Deck 11: The Interpretation of Contracts

Question 1

To interpret the express provisions of a contract a court will

A) begin with the ordinary meaning of the words, and then will examine their meaning within the context of the words.
B) examine the ordinary meaning of the words, and then will determine the most widely held meaning of the words.
C) examine the meaning of the words within the context and then will examine the ordinary meaning of the words.
D) begin with the ordinary meaning of the words and will then ask a jury to determine the societal meaning of the words.
E) examine the most widely held meaning of the words.

Answer 1

A

Question 2

The two approaches to the interpretation of contract are the

A) straight approach and direct approach.
B) plain meaning approach and liberal approach.
C) liberal approach and straight approach.
D) liberal approach and direct approach.
E) plain meaning approach and context approach.

Answer 2

B

Question 3

The liberal approach to interpretation is

A) an approach that focuses of the meaning of words as can be determined from the totality of the contract.
B) an approach that focuses on the meaning of words as it is widely understood.
C) an approach that focuses on the meaning of words as determined by a jury of ordinary persons.
D) an approach that focuses on the dictionary meaning of the words used in a contract.
E) an approach that focuses in the surrounding circumstances and the intent or purpose of the parties.

Answer 3

E

Question 4

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

A) determine the meaning of the words by asking the parties what the meant.
B) seek the most reasonable meaning that can be attributed to the words in the circumstances.
C) ask a jury to determine the meaning of the words.
D) examine the facts of the situation and then ask the parties what the meant.
E) assign its own meaning to the words.

Question 5

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

A) a condition term.
B) a condition precedent.
C) a warranty.
D) an implied term.
E) an appraisal warranty.

Question 6

A collateral contract is

A) a separate agreement between the parties included in a written contract.
B) a void agreement that is related to another written agreement.
C) a separate agreement between the parties made at the same time as a main agreement between the parties, but not included in the written document.
D) an agreement between parties to a contract that precedes another written agreement.
E) an unenforceable agreement that is related to another written agreement.

Question 7

The plain meaning approach to interpretation is

A) an approach that asks members of the jury to determine the plain meaning of words.
B) an approach that focuses on identifying the context of the words used, and then determining the meaning of the words in accordance with the context.
C) an approach that restricts the interpretation to the purpose of the parties.
D) an approach that restricts the interpretation to plain meaning that the parties intended.
E) an approach that restricts the interpretation to the ordinary or plain meaning of the words.

Question 8

Which of the following is not not true?

A) The parol evidence rule does not affect the interpretation of express words already in a contract.
B) The parol evidence rule does not prevent evidence of oral contracts entered into after the written contract.
C) The parol evidence rule excludes evidence of oral contracts entered into after the parties enter into a written contract.
D) The parol evidence rule permits evidence of oral contracts entered into after the parties entered the written contract.
E) The parol evidence rule excludes terms that were discussed before entering a contract but were not included in the contract.

Question 9

An implied term is

A) a term that the promisor intended to include in the contract.
B) a term that is not included in the contract but which the parties, as reasonable persons, would have included had they thought about it.
C) an express term that is removed from the contract.
D) a term that the court will ask the jury to consider implying in the contract.
E) a term that the parties advice the court can be implied into the contract.

Question 10

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

A) Long established customs in particular types of trades.
B) Long established customs in particular types of transactions.
C) Terms that are reasonably necessary, in accordance with the expectation of the parties, to promote business efficacy.
D) What the parties discussed prior to entering the contract.
E) none of the above

Question 11

A business contract includes a term saying that a manufacturer will use "smooth grained sand" in a construction project "if this quality is available. The court will most likely imply that the terms of the contract require the manufacturer to put reasonable efforts into trying to find the specified materials. This is an example of the court

A) implying a term.
B) modifying the contract.
C) adding to the contract.
D) making a contract for the parties.
E) introducing a condition.

Question 12

What is the parole evidence rule?

A) The rule that requires a party to a contract from adducing evidence from a third party regarding discussions he may have had with such a third party about the provisions of a contract.
B) A rule that prevents convicted persons on parole from entering into contractual obligations.
C) The rule that prevents a party from adding to a contract a term that was previously agreed upon, but was not included in the final written contract.
D) The rule that requires that persons on parole seek the approval of a court before entering into any contract.
E) The rule that prevents a court from interpreting a contract that is illegal.

Question 13

In choosing between conflicting testimony a court will

A) refuse to accept either testimony because one person's word is good as another's and will impose a meaning that is determined by a jury of ordinary persons.
B) choose a version of the story that is in accordance with well known legal principles.
C) seek corroboration of one of the versions of a story from a third party, and if that is not possible, it will choose between the versions by basing its decision of the credibility of the parties.
D) refuse to accept either testimony because one persons word is good as anothers', and will impose its own meaning.
E) choose the version of the story that is in accordance with societal norms.

Question 14

Which of the following is not true?

A) The parole evidence rule does not exclude evidence of an oral agreement that the parties may each after they have entered into the written agreement.
B) Implied terms usually result from long established customs..
C) The courts will admit evidence of an oral understanding about a condition precedent even when the written contracts specifies that the rights of the parties are governed exclusively by the written contract.
D) When parties deal expressly with a matter in a contract, a court is not precluded from finding an implied term on the same matter.
E) The parole evidence rule does not affect the interpretation of express terms already in a contract.

Question 15

Where the meaning of words used in a contract are ambiguous, a court will most likely

A) require that the parties return to the drawing table and return with a better contract.
B) set it aside as being unenforceable.
C) require a jury to examine the contract and draw a new contract that will meet the expectations of the parties.
D) make a new contract for the parties.
E) assign a meaning that makes it enforceable.

Question 16

Construing a contract means

A) interpreting a contract.
B) forming a contract.
C) amending a contract.
D) making an addition to a contract.
E) executing a contract.

Question 17

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 products. 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 _.

A) terminate the contract; the contract is void
B) continue with the contract; the contract is not void
C) walk away from the contract; the contract is void
D) continue with the contract; the contract is effective

Question 18

Which of the following is not true?

A) The parol evidence rule prevents a party from adducing evidence about a terms that should have been added to a contract, but were not.
B) In applying the plain meaning approach, a court will determine the ordinary or dictionary meaning of words.
C) Although there are two approaches to interpretation, a court does not adopt one approach to the exclusion of the other.
D) The parol evidence rule does not prevent evidence of an oral agreement reached between the parties after they have entered the written contract.
E) The parol evidence rule excludes the introduction of evidence about the formation of a contract.

Question 19

One approach that the courts adopt to interpret the provisions of contracts is to determine the most reasonable interpretation of express terms. Where this cannot be done, the second approach

A) is to ask the parties if there is an implied term in the contract.
B) involves the determination of the most widely held understanding of the provision.
C) is to determine whether the intention of the parties can be achieved only by acknowledging the existence of an implied term.
D) is to request that a jury determine which interpretation is in accord with societal standards.
E) is to make a contract for the parties.

Question 20

What is a condition precedent?

A) An event that is related to a contract and happens before a contract takes effect.
B) An unconditional undertaking given by a promisee to the promisor to perform an event before a contract takes effect.
C) An undertaking, conditional on the execution of a contract between the parties, that a promisee makes to a promisor prior to entering into a contract.
D) An event that happens before a contract takes effect.
E) Any set of circumstances or events that the parties agree must be satisfied or must happen before their contract takes effect.

Question 21

Implied terms usually result from

A) a decision of the promisee.
B) a decision of the promisor.
C) agreement between the parties.
D) a decision of the court.
E) long established customs of a particular trade.

Question 22

When parties deal expressly with a matter in a contract, a court is not precluded from finding an implied term regarding that same matter.

Question 23

Conditions precedent can be enforced if they are oral.

Question 24

To determine the ordinary meaning of words in a contract, the court will consider:

A) what the dictionary says
B) what is usual business practice
C) what the parties said during their negotiations
D) what the intention of the parties was
E) all of the above

Question 25

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 an appraisal warranty.

Question 26

A business contract includes a term saying that a manufacturer will use "smooth grained sand" in a construction project "if this quality is available. The court will most likely imply that the terms of the contract require the manufacturer to put reasonable efforts into trying to find the specified materials. This is an example of the court introducing an implied term based on

A) principles of statutory interpretation.
B) statutory requirements.
C) business efficacy.
D) previous dealings between the parties.
E) the nature of the trade.

Question 27

Explain the plain meaning approach to the interpretation of contracts. What are the limitations of this approach?

Question 28

A court will sometimes recognize the existence of an implied term from customs in a particular trade or transaction.

Question 29

The parol evidence rule permits evidence of oral contracts entered into between the parties before they enter into a written agreement.

Question 30

A condition precedent is one of a series of conditions that are discussed by the parties prior to the entering of a contract.

Question 31

Evidence regarding certain oral terms that were discussed between the parties to a contract that has been reduced to writing,

A) cannot be introduced into court because of the rule regarding consideration.
B) cannot be introduced into court because of the parol evidence rule.
C) cannot be introduce into court because there were no prior dealings between the parties.
D) cannot be introduced into court because of the rule of express terms.
E) cannot be introduced in court because of the rule of implied terms.

Question 32

The parol evidence rule does not permit evidence of oral contracts entered into between the parties after they enter into a written agreement.

Question 33

The parol evidence rule excludes evidence about the formation of a contract.

Question 34

The parol evidence rule does not permit evidence of oral contracts entered into between the parties before they enter into a written agreement.

Question 35

The courts can introduce implied terms to contradict written terms if one party is more credible than the other.

Question 36

A court will sometimes recognize the existence of an implied term from discussions that the parties had prior to entering into the contract.

Question 37

A clause in a contract that makes a contract enforceable against a buyer if the buyer is able to obtain financing is

A) a condition precedent.
B) a limitation of liability clause.
C) an entire contract clause.
D) a condition subsequent.

Question 38

Which of the following would a court NOT consider in interpreting terms in a contract:

A) industry practice
B) what each party says it actually intended
C) what the parties discussed during their negotiations
D) subsequent oral agreements
E) oral conditions precedent

Question 39

A condition precedent is not one of a series of conditions that are discussed by the parties prior to the entering of a contract.

Question 40

The parol evidence rule permits evidence of oral contracts entered into between the parties after they enter into a written agreement.

Question 41

What is the Moorcock doctrine? When will the courts not apply the Moorcock doctrine to introduce an implied term?

Question 42

What are some of the primary goals of a court in interpreting a contract?

Question 43

The dictionary meaning of a word does not always clarify its meaning. Explain.

Question 44

When a contract is subject to a condition precedent, and the condition is not satisfied the contract ceases to exist. Explain.

Question 45

When a condition precedent is not satisfied the contract ceases to exist. Explain.

Question 46

What is an implied term?

Question 47

What is the parol evidence rule? Explain some of the qualifications to the rule.

Question 48

What is the plain meaning approach to the interpretation of contracts. What are the limitations of this approach?

Question 49

What is an implied term? In what circumstances are the courts likely to find that an implied term is appropriate to the interpretation of the contract?

Question 50

The dictionary meaning of a word does not always clarify its meaning. Explain.