Question 1

Martin has agreed to sell his car to his son for $500.What is the legal effect of this promise?

Accepted Answer

In contract law, there is a presumption that agreements between family members are not intended to be legally binding, unless there is clear evidence to the contrary.

Question 2

Abletree Equipment Supplies is closing its business and offered to sell its inventory to Candu Suppliers Inc.for $100,000.The written offer specifies that it may be accepted by delivering notice in writing to Abletree on or before the 15th of April.Can Candu accept the offer by telephoning Abletree and verbally indicating its acceptance of the offer?

Accepted Answer

The offer specifies that acceptance must be delivered in writing by a certain date, so Candu must follow these instructions for the acceptance to be valid.

Question 3

Which of the following is a requirement of the doctrine of promissory estoppel?

Accepted Answer

Promissory estoppel requires that the plaintiff must have relied on the defendant's promise and changed their position based on that reliance. It does not require valuable consideration in the traditional sense, nor does it require the promise to be in writing.

Question 4

Consideration must always flow from one party in a contract to the other party.

Accepted Answer

Consideration must flow from the promisee to the promisor, but it does not necessarily have to flow from the promisor to the promisee; what is essential is that something of value is provided in return for a promise, but it can be to another party, not directly back to the promisor.

Question 5

What is the meaning of the statement "Promissory estoppel may be used as a shield and not as a sword" with respect to the classical application of the common law doctrine of promissory estoppel?

Accepted Answer

Promissory estoppel is a legal principle that prevents a promisor from going back on a promise made to a promisee, who has relied on that promise to their detriment. It is typically used defensively by a party seeking to prevent the promisor from reneging on a promise, rather than offensively to enforce the promise as the basis of a lawsuit. This means it can be used to stop someone from acting contrary to their promise but cannot be the primary basis for suing them.

Question 6

What is the legal effect of placing a seal on a contract?

Accepted Answer

The presence of a seal on a contract traditionally signifies that the promisor intends to be legally bound by the promise, making it enforceable even if the promise is gratuitous (i.e., made without consideration). This is a holdover from older legal traditions where the seal acted as a form of authenticity and commitment.

Question 7

Panda Industries agreed to supply 500 tons of steel rebar to ABC Builders for a price of $250 per ton.Shortly after the contract came into effect,the market price of rebar rose to $275 per ton.Fortunately,ABC Builders was agreeable to paying the hew higher price.Why might ABC Builder's promise to pay an additional $25 per ton be unenforceable?

Accepted Answer

The promise to pay an additional $25 per ton might be unenforceable due to the absence of fresh consideration. In contract law, consideration refers to something of value that is given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances. Fresh consideration means that for any modification or new promise in a contract, there must be new value given in exchange. Since ABC Builders' promise to pay an additional $25 per ton does not seem to involve any new value or benefit conferred to Panda Industries beyond what was already agreed upon, it lacks fresh consideration.

Question 8

Under what circumstances would a judge who is determining a remedy to a commercial dispute consider that a contract does not exist even though all of the required elements of reaching an agreement are present?

Accepted Answer

A judge may consider that a contract does not exist if a phrase indicates the agreement is subject to a formal contract, as this suggests the parties did not intend to be legally bound until a formal contract is executed.

Question 9

Boyd wanted to buy a 1967 Mustang car and promised he would pay $10 000 to the first person who presented him with such a vehicle.Jai was the first individual to deliver such a car to Boyd.What form of contract exists between Boyd and Jai?

Accepted Answer

A unilateral contract is formed when one party makes a promise in exchange for the performance of a specified act by another party. In this case, Boyd promised to pay $10,000 to anyone who could present him with a 1967 Mustang, making it a unilateral contract because the contract is completed upon the performance of the act (delivering the car) by Jai.

Question 10

What is the proper method of leading contrary evidence to challenge a legal presumption favouring one party?

Accepted Answer

A rebuttable presumption of the parties' intent to contract allows for the introduction of contrary evidence to challenge the legal presumption that favours one party, by proving that the parties did not intend to enter into a contract.

Question 11

Amanda has agreed to attend Rebecca's home and provide her with biology tutoring for three hours per week for a flat fee of $50.What is the legal term for Rebecca's promise to pay Amanda $50 each week?

Accepted Answer

Consideration is the legal term for something of value that is promised in exchange for an action or service, such as Rebecca's promise to pay Amanda $50 each week for tutoring services.

Question 12

Caroline agreed to purchase organic hemp fabric from an Ontario manufacturer.While making an inquiry to purchase organic dyes from a Manitoba producer,she learned they offered a superior organic hemp fabric at a much lower price than the Ontario manufacturer.Knowledge of what legal principle would immediately let Caroline know she made a costly error?

Accepted Answer

A) The principle that parties must be informed as to the adequacy of price, and that it is usually not open to challenge, would immediately let Caroline know she made a costly error by not researching more thoroughly before agreeing to purchase from the Ontario manufacturer. This principle implies that once a deal is agreed upon, the fairness of the price is not typically grounds for altering the agreement.

Question 13

Which statement best expresses the effect of the decision of the court in NAV Canada v Greater Fredericton Airport Authority Inc?

Accepted Answer

The court in NAV Canada v Greater Fredericton Airport Authority Inc held that a gratuitous variation of a contract can be enforceable if the party agreeing to the variation does so voluntarily, without duress or undue influence.

Question 14

What is the modern-day rationale for enforcing a gratuitous promise if the promisor has placed a seal beside his or her signature?

Accepted Answer

The answer of What is the modern-day rationale for enforcing...

Question 15

In what way are promises between family members treated differently than promises between other parties?

Accepted Answer

The law often presumes that promises made between family members are not intended to create legal relations and are therefore non-contractual, unless there is clear evidence to the contrary. This is because such promises are usually made in a domestic or social context.

Question 16

A cancer hospital asked its privately-owned medical isotope source to arrange an earlier shipment of an urgent order.The private supplier confirmed an earlier shipment was possible for a 30 percent surcharge on the contractual price.Because the hospital's cancer patients needed the isotopes desperately,the hospital faxed a written acceptance of the varied terms.The hospital subsequently refused to pay the price increase.What would a New Brunswick court hearing the ensuing dispute be most likely to determine?

Accepted Answer

The hospital's agreement to pay a 30 percent surcharge in exchange for an earlier shipment constitutes new consideration, making the contractual variation enforceable. The hospital's promise to pay more for the same goods, delivered earlier than initially agreed, provides the supplier with a benefit (or the hospital with a detriment) that was not part of the original contract, thus satisfying the requirement for consideration in contract law.

Question 17

In what ways are the use of seals and the doctrine of promissory estoppel similar?

Accepted Answer

Both seals and the doctrine of promissory estoppel can make a gratuitous promise enforceable, as a seal traditionally signifies a formal commitment, and promissory estoppel prevents a promisor from reneging on a promise when the promisee has relied on it to their detriment.

Question 18

Recent legislation in some provincial jurisdictions overrides the common law that governed the acceptance of a payment of a lesser amount in full satisfaction of a debt.What is the policy rationale for the legislation?

Accepted Answer

The policy rationale for such legislation is to promote the settlement of debts on a final basis, encouraging both parties (debtors and creditors) to come to an agreement that conclusively resolves the debt, thereby providing certainty and finality to financial disputes.

Question 19

Which statement most accurately describes the requirement of consideration?

Accepted Answer

Consideration is a fundamental component of a contract, and it refers to something of value that is exchanged between the parties. This can include a promise to do something, a promise to refrain from doing something, or the exchange of goods, services, or money. The key aspect is that each party must provide something of value to the other, which can indeed be a promise in exchange for a promise, making option D correct. Options A, B, and C are incorrect because consideration must be provided by both parties (not just one), not all promises are legally binding without consideration, and the law does not require consideration to be fair or adequate, only that it exists.

Question 20

What element must be present to enable an innocent party to commence a lawsuit when a promise is broken?

Accepted Answer

Consideration is a fundamental element in contract law, which refers to something of value exchanged between parties. It is necessary for a contract to be enforceable, allowing an innocent party to sue if a promise is broken.

Quiz 6: Forming Contractual Relationships