MOS 2275 > Chapter 9 > Flashcards

Chapter 9 Flashcards

(60 cards)

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1
Q

What are the ways a contract can be terminated?

A
  • Performance
  • Agreement
  • Frustration
  • Breach
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2
Q

What does termination by performance mean?

A

Both parties fulfill their contractual obligations

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3
Q

What is the ideal way of concluding a contractual relationship?

A

Termination by performance

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4
Q

What occurs during termination by agreement?

A

Parties voluntarily bring their contract to an end

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5
Q

What is frustration in contract law?

A

An unforeseen event occurs after contract formation making performance impossible

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6
Q

What can lead to termination by frustration?

A
  • Destruction of the subject matter
  • Death/incapacity of one party
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7
Q

What is a breach of contract?

A

A serious failure to fulfill contractual obligations

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8
Q

What happens when a contract is terminated through performance?

A

The relationship between the parties may continue with new contracts

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9
Q

What is novation in contract law?

A

The substitution of parties in a contract or replacement of one contract with another

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10
Q

What is an assignment in contract terms?

A

The transfer of a right by an assignor to an assignee

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11
Q

Fill in the blank: A contract cannot be performed due to a _______.

A

[supervening event]

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12
Q

What is required for a party to establish frustration in court?

A
  • The event was unforeseen
  • Not due to the fault of the parties
  • Not otherwise addressed in the contract
  • Made the contract radically different
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13
Q

True or False: The doctrine of mistake concerns events that occur after the contract is formed.

A

False

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14
Q

What happens when frustration occurs in a contract?

A

All future contractual obligations cease

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15
Q

What is privity of contract?

A

Only parties to a contract can enforce the rights and obligations contained in it

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16
Q

What is the legal significance of Taylor v Caldwell (1863)?

A

Established that destruction of the subject matter can frustrate a contract

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17
Q

What is a force majeure clause?

A

A clause that stipulates what happens to a contract in face of unexpected events

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18
Q

What must a plaintiff demonstrate to prove breach of contract?

A
  • Privity of contract
  • Breach of contract
  • Entitlement to a remedy
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19
Q

What is the classification of breach in contract law?

A

A breach can be classified as a condition or a warranty

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20
Q

What rights does an innocent party have if a condition is breached?

A
  • Sue for damages
  • Treat the contract as ended
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21
Q

What is vicarious liability?

A

The employer is responsible for the negligence of their employees

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22
Q

What did the Supreme Court rule in London Drugs Ltd v Kuehne & Nagel International Ltd?

A

Employees can rely on limitation of liability clauses if extended to them

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23
Q

What happens if a debt is assigned to multiple assignees?

A

The assignee who first gives notice to the debtor is entitled to payment

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24
Q

Fill in the blank: A lack of privity is not a valid defense in actions brought under the _______.

A

[Consumer Protection Act]

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25
What are examples of events that can trigger a force majeure clause?
* War * Natural disasters * Acts of governments
26
What is a warranty in contract law?
A minor term that, if breached, gives the innocent party the right to claim damages only. ## Footnote Compared to a condition, a warranty does not allow for termination of the contract.
27
What is a condition in contract law?
An important term that, if breached, gives the innocent party the right to terminate the contract and claim damages. ## Footnote Breaching a condition allows the non-defaulting party to free itself from the contract.
28
What is an innominate term?
A term that cannot easily be classified as either a condition or a warranty, requiring examination of the breach's nature and consequences. ## Footnote Courts determine whether the innocent party may terminate the contract or only claim damages.
29
What are the two rights of an innocent party if a condition is breached?
* The right to sue for damages * The right to treat the contract as ended
30
What is the purpose of an Exemption and Limitation of Liability Clause?
To limit or exclude liability for breach of contract. ## Footnote Enforceability depends on proving applicability, unconscionability, and public policy concerns.
31
What are the three key questions regarding the enforceability of an exclusion clause?
* Does the clause apply to the facts? * Was the clause unconscionable at the time of contract formation? * Should the clause be unenforced for public policy reasons?
32
In the case of Tercon Contractors Ltd v British Columbia, what was the outcome regarding the exclusion clause?
The Supreme Court ruled the exclusion clause did not apply, allowing Tercon to recover damages. ## Footnote The language was not clear enough to exclude damages for conduct undermining the tendering process.
33
What is anticipatory breach?
A breach that occurs before the date for performance, allowing the innocent party to sue immediately. ## Footnote It can be identified when one party advises the other of a non-fulfillment in advance.
34
What are expectation damages?
The monetary equivalent of contractual performance, aiming to put the plaintiff in the financial position they would have been in had the contract been performed.
35
What is the test of remoteness in contract law?
Determines if damages are recoverable based on whether they could have been anticipated or were reasonably foreseeable at the time of contract formation.
36
What must a plaintiff prove to recover damages for mental distress in contract law?
* The object of the contract was to secure a psychological benefit * The mental suffering was serious enough to warrant compensation
37
What is the duty to mitigate in contract law?
The obligation to take reasonable steps to minimize losses resulting from a breach of contract.
38
What is specific performance?
An equitable remedy that orders the party that breached to perform their contractual obligations exactly. ## Footnote It is only available when the item is unique and cannot be replaced by money.
39
What is an injunction in contract law?
A court order restraining a party from engaging in specified activities related to the breach of contract.
40
What is the significance of the case Fidler v Sun Life Assurance Company of Canada?
It challenged the traditional view that damages for mental distress should be rare, allowing recovery for such damages in certain contracts.
41
What are pecuniary and non-pecuniary damages?
* Pecuniary: for financial loss * Non-pecuniary: for loss of employment, mental distress, and other emotional consequences
42
What happens if a party wrongly assumes a serious breach has occurred?
They would themselves be in breach and liable to the other party.
43
What are the purposes of damages in contract law?
Generally to compensate a plaintiff for losses due to breach of contract.
44
What is the standard for refusing specific performance in cases of severe hardship?
A court may refuse to order specific performance if it would cause severe hardship to the parties or to a third party.
45
Why will a court ordinarily not order specific performance of an employment contract?
Because being forced to work for someone else against the employee’s wishes would interfere too much with the employee’s personal freedom.
46
What is an injunction?
An order from the court that restrains a party from engaging in specified activities, which can be in addition to damages.
47
What type of remedy is an injunction considered to be?
An equitable remedy subject to the court’s discretion.
48
Under what condition will a court not order an injunction?
When the plaintiff does not have 'clean hands' or delays in bringing the matter before the court.
49
What is an interlocutory injunction?
An order to refrain from doing something for a limited period of time until the entire dispute is resolved.
50
What does recission aim to achieve?
It restores the parties to the situation they were in before the contract was formed.
51
What is a key limitation on the remedy of recission?
It is unavailable if the parties cannot restore each other to their precontractual positions.
52
What does the law of restitution provide?
Recourse to plaintiffs who cannot prove an enforceable contract exists but have conferred a benefit on the defendant.
53
Define unjust enrichment.
Occurs when the defendant secures a benefit at the plaintiff’s expense in a manner that is undeserved or unjust.
54
What may a court order in cases of unjust enrichment?
Typically, that the benefit be returned to the plaintiff or otherwise accounted for by the defendant.
55
What is the main objective of restitution?
To remedy unjust enrichment.
56
Fill in the blank: The court may order the defendant to pay a _______.
[restitutionary quantum meruit].
57
What risks does a business face when performing a contract?
The business may be unable to perform or may perform deficiently.
58
What are some proactive measures a business can take to manage contract performance risks?
* Negotiate protective clauses * Limit or exclude liability * Include force majeure clauses * Provide good negotiation training for employees * Obtain proper insurance.
59
What should a business consider after a breach of contract?
* Mediation * Arbitration * Settlement offers instead of going to trial.
60
What factors must the innocent party consider when faced with a breach of contract?
* The risk of losing in court * The remedies available and potential amount of damages * The likelihood of negotiating a settlement * Whether there’s a valuable business relationship to preserve.
MOS 2275
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