Chapter 8

Question 1

What is the norm regarding the enforcement of contracts?

Answer 1

Enforcement of contracts is the norm to preserve integrity, reliability, and predictability of contractual relationships.

Question 2

What are the exceptional circumstances in which contracts are not enforced?

Answer 2

Contracts may not be enforced in cases of unequal relationships, misrepresentation, or defects within the contract.

Question 3

What is a voidable contract?

Answer 3

A contract that an aggrieved party can choose to keep in force or bring to an end.

Question 4

What is a void contract?

Answer 4

A contract involving a defect so substantial that it has no force or effect.

Question 5

Define ‘legal capacity’ in the context of contracts.

Answer 5

Legal capacity is the ability to make binding contracts.

Question 6

Who receives special legal protection in contract law?

Answer 6

Minors and those with mental incapacities receive special legal protection.

Question 7

What is the age of majority in Ontario according to the Age of Majority and Accountability Act?

Answer 7

The age of majority in Ontario is 18.

Question 8

Are minors generally obligated by their contracts?

Answer 8

No, minors are not obligated by their contracts and they may choose to void them.

Question 9

What are common categories of necessaries for minors?

Answer 9

• Food
• Shelter
• Clothing

Question 10

What is the two-step test to determine if a contract is beneficial for minors?

Answer 10

A contract is beneficial when the minor gains an advantage equal to or greater than any rights or interests foregone.

Question 11

What happens to contracts formed while a minor reaches the age of majority?

Answer 11

They remain unenforceable against the minor unless adopted or ratified.

Question 12

What is the Infants Act in British Columbia?

Answer 12

It provides greater protection for minors, making even contracts for necessaries unenforceable at the minor’s election.

Question 13

What is required for a contract to be formed freely and voluntarily?

Answer 13

Both parties must understand the nature and consequences of the agreement.

Question 14

What is the definition of duress in contract law?

Answer 14

Contracts formed under duress are not enforceable as the threatened party did not freely consent.

Question 15

What is economic duress?

Answer 15

The threat of economic harm that coerces the will of the other party, resulting in a contract.

Question 16

What is the legal effect of proving duress?

Answer 16

The contract is voidable at the option of the party subjected to the duress.

Question 17

What is undue influence?

Answer 17

Unfair manipulation that compromises someone’s free will or choice in a contract.

Question 18

Name two types of undue influence.

Answer 18

• Actual Pressure
• Presumed Pressure

Question 19

What must be proven for actual pressure to qualify as undue influence?

Answer 19

The influence existed, it was exercised, and it resulted in the agreement.

Question 20

What is the two-step process to prove unconscionability?

Answer 20

• Proof of inequality of bargaining power
• Proof of an improvident bargain or exploitation

Question 21

What constitutes misrepresentation?

Answer 21

A false statement of fact that causes someone to enter a contract.

Question 22

What are the three categories of actionable misrepresentations?

Answer 22

• Fraudulent misrepresentation
• Negligent misrepresentation
• Innocent misrepresentation

Question 23

What remedy is available for fraudulent misrepresentation?

Answer 23

Rescission or tort damages.

Question 24

What is rescission?

Answer 24

The remedy that results in the parties being returned to their pre-contractual positions.

Question 25

What must a party seeking rescission do?

Answer 25

Act promptly in bringing the complaint forward.

Question 26

True or False: A party who relies on a misrepresentation can have the contract cancelled.

Answer 26

True

Question 27

What does the law require about inquiries during negotiations?

Answer 27

A negotiating party must answer inquiries accurately and any volunteered info must be correct.

Question 28

What is the significance of timing in contract statements?

Answer 28

Timing determines if a statement is a promise or term of the contract.

Question 29

What is an example of misrepresentation through concealment?

Answer 29

A vendor of a building concealing a crack in the foundation.

Question 30

What is negligent misrepresentation?

Answer 30

Remedy is rescission or tort damages. The speaker makes the statement carelessly or negligently. ## Footnote Negligent misrepresentation occurs when a party makes a false statement without due care to ensure its truthfulness.

Question 31

What is innocent misrepresentation?

Answer 31

Remedy is rescission. The speaker has not been fraudulent or negligent, but has misrepresented a fact. ## Footnote Innocent misrepresentation occurs when a party makes a false statement believing it to be true.

Question 32

What are the remedies for fraudulent or negligent misrepresentation?

Answer 32

Courts may grant rescission and also award damages in tort. ## Footnote Damages in tort refer to monetary compensation awarded for loss or injury as a result of the misrepresentation.

Question 33

What is a common mistake in contract law?

Answer 33

Both parties to the agreement share the same fundamental mistake. ## Footnote Common mistakes can lead to the contract being set aside if the mistake affects the contract's foundation.

Question 34

What is rectification in contract law?

Answer 34

A remedy available where the parties have made a mistake in recording their agreement and based on establishing the specific terms actually agreed to. ## Footnote Rectification can only correct recording errors, not renegotiate terms.

Question 35

What must a party seeking rectification demonstrate?

Answer 35

* Identify the terms that were omitted or recorded incorrectly * Provide evidence of the specific terms the parties had agreed to when the contract was formed ## Footnote Courts will not allow parties to go back in time and re-engineer a completed transaction.

Question 36

True or False: Simple carelessness in signing a document can avoid enforceability.

Answer 36

False. ## Footnote Carelessness or failure to read a document does not suffice to challenge enforceability.

Question 37

What happens if a tender is submitted with an error?

Answer 37

The tender cannot be withdrawn after the official closing time, and the party is bound by the tender as a preliminary contract (Contract A). ## Footnote This binds the tenderer to the rules of the tendering process.

Question 38

What defines an illegal contract?

Answer 38

A contract that cannot be enforced because it is contrary to legislation or public policy. ## Footnote Illegal contracts can be void if they violate specific statutes or public policy.

Question 39

What is the Statute of Frauds?

Answer 39

A law that requires certain contracts to be in writing to be enforceable. ## Footnote It is intended to prevent fraud and perjury by ensuring there is written proof of certain kinds of contracts.

Question 40

List the four categories most relevant to business under the Statute of Frauds.

Answer 40

* Contracts of guarantee * Contracts not to be performed within a year * Contracts dealing with land * Contracts for the sale of goods ## Footnote Contracts in these categories must have essential terms documented and signed.

Question 41

What is a non-compete clause?

Answer 41

A clause forbidding competition itself. ## Footnote Non-compete clauses can be enforceable if they are reasonable and protect legitimate business interests.

Question 42

What must non-solicitation clauses be to be enforceable?

Answer 42

* Reasonable * Unambiguous * Restricted to a specific timeframe ## Footnote Territorial limitations are generally not required due to the globalized nature of the economy.

Question 43

What is the doctrine of part performance?

Answer 43

An exception allowing oral agreements for land transactions to be enforced if performance acts can only be explained by the existence of an agreement. ## Footnote This doctrine can substitute for the writing requirement in certain situations.

Question 44

True or False: Electronic contracts are generally unenforceable.

Answer 44

False. ## Footnote Contracts are generally enforceable in any form, but there are exceptions regarding signatures and specific legal requirements.

Question 45

What is the requirement for a guarantee under the Statute of Frauds?

Answer 45

Must generally be evidenced in writing. ## Footnote Some jurisdictions, like Alberta, require additional formalities for non-corporate guarantors.

Question 46

What is the purpose of identifying the source and authenticity of a document?

Answer 46

To establish the signatory’s approval of the document’s contents ## Footnote This is crucial for validating legal agreements and ensuring that the parties involved are committed to the terms outlined.

Question 47

What are courts' general views on technicalities in written contracts?

Answer 47

Courts have avoided being unduly technical ## Footnote This means that courts prioritize the intent of the parties over strict adherence to formalities.

Question 48

What constitutes a sufficient mark for authentication of a document?

Answer 48

A mark made by the person signing is sufficient if intended as authentication of the document ## Footnote This includes mere initialling of the document.

Question 49

What does Ontario’s Electronic Commerce Act say about electronic signatures?

Answer 49

A legal requirement that a document be signed is satisfied by an electronic signature ## Footnote Section 1(1) defines an “electronic signature” as information created or adopted to sign a document.

Question 50

How have most Canadian jurisdictions responded to electronic signatures?

Answer 50

Accepted electronic signatures according to statutory rules of varying strictness ## Footnote This indicates a growing acceptance of digital transactions in legal contexts.

Question 51

What was concluded in a court case regarding email signatures?

Answer 51

An email with the sender’s name typed at the bottom counted as a signature required by the Statute of Frauds ## Footnote This case illustrates the evolving nature of what constitutes a valid signature.

Question 52

What is the general requirement for contracts under the Sale of Goods Act?

Answer 52

Contracts for the sale of goods above a specified amount must be in writing to be enforceable ## Footnote Most Acts specify a threshold amount, e.g., $50 in Alberta.

Question 53

What are the exceptions to the written contract requirement in the Sale of Goods Act?

Answer 53

No written contract is required when: * The buyer makes partial payment * The buyer accepts all or parts of the goods ## Footnote In these cases, the oral contract is enforceable.

Question 54

Why is it prudent to keep a written record of contracts?

Answer 54

To avoid disputes caused by personnel changes, fading memories, and disagreements ## Footnote A well-documented contract clarifies obligations and helps avoid litigation.

Question 55

What should businesses balance when maintaining records?

Answer 55

The security of complete written records and the time and effort needed to produce them ## Footnote This is especially relevant for small or routine transactions.

Question 56

What general requirement exists for internet contracts across Canada?

Answer 56

Merchants must provide a copy of their online contract and other particulars related to the sale ## Footnote This is part of a broader consumer protection strategy.

Question 57

What can happen if a merchant fails to comply with internet contract requirements?

Answer 57

The consumer can cancel the contract altogether, making it unenforceable ## Footnote This emphasizes the importance of adherence to regulations in online transactions.

Question 58

What should a business be concerned about when entering contracts?

Answer 58

Potential legal incapacities, unfair advantage, misleading information, substantial mistakes, and public policy violations ## Footnote These factors may signal issues if litigation becomes necessary.

Question 59

True or False: Securing a deal at any cost is always beneficial.

Answer 59

False ## Footnote Securing a deal at any cost may lead to unenforceable agreements.