Contract Law Questions and Scenarios

Termination of Offers

1. Martin offered to sell property for $200,000 on January 16th to Ted. In the offer, Martin writes "Offer to remain open for 5 days until 5:00 pm January 21". Which of the following situations will cause Martin’s offer to Ted to end?

 

a. Martin is in an accident on January 20th and dies

b. Martin gets an offer from Janet to purchase the property for $220,000 and accepts it

c. Martin receives a counter-offer from Ted for $190,000

d. All the above

e. A and C above

 

2. Using the facts from question 1 above, describe one other scenario that would cause Martin’s offer to end that is not listed above.

 

 

 

 

 

3. Indicate the incorrect statement about consideration. (1 mark)

 

a. Consideration is an essential part of contract formation

b. The common law holds that consideration must be adequate to ensure that contracts are fair bargains.

c. Consideration is "the price for which the promise (or the act) of the other is bought."

d. Past consideration cannot be used as consideration for a new contract.

e. In a unilateral contract, the performance by the promisee provides consideration to the promisor.

 

 

 

 

4. Which of the following is false regarding the requisite intention to create a contract? Where appropriate, assume that all the other elements necessary to form a contract are present

 

a. An intention to be legally bound is a necessary element of a contract; without it there is no contract.

b. The court will presume there is no intent to be legally bound in social relationships.

c. Although the court makes presumptions about the intention of parties to be bound, the presumption may be rebutted by evidence to the contrary.

d. Parties may expressly state their intention to be legally bound in which case the court need not rely on presumptions.

e. Parties to a contract must write down their intention to be legally bound in order for the court to be able to enforce a contract.

 

 

5. Which of the following is false with regard to contract law?

 

a. In order for a contract to be binding upon the parties, it must be evidenced in writing.

b. An exchange of promises where each party receives something of value is necessary for a contract to exist

c. To form a contract there must be an offer which is accepted unconditionally.

d. In a standard form contract, any ambiguous terms will be interpreted by a court in favour of the Offeree.

e. Courts want to ensure that parties are free to contract and will not examine the adequacy of the consideration each party receives

 

6. If you pay $100 for a 90-day option to purchase property offered at $200,000, which of the following is true?

 

a. You have bought a 90-day period of time within which you may or may not accept the offer of the land.

b. The option agreement is not supported by adequate consideration therefore is not a contract.

c. You have agreed that you will accept the offer of land within the 90-day period.

d. The $100 is considered a counteroffer and rejects the offer of $200,000.

e. The seller of the land can revoke the offer to sell the land any time before acceptance.

 

 

7. Explain the difference between the terms “void” and “voidable”.  If a contract is “voidable”, can such a contract continue?

 

 

 

 

8. Explain what is meant by “privity of contract”, using an example

 

 

 

 

 

9. What are exceptions to privity of contract, provide a brief explanation of each

 

 

 

 

 

10. Name an exception to consideration in a contract

 

 

 

 

11. For each of the following provide both the remed(ies) available and whether the contract would be void or voidable:

 

a. Innocent misrepresentation

b. Fraudulent misrepresentation

c. Negligent misrepresentation

d. Duress

e. Undue influence

f. Mistake

 

 

12. Amy’s daughter Kendra is an actress at the age of 13. Kendra is super excited when she gets a written offer to star in a tv show. She accepts the offer on the spot without talking to her mom even though it involves moving to a different city. While Amy is proud of her daughter, she cannot move because she has a great career and has other children who she does not want to uproot.

 

a. Can Amy get Kendra out of the contract or is Kendra bound by the terms? Explain your answer

 

 

 

b. Kendra persists in getting her mom’s permission to move and work on the tv show. Amy signs off on the contract that Kendra accepted. A few weeks in, the show loses funding and Kendra’s employment is at an end. Kendra never got paid for her work. Amy decides to sue the show for Kendra’s lost wages. What defence(s) can the tv show bring to this claim and will they be successful? Explain why or why not.

 

 

 

13. Explain what the difference is between a misrepresentation that is a statement of fact versus a misrepresentation that is a statement of opinion, and what the effect is, if any, on the ability to seek a remedy

 

 

 

 

 

14. A prospective purchaser of the assets of a business, who is in bankruptcy asks the trustee in bankruptcy the value of the assets. The trustee provides a number to the prospective purchaser, but doesn’t check to make sure that the numbers he provided are accurate. The purchaser, relying on the advice of the trustee goes ahead and buys the assets, he later learns that the assets are worth much less than he was told by the trustee. This is an example of what kind(s) of misrepresentation? Explain your answer.

 

   

15. You move out of your apartment; you have a month by month lease and you provided your landlord with proper notice. The night before you are set to move, you return to your apartment after work and find that the landlord has changed the locks. All of your belongings are in the apartment. You see your landlord and he tells you that that in order to get access to your apartment you need to pay him $1,000. You are infuriated, but, you have nowhere else to go, you have movers scheduled in the morning, and need your belongings. You pay the $1,000. Can you bring a claim against the landlord and if so, on what basis can you claim your money back? Explain your answer.

 

 

 

 

 

 

16. Provide 2 examples of the kinds of relationships in which the presumption of undue influence may arise and briefly explain why

 

 

 

 

 

 

17. The Alberta Employment Standards Code imposes minimum standards that an employer must provide an employee, for example: vacation time, holiday pay, and pay in lieu of notice periods for dismissal without cause. The minimum standards may not be contracted out of. If an employee signs an employment agreement where she agrees that she will not receive any paid vacation, is that contract enforceable? if not, on what basis? (looking at the elements required for a contract). (2 marks)  

 

 

 

 

 

 

 

18. A contract is entered into for a shipment of goods between Ace Co. (the purchaser) and Bee Ltd. (the supplier) on January 8, 2020. Bee Ltd. drafts a contract which states that the goods will be delivered by the cargo ship the Peerless. Unbeknownst to both parties, there are two ships named Peerless. The first ship Peerless will be entering harbor at Ace Co’s location on June 1st, while the second ship Peerless will be entering the same harbor on August 1st. Bee Ltd. meant to deliver with the second ship, Peerless on August 1st. Ace Co. thought that the contract referred to the first ship, expecting delivery on June 1st.

 

(a) On what basis may the contract be terminated?

 

(b) In which party’s favour will the contract be resolved and why?

 

 

(c) What element of contract formation may be said to be absent in the above example?

 

 

19. Stacie decides to sell her house to her friend Scout for a purchase price of $300,000. Stacie and Scout do not want to hire lawyers or realtors and they verbally agree that Scout can move into the house as long as she gives Stacie installment payments of $25,000 until the purchase price is paid in full. Stacie receives the first five installments totaling $125,000, but Scout loses her job and stops making the payments. Their friendship quickly deteriorates, and Stacie brings a lawsuit for the fulfillment of the contract.

 

a. Do Stacie and Scout have a contract? Explain your answer by discussing the required elements for contract formation in this case.

 

 

 

b. Is the verbal contract enforceable, why or why not? Explain your answer.

 

 

 

Vin opened a new restaurant which he incorporated as Yum Inc. on March 20, 2020. Yum Inc. entered into a contract with Veggies On Demand Corp. to have them deliver the produce for the restaurant. Unfortunately, a global pandemic prevented Vin from opening his restaurant. He calls Veggies On Demand Corp. to let them know that he has to cancel the contract. They are not sympathetic, even though they did not bring any deliveries of produce they commence a lawsuit where they only name Vin personally as the Defendant. What defences can Vin raise to defend himself against the claim that is brought by Veggies On Demand Corp?