common law.

Accepted Answer

The common law is the basis for most rules governing contractual disputes.

Question 18

With regard to matters concerning contractual business relationships,which of the following is applicable to an economic breach of contract?

Accepted Answer

An economic breach of contract occurs when one party elects to refuse performance of their contractual obligations and instead pays damages for breach. Option A refers to a situation where one party is attempting to negotiate a reduction in price after services have been received, which is not a breach of contract. Option B refers to legal obligations that prevent a business from considering other opportunities, which is not related to breach of contract. Option D refers to completing the performance of contractual obligations, which is not related to breach of contract.

Question 19

The purchase of stationery supplies from a retailer for cash,without an invoice or a receipt being provided in return,is an example of which of the following?

Accepted Answer

The answer of The purchase of stationery supplies from a...

Question 20

The legal rules governing contracts are typically derived from the common law.Which of the following is an example of a contract that would be governed by legislation?

Accepted Answer

The Sale of Goods Act is a piece of legislation that governs contracts involving the sale of goods. Therefore, a contract involving the sale of goods would be governed by legislation rather than common law.

Quiz 5: An Introduction to Contracts