Canadian Business Law Today Canadian 1st Edition Breen

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TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.

1) A void contract is one that never existed.

Answer: True False

2) A voidable contract is one that never existed.

Answer: True False

3) A void contract is one that one party can enforce if they wish.
Answer: True False

4) A voidable contract is one that one party can enforce if they wish.
Answer: True False

5) Capacity is a contractual element that allows the contract to be evaluated by society.

Answer: True False

6) Legality is a contractual element that allows the contract to be evaluated by society.

Answer: True False

7) Voluntariness in a contract means you entered into it freely.

Answer: True False

8) Capacity is the contractual element to protect a vulnerable person from being taken advantage of.
Answer: True False

9) Legality is the contractual element to protect a vulnerable person from being taken advantage of.
Answer: True False

10) The purpose of a contract must be legal and enforceable by a court.

Answer: True False
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11) A court will not enforce a contract that is against public policy.
Answer: True False

12) If a contract conflicts with the interests of society it is against public policy and not enforceable.
Answer: True False

13) When a party is not capable of understanding a contract they may lack the required element of
capacity.
Answer: True False

14) Forcing someone into a contract makes the purpose of the contract illegal.
Answer: True False

15) You can enforce a contract with a friend for not paying the amount owed during a poker game.
Answer: True False

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16) Public policy can change over time and make a once illegal contract legal.
Answer: True False

17) Although some acts may not be illegal, the courts will not enforce a contract that is against public
policy.
Answer: True False

18) If a contract is against public policy, the court will deem the contract void and refuse to enforce it.
Answer: True False

19) Courts are required to enforce contracts that are not illegal but are merely against public policy.
Answer: True False

20) Courts will enforce contracts that are not illegal but merely against public policy.
Answer: True False

21) The parties to a contract must be capable of understanding what they are getting into.
Answer: True False

22) A person lacking capacity determines if the contract is voidable.

Answer: True False

23) Each province has a statute that determines the age of majority.
Answer: True False

24) In Canada, the age of majority is 21.

Answer: True False

25) Generally, contracts with minors are enforceable.

Answer: True False

26) An apprenticeship contract with a minor is a beneficial contract of service and is unenforceable.
Answer: True False

27) Even reasonable contracts with minors are unenforceable.

Answer: True False

28) Contracts with minors for necessaries are enforceable.

Answer: True False

29) If a minor purchased a computer on monthly payments, capacity allows a minor to get out of a
contract but keep the goods.
Answer: True False

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30) An intoxicated person who does not try to set aside the contract upon becoming sober will be bound
by the contract.
Answer: True False

31) Corporations may have limited capacity to enter into contracts.

Answer: True False

32) Labor unions may have limited capacity to enter into contracts.
Answer: True False

33) Enemy aliens may have limited capacity to enter into contracts.
Answer: True False

34) Aboriginal peoples may have limited capacity to enter into contracts.
Answer: True False

35) When deciding whether to end a contract, a court will examine why a party entered into a contract.
Answer: True False

36) A mistake is a wrongful belief about the terms of a contract that caused the person to enter into the
contract.
Answer: True False

37) A mistake is a misunderstanding about the terms of the contract.

Answer: True False

38) A court applies the reasonable person test to determine a mistake.

Answer: True False

39) Rectification is a remedy the court uses to correct a typographical error in a contract.
Answer: True False

40) When a party is unaware of the nature of a contract they can argue non est factum to have the
contract set aside.
Answer: True False

41) If the subject matter of a contract was destroyed prior to contract formation, the contract is voidable.
Answer: True False

42) A person signing a contract can avoid the consequences if they have not been careless and the
mistake is a serious one.
Answer: True False

43) Unjust enrichment is when one party to a contract mistakenly gives a benefit to the other party.
Answer: True False

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44) Misrepresentation is a false statement of fact that induces the other party into the contract.
Answer: True False

45) A misrepresentation must be the statement that induced the party to enter into the contract.
Answer: True False

46) Purposely making a false statement to induce another into a contract is fraudulent misrepresentation.
Answer: True False

47) Purposely making a false statement to induce another into a contract is innocent misrepresentation.
Answer: True False

48) Rescission and damages are remedies for fraudulent misrepresentation.

Answer: True False

49) Rescission and damages are remedies for innocent misrepresentation.

Answer: True False

50) The same remedies are available for both fraudulent and innocent misrepresentation.
Answer: True False

51) The duty of utmost good faith requires parties in a special relationship to make full disclosure before
entering into a contract.
Answer: True False

52) In online transactions, suppliers have a duty to disclose terms that a reasonable person may not
expect in a contract.
Answer: True False

53) Suppliers in online contractual transactions have no special duties when dealing with customers.
Answer: True False

54) An exemption clause is an attempt to limit liability under a contract.

Answer: True False

55) The party relying on an exemption clause only need prove it is reasonable.
Answer: True False

56) It is up to the dominant contracting party to overcome the presumption of undue influence.
Answer: True False

57) Undue influence is presumed for certain relationships of trust and confidence.
Answer: True False

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 58) Having the other party to
a contract obtain independent legal advice prior to signing the contract will
rebut the presumption of undue influence.
Answer: True False

59) Duress is coercing a party into entering a contract through threat or the use of harm to the person.
Answer: True False

60) Duress is a form of threat that forces a person into entering a contract against their will.
Answer: True False

61) A contract made under the threat of violence to the person is void.
Answer: True False

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.

62) Which of the following will not impact the voluntariness of one party's agreement to the contract?
A) Mistake B) Misrepresentation
C) Undue influence D) Fairness
Answer: D

63) Which of the following is not a requirement for a valid contract?

A) Capacity B) Voluntariness C) Legality D) Fairness
Answer: D

64) When a court determines that a contract is illegal the court will:
A) Declare the contract void and put the parties back into the position they were before the
contract
B) Declare the contract void and not offer any assistance to the parties
C) Declare the contract voidable and put the parties back into the position they were before the
contract
D) Declare the contract voidable and treat it like any other breach of contract
Answer: B

65) Which of the following is against public policy?

A) Hiring someone to marry your son
B) Hiring someone to clean your house
C) Hiring someone to steal a car
D) Hiring someone to make a false insurance claim
Answer: A

66) Which of the following would not be considered a necessary?

A) Bus fare B) Clothing C) Television D) Food
Answer: C

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67) In which of the following situations can a minor end a contract with no liability?
A) A contract for the purchase of clothes B) A contract for a future vacation
C) A contract for the medical services D) A contract for the rent on an apartment
Answer: B

68) A person claiming insanity to set aside a contract must show that:
A) The insanity was a permanent condition
B) The other person was not aware of the insanity
C) The insanity was only temporary
D) The other person knew of the insanity
Answer: D

69) Which of the following groups does not have a limit on their capacity to contract?
A) Minors B) Aboriginal people
C) Women D) Corporations
Answer: C

70) Mary and Janet entered into a contract for the purchase of a used vehicle. Mary thinks she is selling
her 2010 Kia Soul and Janet thinks she is selling her 2012 Audi. This is an example of:
A) Undue Influence B) Misrepresentation
C) Duress D) Mistake
Answer: D

71) Mary and Janet both agree on a sale price for the vehicle of $8000. They reduce their contract to
writing and incorrectly put the price at $800. The usual remedy by a court in this situation is:
A) Rectification B) Repudiation C) Rescission D) Ratification
Answer: A

72) Andy thinks he is selling an ordinary painting for $50. Bill knows that he is in fact buying
something by Robert Bateman. The legal effect of this contract is:
A) Voidable B) Unenforceable C) Void D) Enforceable
Answer: D

73) Andy agrees to sell his painting to Bill. At the time the contract is made, the painting is destroyed by
fire. The legal effect of this contract is:
A) Voidable B) Enforceable C) Void D) Unenforceable
Answer: C

74) Which of the following is not a requirement to prove non est factum?
A) The signer could not read the contract
B) The signer was not careless in signing the contract
C) The subject matter was not what the signer believed it to be
D) The subject matter was exactly what the signer believed it to be
Answer: D

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75) Andy thinks he has agreed to paint Bill's portrait for $500, not including canvass and paints. Bill
thinks the $500 rice covers both labour and materials. If neither party's interpretation is reasonable
OR both are equally reasonable, the legal effect of this contract is:
A) Enforceable B) Voidable C) Unenforceable D) Void
Answer: D

76) A person can use mistake as a defence to void a contract dispute if:
A) The mistake is unknown to both when they signed the contract
B) The mistake is a typographical error in the contract
C) The mistake is that both parties have changed their mind
D) The mistake is about the subject matter
Answer: D

77) Both parties have signed an agreement regarding the purchase and sale of a new vehicle. Which of
the following would allow the contract to be set aside on the basis of misrepresentation?
A) The misrepresentation must have been a false statement.
B) The misrepresentation must have induced the party to buy the vehicle.
C) The misrepresentation must have been in writing.
D) The misrepresentation must have been made knowingly.
Answer: B

78) John and Mary are thinking of buying a house. They see one they like and arrange to view it. The
current owner, Emelda shows them over the house stating, "I've owned this house for 20 years, and
it is completely sound. There are no problems." In fact, as John and Mary discover later, the house is
infested with termites. If Emelda did not know there were termites, this would be an example of:
A) Undue influence B) Innocent misrepresentation
C) Fraudulent misrepresentation D) Duress
Answer: B

79) John and Mary are thinking of buying a house. They see one they like and arrange to view it. The
current owner, Emelda shows them over the house stating, "I've owned this house for 20 years, and
it is completely sound. There are no problems." In fact, as John and Mary discover later, the house is
infested with termites. If Emelda did know there were termites and was desperate to sell, this would
be an example of:
A) Undue influence B) Fraudulent misrepresentation
C) Innocent misrepresentation D) Duress
Answer: B

80) If the court determines that there was undue influence in a contract, then that contract is:
A) Illegal B) Voidable C) Legal D) Void
Answer: B

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81) John is at his doctor's office getting a check-up after a health scare. He tells his doctor that he needs
to sell his vehicle. His doctor tells him he will buy it for $10,000. John was going to list it for
$15,000.00, but feels obligated to sell to his doctor. This is an example of:
A) Innocent misrepresentation B) Undue influence
C) Duress D) Fraudulent misrepresentation
Answer: B

82) Which of the following is an example of duress?

A) Dave tells Tom that he sold the computer to someone else
B) Dave won't sell his computer to Tom unless Tom pays more
C) Tom wants to buy Dave's computer and Dave sells it to someone else
D) Tom threatens to destroy Dave's computer if he won't sell it to him
Answer: D

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Answer Key
Testname: UNTITLED6

1) TRUE
2) FALSE
3) FALSE
4) TRUE
5) FALSE
6) TRUE
7) TRUE
8) TRUE
9) FALSE
10) TRUE
11) TRUE
12) TRUE
13) TRUE
14) FALSE
15) FALSE
16) TRUE
17) TRUE
18) TRUE
19) FALSE
20) FALSE
21) TRUE
22) TRUE
23) TRUE
24) FALSE
25) FALSE
26) FALSE
27) FALSE
28) TRUE
29) FALSE
30) TRUE
31) TRUE
32) TRUE
33) TRUE
34) TRUE
35) TRUE
36) TRUE
37) TRUE
38) TRUE
39) TRUE
40) TRUE
41) FALSE
42) TRUE
43) TRUE
44) TRUE
45) TRUE
46) TRUE
47) FALSE
48) TRUE
49) TRUE
50) TRUE

1
0
Answer Key
Testname: UNTITLED6

51) TRUE
52) TRUE
53) FALSE
54) TRUE
55) FALSE
56) TRUE
57) TRUE
58) TRUE
59) TRUE
60) TRUE
61) FALSE
62) D
63) D
64) B
65) A
66) C
67) B
68) D
69) C
70) D
71) A
72) D
73) C
74) D
75) D
76) D
77) B
78) B
79) B
80) B
81) B
82) D

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