Question 1

Joyce's son,Al,borrowed money from Verity Finance.He lost his job last month and has not made the latest payment on the debt.When Verity's collections department telephones,Joyce answers the phone.She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss.Verity must first try to get the money from Al before approaching Joyce.

Accepted Answer

Verity must try to collect the money from the debtor, Al, before approaching a third party, even if that third party is willing to make the payments. This is standard practice in debt collection.

Question 2

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." Z's promise would be unenforceable,unless it was made in writing and signed by Z.

Accepted Answer

This statement is based on the Statute of Frauds, which requires certain contracts, including guarantees or promises to pay the debts of another, to be in writing and signed by the guarantor or promisor. Therefore, unless Z's promise is in writing and signed by him, it would not be enforceable.

Question 3

Joyce's son,Al,borrowed money from Verity Finance.He lost his job last month and has not made the latest payment on the debt.When Verity's collections department telephones,Joyce answers the phone.She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss.Joyce's promise is called an indemnity.

Accepted Answer

Joyce's promise is considered a guaranty because she is agreeing to fulfill the obligation if Al fails to do so, not an indemnity which would involve compensating for loss or damage.

Question 4

Hrushka is the executor of her father's will.She does not want to liquidate any part of his stock portfolio at this time to pay off a large debt he owed Tom,because the market is very low right now and she would get a better price later in the year.Her verbal promise to Tom that she will repay him herself is unenforceable.

Accepted Answer

Verbal promises are generally unenforceable and Hrushka cannot be legally bound to repay the debt herself, despite her intentions.

Question 5

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.Ravi may successfully plead that his words were agreement in principle only.

Accepted Answer

Ravi's words were not an agreement in principle because he did not intend to be bound by them. He only agreed to sell the painting if he could get a charitable tax deduction, which he later found out he could not.

Question 6

Joyce's son,Al,borrowed money from Verity Finance.He lost his job last month and has not made the latest payment on the debt.When Verity's collections department telephones,Joyce answers the phone.She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss.If Verity,without Joyce's knowledge,extends the time Al has to make the payments but increases the interest rate by ½%,because he explains about his job loss,they could no longer enforce Joyce's promise,regardless of whether or not it was in writing and signed by her.

Accepted Answer

Joyce's promise to pay Al's debt is considered a surety, which is contingent upon the original terms of the contract between Al and Verity Finance. If Verity unilaterally alters the terms of the agreement with Al (such as extending the payment period and increasing the interest rate), without Joyce's consent, her promise can be voided because the original contract she agreed to guarantee has been materially altered.

Question 7

Mr.Guimond was teaching his son,Jacques,to drive in the family car when Jacques failed to apply his brakes soon enough and hit the car in front,causing considerable damage.Mr.Bouchard,the driver of the other car,should get Mr.Guimond's promise to pay for his repairs in writing or it will be unenforceable.

Accepted Answer

A promise to pay for repairs in this scenario is considered a contract, and contracts should always be in writing in order to be enforceable in court.

Question 8

In the presence of several witnesses,A verbally agreed to purchase B's farm for $175,000.The next day,B changed his mind,and refused to sell the farm to
A.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm.B may successfully plead the Statute of Frauds as a defence.

Accepted Answer

The Statute of Frauds requires certain contracts, including contracts for the sale of land, to be in writing to be enforceable. Since the agreement between A and B was only verbal, it would not be enforceable under the Statute of Frauds. Therefore, B can successfully plead the Statute of Frauds as a defense.

Question 9

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.The verbal agreement is valid and enforceable if the witnesses testify in court that an agreement of purchase and sale was made.

Accepted Answer

The scenario states that the verbal agreement of purchase and sale was made in the presence of witnesses. If those witnesses testify in court to the validity of that agreement, then it would be considered a valid and enforceable contract.

Question 10

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." The contract of guarantee is subject to the Statute of Frauds.

Accepted Answer

The contract of guarantee, in which Z agrees to pay Y if X does not, is a contract that falls under the Statute of Frauds, which requires that it must be in writing and signed by the guarantor.

Question 11

In the presence of several witnesses,A verbally agreed to purchase B's farm for $175,000.The next day,B changed his mind,and refused to sell the farm to A.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm.If A had given B $10 in cash as a deposit the agreement would be enforceable.

Accepted Answer

While a verbal agreement can be legally binding, in this case, a deposit of $10 would not make the agreement enforceable. The sale of real property (such as a farm) must be in writing to be enforceable under the Statute of Frauds. Therefore, the verbal agreement alone would not be enough to compel B to sell the farm to A.

Question 12

In the presence of several witnesses,A verbally agreed to purchase B's farm for $175,000.The next day,B changed his mind,and refused to sell the farm to
A.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,A sued B for breach of contract and for a decree of specific performance to compel B to sell him the farm.Assuming the verbal agreement is unenforceable,the contract would still exist.

Accepted Answer

The answer of In the presence of several witnesses,A verbally...

Question 13

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.The verbal agreement is unenforceable.

Accepted Answer

The gallery can sue Ravi for breach of contract and for a decree of specific performance to compel Ravi to sell it the painting, based on the verbal agreement of purchase and sale made in the presence of witnesses. The fact that Ravi later learned that no tax deduction could be expected does not invalidate the contract.

Question 14

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." Z has made an offer to guarantee the payment of the debt of X.

Accepted Answer

Z has offered to act as a guarantor for X's debt, meaning that if X does not pay, Z has agreed to pay on X's behalf. This removes the risk for Y in selling the automobile to X and allows X to purchase the vehicle on credit.

Question 15

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.Ravi may successfully plead the Statute of Frauds as a defence.

Accepted Answer

The Statute of Frauds applies to certain types of contracts that are required to be in writing, such as contracts for the sale of goods over a certain monetary amount. However, since the agreement between Ravi and the gallery was made orally and in the presence of witnesses, it may still constitute a valid contract. Therefore, Ravi cannot successfully plead the Statute of Frauds as a defense.

Question 16

Lev and Drew have been negotiating verbally and in writing concerning the purchase by Lev of a number of items manufactured by Drew's company.Lev insists that they have only reached the stage of having an agreement in principle but Drew says they have a binding contract.If one of the terms they agreed upon verbally was that they would execute a written contract,the court will hold that a contract does exist.

Accepted Answer

The answer of Lev and Drew have been negotiating verbally...

Question 17

Ravi,an art collector,had been made a standing offer by a gallery to purchase one of his paintings for $150,000.At shows and luncheons of the art community he had previously rejected the entreaties,knowing the painting to be worth at least twice as much.On the latest occasion of a luncheon at which Ravi was deliver an art commentary to the guests,the gallery made its offer once more.To himself,Ravi considered the offer and concluded he could use the charitable tax relief that such a sale at a loss would generate.In the course of his speech,he acknowledged and accepted the offer.Two days later,Ravi's lawyer advised him that the purchasing gallery was NOT a charitable foundation,and no tax deduction for such a "donation" could be expected.Ravi then refused to sell the painting to the gallery.On the strength of the verbal agreement of purchase and sale made in the presence of witnesses,the gallery sued Ravi for breach of contract,and for a decree of specific performance to compel Ravi to sell it the painting.The gallery can successfully answer all of Ravi's case by raising the parol evidence rule.

Accepted Answer

The parol evidence rule excludes evidence of any prior or contemporaneous agreements that contradict or vary the terms of a written contract. In this case, there was no written contract between Ravi and the gallery, only a verbal agreement made in the presence of witnesses. Therefore, the parol evidence rule would not apply to prevent the gallery from enforcing the agreement and seeking specific performance.

Question 18

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." If Z made the guarantee in writing,and signed the document,the guarantee would not be enforceable until X defaulted on a demand for payment by.

Accepted Answer

A guarantee is a secondary obligation that becomes enforceable only when the primary debtor (X) defaults on their obligation to pay. Therefore, Z's guarantee would only be enforceable if X fails to pay after a demand for payment is made.

Question 19

Joyce's son,Al,borrowed money from Verity Finance.He lost his job last month and has not made the latest payment on the debt.When Verity's collections department telephones,Joyce answers the phone.She agrees to make the payments if Al does not because she is worried about his state of mind due to his job loss.Joyce's promise does not have to be in writing to be enforceable.

Accepted Answer

Under the Statute of Frauds, a promise to answer for the debt of another must be in writing to be enforceable, unless it falls under an exception, which is not indicated in this scenario.

Question 20

Pashi promises,in an unsigned note,to give Neve,her daughter-in-law-to-be,the family jewellery and some share certificates worth $100,000 on the day she marries Pashi's son.If she does not do so,Neve can enforce the agreement since it is evidenced in writing and she,by marrying,gave Pashi consideration for her promise.

Accepted Answer

The agreement may not be enforceable because it lacks a formal contract element, specifically being unsigned, and consideration from Pashi's perspective might not be legally sufficient as marriage may not directly benefit her in a way that constitutes consideration in a contractual context.

Quiz 10: The Requirements of Form,writing and Privacy

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." The contract of guarantee is subject to the Statute of Frauds.

X wished to purchase a motor vehicle from Y on credit,but X was unemployed,and Y was hesitant to sell to him for that reason.Z,who was quite wealthy,said to Y: "Sell X the automobile on credit,and if X does not pay you,I will." Z has made an offer to guarantee the payment of the debt of X.