TEST BANK for Contemporary Canadian Business Law Willies 10th Test Bank & Solutions Manual. by welldoneassistant

Chapter 1

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A sophisticated client A) does not require the services of a lawyer. B) is someone with formal legal training. C) distrusts and derides lawyers. D) understands the importance of the solicitor-client relationship. E) should represent themselves, rather than paying for legal services. 2) Raman is a sophisticated client. This means that she A) understands how to manage a lawyer-client relationship. B) is a small business owner. C) manages her legal affairs without assistance from a lawyer. D) has a law degree. E) will probably never find herself in a situation necessitating legal advice.

3) In the context of a sophisticated client, "sophisticated" can best be defined as A) complicated, self-reliant, and cosmopolitan. B) confident, knowledgeable, and up-to-date. C) aggressive, dynamic, and forceful. D) refined and cultured. E) simple and naïve.

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4) Which of the following best describes the likelihood of a student becoming involved in a situation necessitating legal advice? A) A student, or someone close to the student, will always become involved in such a situation B) Because students cannot be sophisticated, they will often become involved in such situations. C) Legal advice is not available to students. D) A student, or someone close to a student, sometimes becomes involved in such a situation. E) Because students are not business people, they never become involved in such situations.

5) Becoming a sophisticated client will A) ensure that a business person never needs a lawyer. B) relieve a business person from having to conduct legal research. C) protect a business person from needing legal advice. D) result in a business person developing a bias against lawyers. E) help a business person manage her legal affairs more efficiently and effectively. 6) Having a good lawyer on your team is A) a legal requirement prior to incorporating a business. B) a critical component of being a sophisticated client. C) only necessary for large companies. D) a good alternative to becoming a sophisticated client. E) usually too expensive to be worthwhile. 7) William Shakespeare's Henry VI, Part II includes the line "The first thing we do, let's kill all the lawyers." The president of the Canadian Bar Association interpreted this quotation as A) a threat to all members of the legal profession. B) an offence meriting severe legal consequences. C) a comment on the importance of the "rule of law".

D) a lawyer-bashing joke. E) a humorous attempt to embarrass lawyers everywhere. 8) Which of the following best describes the role of the lawyer? A) The lawyer is simply one of the experts the businessperson consults. B) The client makes decisions regarding civil matters; the lawyer makes decisions regarding criminal matters. C) The lawyer makes decisions regarding civil matters; the client makes decisions regarding criminal matters. D) The client must follow the lawyer's instructions, as long as they are lawful. E) The lawyer makes the legal decisions for the client. 9) Which of the following statements best describes solicitor-client privilege? A) The lawyer makes decisions regarding civil matters; the client makes decisions regarding criminal matters. B) The lawyer makes the legal decisions for the client. C) The lawyer is the only expert a client should consult. D) Refers to the duty of the lawyer to keep the information provided by the client confidential. E) The lawyer must follow the client's instructions, even if they are illegal in nature.

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10) Which of the following is NOT a good reason for a business person to seek advice from a lawyer? A) The businessperson cannot understand the necessary legal information. B) The businessperson is facing criminal charges. C) The businessperson cannot find the necessary legal information. D) It would take too long for the businessperson to find the necessary legal information. E) The necessary legal information is available online.

11) For sophisticated clients, the availability of an abundance of legal information online is A) a negative development, because accessing this information tends to be more costly than retaining a lawyer. B) a negative development, because online information is rarely accurate or helpful. C) a neutral development, because lawyers are still the only ones able to access this information. D) a positive development, because it provides greater access to information they can use as part of their decision-making process. E) a positive development, because it means that they will no longer need to retain lawyers as part of their team. 12) When searching online for legal information, it is best to A) trust that if it is published online, it must be accurate. B) use American sources, as they tend to be more comprehensive than Canadian ones. C) gauge the accuracy of the information by the look of the website. D) never trust the information found on a website. E) seek advice from a lawyer when answers cannot be readily found. 13) Sophisticated clients A) know that it is better to hire a lawyer than to conduct research on one's own. B) are willing to pay for legal advice at any cost. C) have the skill and confidence to find basic legal information. D) tend to be embarrassed to request legal advice. E) do not need to retain a lawyer. 14) One reason for the general lack of respect for lawyers is that

A) many people do not understand the role of the lawyer in the solicitor-client relationship. B) the cost of legal advice generally outweighs its benefit. C) lawyers who breach their duties are generally not subject to any punishment. D) lawyers are rarely able to provide information or advice relevant to business matters. E) lawyers are not bound by a Code of Professional Conduct. 15) The role of the lawyer is to A) provide legal advice relevant to the client's situation, which the client has no choice but to follow. B) provide legal advice relevant to the client's situation, which the client is free to ignore. C) delay the client's decision-making process. D) tell their clients what they must do. E) tell their clients what they must not do. 16) The primary purpose of an initial consultation with a lawyer is A) for the prospective client to decide whether to retain the lawyer. B) for the prospective lawyer to help mediate the current dispute. C) to discuss the availability of Legal Aid. D) to develop strategies for dealing with the legal situation in question. E) to arrange payment of the lawyer's fees up front.

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17) The decision to enter into the lawyer-client relationship should be A) a mutual decision made primarily on the basis of trust. B) made primarily on the basis of cost. C) solely up the client, as he or she is the one paying for the services. D) solely up to the lawyer, as he or she is the one with the legal training. E) made quickly to ensure that no one else can retain your lawyer.

18) When setting up a small business, the best approach to follow is to assume that after the business has been set up and commences operating A) a lawyer will no longer be required. B) the lawyer you chose to assist you in the start-up of the business will provide free legal services for the duration of the business's operation. C) the lawyer you chose to assist you in the start-up of the business will continue to represent you. D) the lawyer you chose to assist you in the start-up of the business will refer you to a different lawyer. E) you will not need legal advice, as long as you are a sophisticated client. 19) Which of the following is NOT an advantage to maintaining an ongoing relationship with your lawyer? A) The lawyer will know and understand you and your business. B) The lawyer will view you as her client, giving you and your requests priority. C) The lawyer will automatically track your business activities, so that he or she can provide constant advice and guidance. D) The lawyer will be able to customize his or her legal advice, so it will be even more useful to you. E) The lawyer will be able to provide legal advice more efficiently, thereby reducing your legal costs. 20) When someone refers you to a particular lawyer, you should A) retain the lawyer regardless of their area of practice. B) ignore the referral as irrelevant. C) ensure the referral is being given by someone you trust. D) ensure the referral is from a family member, rather than a mere friend. E) retain the lawyer regardless of who gave you the referral. 21) A lawyer referral service

A) provides the names and phone numbers of lawyers who practice in a particular area of law. B) regulates the legal profession in the interest of the public. C) will enable a businessperson to retain a lawyer without need for an initial consultation. D) is an online fee-based service providing guaranteed results. E) is also known as "Legal Aid". 22) A provincial law society A) operates primarily to enhance the commercial interests of its members. B) has as its mandate the provision of free legal services, in the public interest. C) is a self-governing body for businesspeople seeking legal advice. D) is a self-governing body for lawyers. E) operates primarily to offer low-cost legal advice to members. 23) The Canadian Bar Association is A) an organization responsible for reviewing lawyers' accounts. B) a disciplinary body for members of the legal profession. C) a professional organization that represents judges and lawyers. D) focused on enhancing public safety in the liquor distribution industry. E) the national society for legal aid services.

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24) Legal aid is A) universally available, regardless of subject matter or financial need. B) available to anyone who can demonstrate financial need, regardless of subject matter. C) only available for business law issues. D) available subject to substantive and financial eligibility requirements. E) available exclusively for criminal law issues, subject to demonstrated financial need. 25) Which of the following statements is most accurate? A) If you have a legal problem and cannot afford a lawyer, one will be provided for you. B) If you qualify for legal aid, you will automatically be exempt from all legal costs. C) Everyone qualifies for legal aid. D) Everyone can afford a lawyer. E) If you have a legal problem and cannot afford a lawyer, you may be eligible for legal aid.

26) If you collect money as a result of a settlement or judgment obtained through the assistance of legal aid, you will A) probably be able to keep the full amount of the settlement of judgment. B) probably have to repay some or all of the legal aid benefits you received. C) probably be ineligible to enforce the settlement or judgment if the debtor refuses to pay. D) be required to turn the amount of the settlement or judgment over to legal aid. E) be required to turn the amount of the settlement or judgment over to the court. 27) Legal Aid Ontario will NOT cover any of the following except A) defamation. B) wrongful dismissal. C) change of name. D) criminal matters. E) personal bankruptcy. 28) The BC Legal Services Society may pay for a lawyer for a low-income client if the client has a legal problem involving any of the following except A) serious family problems.

B) mental health or prison issues. C) commercial litigation. D) criminal charges. E) immigration problems. 29) A small business owner A) is wise to obtain legal aid for its business matters, rather than having to incur legal costs. B) should always use duty counsel, rather than having to retain a lawyer. C) is usually not able to receive legal aid with respect to the legal issues involving the business. D) should retain duty counsel to draft contracts outlining legal duties. E) is automatically entitled to legal aid assistance. 30) Which of the following statements regarding duty counsel is accurate? A) There is an advantage to using duty counsel rather than retaining one's own lawyer. B) There is a lengthy application process to obtain duty counsel. C) Duty counsel typically take on your entire case and represent you at trial. D) Duty counsel are available to assist in a wide range of business law issues. E) Duty counsel can provide limited assistance in certain court matters.

31) Duty counsel are typically available A) in criminal courts, family courts, or immigration courts. B) to review and draft a variety of contracts. C) in superior court bankruptcy matters. D) for small claims and real estate disputes. E) for commercial litigation.

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32) Duty counsel are A) court lawyers who assist individuals who are not represented by a lawyer. B) retired lawyers and judges who volunteer through legal aid societies. C) non-lawyers who provide advice to those in financial need. D) legal assistants who offer legal services at rates significantly lower than those charged by lawyers. E) law students who are fulfilling requirements established by a provincial law society.

33) Legal fees A) are always calculated in a single, specified way. B) are typically negligible. C) should not be discussed with a lawyer until a bill has been prepared. D) should be discussed during the initial consultation with the lawyer. E) are rarely the subject of confusion or misunderstanding. 34) Which of the following statements is true? A) Some people don't retain lawyers even when they need them because they are afraid of the cost. B) It is a popular misconception that legal services can be very costly. C) Lawyers should always be retained, regardless of the cost. D) It is considered unprofessional to raise the issue of fees during a consultation with a lawyer. E) All lawyers bill clients on an hourly basis. 35) Contingency fee agreements A) may result in a lawyer not receiving any legal fees for the work done on a file. B) are not subject to any restrictions. C) must be prepared for all lawyer-client relationships. D) are typically used for real estate purchases, the drafting of wills, and incorporations.

E) are synonymous with retainer agreements. 36) Which of the following statements regarding provincial law societies is false? A) Provincial law societies may set maximum contingency fees for certain types of cases. B) Provincial law societies may restrict the use of contingency fee agreements. C) Provincial law societies provide free legal services to people in need. D) Provincial law societies may offer a fee mediation service. E) Provincial law societies provide online information on lawyers' fees. 37) Typically, lawyers bill on the basis of which of the following? A) A fixed fee, a stipend, or a pro rata distribution. B) A fixed fee, an hourly rate, or a contingency fee. C) A fixed fee, a pro rata distribution, or a contingency fee. D) A stipend, a pro rate distribution, or an hourly rate. E) A stipend, an hourly rate, or a contingency fee.

38) Which of the following statements regarding retainers is false? A) The lawyer may require the client to "top up" the retainer as funds are withdrawn from the trust account. B) A retainer helps ensure that a lawyer will be paid for his or her legal services. C) Provincial law societies typically restrict the use of retainers to personal injury or product liability cases. D) A retainer is deposited into a trust account, to the credit of the client. E) Before commencing work on a matter, a lawyer usually requests that a retainer be paid.

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39) A retainer A) works as a deposit. B) is the amount a client must pay that is in addition to regular legal fees and disbursements. C) is the amount a lawyer will receive when charging based on a contingency fee agreement. D) refers to the costs incurred by a lawyer on a client's behalf. E) works to secure the release of an arrested person.

40) Provincial law societies A) exist primarily to assist clients with complaints concerning fees. B) deal with complaints regarding a lawyer's conduct. C) provide compensation to clients who are unhappy with legal services. D) guarantee success in litigation matters. E) are non-profit law firms offering a range of legal services. 41) If you have a complaint about the fees being charged by your lawyer A) you can have your bill reviewed by a court official. B) your provincial law society represents your only course of action. C) you must participate in a fee mediation service. D) you should not discuss your concerns with your lawyer directly. E) you should begin by commencing a court action. 42) Fee mediation A) is compulsory whenever a client raises a concern about a lawyer's bill. B) involves a neutral mediator who tries to facilitate a mutually acceptable resolution of a dispute over fees charged by a lawyer. C) involves a review of a lawyer's bill by a court official. D) involves a judge who determines whether or not a lawyer's bill is reasonable. E) is offered by every provincial law society as the primary means of dispute resolution for complaints

regarding

lawyers' fees.

43) A client who is unable to resolve a fee dispute with a lawyer can have the lawyer's bill reviewed by a court official. These court officials have the power to A) impose fines on either the client or the lawyer. B) require that the client and lawyer attend fee mediation. C) decide that the bill is too high and reduce it accordingly. D) authorize compensation to be paid by the provincial law society. E) order that a lawyer be taken into custody. 44) A provincial law society's complaint-resolution process usually begins with A) a hearing before a panel. B) a formal investigation. C) oral submissions by legal counsel. D) a review of the complaint by a court official. E) an attempt at mediating the dispute between the client and the lawyer.

45) Complaints made to the provincial law society regarding a lawyer's conduct may result in a hearing. This hearing A) involves the testimony of witnesses and the entering of other evidence. B) is held before a superior court judge. C) is held in the absence of legal counsel. D) results in compensation being paid to the client who made the complaint. E) can result in a finding of misconduct, although the law society does not have the power to impose penalties.

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46) If you cannot resolve a fee dispute with your lawyer, you should A) sue your lawyer for non-payment. B) refuse payment on legal grounds. C) make a formal complaint to the bar association. D) have your bill reviewed by the appropriate court official. E) refuse payment on ethical grounds.

47) If a law society panel finds a lawyer guilty of misconduct, the penalty could include all of the following except A) a suspension. B) incarceration. C) disbarment. D) a fine. E) costs of the hearing. 48) If you believe that you have suffered a financial loss because of your lawyer's misconduct A) you should wait as long as possible before you proceed. B) you should have the matter reviewed by a taxation or assessment officer. C) you may be compensated by the bar association at the end of their investigation. D) you will automatically be awarded compensation by the provincial law society at the end of their hearing. E) you may need to seek legal advice from another lawyer. 49) Lawyers' rules of professional conduct A) are recommended guidelines only. B) establish professional and ethical obligations of lawyers.

C) are generally not taken seriously by members of the legal profession. D) will, if breached, automatically result in a lawyer facing criminal charges. E) are established by the Canadian Bar Association. 50) Which of the following statements best describes the difference between law and ethics? A) Ethics tells us what we must do; law tells us what we should do. B) A person need not worry about acting legally, as long as she acts ethically. C) Law tells us what we must do; ethics tells us what we should do. D) If a person acts unethically, he has broken the law. E) Law and ethics are interchangeable. 51) Many people lack trust or confidence in lawyers because A) most lawyers are unethical. B) lawyers who act unprofessionally are not subject to any penalty. C) few provincial law societies have established rules for professional conduct. D) a few well-publicized cases involving lawyers has tainted the reputation of the whole profession. E) lawyers have no professional or legal obligations.

52) The Canadian "Code of Professional Conduct" for business people A) is the same as the lawyers' code of conduct. B) establishes the professional and ethical obligations of businesspeople. C) was created by the provincial business society. D) has been used to prosecute a number of high-profile cases. E) does not exist.

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53) Sophisticated clients who are starting a business should A) opt not to prepare a code of conduct, because of potential liability exposure in the event of a breach. B) only concern themselves with ethical behaviour that is required by law. C) make a commitment to ethical behaviour and prepare a statement of values. D) consult a lawyer about how to engage in unethical behaviour undetected. E) refrain from reporting illegal or unethical behaviour.

54) You can enhance the success of your business by A) personally adopting core values and incorporating them into a code of conduct for the business. B) relying on the Canadian Code of Professional Conduct for Businesspeople. C) retaining a lawyer who is willing to engage in unethical conduct on your behalf. D) not seeking legal advice in cases where your conduct may be questionable, as you will then be bound by the lawyer's code of professional conduct. E) incorporating core values into a code of conduct, regardless of whether or not you adopt those values personally. 55) Which of the following does NOT represent a core ethical value identified by the Josephson Institute for Ethics? A) Courage B) Respect C) Caring D) Fairness E) Citizenship 56) According to the Josephson Institute for Ethics, the core ethical value of trustworthiness has as its supporting ethical principles A) respect, autonomy, courtesy, self-determination. B) citizenship, philanthropy, voting. C) caring, kindness, compassion. D) justice, fairness, impartiality, equity. E) truthfulness, sincerity, candor, integrity, promise keeping, loyalty, honesty.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 57) "The first thing we do, let's kill all the lawyers." is a popular quotation from William Shakespeare, the meaning of which is open to debate. 58) A sophisticated client knows how to form and use the solicitor-client relationship to facilitate making good business decisions. 59) Generally, good business decisions cannot be made without consideration of the appropriate laws. 60) A sophisticated client never conducts legal research on his or her own, but always seeks advice from a lawyer. 61) It is always wise to retain legal counsel when you are facing criminal charges. 62) In making business decisions involving legal issues, a sophisticated client will tend to complete some research of the relevant law on her own. 63) The time and cost to be incurred by hiring a lawyer is irrelevant: It is always worthwhile to get legal advice from a lawyer.

64) Sophisticated clients understand that success depends on good business decisions, and good business decisions depend on appropriate information (including legal information). 65) In the lawyer-client relationship, the decision-maker is the lawyer, not the client.

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66) Solicitor-client privilege refers to the lawyer making all the decisions for the client. 67) The solicitor-clent privilege refers to the duty of the lawyer to keep the information provided by the client confidential. 68) There is sufficient information in the Yellow Pages to help a person decide whether a particular lawyer would be appropriate.

69) Given the growing complexity of the law and the consequence that more lawyers specialize, a business person might have multiple lawyers. 70) It is more advantageous to retain your own lawyer than to simply use duty counsel. 71) Small business owners are usually able to receive legal aid with respect to the legal issues involving the business. 72) A retainer is the amount a client must pay to a lawyer over and above regular legal fees. 73) Provincial law societies may restrict the use of contingency fee agreements. 74) Most provinces set a minimum contingency fee for family law cases. 75) A complaint made to the provincial law society about a lawyer's conduct does not result in compensation being paid to the client who made the complaint. 76) Clients who believe that they have suffered financial loss due to their lawyer's misconduct should not

procrasti nate as limitation periods may exist. 77) If a complaint regarding a lawyer's conduct cannot otherwise be resolved, and the law society decides the complaint is valid, then the lawyer will face automatic disbarment. 78) Ethics depends on a person's conscience, rather than on what the law says. 79) Ethical behaviour implies integrity, honesty, and professionalism. 80) A code of professional conduct is needed because the vast majority of lawyers are unethical. 81) Compliance with a code of ethics in an organization is unrelated to whether or not top management practises ethical behaviour. 82) In 2005, Canada was ranked number one in the world on a list of countries perceived to be free of corruption. 83) Core ethical values, and their supporting ethical principles, should be used as the basis for a business code of conduct.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 84) What term can be used to describe someone who understands the role of a lawyer, when and how to retain one, and how to manage the lawyer-client relationship? 85) Complete the following quotation from William Shakespeare's Henry VI, Part II: "The first thing we do, let's ________".

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86) When making significant business decisions, when should business people consult their lawyers? 87) In the lawyer-client relationship, who is the decision-maker? 88) When must a lawyer follow a client's instructions?

89) What must a business person consider before asking a lawyer for assistance in making a business decision?

90) Why is it unnecessary (and undesirable) for a client to seek legal advice for every decision she must make? 91) If a business person cannot find important legal information on his own, or cannot understand the information he finds, what should he do? 92) When will a sophisticated client do her own legal research? 93) What recent development has given non-lawyers greater access to legal information? 94) How has the lawyer-client relationship been affected by computers and the Internet? 95) What is the main role of a lawyer? 96) Why might a business person have more than one lawyer? 97) Identify the sources you would consult when looking for an appropriate business lawyer. 98) Identify the advantages to a business person of maintaining an ongoing relationship with a lawyer.

99) What is the Canadian Bar Association and what is its purpose? 100) What is a provincial law society and what is its mandate? 101) What is "duty counsel"? 102) Why should a business owner not assume that legal aid will be available to him or her? 103) What may occur if you collect money as the result of a settlement or judgment obtained through assistance from legal aid? 104) List the three main ways in which lawyers may charge their clients. 105) When is the fixed fee method of billing most often used? 106) In addition to legal fees, what other costs is a client responsible for paying? 107) What are disbursements and what do they generally include?

108) What is a retainer?

109) What is a contingency fee arrangement?

110) When is a contingency fee agreement most often used?

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111) When should a client ideally first discuss the issue of fees with a lawyer? 112) Is it more cost-effective to hire a senior lawyer with a high hourly rate, or a junior lawyer with a low hourly rate? Explain. 113) How does a contingency fee agreement potentially benefit a client? 114) What is disbarment?

115) For lawyers who are found guilty of misconduct, what penalties might they face? 116) What can you do if you cannot resolve a fee dispute with your lawyer? 117) What should clients do if they believe they have suffered a financial loss because of their lawyer's misconduct? 118) Outline the steps of the law society's typical complaint-resolution process. 119) Distinguish between law and ethics. 120) Provide three examples of conduct that fail to meet the standards of professional responsibility for lawyers. 121) In addition to penalties from the provincial law society, in what else may a lawyer's misconduct result? 122) Provide three examples of issues that ought to be addressed in a business person's code of ethics.

123) What are the six core values identified by the Josephson Institute for Ethics? 124) What is a code of business conduct? 125) Why should a code of business conduct be used by a small business? 126) What format must a code of business conduct take? 127) What is a good way to ensure the long term adoption of ethical behaviour of employees of a business? ESSAY. Write your answer in the space provided or on a separate sheet of paper. 128) Explain what makes someone a "sophisticated client". 129) Explain, using examples, what advice and information a lawyer can provide to a person starting a business. 130) Explain how a business person would go about finding an appropriate lawyer, including a discussion of what makes a lawyer appropriate for a particular client. 131) Explain the concept of legal aid.

132) Explain the different ways in which a lawyer may calculate the legal fees to charge a client, providing examples of when each might be used. 133) Outline the types of complaints a client may have about a lawyer, and how the client should proceed in each instance.

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134) Do business people make good ethical choices? Explain, providing examples.

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1) D 2) A 3) B 4) D 5) E 6) B 7) C 8) A 9) D 10) E 11) D 12) E 13) C 14) A 15) B 16) A 17) A 18) C 19) C 20) C 21) A 22) D 23) C 24) D 25) E 26) B 27) D 28) C 29) C 30) E 31) A 32) A 33) D 34) A 35) A 36) C 37) B 38) C 39) A 40) B 41) A 42) B 43) C 44) E 45) A 46) D 47) B 48) E 49) B 50) C 51) D

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52) E 53) C 54) A 55) A 56) E 57) TRUE 58) TRUE 59) TRUE 60) FALSE 61) TRUE 62) TRUE 63) FALSE 64) TRUE 65) FALSE 66) FALSE 67) TRUE 68) FALSE 69) TRUE 70) TRUE 71) FALSE 72) FALSE 73) TRUE 74) FALSE 75) TRUE 76) TRUE 77) FALSE 78) TRUE 79) TRUE 80) FALSE 81) FALSE 82) FALSE 83) TRUE 84) A sophisticated client. 85) Kill all the lawyers . 86) Taking into consideration time and expense, businesspeople generally ought to consult their lawyers when they cannot find the legal information relevant to their decision on their own, or when they cannot understand the information they find. 87) The client. 88) When those instructions are lawful. 89) The time and cost, and whether the client could effectively find and understand the relevant information on his or her own. 90) Because this can be prohibitively expensive, and can result in delays in the client's decision-making. 91) Consult a lawyer. 92) Whenever she requires legal information to make a business decision and it is not appropriate to hire a lawyer. 93) The tremendous increase of legal information available online. 94) There is now an abundance of legal information accessible to non-lawyers, making it possible for non-lawyers to conduct some legal research without the assistance of a lawyer. 95) To provide legal advice relevant to a client's situation. 96) Given the growing complexity of the law, more lawyers are specializing. If a businessperson faced a wide variety of legal issues (such as both civil and criminal matters), more than one lawyer might be needed. 97) The phone book (e.g. Yellow Pages), other advertisements, referrals from friends and relatives and trusted colleagues, the relevant law society.

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98) The lawyer will know and understand the client and his business. This will enable the lawyer to provide legal advice more efficiently (thereby reducing legal costs) and to customize legal advice (making it more useful). In addition, the lawyer will be more inclined to give priority to the longstanding client. 99) The Canadian Bar Association is a professional organization representing judges and lawyers. One of its purposes is to enhance the profession and the commercial interests of its members. 100) A provincial law society is a self-governing body for lawyers in a province. Its mandate usually involves regulating the legal profession, in the public interest. 101) Duty counsel refers to court lawyers who assist individuals who are not represented by a lawyer. 102) A business owner is usually not able to receive legal aid with respect to the legal issues involving the business, due to both substantive and financial eligibility requirements. 103) You will probably have to repay some or all of the benefits received from legal aid. 104) Fixed fee, hourly rate, and contingency fee. 105) For specific tasks, such as preparing a will, purchasing a house, or incorporating a business. 106) Disbursements (out-of-pocket costs incurred by the lawyer on the client's behalf). 107) Disbursements are out-of-pocket costs incurred by the lawyer on the client's behalf. They typically include court filing fees, long distance telephone charges, courier charges, expert fees, and photocopying costs. 108) A retainer works as a deposit. It is an amount paid by a client and deposited into a lawyer's trust account, to the credit of the client. When the lawyer bills the client, the amount owing is taken from the retainer. 109) The lawyer is paid a percentage of the amount a client collects from settlement or judgment. If the client does not collect anything, the lawyer does not receive anything. 110) In personal injury or product liability cases. 111) During the initial consultation. 112) It depends. For example, if the senior lawyer is able to work more efficiently than the junior lawyer, the overall fee might be lower for the senior lawyer. 113) The client does not need to pay any legal fees unless and until a settlement or judgment is obtained. Without contingency fee arrangements, some clients would not be able to afford a lawyer at all. 114) Termination of membership in the law society. 115) A reprimand, fine, suspension, disbarment, costs of the hearing. 116) You may be able to participate in a fee mediation service. If any mediation is unsuccessful, you can have your lawyer's bill reviewed by a court official. 117) They should not procrastinate, and may need to seek legal advice from another lawyer. 118) There is usually an attempt at mediation which, if unsuccessful, is usually followed by a formal investigation. This may result in a hearing before a panel. If the panel finds the lawyer guilty of misconduct, the lawyer faces a number of possible penalties. 119) Law tells us what we must do, while ethics tells us what we should do. 120) There are numerous possible responses. Examples provided in the text include: failing to serve a client in a timely fashion, failing to respond to clients, failing to disclose to a judge that another judge had previously refused the same application, swearing a false affidavit, poor accounting of a trust account, improper transfers from trust accounts, and misappropriation of trust funds. 121) If the behaviour is also criminal, the lawyer may face criminal charges. If the behaviour results in a client suffering a financial loss, the lawyer may also be sued. 122) Examples could include: conflicts of interest; protection and proper use of corporate assets and opportunities; confidentiality of corporate information; fair dealing; compliance with laws, rules, and regulations; and the reporting of any illegal or unethical behaviour. 123) Trustworthiness, respect, responsibility, fairness, caring, citizenship. 124) A formal statement adopted by a company that sets out its values and standard of business practices, essentially codifying a company's organizational values and establishing procedural norms and standards of expected behaviour. 125) An effective code of conduct is one of the best ways to ensure the long-term adoption of ethical behaviour by employees. 126) There is no prescribed format. 127) Creating and modeling an effective code of conduct.

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128) A sophisticated client is someone who understands the role a lawyer plays, when to represent himself or herself, when and how to hire a lawyer, the costs associated with hiring a lawyer, what to expect from the solicitor-client relationship, and what to do if dissatisfied with a lawyer's conduct. A sophisticated client puts aside negative attitudes associated with lawyers and seeks timely legal advice. Here students would be expected to discuss the ways in which a lawyer can help a business person make good business decisions. 129) Here students are expected to provide a variety of examples, including with regard to: forms of business organization; purchase of another business or its assets; compliance with relevant municipal, provincial, or federal laws; lease negotiations; review of financing documents; review or preparation of other contracts; advice regarding intellectual property issues; etc. 130) Here students should outline the search process, including suggesting sources of names of potential lawyers (from advertisements, referrals, the law society, etc.), and setting up a meeting for an initial consultation. Reference should be made to the importance of establishing mutual trust as the foundation for the lawyer-client relationship. It is not enough for a lawyer to be knowledgeable and successful; the lawyer must also practice in the relevant area and be someone who the businessperson feels they can trust. 131) Legal aid is available in limited cases to assist those with legal problems who cannot afford a lawyer. The provision for legal aid varies across the country and students may be required to provide details as to financial and substantive eligibility requirements specific to their own province. In any event, students ought to note that not everyone qualifies for legal aid, that even those who qualify may have to pay some legal costs, and that benefits must be repaid in some circumstances. Of particular relevance, a small business owner is usually not able to receive legal aid with respect to the legal issues involving the business. 132) There are three main ways that lawyers calculate their fees. First, a lawyer may charge a fixed fee for the work required, regardless of the time spent. This is often used for specific tasks, such as purchase or sale of real estate, preparation of a will, an incorporation, etc. Second, the lawyer may bill on the basis of an hourly rate for time actually spent. This is very common. Third, the lawyer may receive a percentage of the amount the client collects through a settlement or judgment. This is often appropriate for personal injury claims or in product liability cases. 133) A client may have complaints regarding the fees charged by the lawyer. In this case, the client could attempt to deal with the lawyer directly, may have access to a fee mediation service, and can ultimately have the lawyer's bill reviewed by a court official. A client may have complaints about a lawyer's conduct (other than related to fees). In this case, the client can go through the law society's complaint resolution process. Finally, a client may have suffered financial loss due to the lawyer's misconduct. In this case, the client should act quickly, and may need to seek legal advice from another lawyer. 134) Explain your answer, providing examples. Here students should recognize that while many businesspeople do conduct themselves in an ethical manner, not all businesspeople make good ethical choices. There is no general code of professional conduct for businesspeople, and there have been many recent cases of businesspeople engaging in questionable activities. Students could draw upon any one of a number of potential examples, including WorldCom, Enron, Martha Stewart, Conrad Black, to name only a few.

Chapter 2

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In a CBC interview, a noted environmentalist said that if he were forced to choose between the lives of the last breeding pair of whales and those of a boatload of men who were out to kill them, he would sacrifice the men to save the whales. He cited the war-crimes trials after World War II for the principle that immoral laws should be resisted to protect "the higher good." This position exemplifies which one of the following? A) Legal realism B) The law of equity C) Natural law D) Legal positivism E) The law of the sea

2) Which of the following is correct with respect to the role of statutes in our legal system? A) In Canada, most new law follow the Civil Code legal system. B) Once a statute has been interpreted and applied in a court, a subsequent judge in a lower court is not required to follow that decision if he disagrees with it. C) A statute, if it is clear and concise and properly passed, will always override common law and equity. D) Where a properly passed provincial statute is in conflict with a well-established common-law principle, the statute will be void. E) Only the federal parliament may enact statutes.

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3) Which of the following statements is correct with respect to the sources of our law? A) The only province in which a judge is required to follow a comprehensive civil code is Ontario. B) The common law derived aspects of the law of families and estates from the French Civil Code. C) The Courts of Chancery developed the law of contracts. D) Equity is a system of law developed by the provincial legislatures. E) The term stare decisis refers to the practice of following precedent, which forms the basis of our common-law system.

4) With regard to the relationship between the judiciary (courts) and the legislatures, which of the following is true? A) The statute law never overrides the case law on the same point. B) A provincial statute cannot be struck down by the courts for being contrary to the Charter of Rights and Freedoms. C) The Supreme Court of Canada cannot strike down any statute passed by the federal parliament because "Parliament is supreme." D) The Supreme Court of Canada has the power to find the province didn't have the power to pass the statute, with the result that the statute would no longer be law. E) The courts cannot affect the meaning of the statute through subsequent interpretation. 5) Which of the following is true with regard to Canada's Constitution? A) Our Constitution consists of only the Charter of Rights and Freedoms. B) The Charter of Rights and Freedoms is a part of the BNA Act (1867). C) The Charter of Rights and Freedoms cannot be amended by the federal parliament acting alone. D) The Constitution Act (1982) requires British Parliament to amend it. E) The British North America Act of 1867, the first document to determine which classes of subjects could be dealt with by the provinces and which by the federal government, was passed by our federal parliament. 6) Uncle Max just immigrated to Canada and learned some things about our laws and constitution on the plane.

Which of the following things he heard is true? A) The Charter of Rights and Freedoms, part of the Constitution Act (1982), has been entrenched in our constitution and therefore cannot be changed. B) There are many aspects of our constitution we have inherited from the United States. C) Our federal parliament is supreme in enacting laws concerning municipalities. D) The British North America Act of 1867, the first document to determine which classes of subjects could be dealt with by the provinces and which by the federal government, was passed by the Queen Victoria. E) Our constitution provides that the provincial legislatures have exclusive jurisdiction to enact laws concerning education and property in the province. 7) Which of the following statements about statutes is true? A) Statutes only apply when there is no common law covering the situation. B) Government regulations are considered supreme to statute law. C) Statutes often summarize or modify canon law. D) A statute may be only federal. E) Statutes are laws created by legislative bodies.

8) Which of the following is a legal right under the Charter? A) Everyone has the right to be employed. B) Everyone has the right not to be exposed to any unreasonable search and seizure. C) Everyone has the right to freedom of expression regardless if it interferes with the freedom of others. D) Everyone has the democratic right to vote regardless of age or mental capacity. E) Everyone has the right to not to be deprived of their property.

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9) At a recent computer show, you heard a student trying to explain our legal system to a man who recently immigrated from Russia. Which one of the following statements he made is correct? A) Judge-made law in England came from two traditions, civil law and parliamentary supremacy. B) Today, we are governed by statutes passed by our elected representatives as well as by judge-made law. C) With the creation of our court system, the equitable tradition was lost. Today a judge of our superior court does not apply principles or remedies developed by the courts of equity. D) The chief characteristic of the common law is the theory of precedent; that is, judges are bound by decisions of judges on superior courts in that jurisdiction on the same point of law. E) All the provinces follow law that stemmed from the English common law. 10) Which of the following statements is correct with respect to our constitutional law? A) Neither the Federal or Provincial governments can change the provisions of the Charter of Rights and Freedoms without going through the constitutional amending process. B) The Constitution Act (1982) is the supreme law of Canada and overrides statutes. C) The Charter is entrenched and, as such, none of its provisions can be overridden by any level of government. D) The Constitution Act (1982) was passed only by the English parliament. E) The Canadian Charter of Rights and Freedoms is part of the BNA Act (1867). 11) Which of the following is correct with respect to the impact of the passage of the Charter of Rights and Freedoms in Canada? A) The Charter applies only to private disputes between individuals. B) The passage of the Charter has placed no limits on the supremacy of parliament. C) Section 33 allows parliament or the legislature to override any provision of the Charter providing they clearly state they are doing so "notwithstanding" the specific provision of the Charter. D) Section 1 of the Charter divides the powers between the federal and provincial governments. E) The passage of the Charter has given the judges more power than they had before its passage.

12) Which of the following is correct with respect to the Charter of Rights and Freedoms? A) The effect of the notwithstanding clause is to shift the power back to the judges. B) The parliament or provincial legislature cannot override a section of the Charter. C) Section 33 (the notwithstanding clause) only applies to all specified provisions of the Charter. D) The federal or the provincial legislature can override a person's right not to be discriminated against on the basis of race or religion. E) The federal or provincial legislature cannot override a person's right to free speech. 13) Which of the following statements is correct with respect to the application of the Charter of Rights and Freedoms? A) The provisions of the Charter only apply to government and to any government representative exercising a statutory power. B) The Charter does not specifically prohibit discrimination on the basis of sexual preference. C) Any provincial human rights legislation must comply with the provisions of the Charter. D) The Charter of Rights and Freedoms does not regulate the relationship between a university or hospital and its employees. E) The Charter of Rights and Freedoms applies to the federal and provincial governments but not to local municipal governments.

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14) Which of the following is correct with respect to the impact of the Charter of Rights and Freedoms? A) The passage of the Charter has increased the power of the courts. B) The passage of the Charter has shifted power from the federal to the provincial government. C) The passage of the Charter has led the provincial and federal legislatures to become more activist in making law. D) The passage of the Charter has shifted power from the courts to parliament. E) The passage of the Charter has placed significant limitations on the power of the judiciary.

15) Which of the following is true with regard to our legal system? A) Our constitution can be amended by the federal parliament acting alone. B) Our Charter of Rights and Freedoms diminishes the power of both the federal and provincial legislatures. C) An appeal from the Supreme Court of Canada goes to the Federal Court of Appeal. D) If a case were heard before a provincial trial level court, the judge could apply legal principles and award only cash remedies. E) Case law overrides the statute law on the same point. 16) Which of the following is correct with respect to the definition of law? A) Law defined in practical terms as to what the court will do is a reflection of legal positivism. B) Law defined in terms of morality is a reflection of natural law theory. C) Law defined in terms of authority is a reflection of natural law theory. D) Law defined in moral terms is a reflection of legal positivism. E) Law defined in terms of authority is a reflection of legal realism. 17) Which of the following is the most usable definition of law? A) We must define law in terms of what people used to do. B) It is most useful to us to define law in terms of what we think people ought to do. C) We must define law in terms of what society needs people to do. D) It is most useful to us to define law in terms of what people do. E) We must define law in terms of what the courts will enforce. 18) Which of the following is an example of substantive law? A) The rule that hearsay evidence is not permitted in a trial

B) The rule that establishes the type of document by which an action is commenced C) The rule that a victim of fraud can sue D) The rule that any action under $10,000 must be brought in the small claims court E) The rule that a tort action must be commenced within 2 years of the action complained of 19) Which of the following is true regarding categories of law? A) Substantive law determines how procedural laws will be enforced. B) Criminal law involves the rules that govern our personal, social, and business relations. C) Procedural law establishes the limits on an individual's conduct. D) Private law includes constitutional law. E) Substantive law establishes the rights an individual has in society.

20) Which of the following is true regarding the history of the legal system used in England? A) Historically, kings and nobles worked together to establish a common system of justice. B) The early Norman kings failed to establish a feudal system, which allowed Roman civil law to take hold in England. C) Strained relations between the English and French kingdoms explain why England adopted Roman civil law as its system of justice. D) England alternately used common law and civil law legal systems, depending on the strength of the reigning king. E) During times when power was decentralized, local lords, barons, or sheriffs would administer justice.

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21) In terms of the development of the common law legal system, which of the following is true? A) Historically, local lords, barons, or sheriffs held court as part of their feudal responsibility. B) Traveling courts, established by weak kings, provided a relatively unattractive method of resolving disputes. C) The courts of the nobles grew in power, eventually evolving into the modern courts of today. D) Trial by battle involved some psychological test. E) Trial by ordeal involved armed combat between the litigants or their champions.

22) The custom of following already decided cases is called A) common law. B) Ultra vires. C) Res judicata. D) civil law system. E) Stare decisis.

23) Which of the following will override a particular provincial common-law rule as articulated by a trial-court judge of the highest trial level court in the province? A) A contrary subsequent ruling by the Court of Appeal of the province B) A new provincial statute to the contrary in another province C) A contrary ruling by an appeal court judge in another province D) A similar subsequent ruling by a trial-court judge in another province E) A contrary ruling by a small claims court judge 24) Which one of the following statements is not accurate with respect to the Canadian legal system? A) The full normal route of a civil action is from a provincial trial court to a provincial Court of Appeal to the Supreme Court of Canada. B) The three major components of present Canadian law are the common law, equity, and statutes. C) The principle of stare decisis provides that courts within a province are bound to follow previous decisions on the same legal point from the courts of other provinces. D) The traditional supremacy of parliament to make law has been limited to some extent by the Charter of

Rights and

Freedoms. E) The original Canadian Constitution is now known as the Constitution Act (1867).

25) Which of the following is correct with respect to the civil law system? A) The code is persuasive only and the judges are free to disregard it where the situation warrants. B) The Civil Code governs all legal matters arising in Quebec including criminal actions. C) The system used in Quebec is based on Justinian's code rather than the Napoleonic Code. D) The Civil Code as used in Quebec covers private disputes between individuals. E) Quebec and New Brunswick use a system based on the French Civil Code. 26) Which of the following is correct with respect to the characteristics of stare decisis in the common law? A) It is based on trial by battle and trial by ordeal. B) It allows decisions of the courts to be predictable by the parties. C) Our statutes play the same role as the code used in the French system. D) This term refers to the role played by the law of equity in our system. E) It prevents a higher court from overruling a lower one.

27) Which of the following is correct with respect to the law of Quebec? A) The code used in Quebec is a variant of Justinian's code rather than the Napoleonic Code. B) The Quebec Civil Code was most recently revised in 1985. C) The code is binding and prior cases are just persuasive. D) The Civil Code used in Quebec is a direct copy of the Napoleonic code used in France. E) Once judges make decisions based on the code, it is those decisions that are binding on other judges faced with similar problems.

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28) Which one of the following is not generally recognized as a source of the common law? A) Local British customs and traditions B) The law merchant C) The law of equity D) Roman civil law E) Church (or canon) law

29) Which of the following statements best describes the law merchant? A) The law merchant is another name for the Sale of Goods Act. B) The law merchant is a body of law designed to control trade practices. C) The law merchant was designed to protect consumers from unscrupulous merchants. D) The law merchant is a body of law created by merchant guilds, which was incorporated into the common law. E) Our laws relating to consumer protection are derived from the law merchant. 30) Which of the following will a judge not apply in a Canadian court? A) Equitable principles B) Common law principles C) Constitutional law D) Roman law E) Statute law 31) The common-law courts refers to A) the court of common pleas, the court of king's bench, and the chancery court. B) the court of king's bench, the chancery court, and the court of equity. C) the court of king's bench, the chancery court, and the exchequer court. D) the court of common pleas, the chancery court, and the exchequer court.

E) the court of common pleas, the court of king's bench, and the exchequer court. 32) Which of the following was not one of the factors that led to the creation of the law of equity? A) The need for a supplement to the common law B) The adherence to precedent C) Stare decisis D) The outcome in the common law courts was unpredictable E) Rigidity in the common law courts 33) Which of the following is correct with respect to the law of equity? A) Equity refers to the amount still owing on a debt. B) Equity means fairness in our legal system. C) The Court of Equity was one of the original common law courts along with the Court of King's Bench and the Court of the Exchequer. D) Equity no longer exists; the courts were merged. E) Equity refers to the body of law created by the Courts of Chancery.

34) In R. v. Keegstra, the Supreme Court of Canada stated that A) the decision of a sub-ordinate court must always be followed, regardless of the specific facts of the case. B) decisions of the Supreme Court of Canada ought only be applied in federal cases. C) although the freedom of expression is violated by the Code, these infringements are justifiable under Section 1 of the Charter of Rights and Freedoms. D) the doctrine of stare decisis no longer applies. E) provincial Court Judges have no authority to impose sentences in matters involving freedom of expression.

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35) In R. v. Clough, the BC Court of Appeal stated that A) the Provincial Court Judge could not refuse to follow the decision of a senior court on the basis that the case had been wrongly decided. B) decisions of the Supreme Court of Canada ought only be applied in federal cases. C) the decision of a senior court must always be followed, regardless of the specific facts of the case. D) the doctrine of stare decisis no longer applies. E) provincial Court Judges have no authority to impose sentences in matters involving criminal offences such as drug trafficking. 36) Which of the following is true in respect of delegation between the federal and provincial governments? A) The provincial governments are considered inferior legislative bodies, so they can abdicate their powers, but only to the federal government. B) The federal government is considered an inferior legislative body, so it can abdicate its powers, but only to a provincial government. C) Direct delegation between the federal and provincial government bodies is the only way governmental bodies can conduct their business. D) Federal and provincial governments can delegate their powers to inferior bodies, such as boards and individual civil servants. E) There is no practical way for governments to overcome the prohibition against delegation. 37) With regard to the Constitution of Canada, which of the following is false? A) Members of our federal parliament in Ottawa have been given the sole power to amend the Charter of Rights and Freedoms. B) The Constitution Act (1982) contains a Charter of Rights and Freedoms that curbs the power of the federal and provincial legislatures. C) Our Constitution provides for a federal system of government, i.e., for two levels of government,

federal and

provincial. D) The Constitution Act (1867) (formerly, the British North America Act) clarifies which matters can be dealt with by the provincial governments (i.e., the provincial legislatures). E) The Constitution Act (1867) was a statute passed by the British Parliament, but it is no longer necessary to have the British Parliament amend it if Canadians want it amended.

38) With regard to the Constitution of Canada, which of the following is true? A) Our Constitution provides for a single system of government. B) The British Parliament can continue pass legislation that affects Canada. C) The Constitution Act (1982) provides which matters can be dealt with only by the federal government. D) The Constitution Act (1982) contains a Charter of Rights and Freedoms that curbs the power of the federal and provincial legislatures. E) Federal judges have been given the sole power to amend the Charter of Rights and Freedoms.

39) Jake was charged with an offence. Which of the following could not be a legitimate defence in any circumstances? A) He had a legal excuse for doing what he did. B) He did not do the act complained of. C) The legislative branch of government is the proper body to hear criminal cases. D) The legislation violated his Charter rights. E) The legislation creating the offence is beyond the authority of the body that created the offence.

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40) In which one of the following cases can the Supreme Court of Canada not override the will of the federal parliament? A) Parliament enacts legislation that infringes on rights contained in the Charter of Rights and Freedoms. B) Parliament enacts legislation that is ultra vires. C) Parliament enacts legislation in an area outside their jurisdiction. D) The Supreme Court of Canada disagrees with the substance of the legislation. E) Parliament enacts legislation that is not clear.

41) Which of the following is true with regard to Canada's Constitution? A) The Charter of Rights and Freedoms cannot be amended by the federal parliament acting alone. B) The British North America Act of 1867, the first document to determine which classes of subjects could be dealt with by the provinces and which by the federal government, was passed by our federal parliament. C) Our Constitution consists of only the Charter of Rights and Freedoms. D) The Charter of Rights and Freedoms is a part of the BNA Act (1867). E) The Constitution Act (1982) requires British Parliament to amend it. 42) Which of the following statements with respect to the power to prorogue (adjourn) Parliament is true? A) The decision to prorogue Parliament is specified in the Charter of Rights and Freedoms. B) The Queen has exclusive power to prorogue Parliament. C) The decision of whether to prorogue Parliament, or not rests with the Prime Minister. D) The decision of whether to prorogue Parliament, or not rests with the Governor General. E) The Governor General has the power to prorogue Parliament, but only if the Opposition party agrees. 43) In Chatterjee. v. Ontario, the Supreme Court of Canada A) concluded that the federal and provincial legislation were in conflict, with the result that paramountcy would apply. B) unanimously upheld the provincial law, since the dominant feature related to "property and civil rights", a provincial matter. C) held that only the federal legislation was invalid.

D) held that only the provincial legislation was invalid. E) held that both the federal and provincial legislation were invalid. 44) Which of the following is not a legal right under the Charter? A) Everyone has the right not to be deprived of life, liberty, and security. B) Everyone has the right to be presumed innocent until proven guilty. C) Everyone has the right not to be arrested or detained without being told why. D) Everyone has the right not to be subjected to any cruel and unusual punishment. E) Everyone has the right, if acquitted of an offence, not be tried for it again.

45) Ms. Lott was required by a provision in the B.C. school act to retire from her position as an elementary teacher at the age of 65. She did not want to retire. She commenced an action against the school board. Which of the following is false with regard to this situation? A) The federal legislature is the proper body to decide if the provincial school act is lawful. B) The people of Canada, through their elected representatives, could change the Constitution Act, including the Charter of Rights and Freedoms. C) The Constitution allows the legislature to discriminate if it can be demonstrated that the discrimination is justified in a free and democratic society. D) A provision of the Charter of Rights and Freedoms of the Constitution Act prohibits discrimination. E) The legislature, if it is acting within its authority (i.e., within s. 92 of the Constitution Act), can pass a statute that discriminates if it states that the statute will operate notwithstanding the provisions of the Charter of Rights and Freedoms.

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46) Regarding the Charter of Rights and Freedoms, which of the following statements is true? A) The guarantee of the right of free speech allows citizens to avoid being held liable for defamation under the Constitution of Canada. B) The Charter protects fundamental freedoms that apply only to relations between private citizens. C) Any statute, by any level of government inconsistent with the provisions of the Charter is considered binding on all Canadians. D) Neither the federal and the provincial governments can change the provisions of the Charter without going through the constitution amending process. E) Any action by a government official violating the provisions of the Charter is not actionable under the Charter.

47) Which among the following was not a purpose of the Constitution Act (1982)? A) To protect individuals against acts of governments or their agencies that infringe on their rights B) To guarantee individual rights C) To list government enactments having constitutional status D) To redefine the role of the queen and her representative, the Governor General E) To place some limitations on the supremacy of parliament 48) Which of the following is correct with respect to limitations on the Charter? A) It only applies to the federal government. B) Interference with rights must be justifiable in a free and democratic society. C) It cannot be used by a resident who is not a citizen of Canada. D) It does not protect the rights of aboriginal people. E) It only applies to government employees. 49) Which of the following statements is correct with respect to human rights laws in Canada? A) All employers have an obligation to accommodate all of the religious practices and disabilities of their employees. B) Human rights in the federal area are protected by the federal human rights commission, which enforces

the Canadian

Bill of Rights. C) Federal and provincial human rights commissions are courts, and the commissioners are superior court judges with the rights and powers associated with that office. D) Protection against discrimination on the basis of sexual orientation is recent and not yet specified in some human rights statutes. E) From a business point of view, the Charter is much more important than the provincial human rights legislation.

50) Which of the following is correct with respect to the Charter of Rights and Freedoms? A) The federal or provincial legislature cannot override a person's right to free speech. B) The effect of the notwithstanding clause is to shift the power back to the judges. C) The federal or the provincial legislature cannot override a person's right not to be discriminated against on the basis of race or religion. D) The parliament or provincial legislature can only override a section of the Charter under the notwithstanding clause if they clearly state they are doing so and then wait 5 years before implementing the provision. E) Section 33 (the notwithstanding clause) only applies to some specified provisions of the Charter.

51) The Charter of Rights and Freedoms does not apply to which of the following? A) A human rights commission B) A restaurant C) The police D) The provincial cabinet E) A municipal council

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52) Which of the following statements is incorrect with respect to the application of the Charter of Rights and Freedoms? A) The Charter of Rights and Freedoms applies to the federal and provincial governments but not to local municipal governments. B) The provisions of the Charter only apply to government and to any government representative exercising a statutory power. C) Any provincial human rights legislation must comply with the provisions of the Charter. D) The Charter of Rights and Freedoms does not regulate the relationship between a university or hospital and its employees. E) The Charter does not specifically prohibit discrimination on the basis of sexual preference. 53) Which of the following is incorrect with respect to the rights of the party whose Charter rights have been violated? A) When evidence is obtained in violation of a person's Charter rights, the court may exclude that evidence. B) The remedies available to the victim of a violation of a Charter provision are restricted to those listed in the Charter. C) The rights and freedoms guaranteed in the Charter vary depending on whether a person is a citizen, a resident, or a visitor. D) The court is free to impose any remedy for a Charter violation that it considers appropriate. E) The Charter gives a court the power to exclude any evidence that has been obtained in violation of a Charter right. 54) Which of the following is a right or freedom guaranteed in the Charter? A) The right to have your children educated in any language B) The right to bear arms C) The right to vote in federal and provincial elections

D) The right to own property E) The right to be assured of a minimum level of income 55) Which of the following is correct with respect to language rights as set out in the Charter? A) Everyone in Canada has the right to have all federal and provincial government services provided in both English and French where numbers warrant. B) Everyone in Canada has the right to have their child educated in their choice of English or French where numbers warrant. C) Only Canadian citizens have the right to have their children educated in their choice of English or French where numbers warrant. D) Only federal government services must be provided in both English and French. E) Everyone in Canada has the right to have all federal and provincial government services provided in both French and English no matter where they are.

56) Which one of the following is a Charter right that the provinces could not override through the use of the notwithstanding clause (Section 33 of the Charter)? A) The right to be told why you are being arrested B) The right to move anywhere you want in Canada C) The right to worship who, how, or what you wish D) The right not to be subjected to any cruel or unusual punishment E) The right to not be discriminated against because you are black

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57) Which of the following is correct with respect to the impact of the Charter of Rights and Freedoms? A) The passage of the Charter has shifted power from the courts to the parliament. B) The passage of the Charter has increased the power of both parliament and the provincial legislatures. C) The passage of the Charter has increased the power of the courts. D) The Charter has shifted power from the provinces to the federal government. E) The passage of the Charter has shifted power from the federal to the provincial government.

58) In Maple Ridge District v. Meyers, the Supreme Court of Canada A) struck down the legislative competence of Maple Ridge bylaw down as ultra vires. B) held that there was no gender discrimination. C) found that neither section 1 nor section 15 of the Charter could be applied to actions of the government. D) determined that the section 15 equality rights of females had not been infringed. E) concluded that the Maple Ridge District government was well within its Constitutional rights. 59) In Rothmans, Benson & Hedges Inc. v. Saskatchewan, the Supreme Court of Canada A) concluded that the federal and provincial legislation were not in conflict; one simply went further than the other. B) held that only the provincial legislation was invalid. C) concluded that the federal and provincial legislation were in conflict, with the result that paramountcy would apply. D) held that only the federal legislation was invalid. E) held that both the federal and provincial legislation were invalid. 60) Which of the following is true regarding human rights? A) There is still no legislative protection against sexual harassment. B) Human rights protection applies to all areas, without restriction. C) Human rights tribunals have the power to investigate human rights complaints, but no authority to impose sanctions nor to provide remedies. D) All remaining legal issues concerning human rights protection of same-sex relationships have been resolved.

E) Both the federal and provincial governments have established special human rights tribunals authorized to hear complaints of human rights violations. 61) In Ontario Human Rights Commission et al. v. Simpsons-Sears Ltd., the Supreme Court of Canada A) determined that it is the intention to discriminate that is relevant, not whether or not discrimination actually occurred. B) found that the employer was required to take reasonable steps to accommodate the religious practices of an employee. C) decided that only certain religions are worthy of protection under human rights legislation. D) concluded that it is unnecessary to accommodate an employee when doing so would inconvenience the employer. E) held that religious discrimination is acceptable in the workplace.

62) Which of the following is true regarding human rights legislation? A) Canada's first-ever human rights complaint concerning an Internet hate site involved Ernst Zundel. B) Since the introduction of the Charter of Rights and Freedoms, provincial human rights codes are no longer significant. C) Human rights commissions cannot deal with complaints arising from business interactions. D) Material on the Internet is exempt from the application of human rights legislation. E) The mandate of human rights commissions is to encourage the government to follow principles of equality. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 63) Law and morality are the same thing.

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64) The legal philosophy that defines law in terms of the authority of the person who passed it is called legal realism. 65) Substantive law deals with rules that establish a structure for enforcing rights and obligations. 66) Civil law is based on a codified system.

67) Judges in a common-law system base their decisions on other judges' decisions.

68) Stare decisis is the Latin term for following the Code.

69) A British Columbia judge is required to follow the decisions of a higher court in Alberta. 70) The common-law courts as developed by King Henry and subsequent kings were used to impose the will of the sovereign on the people. 71) In our system, if a judge feels that the decision made by a judge in a higher court is wrong, he or she is free to disregard it. 72) Stare decisis can contribute to stagnation. 73) Stare decisis in the common-law system plays the same role as the code in the French system, lending predictability to the law. 74) Common law is also known as judge-made law. 75) Canon law refers to the law created by the Church.

76) The law of equity was developed in the Court of Chancery. 77) The Courts of Chancery originally followed stare decisis and precedent, as did the common-law courts. 78) Although the Courts of Chancery and common-law courts were merged, the bodies of law remain separate today. 79) The law of equity simply means fairness in our legal system. 80) Subordinate legislation includes regulations and municipal bylaws. 81) Legislation forms the foundation of our legal system, although judge-made law continues to take precedence over statutes. 82) Parliamentary supremacy is no longer completely in effect in Canada today. 83) Transfer payment schemes can allow the federal government to exercise some control over how a provincial government operates certain programs that fall with provincial jurisdiction.

84) Once a bill has received royal assent, it may be effective immediately or it may be effective on later proclamation. 85) All provincial bills require royal assent of the Governor General before they can become law.

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86) While the Charter of Rights and Freedoms protects individuals' rights from government abuses, there is still no legislation to protect individuals' rights from abuse by the public. 87) Sexual harassment is regarded as a form of discrimination on the basis of gender. 88) Legislation prohibiting all prison inmates from voting in federal elections was found to constitute an unjustified denial of the right to vote. 89) Everyone in Canada has the right to freedom of conscience and religion.

90) There are no limitations to the right of freedom of expression.

91) Laws which restrict collective bargaining are not subject to the Charter of Rights and Freedoms. 92) The Charter of Rights and Freedoms ensures Canadians can travel and live anywhere within Canada. 93) The Charter of Rights and Freedoms expressly prohibits discrimination on the basis of sexual preference. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 94) Why is law important? 95) The type of law that depends on a moral code or morality to define what the law is, is called ________. 96) The legal theory that defines law in terms of a command by someone in authority is called ________. 97) The theory of law that defined law in terms of what the courts actually do is called ________.

98) Contrast substantive law and procedural law. 99) Contrast public law and private law. 100) What role does the civil code system of law play in Canada? 101) Explain what role precedent plays in the civil code legal system. 102) When was the last time Quebec revised its Civil Code? 103) Explain what is meant by stare decisis. 104) Is the B.C. Supreme Court judge bound to follow an Ontario Court of Appeal decision? 105) What role does the decision made by an Ontario Court of Appeal judge have on a B.C. Supreme Court judge? 106) Indicate the three courts that together made up the common-law courts.

107) The body of rules developed by the Court of Common Pleas, Court of King's Bench, and Exchequer Court became known as ________. 108) What gives judges flexibility in deciding whether or not to apply a particular precedent? 109) Give two examples of other areas of law from which the common-law judges borrowed in order to create the common law.

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110) Explain why the law of equity developed.

111) The body of law developed by the Courts of Chancery is called ________. 112) The law of equity was developed by ________.

113) "If somebody did not like the decision of the judge in the common-law court, they could appeal to the Court of Chancery." Indicate what is wrong with that statement. 114) "The term 'equity' refers to fairness in our legal system." Discuss the accuracy of this statement. 115) What is meant by a statute? 116) Explain the relationship between regulations and statutes. 117) Explain why statutes override the common law. 118) Which province in Canada continues to use a civil code system? 119) "Canada's Constitution is embodied in the British North America Act." Comment on the accuracy of that statement. 120) What is the significance of the Constitution Act (1867)? 121) Explain what is meant by the principle of the rule of law.

122) When we speak of parliamentary supremacy in Canada, which is based on a confederation between federal and provincial government, which level of government is supreme? 123) Give examples of areas that fall under federal jurisdiction. 124) Give an example of powers that are given to the Provincial government under Section 92 of the Constitutional Act (1867). 125) When an individual is faced with federal legislation and provincial legislation both dealing with the same subject matter, which should he obey? 126) How do transfer-payment schemes help to circumvent the constitutional rigidity created by the division of powers? 127) What is meant by the Revised Statutes of Canada? 128) How does the Charter of Rights and Freedoms affect the principle of parliamentary supremacy? 129) Why did we need the Charter of Rights and Freedoms?

130) What is the effect of the passage of Charter of Rights and Freedoms on the principle of supremacy of parliament? 131) Explain the limitations on the application of the Charter of Rights and Freedoms.

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132) "An individual who is refused service at a restaurant because of his race has had his Charter rights violated." Comment on the accuracy of this statement. 133) What is a "sunset clause" in the context of limitations on the Charter of Rights and Freedoms? 134) Indicate what kind of personal freedoms are protected under the Charter. 135) Indicate the kind of democratic rights protected under the Charter.

136) What kind of rights are protected under the heading of mobility rights in the Charter? 137) What kind of legal rights are protected under the Charter?

138) Explain what is meant by the term "principles of fundamental justice." 139) What kind of equality rights are protected by the Charter of Rights and Freedoms? 140) How are language rights protected by the Charter of Rights and Freedoms? 141) Explain how the rights set up in the Charter of Rights and Freedoms are limited. 142) Explain how Section 1 of the Charter of Rights and Freedoms limits those rights and freedoms. 143) How does Section 33 limit the rights set out in the Charter of Rights and Freedoms? 144) "The Charter of Rights and Freedoms is separate from, and therefore has no bearing on, other human rights

legislatio n." Discuss the accuracy of this statement. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 145) The term "law" may be defined in a variety of ways. Explain. 146) Explain the relationship between common law and equity in the development of our legal system. 147) "In our modern legal system, the term 'equity' in synonymous with fairness." Discuss the accuracy of that statement. 148) Explain the relationship between statutes, equity, and common law in our legal system, including a brief discussion on the historical development of these three major aspects of our law. 149) Explain the role the British North America Act played in Canada's constitutional history. 150) Discuss the constitutional rigidity created by the 1867 division of powers and the means used by the federal and provincial governments to overcome this. 151) Compare and contrast provincial and federal passage of bills.

152) Discuss the significance of the passage of the Charter of Rights and Freedoms in Canada's legal system. 153) Discuss any limitations on the application of the Charter of Rights and Freedoms. 154) Discuss why it is important for businesspeople to become familiar with the human rights legislation in force in your province.

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1) C 2) C 3) E 4) D 5) C 6) E 7) E 8) B 9) D 10) B 11) E 12) D 13) E 14) A 15) B 16) B 17) E 18) C 19) E 20) E 21) A 22) E 23) A 24) C 25) D 26) B 27) C 28) C 29) D 30) D 31) E 32) D 33) E 34) C 35) A 36) D 37) A 38) D 39) C 40) D 41) A 42) D 43) B 44) A 45) A 46) D 47) D 48) B 49) D 50) E 51) B

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52) A 53) B 54) C 55) D 56) B 57) C 58) A 59) A 60) E 61) B 62) A 63) FALSE 64) FALSE 65) FALSE 66) TRUE 67) TRUE 68) FALSE 69) FALSE 70) FALSE 71) FALSE 72) TRUE 73) TRUE 74) TRUE 75) TRUE 76) TRUE 77) FALSE 78) TRUE 79) FALSE 80) TRUE 81) FALSE 82) TRUE 83) TRUE 84) TRUE 85) FALSE 86) FALSE 87) TRUE 88) TRUE 89) TRUE 90) FALSE 91) FALSE 92) TRUE 93) FALSE 94) It determines how effectively we interact with one another. It governs personal and commercial relationships. 95) Natural law 96) Legal positivism 97) Legal realism 98) Substantive law establishes the rights an individual has in society and the limits on that individual's conduct. Procedural law determines how the substantive laws will be enforced. 99) Public law includes constitutional law and the laws that affect an individual's relationship with the government. Private law involves the rules that govern our personal, social, and business relations. 100) Quebec uses a civil code for areas that fall under their jurisdiction. 101) Prior judges' decisions are merely persuasive, not binding; the code is binding.

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102) A new Civil Code in Quebec came into effect on January 1, 1994. 103) This means essentially "let the decision stand" and involves the process existing in the common-law system whereby one judge's decision must be followed by another. This is the system of precedent whereby one judge's decision forms a precedent that must be followed by other judges as made in other cases. 104) No, it's only at the same level or higher in the same court hierarchy (i.e., the B.C. Court of Appeal, the B.C. Supreme Court) that the decision must be followed. Every judge must follow Supreme Court of Canada decisions, but the Supreme Court of British Columbia need only follow the B.C. Court of Appeal, and the Supreme Court of Canada need not follow the decision of any provinces. 105) The decision is merely persuasive. It is not binding since that judge is not in the same court hierarchy (i.e., B.C. Court of Appeal, Supreme Court of Canada). 106) Court of Common Pleas, Court of King's Bench, Exchequer Court. 107) The common law 108) While a judge cannot stray very far from the established line of precedents, a judge can "distinguish the facts" by finding essential differences in the facts of the current case and the prior decision. 109) Roman civil law, canon law or church law, and the law merchant (not equity or the Chancery). 110) Because of the inequity and harshness of the common law, people petitioned the king for relief. The king appointed the chancellor and eventually the chancellery courts to overcome the inflexibility and harshness of the common-law rules. The body of law that developed was equity, and so it can be said that equity developed to supplement the common law because of the inadequacy and rigidity of the common law. 111) Equity 112) The Courts of Chancery 113) The Court of Chancery was a separate court system altogether. You didn't need to appeal from the common-law courts to the Courts of Chancery; rather, you went to the Chancery in the first place because you knew that there would be no remedy provided or available in the common-law courts. 114) Equity is that body of law developed by the Courts of Chancery and may or may not be considered fair by today's standards. By the Judicature Acts, the Courts of Chancery and common-law courts were merged into one court system, the English High Court of Justice. It must be emphasized that the bodies of law developed (that is, common law and equity) remain separate and distinct bodies of law. 115) A statute is a parliamentary or legislative enactment having the force of law. It is sometimes referred to as a bill prior to passage and legislation or an act afterwards. 116) Often a statute will empower a particular government department to develop regulations pursuant to the statutes to enforce or give effect to the provisions of that statute. For example, regulations under the Employment Insurance Act, Workers' Compensation Act, etc., have the force of legislation if they are passed properly pursuant to these statutes. 117) Because of the principle of parliamentary supremacy, when parliament passes a statute, it overrides common law or equity and determines the law. 118) Quebec 119) This is incorrect. Canada has a constitution similar to Great Britain, which is an unwritten constitution that includes a great many separate constitutional documents such as the Magna Carta, English Bill of Rights, etc. The British North America Act is just one of the elements of that constitution. The British North America Act is now referred to as the Constitution Act (1867). 120) It created the Dominion of Canada and, for our purposes today, it divides powers between the federal and provincial governments. 121) This principle protects citizens of Canada from arbitrary action; that is, any government official in Canada must be able to point to some statute or regulation authorizing them to do what they have done. 122) Both or neither; Sections 91 and 92 divide powers between the federal and provincial governments. 123) money, banking, postal service, currency, criminal law, appointment of judges to a higher level of provincial and federal courts, aviation, telecommunications. 124) Hospitals, education, public health, administration of courts, commercial activities carried on at the local level 125) If the federal legislation is valid, the provincial legislation is valid, and there is no conflict between them (that is, one just sets higher standards then the other), the individual must obey the higher standard. If there is a true conflict between them, however, the principle of paramountcy dictates that the federal legislation be followed.

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126) Through such schemes, the federal government can exercise influence over how a provincial government operates programs under provincial control. 127) Every so many years the statutes are summarized and brought up to date. When this happens, it is referred as the Revised Statutes. The last time this was done in Canada was 1985. Hence the Revised Statutes of Canada (1985). 128) Prior to 1982, in theory at least, parliament was supreme. Either the federal government or the provincial government had the power to pass all types of legislation. After 1982, however, the Charter placed limitations on that power, thus redirecting power to the courts and limiting the principle of supremacy of parliament. 129) Although we relied on the parliamentarians, before the passage of the Charter, to protect basic rights and freedoms, there are enough examples of violations of those basic rights and freedoms in recent times to cast doubt on whether there were sufficient safeguards. Thus, the Charter of Rights and Freedoms was passed to place a check on the power exercised by the parliamentarians. 130) Prior to passage of the Charter, reliance was placed on the parliamentarians to protect basic rights and freedoms. Subsequent to the Charter, that same reliance is now placed on the judges in the court. There has been a transfer of power from the parliamentarians to the courts, and to that extent at least it can be said that parliament is no longer supreme. 131) The Charter only applies to public matters such as government and the laws they create. This applies to the federal, provincial and municipal levels of government. 132) The Charter of Rights and Freedoms is not intended to cover this situation; it's not a public matter involving government, rather, a private matter between citizens. That must be dealt with by the local human rights legislation in the province. However, if that local human rights legislation does not counter this situation, then that human rights legislation, which is an act of the government, can be challenged under the Charter. 133) A "sunset clause" is applied to the operation of section 33. If the notwithstanding clause is invoked, the statute must be re-enacted by that legislative body every five years. 134) Freedom of conscience, religion, freedom of belief, opinion, expression, freedom of peaceful assembly and association. 135) The right to vote, the requirement that elections be held on a regular basis, and that the legislature be elected and sit at least once a year. 136) The rights of Canadians to travel and live anywhere within the geographical limitation of Canada, and the right to earn a livelihood in those areas. 137) The rights to life, liberty and security of person and not to be deprived thereof, except in accordance with the principles of fundamental justice; the right to be free from any unreasonable search and seizures; the right to be free of arbitrary imprisonment; the right to be informed about why we are arrested; the right to retain counsel; the right to be tried within a reasonable time; the presumption of innocence; the right not to be tried twice for the same offence; the right not to be subjected to any cruel and unusual punishment. 138) This is similar to the American "due process" or the rules of natural justice. A person is entitled to a fair hearing, including an opportunity to have notice of the charges that are brought against him, an opportunity to speak to those charges, to present his side of the case, the right to cross-examine witnesses if necessary to determine the validity of the accusation or charges, the right to be tried by somebody free of bias. 139) The Charter prohibits discrimination of the bases of sex, religion, race, age, colour, mental or physical disability, and national or ethnic origin. It also states that equality of male and female is guaranteed and that aboriginal rights of the Native peoples are not affected in any way. (NOTE: Section 15 of the Charter is really broader than this and prohibits any form of discrimination.) 140) The Charter gives French and English equal status and protects the right of minorities to use those languages, including the right to have your children educated in one of those languages providing it is the first language of the parents or they received their primary education in that language. 141) 1. The Charter only applies to public matters and government relations. 2. Section 1 of the Charter limits the rights and freedoms so that they can be interfered with where to do so could be "demonstrably justified in the free and democratic society." Section 33, the "notwithstanding clause," allows the provinces or the federal government to override Section 2 or Sections 7-15 by so declaring in the legislation. 142) Legislation can be passed inconsistent with the rights set out in the Charter of Rights and Freedoms where to do so can be justified in a free and democratic societyin other words, where it is reasonable to do so. 143) This is the "notwithstanding clause"; it allows the government, for a period of five years, to override the rights set

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out Sections 2 and 7-15 of the Charter by so stating in the legislation. At the end of five years, such overriding legislation in lapses and must be passed again. 144) The statement is inaccurate. Because the Charter requires that every individual have "equal protection and equal benefit of the law", the courts will essentially rewrite human rights legislation that is found to be under-inclusive (such as in Vriend v. Alberta with respect to sexual orientation). 145) Students should note that is not possible to define law in a single, all-inclusive way, and that philosophers have been trying to define law for centuries. Students should identify the different ways in which law has been defined. In particular, law has been defined in moral terms (natural law theorists), defined by looking at its source (legal positivists), and defined in practical terms (legal realists). For purposes of studying business law, law can be defined as the body of rules that can be enforced by the courts or by other government agencies. Students ought to recognize that this definition of law has limitations, as it does not suggest what is just or moral. 146) The student should relate how equity developed and why. The inadequacies of the common law led to the need for equity. Problems with the common law included the fact that stare decisis caused stagnation, and the remedies provided in common law were inadequate. This led to people petitioning the king for relief. Eventually this is taken over by the chancellor, and the Court of Chancery developed. The body of law called equity was developed by the Court of Chancery. It supplements the common law. But the Chancery Courts also became stagnant. Equity also became inadequate and unfair. Eventually the courts merged but not the separate bodies of law. Equity is the body of law developed by the Courts of Chancery and, although the courts were merged, the bodies of law remain distinct. Today the law of equity is applied by judges along with the common law and statutes. 147) Students should point out that equity is that body of law developed by the Courts of Chancery and may or may not be fair in modern terms. This requires a discussion of how equity developed and why as discussed above. The student should comment on the inadequacies of the common law, including the use of stare decisis causing the development of law to stagnate, and the inadequate common-law remedies. This led to people petitioning the king for relief. This was taken over by the chancellor and eventually the Court of Chancery developed. Equity then is the body of law developed by the Court of Chancery and it is intended to supplement the common law. But the Chancery Courts also became stagnant with their own serious problems, so much so that the law as administered in those courts was not much better than in the common law courts. Equity then does not mean fairness but that body of law developed in the Courts of Chancery, and it may or may not be fair by today's standards. The two courts' structures were merged but not the bodies of law. The answer should show that students understand that the law of equity was developed by the Chancery Court and hopefully is fairer than the common law, but that it is a mistake to equate equity with fairness in our legal system. 148) Students should explain how equity and common law are judge-made law and that statutes are made by parliament or by the provincial legislatures. They should also explain that equity was created as a supplement to the common law to overcome its harshness and rigidity. Since parliament is supreme, its acts override judge-made law, and thus statutes override common law and equity. If there is no overriding statute, a judge will apply either equity or common law, depending on the subject matter and what is asked for in a given case. The constitutional authority of the body passing the statute with reference to the Constitution Act (1867) and the Charter will determine its validity. The statute will normally only override judge-made law if its provisions are specific and unambiguous. Students' answers should show that they understand not only what statutes, equity, and common law are as the components that make up our law, but also where they come from and how they are applied in our courts today. 149) Students should describe the nature of Canada's constitution and the place of the BNA Act in it. They should point out that Canada has a constitution similar to Great Britain's, that it is unwritten in the sense that it is not contained in just one document, and that all of the great English constitutional traditions are also part of our constitution. These traditions include the rule of law, the Magna Carta, and the supremacy of parliament. Students should also state that the BNA Act was an act of the British Parliament; that it created Canada as a confederation; that its primary significance today is that it divides powers between the federal and provincial governments; and that today it is called the Constitution Act (1867). Students' answers should show that they know not only what the BNA Act is but also how it relates to the other elements of Canada's constitution and just what the overall nature of that constitution is. 150) Students should describe how the Constitution Act (1867) assigns different powers to the federal government (under

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s. 91) ncial governments (under s. 92). The key to this question is a discussion of the prohibition on direct delegation. and Students should explain how indirect delegation can be used to overcome the problems this creates. Agreements to to share powers, such as transfer payment schemes, should also be discussed. Good students will also raise the the possibility of constitutional amendment, and the process required to accomplish this. Students would be expected provi to refer to certain historical examples, such as employment insurance. 151) Students should summarize the traditional passage of bills from both a provincial and a federal perspective, making note of key differences. Provincially, bills are introduced in the Legislative Assembly with a first reading(usually without debate), followed by a second reading (and debate), then review (and possible amendment) by the Committee of the Whole, and a third reading (with final debate and vote). Mention should be made of the requirement of royal assent by the Lieutenant-Governor, noting that some legislation is effective immediately while other legislation is not effective until later proclamation. Federally, the process is similar, but not identical. Students should point out that federal bills are subject to three readings in each of two houses (the House of Commons and the Senate), that there are variations involving review by Committee, and that royal assent for federal legislation falls to the Governor General. 152) Students should describe the nature of the Charter of Rights and Freedoms, why it was needed, and how it affected the rest of Canada's legal system. Before the Charter, there were few restrictions on government because of supremacy of parliament. There was a need for overall entrenched rights that controlled the actions of government and government officials and agents including the police. It is important that they indicate that the Charter only applies directly to governments but indirectly affects individuals' relations with each other because provincial and federal human rights legislation and other statutes must conform to the Charter. They should show that the Charter shifts power to the courts, that parliament is no longer supreme, but also that there is an exception with the notwithstanding clause. Students' answers should show that they know what the Charter of Rights and Freedoms is, why it was passed, and that it fundamentally altered the relationship between the courts and parliament in this county. 153) Here students are expected to discuss the three major limitations on the Charter (Sections 33, 32, and 1), but also to explain how those limitations work with respect to the application of the Charter in our courts. They should indicate that the purpose of the Charter was to limit the power of government. Section 32 limits the application of the rights and freedoms specified in the Charter to the federal and the provincial governments. The Charter applies to legislation, regulations, and bylaws passed by all levels of government, and it also applies to actions by government officials carrying out their official functions. The Charter applies to all representatives of the government exercising statutory authority, including police and other law enforcement bodies. The Charter does not apply to private relations between individual persons. Section 33 allows the parliament or legislature through legislation to override certain sections of the Charter, but they can only override Section 2 and Sections 7 to 15. These are important provisions of the Charter. To override the Charter in this way, they must clearly state that the provision applies notwithstanding the specific provision of the Charter. This must be repeated every 5 years. Section 1 allows reasonable exceptions to the application of the rights and freedoms listed. They must be reasonably necessary (justified) and must not go further than necessary to accomplish the reasonable goal. Therefore, the rights and freedoms set out in the Charter are not absolute. Students' answers should show that they understand that the rights and freedoms set out in the Charter are not absolute, that it only applies to government action, and that power has been given to the provinces and federal government to specifically override some important provisions of the Charter. 154) Students should identify the legislation currently in force in your jurisdiction and explain how this legislation applies to general public. The protected areas (such as public services, employment practices, etc.) should be outlined, and examples of prohibited grounds of discrimination should also be raised. Students should explain how the duty to accommodate those facing discrimination applies, along with exceptions to this rule (e.g. bona fide occupational requirements, etc.). Students' answers should reveal that they understand that compliance with such legislation should be regarded as a necessary cost of doing business.

Chapter 3

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) (Modify this question for your province.) Fred sold Carole his old MacIntosh computer and the printer with eight programs for $2900. After she paid $1000, Carole quit paying. When she had no complaint about the computer, printer or programs but just wouldn't pay, Fred decided to sue. He would most likely begin his action in: A) Criminal Division, Provincial Court B) B.C. Court of Appeal C) Small Claims Division, Provincial Court D) B.C. Supreme Court E) Federal Court

2) With regard to the process of a civil law suit, which of the following is true? A) A "counterclaim" is an action by the defendant back against the plaintiff. B) The plaintiff must prove his case on the balance of probabilities, not beyond a reasonable doubt. C) Any admission by the defendant at the examination for discovery can be used against him by the plaintiff at trial. D) The "statement of claim" is a document registered by the plaintiff which contains a summary of the allegations that support the cause of action. E) All of the above.

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3) Which one of the following statements with regard to the characteristics of civil and criminal actions is true? A) If a person is convicted of a criminal offence, he cannot also be sued in a civil action by the victim. B) The prosecutor must prove his case based "upon a balance of probabilities". C) In a criminal case, an individual person is taking the action against the accused. D) A civil action is a private action; that is, a person or persons sue another or others usually for the purpose of being compensated for injury or loss suffered. E) The person who begins a civil action is usually called the "prosecutor."

4) Which of the following is correct with respect to the litigation process? A) A statement of defence is a pleading prepared and filed by a plaintiff in response to the defendant's claims. B) A counterclaim is brought by the plaintiff who is then claiming against the defendant. C) Even though a judgment is obtained, payment is not assured. D) An offer to settle brings to an end the parties' right to proceed to trial. E) An examination for discovery of documents is an opportunity for the parties to settle the dispute before proceeding to trial. 5) Bruce told Ewen that he would be willing to pay a high rate of interest for a two-month loan of $1 000. Ewen agreed to lend him this amount at an annual rate of 25%, repayable June 14. Bruce agreed to these terms. Meanwhile, Bruce had recently completed some plumbing work for Martinson for which he was owed $2 000. If Bruce failed to pay Ewen on June 14, which of the following is true? A) Ewen could sue Martinson for violation (breach) of the contract. B) Ewen could execute against Bruce even if he had not obtained judgment against him. C) Ewen could serve Martinson with a garnishing order after obtaining judgement commanding him to pay the money owed to Bruce into court if the money had not yet been paid to Bruce. D) Ewen does not have to wait to obtain a judgment before executing against Bruce's assets. E) If Ewen obtained a judgment against Bruce, he could compel him to be examined about Martinson's income, property, and debts.

6) With regard to the relationship between the judiciary (courts) and the legislatures, which of the following is true? A) The courts have no power to declare a provincial statute to be void, only federal statutes can be struck down by the courts. B) A provincial statute could be struck down by the courts for being contrary to the Charter of Rights and Freedoms. C) Common law overrides case law on the same point. D) The courts cannot affect the meaning of the statute through subsequent interpretation. E) The courts have no authority to affect a statute once it has been passed by our elected representatives in the federal parliament. 7) When we eventually get some cases that interpret a new section of the Criminal Code of Canada, from which one of the following courts will we get the most authoritative precedent, i.e., the most binding ruling? A) The Federal Court of Appeal B) The Manitoba Court of Queen's Bench C) The Supreme Court of Canada D) The Ontario Court of Appeal E) The Supreme Court of B.C.

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8) (Modify this question for your province.) James sued XYZ Company for $100,000 for negligence in the construction of an airplane. James alleged that because of this negligence the plane crashed and he sustained a serious back injury. In which one of the following courts should he bring this action? A) Small Claims Court B) Federal Corporation Court C) B.C. Supreme Court D) County Court E) B.C. Court of Appeal

9) Which of the following is false with regard to our legal system? A) Our Charter of Rights and Freedoms diminishes the power of both the federal and provincial legislatures. B) Our constitution can be amended but not by the federal parliament acting alone. C) An appeal from the Supreme Court of Canada goes to the Federal Court of Appeal. D) Although a statute overrides the case law on the same point, subsequent cases may affect the statute by interpreting its meaning. E) If a case were heard before a provincial trial level court, the judge could apply both legal and equitable principles and award both legal and equitable remedies. 10) (Modify this question for your province.) Which of the following is false with respect to our court system? A) The consequence of the merger of the common law courts with the courts of equity is that the courts now apply both the legal and equitable principles and remedies. B) The lawyer arguing before the B.C. Supreme Court could cite a British case, but the judge is not bound to follow it. C) A judge on the B.C. Court of Appeal is bound to follow the decision of a judge on the B.C. Supreme Court on an identical case. D) A negligence action, where the extent of damage is $1500, would most likely begin in the B.C. Provincial Court, small claims division. E) There is no monetary limitation on the B.C. Supreme Court; i.e., the case may involve any amount of money. 11) With regard to the process of a civil law suit in a superior court, which of the following is true? A) An action is usually commenced by issuing a chambers application. B) The writ is a document issued by the defendant to indicate that he or she will defend against the action.

C) Regardless of whether or not a defendant responds to the plaintiff's claims by filing the required documents, a matter must proceed to trial before a judgment can be awarded. D) The plaintiff must prove his case on the balance of probabilities. E) Once a statement of claim is served, the next step is the trial. 12) Which of the following is true with regard to our court system? A) At the court of appeal level, judges are only bound by statute law. B) There is no maximum monetary limit on a matter before the superior trial court of the province. C) Only the plaintiff could appeal a decision of a judge of the provincial court. D) The theory of precedent (stare decisis) dictates that a judge on a Court of Appeal in one province is bound to follow the decision of the Court of Appeal of another province on the same legal point. E) If a case were heard before the superior court of the province, the judge could no longer apply both legal and equitable principles, just principles from the courts of equity.

13) In which of the following situations would the court likely be closed to the public or the press barred from publishing the proceedings? A) When the matter involves sexual misconduct and is embarrassing to the accused B) When the matter involves drunk driving C) When the government is one of the parties D) When large corporations are involved and the testimony involves economically sensitive material E) When children are involved

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14) Which of the following is correct with respect to the function of our court system? A) The court must be satisfied that it was more probable that the accused committed the crime than not. B) The victim of the crime is the one who prosecutes the action in the court. C) The court must be satisfied that the plaintiff's position is correct on the balance of probabilities. D) A victim is the plaintiff in a criminal matter. E) A jury can only be used in a criminal matter.

15) June was driving her car home after an office party and she was in an accident where, in addition to substantial damage to both cars, the other driver was seriously injured. Which of the following is correct with respect to the court experiences she is likely to have? A) If she is charged criminally and acquitted, she can still be sued for negligence by the injured driver. B) If she is sued civilly and found not liable, she cannot be tried criminally for the same accident. C) The principle of double jeopardy means she can only be taken to court once, and so the choice must be made to proceed either civilly or criminally. D) She can opt for a jury trial only if the criminal trial proceeds in the provincial court. E) If she is charged criminally for drunk driving and acquitted, that is the end of the matter. She cannot be tried again criminally or sued civilly. 16) Which of the following is correct with respect to our courts? A) All criminal matters are dealt with in the Federal Court and Federal Court of Appeal. B) The appointment of a Court of Appeal judge is a matter for the federal government. C) All judges are appointed by the federal government. D) All courts are the same, province to province. E) All judges are appointed by the provincial cabinet. 17) Which of the following is correct with respect to the jurisdiction of the various courts mentioned? A) At the provincial superior court trial level, at least 3 judges sit and adjudicate the matter. B) The procedure used in small claims courts is identical to that used in superior level courts. C) Young offenders are now tried in the adult criminal court. D) Divorce is a matter for a superior court.

E) At the court of appeal level, 3 or 5 judges normally sit unless there is a jury involved, and then there is only one judge. 18) Mildred and Sam's marriage breaks up and she wants a divorce. Which court would deal with this action? A) The surrogate court B) The small claims court C) The family court D) The superior trial court E) The provincial youth court 19) (Modify this question for your province.) Mildred and Sam are having marriage difficulties. Their 14-year-old son, George, in reaction, steals a car and smashes it up when joy riding. He is charged under the Youth Criminal Justice Act. Which court would deal with this action in your province? A) The superior trial court B) The small claims court C) The family court D) The youth court E) The surrogate court

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20) Mildred and Sam's marriage breaks up, and a creditor is suing Mildred for $5,000 because she co-signed for the loan for the purchase of the car. Which court would deal with this action in your province? A) The family court B) The small claims court C) The surrogate court D) The superior trial court E) The provincial youth court 21) Mildred and Sam's marriage breaks up, and Mildred wants possession of the house to raise the kids. Which court would deal with this action in your province? A) The family court B) The surrogate court C) The small claims court D) The provincial youth court E) The appellate court

22) Which of the following involves a question of law rather than a question of fact? A) James and Joe were in a fight where Joe claims he was justified in hitting James because James yelled at him and called him nasty names. B) James owed Joe money, and Joe claimed he had paid it back two years ago. C) James and Joe were in an automobile accident, and Joe claims that James was speeding. D) James was accused of fighting and causing injury to Joe, but James claims that Joe was the aggressor. E) James claimed that Joe called him nasty names and sued for slander. Joe says that he did make some negative statements, but that they were all true. 23) Which of the following accurately reflects a recent change to the court system? A) The Nunavut Court of Justice is Canada's first single-level court. B) Domestic violence courts have been ruled unconstitutional and are currently in the process of being disbanded. C) Sentencing circles are "circuit courts" which travel throughout rural areas to hear cases. D) Unified family courts have made the court process significantly more complicated, because of added court procedure and complex rules. E) Drug treatment courts have been established in certain jurisdictions, where the emphasis is on lengthy

jail time and

other severe penalties.

24) Which of the following is correct with respect to the Supreme Court of Canada? A) The Supreme Court of Canada can make some decisions that bind both the federal parliament and provincial legislatures. B) The Supreme Court of Canada is made up of three judges from each province and one from each territory, although a quorum consists of only nine judges. C) The Supreme Court of Canada has the power to override parliament in all areas. D) The Supreme Court of Canada deals with disputes arising from matters in the federal system (matters given to the federal parliament under the Constitution Act (1867)); anything else must be handled by the provincial courts. E) The Supreme Court of Canada is always subject to decisions made by the federal parliament. 25) In the Ontario Court of Appeal decision in Joseph v. Paramount Canada's Wonderland, the Court held that A) There is no limitation period to civil cases. B) when a person sues for negligence, there must also be a breach of contract or the action will fail. C) if a claim filed after the expiration of the limitation period, and the special circumstances doctrine no longer applies, the action would be prohibited. D) limitation periods do not apply to negligence claims. E) limitation periods do not apply to claims for breach of contract.

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26) Several provinces have implemented 'mental health courts'. These specialized courts focus on A) single-level courts whereby judges in this court are given the powers of both the superior trial courts and territorial courts for those with mental disorders. B) cases involving aboriginal offenders and victims. C) the treatment and rehabilitation of those who have committed criminal acts due to mental disorders D) the punishment of those who have committed criminal acts due to mental disorders E) domestic violence cases involving spousal, elder, and child abuse.

27) In Semelhago v. Paramadevan, the Supreme Court of Canada held that in land transaction disputes A) only alternative dispute resolution is possible. B) specific performance is the only possible remedy. C) damages and specific performance must both be awarded. D) neither damages nor specific performance will ever be available. E) specific performance should not always be considered the appropriate remedy. 28) Which of the following statements concerning limitation periods is true? A) Government bodies are above the law. B) Limitation periods are invalid, because they are ultra vires. C) The relevant limitation period applies to even government bodies. D) Limitation periods are invalid, because they offend the Charter of Rights and Freedoms. E) Government bodies are exempt from limitation periods. 29) In the procedure leading to trial of a civil matter, the step in which one party can be required to answer under oath questions that are put to him by the other party's lawyer is known as which one of the following? A) Default judgment B) The statement of defence C) The appearance D) Stare decisis E) Examination for discovery 30) (Modify this question for your province.) Which of the following is the document that initiates a court action in

this

jurisdiction? A) Appearance B) Statement of defence C) Statement of claim D) Discovery E) Writ of summons 31) If the court finds the defendant liable for the tort of battery, the court could award damages to the plaintiff that were not for the purpose of compensating the plaintiff, but for the purpose of punishing the defendant. Such damages are called A) special damages. B) compensatory damages. C) punitive damages. D) derogatory damages. E) general damages.

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32) Hank sold three properties for Mr. W and had been paid his commission for the first, but not for the last two. Hank had done everything according to the contract and according to the relevant statutes, but Mr. W wouldn't pay. Hank knows that Mr. W has a bank account with the Bank of Montreal and has money owed to him from a Mr. Gregory. If Hank successfully sued Mr. W., which of the following would be false? A) Hank could force the bank to pay into court an amount of money from Mr. W's account to satisfy the debt. B) Hank could personally seize the property of Mr. Gregory to satisfy the debt. C) Hank could examine Mr. W under oath to determine what assets he has. D) Hank could get an order commanding a government official to seize enough of Mr. W's goods to satisfy the judgment debt. E) The lawsuit commenced by Hank against Mr. W would have been for breach of contract.

33) With regard to the process of a civil law suit in a superior court, which of the following is false? A) Court costs are an amount of money equal to the legal fees and disbursements of the winning party, which the court always orders the losing party to pay to the winner. B) Failure of the defendant to respond to the plaintiff's claims can result in judgment being taken against him without the court having heard his side of the argument. C) A defendant in a civil action might also be charged in a criminal action for the same act, e.g., a battery. D) The plaintiff must prove his case on the balance of probabilities, whereas a prosecutor in a criminal action has to prove his case beyond a reasonable doubt. E) If, in the examination for discovery, the defendant admits facts set out in the plaintiff's statement of claim, the plaintiff does not have to prove those facts at trial; he merely reads the admissions from the transcript of the examinations. 34) The procedure that allows a judgment creditor to ask a judgment debtor about his income, property, and debts is which of the following? A) Examination in aid of execution B) Seize or sue rule C) Execution D) Secured transaction E) Garnishee procedure 35) Mr. Holden, a program developer, had a successful business helping small firms and shops computerize their businesses. In his spare time, he developed software for inventory control that was superior to others on the market. He launched an ad campaign and all went well for several monthsuntil a competitor came out with a cheaper program. In time, he could not pay his debts when they became due and owing. A

supplier damages and was awarded $21,000. Holden did not pay. With regard to the supplier's position at this time, sued for which of the following is false? A) The supplier could have a garnishee order served on Holden's bank, ordering the bank to pay money into court instead of to Holden. B) The supplier could examine Holden under oath about his assets and sources of income. C) The supplier could get a government official to seize and sell enough of Holden's property to satisfy the debt. D) The supplier could obtain a writ of execution that directs a court official to seize Holden and detain him in court until he arranges payment. E) Since the decision is in his favour, the supplier would be a judgment creditor, Holden, a judgment debtor. 36) Which of the following is incorrect with respect to the function of the small claims court? A) The monetary jurisdiction of the court is limited. B) The recovery of costs to compensate for legal fees is severely limited. C) Lawyers usually don't attend. D) The procedure is the same as the provincial superior trial court. E) The provincial government appoints the judge.

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37) Which of the following is correct with respect to the jurisdiction of a court where an action arises in a separate province in Canada? A) You can sue where you live, where the defendant resides, or where the action arose. B) You can only sue where the defendant resides. C) You can only sue where the action arose. D) You can sue where the defendant resides or where the action arose. E) You can sue in the federal court, where the defendant resides, where the action arose, or where you live.

38) Which of the following is correct with respect to the enforcement of judgments? A) The parties to a contract can specify that the civil law of another jurisdiction is to apply to the transaction. B) Once a judgment is obtained, that judgment can be enforced anywhere in the world. C) To enforce a judgment in another jurisdiction, that case must always be heard all over again. D) Parties can avoid the operation of Canadian criminal law by specifying that the law of some other jurisdiction will apply to their activity even though it takes place in Canada. E) A judgment can only ever be enforced in the jurisdiction where it is obtained. 39) Which of the following is true with respect to recent litigation reforms? A) The dollar amount of a claim has no bearing on the procedure to be followed in either Ontario or Alberta. B) Several provinces have started mandatory case management, which involves judicial supervision of the litigation process. C) Mediation is compulsory in every common law province except for Ontario. D) Summary trials in Alberta and British Columbia require all evidence to be presented orally, to save the time associated with document preparation. E) Small claims court procedures are becoming more complicated in all jurisdictions in order to dissuade parties from availing themselves of the court system. 40) Which of the following is correct with respect to the use of a jury in your province? A) A jury can be used only at the court of appeal level. B) Juries are no longer used in Canadian courts. C) A jury can be used at the provincial court level in criminal matters only.

D) Juries may be available in both criminal and civil matters at the superior court trial level. E) A jury can be used at the superior court trial level, but only for criminal matters. 41) Which of the following is not one of the requirements of natural justice? A) Notice of the hearing B) The evidence be heard by the person making the decision C) The decision be made free from bias D) An opportunity to present your side E) The rules of evidence be adhered to 42) Which of the following statements is correct with respect to the functions of government? A) The legislative branch of government consists of the federal parliament and the provincial legislative assemblies. B) The legislative branch of government consists of those senior clerks who are responsible for proposing and drawing up new legislation. C) The executive branch of government consists of the federal parliament and the provincial legislative assemblies. D) The judicial branch of government consists of the police forces and the RCMP. E) The executive branch of government consists of those senior clerks working for the ministers.

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43) A privative clause is which of the following? A) The privative clause refers to the section of the Charter of Rights and Freedoms that prevents the Charter from applying to private or non-governmental matters. B) A privative clause is an attempt to prevent the courts from reviewing the decision of an administrative tribunal. C) Privative clauses are those sections of the charter with respect to personal freedoms. D) A privative clause is an attempt to restrict the decision-maker powers of administrative tribunals to a closely confined area. E) Privative clauses restrict certain people from participating in administrative tribunals.

44) Which of the following is not a rule of natural justice? A) A person must be given an opportunity to put his side forward. B) A person must be allowed to retain a lawyer. C) A person affected by a decision must be notified that the decision is to be made. D) The decision maker must be impartial. E) A person must be given the opportunity to cross-examine a witness or complainant if that is the only way to defend himself. 45) When a government administrator refuses to make a decision that she is required to make by statute, which of the following remedies is the appropriate one to obtain from the courts? A) Mandamus B) Injunction C) Declaratory judgment D) Prohibition E) Certiorari 46) Which of the following is false with regard to administrative law? A) A writ of mandamus can force the administrator to perform his or her duty. B) If a person's rights have been violated by an administrative tribunal, he can go to the courts for a judicial review, which is not truly an appeal, but merely a request for the court to exercise its supervisory jurisdiction. C) A privative clause will always successfully prohibit the courts from reviewing a decision made by a

tribunal. D) A writ of certiorari renders the decision of an inferior body as having no legal effect. E) A court can exercise its right of judicial review when an error of law on the record has been made. 47) Which one of the following statements is correct with respect to how the passage of the Charter of Rights and Freedoms affected parliamentary supremacy? A) With the passage of the Charter of Rights and Freedoms, the Parliament of Canada has become Canada's final court of appeal. B) Under the Charter of Rights and Freedoms, the Supreme Court can declare some things done by both levels of government unlawful. C) The federal parliament is now supreme and can override anything done by the provincial legislatures or the courts. D) Now in Canada there is an effective system of checks and balances where the prime minister on some occasions can overrule decisions made by parliament or the Supreme Court of Canada. E) The power of the parliament and the provincial legislatures is now supreme in the areas assigned to them under the Constitution.

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48) Joe approached a provincial government clerk and applied to renew his licence to operate a heavy multi-axle truck on the highways. His application was refused. Which one of the following would not be a ground upon which the decision of that clerk could be challenged? A) The clerk acted beyond the powers given him in the statute and regulations by considering matters not authorized in those enactments. B) The clerk, who was the only one to have reviewed the evidence, left the decision up to his secretary to make. C) The clerk owned his own large truck that operated in competition with Joe in the same small community. D) The clerk decided that not enough women were doing this kind of job, and since Joe was a man, the licence was not renewed to correct the imbalance. E) The clerk exercised a discretionary power given to him under the legislation.

49) In Baker v. Canada, the Supreme Court of Canada ruled which of the following decisions? A) The Court confirmed the decision because the immigration officer had acted appropriately. B) The Court declined to hear the case, because Courts have no authority review board decisions. C) The Court set aside the decision because the hearing had violated the Charter of Rights and Freedoms. D) The Court set aside the decision, and ordered another hearing be held since there was a reasonable apprehension of bias. E) The Court confirmed the decision because the process followed by the hearing was proper in the circumstances. 50) In Ahumada v. Canada (Minister of Citizenship and Immigration), what did the Federal Court of Appeal decide was the test for bias in those circumstances? A) Is there clear evidence proving bias beyond all reasonable doubt? B) Did the tribunal willfully and deliberately make a decision from a position of bias? C) Considering the matter subjectively, would a panel member have believed he or she was capable of bias at the time of the decision? D) Did the person alleging actually feel that the tribunal was biased? E) Would a reasonable person informed of the facts think it more likely than not that the tribunal was biased? 51) In determining whether or not the decision of an administrative tribunal is subject to judicial review, which of the following would not be a relevant question? A) Is the statute that created the tribunal consistent with the Charter of Rights and Freedoms?

B) Is the tribunal acting within the power given to it by statute? C) Did the tribunal follow the rules of natural justice? D) Is the statute that created the tribunal ultra vires under the Constitution Act (1867)? E) Did the tribunal make the same decision that a court would have made? 52) Which of the following statements regarding administrative law is true? A) Administrative tribunals are part of the legislative branch of government when they make rules, and are part of the judicial branch of government when the hold hearings. B) Administrative tribunals tend to be less efficient, slower, and more costly than the courts. C) Administrative tribunals include labour relations boards, human rights commissions, and workers' compensation boards. D) A government bureaucrat acting in a regulatory capacity can do anything incidental to the performance of her job. E) As long as government agents administer government policy, individuals have no right to challenge their authority.

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53) In which one of the following situations would Joe not be successful in his challenge of the decision of the board or tribunal? A) Joe, a landlord, applied to the appropriate board for relief from certain restrictions under the residential tenancy act. His request was refused. To his surprise, at the beginning of the session, one of the board members declared that he was the father of one of his tenants. He did this so that the all parties would be aware of any bias he might have and not be affected by it. B) Joe, a student, was refused a graduate research grant to study the Moslem religion by a government funding body because it was inappropriate, Joe being Jewish. C) Joe operated an art gallery and had a showing of very controversial nude photos of children. He was prosecuted and fined under a municipal bylaw that made it a crime to show pornographic material anywhere in the municipality. D) Joe applied for a liquor licence for his night club. His application was denied on the grounds that he did not complete the application form and pay the prescribed application fee. E) Joe was applying for a government student loan and was refused because he was not registered in a recognized program. The regulations set out what constituted a recognized program, but the statute creating the loans program was silent with respect to this restriction. Joe asked the loans officer about this and was told this regulation did not have to be specifically authorized by statute.

54) Sandamali had been running a business in a small municipality for a number of years. She wasn't always up to dat e on the relevant legal issues facing her business, but she always acted ethically and treated her customers well. After a number of notices from the municipality went unanswered, Sandamali had her business licence withdrawn. Which of the following would not be grounds upon which she might challenge the decision? A) The regulations relied on were not authorized by statute. B) The legislation was an attempt by the provincial government to pass criminal law legislation under the guise of a provincial power. C) The legislation was invalid under the Charter of Rights and Freedoms. D) The provincial government did not have authority to pass the legislation under section 92 of the Constitution Act (1867). E) The legislation was intra vires. 55) Sam operated a restaurant and George, a health inspector, visited the premises. Finding that one of the waiters had AIDS, George ordered the restaurant closed, using a section of the regulations allowing such closures to prevent the spread of contagious diseases. Sam was very unhappy about the loss of business but didn't want to fire his waiter. He looked up the statutes and regulations governing this area and discovered that the statutory definition of contagious disease would not apply to AIDS, even though AIDS had been

specifical ly included in the regulations. Which of the following is incorrect with respect to Sam's legal position? A) Sam can reopen the restaurant. B) Sam can challenge the action even though the closure was authorized in the regulations. C) Sam can ask for an order of prohibition to prevent any similar action in the future. D) Sam can bring a court action for certiorari to have the decision of the health inspector quashed. E) If there is a privative clause in the statute making the decision of the health inspector final, there is nothing Sam can do.

56) Max operated a video store in a small community, and because of financial problems, decided to show pornographic movies. The citizens were outraged when they learned about the change and demanded that the police close down the store. The police refused, saying there was no law against it. The citizens then persuaded the town council to pass a bylaw making such immoral activities a crime. This was done, and Max was ordered by the police to close down the theatre. Which one of the following accurately describes Max's legal position? A) Because this is a moral matter, no level of government can interfere with his right to operate such a business anywhere he wants. B) He must close down whether or not the town council has the power because, once it is clear that the standards of the community designate a particular business as offensive, that business cannot be allowed to continue. C) He can stay open but cannot advertise in any way to promote this activity. D) He must close down the theatre because the town council has the power to require him to conform with such a provision. E) He can stay open because the town council had no power to make such activities a crime.

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57) Consider the following statements with respect to the exercise of governmental powers. Identify the false statement. A) The power of government officials to interfere with individuals' rights derives from their status and operates independently of any legislation. B) Before a government agency can take action that interferes with someone's rights, legislation must have been passed to permit that action. C) Statutes often restrict the power of government officials. D) The exercise of governmental power is subject to a number of constitutional limitations. E) The doctrine of parliamentary supremacy (i.e., the unrestricted right to legislate) has been modified by the addition of the Charter of Rights and Freedoms. 58) Jones operated a local movie theatre in a small town that had fallen on hard times. As a last ditch effort to attract customers, he decided to show pornographic movies. From the week the change was made, the theatre had to turn away customers on a regular basis. The local town council was quite upset, however, especially since a number of them represented a conservative and religious constituency. They decided to take away the licence of the theatre but were quickly informed that they did not have the power to do that. They then decided to increase the licence fee from the regular $50 per year to $15,000 per year. Jones was notified of the fact that this course of action was being considered, and he was given a chance to appear before the council to state his case. He did so, but the council decided to go ahead with the decision in any case. This, of course, would force Jones out of business, and so Jones, after exhausting any local remedies and appeals, took the matter to court. Which of the following accurately indicates the legal position of the parties? A) The municipal council's decision will stand since this is a proper use of their licensing power. B) Jones will be successful and will seek an order of mandamus. C) Jones will not be successful since the decision has been made and he has exhausted his remedies. D) Jones will be successful since this is an attempt by a municipal council to pass criminal law, which is under federal jurisdiction. E) Jones will be successful and will seek an order of prohibition.

59) Joe owned a house and wanted to make an addition that would double its size. He applied to the city hall for a building permit but was amazed at a new policy instituted by the engineering department, restricting the size of all buildings to 50% of the lot size. This was considerably less than what he wanted, and his request for a building permit was refused. Angry, he decided to proceed anyway. What should Joe do with respect to his legal position? A) If Joe found out that the council had met and decided to demolish his addition, there is nothing he can do now as the decision has been made. B) Joe found out from a friend that on the agenda for the next closed session of council, to be held in two days, was the request for an order to set an example of Joe and to demolish his addition. Joe should go to the court asking for a writ of mandamus. C) If Joe found out that the council had met and decided to demolish his addition, he should apply to the court for certiorari and an injunction. D) Joe found out from a friend that on the agenda for the next closed session of council, to be held in two days, was the request for an order to set an example of Joe and to demolish his addition. Joe should go to the court asking for a writ of certiorari. E) Even if Joe finds out that the city council is planing to take action against him, there is nothing he can do as he did fail to get a permit.

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60) Taisa was a massage therapist who ran a successful business from her home. One of her long-time clients, Greg, owed her a considerable sum of money relating to unpaid massage therapy sessions. Greg was reluctant to pay because he was unhappy with the services he had received. Which of the following is true? A) If her primary concern is the ability to appeal the decision made, Taisa should consider an alternative form of dispute resolution. B) If her primary concern is to keep costs low, Taisa should commence a civil action against Greg as soon as possible. C) Taisa needs to commence a civil action, as alternative forms of dispute resolution are not available in commercial disputes. D) If her primary concern is to preserve her relationship with Greg, Taisa should consider an alternative form of dispute resolution. E) If her primary concern is to ensure the dispute is kept private, Taisa should commence a civil action against Greg.

61) Which of the following cases would be a good one to mediate? A) A case where the parties want to maintain goodwill B) A case where the parties do not trust each other C) A case where the parties want a high degree of public visibility D) A case where the parties want to ensure the right to appeal E) A case where the parties are not concerned about costs and delays 62) Which of the following is an advantage of using ADR? A) Sets a binding precedent B) Ensures full disclosure C) Speedy resolution D) Lengthy process E) More expensive than litigation 63) Which of the following statements is correct? A) The parties to a dispute lose control in negotiations. B) Privacy is maintained in an adjudication. C) Goodwill is most likely maintained in litigation. D) ADR agreements are enforceable or appealable.

E) There is a great deal of flexibility in negotiation/mediation. 64) Which of the following is an advantage of the mediation process? A) Overcomes power imbalances B) Consistent outcomes C) Less expensive than litigation D) Redress for injury E) Full disclosure 65) There are many characteristics associated with the use of the court process that may be considered advantages and disadvantages when compared to alternate dispute resolution. Which of the following is a favourable characteristic one would associate with the litigation process? A) A less costly method of obtaining a resolution to a dispute B) A speedier method of obtaining resolution of a dispute C) A method of dispute resolution where both parties are more likely to be satisfied with the outcome D) Enforcement of the decision is more likely. E) Confidentiality is protected.

66) Which of the following statements is true? A) The rules of precedent apply to arbitration hearings. B) Use of ADR precludes parties from litigating. C) The public is entitled to know the result of mediated cases. D) ADR methods are less costly than adjudication. E) Mediators have the power to enforce decisions.

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67) A negotiation will most likely lead to agreement when the parties are A) aggressive. B) coercive. C) uncommunicative. D) equal in power. E) vulnerable.

68) Which of the following will contribute to the success of a negotiation? A) One party is more powerful than the other. B) One of the parties uses coercion to get an agreement. C) The parties rely on outsiders to put forward their cases. D) One party dominates or controls discussions. E) All relevant information is brought forward by both sides. 69) Which of the following best describes the process of mediation? A) Cooperative/flexible B) Time-consuming C) Controversial D) Rigid E) Structured

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 70) A case in which a businessperson is being prosecuted for fraud would be held in a criminal court. 71) A case in which one person sues another for breach of contract would be conducted in a civil court. 72) A person has the right to appeal a decision in a civil court.

73) The Supreme Court of Canada only hears appeals of private citizens. 74) Because the federal government has been given power over the courts, the court structure is the same in each province. 75) A jury is not available in civil disputes. 76) A jury is only available in civil disputes. 77) Juries are no longer used in Canada. 78) When one person is suing another in a civil matter, the judge must be satisfied about the outcome on the balance of probabilities. 79) In a criminal matter, the judge must be satisfied that the accused probably committed the crime. 80) When a person is acquitted in a criminal matter, he or she can no longer be sued civilly. 81) Being charged with speeding is an example of a civil dispute.

82) When a court has to decide in an assault action whether Joe really did hit James, this is a question of law. 83) When a court has to decide in an assault case whether Joe really did hit James, this is an example of a question of fact.

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84) When, in an assault case, the court has to decide whether the nasty names Joe called James justified James hitting Joe, this is an example of a question of fact. 85) When, in an assault case, the court has to decide whether the nasty names Joe called James justified James hitting Joe, this is an example of a question of law. 86) The federal government appoints all judges in Canada.

87) The Supreme Court of Canada only hears appeals from other courts. 88) The emphasis of drug treatment courts is incarceration. 89) The emphasis of mental health courts is punishment. 90) The Tax Court of Canada is considered a superior court.

91) The rules of evidence govern the type of testimony that can be obtained from witnesses and all other types of evidence to be submitted at trial. 92) Juries are limited to criminal matters. 93) The procedure in the small claims court is the same as that used in the superior trial level court of the province. 94) When a cause of action arises in one province and the plaintiff and defendant live in other provinces, the person suing can only bring an action where that cause of action arose.

95) Generally, when a cause of action arises in one province and the plaintiff and defendant live in other provinces, the person suing can sue where the defendant resides or where the cause of action arose. 96) Generally, when a cause of action arises in one province and the plaintiff and defendant live in other provinces, the person suing can only sue where the defendant resides. 97) Where transactions on the Internet are involved, an action can only be brought where the defendant company is actually physically located. 98) Once a judgment has been obtained, it can be enforced in any jurisdiction in the world. 99) Garnishment involves the interception of funds owed to the judgment debtor. 100) All methods of execution or enforcement require that a judgment first be obtained. 101) Solicitor-client costs are those commonly awarded. 102) The executive branch of government is responsible for regulatory bodies created by legislation.

103) Some businesses may be subject to both federal and provincial regulations. 104) Both the federal and provincial governments have administrative tribunals that can affect us. 105) Judicial review is an appeal of the decision to a higher court.

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106) The decision of an administrative tribunal may be challenged because of an abuse of discretionary power. 107) The decision of a decision maker may be challenged on the basis of a legal error made on the record of the proceedings. 108) The decision of an administrative tribunal may be challenged on the basis that the rules of natural justice were not followed in reaching that decision.

109) Mandamus involves the decision maker being required to make a decision that she has been avoiding. 110) The administrative tribunal process is excluded from Charter supervision because of the "notwithstanding clause." 111) Mandamus involves the decision of the decision maker being stopped before the decision is made. 112) Mandamus involves the decision of the decision maker being quashed or of no effect. 113) Prohibition involves the decision of the decision maker being quashed or of no effect. 114) Prerogative writs are the remedies available when a duty to act fairly has not been met. 115) It is generally cost-effective and worthwhile to pursue judicial review. 116) A court will invariably disregard a mediated settlement. 117) Alternative dispute resolution is a way to avoid penalties imposed by the courts.

118) You can always count on a mediated process to be fair. 119) Negotiation only works when both parties are willing to make concessions. 120) A successful negotiation has the potential of enhancing a business relationship. 121) Mediation is a concept developed in the past decade. 122) People are generally more willing to comply with court decisions than mediated agreements. 123) The job of the mediator is to help the parties come to an agreement, not to make a decision for them. 124) Contracts requiring arbitration are becoming more common. 125) Serious disadvantages of alternate dispute resolution are that it is expensive and time consuming. 126) A significant disadvantage of the court system is that there is no way to enforce the judgment. 127) Legal concessions made "without prejudice" during negotiations will not hurt the parties if litigation results.

128) Mediation and arbitration are becoming more common in resolving online disputes. . 129) To this date, online dispute resolution programs have not been developed to help resolve disputes between parties.

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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 130) Indicate under what circumstances the public can be excluded from our courtrooms. 131) Distinguish between a criminal and civil trial.

132) What is the standard of proof used in a civil action?

133) What is the standard of proof used in a criminal matter?

135) Who brings a civil action?

134) Who prosecutes a criminal matter?

136) Who are the parties in a civil action? 137) Who are the parties to the appeal of a civil action? 138) Indicate what can be appealed in an appeal court. 139) Distinguish between a question of fact and a question of law. 140) Describe the court structure in place in your province. 141) Indicate the jurisdiction of the Small Claims Court in your area. 142) Describe the limits on the jurisdiction of the superior trial court in your province.

143) What is the highest court in Canada? 144) What is the jurisdiction of the highest court in Canada? 145) How many judges are involved at the Supreme Court of Canada level? 146) Indicate the jurisdiction of the Federal Court. 147) Indicate the jurisdiction of the Federal Court of Appeal. 148) Name the Federal Courts. 149) Explain what power the federal government has to appoint judges. 150) Explain the function and jurisdiction of the Federal Court. 151) Explain any limitations on the superior trial court of the province. 152) Distinguish between the role of the judge and that of the jury in a civil dispute.

153) Explain under what circumstances the courts may be closed to the public and press. 154) Explain under what circumstances a ban on the publication of court proceedings may be imposed. 155) Explain why the courts are open to the public and press.

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156) Indicate the differences in the standards of proof in a civil and a criminal trial. 157) Contrast the position of the victim in a criminal and a civil trial. 158) Explain what the "R" stands for in the citation R. v. Jones.

159) Distinguish between small claims courts and provincial superior courts when dealing with civil disputes.

160) Describe the options available to a judgment creditor in respect of the enforcement of judgments. 161) Describe the types of remedies that can be requested by a plaintiff in a civil action. 162) How is the procedure in small claims court different from that followed in superior trial court? 163) How is an action usually started? 164) (Modify this question for your province.) Explain what is meant by filing an appearance. 165) Indicate what a statement of claim is. 166) What does the statement of defence contain? 167) What is a counterclaim? 168) Explain what happens at the discovery of document stage of the discovery process.

169) Explain what is meant by the examination for discovery. 170) Explain why the examination for discovery can be so important in any court action. 171) The pre-trial process is often criticized as causing long delays. Explain why it is necessary. 172) Explain what a lawyer can do on cross-examination that he can't do on direct examination. 173) Explain what is meant by costs when they are awarded in court action. 174) Explain what is meant by a dry judgment. 175) What is the name given to the hearing held to determine the assets of the debtor and how they can be made to pay the judgment? 176) Explain what happens in an examination in aid of execution (examination in aid of enforcement in Alberta). 177) Explain what is meant by a garnishee.

178) Indicate any limitations on the operation of the garnishment process. 179) Under what circumstances can a creditor take steps even before judgment to seize property or funds? 180) Explain the effect of a limitation period set out in legislation.

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181) What is the effect of failure to adhere to a limitation period?

182) When a cause of action arises in some other province in Canada, where can the victim bring the action? 183) Explain the difference between a body such as a human rights commission and the superior trial court of the province. 184) Explain the difference between regulatory offences and criminal law.

185) Distinguish between the executive and legislative branches of government. 186) What are the two main things to look for when determining whether the decision of a government bureaucrat can be challenged? 187) What is meant by government regulations? 188) What is the major requirement for the rules of natural justice? 189) Indicate three of the requirements of the rules of natural justice. 190) What constitutes a fair hearing? 191) Indicate three situations where someone affected by the decision of an administrator can turn to the courts for relief. 192) What is meant by a writ of certiorari?

193) What is meant by prohibition? 194) What is meant by mandamus? 195) Explain what is meant by a privative clause. 196) How do the courts react to privative clauses? 197) Distinguish the prerogative writ certiorari from mandamus. 198) Indicate two alternatives to court action. 199) Distinguish between mediation and arbitration. 200) What does a successful negotiation require? 201) What impact do "without prejudice" statements made during negotiations have if litigation results? 202) What does successful mediation require?

203) What does arbitration require in order to be effective? 204) Hao wants to negotiate a settlement, but he lacks skill and experience as a negotiator. What option is available to him?

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205) Indicate the advantages of mediation and arbitration over judicial process. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 206) Describe recent developments in Canada's court systems made by various governments. 207) Describe the process of obtaining judicial review, including the historical prerogative writs. 208) Describe the process involved when one person sues another in a civil action.

209) "One of the greatest weaknesses in our court system is the unreasonable delay when one person sues another." Discuss the validity of that statement. 210) Discuss the options that are available to a successful litigant in enforcing the judgment against the loser. 211) Discuss the restrictions on the power of government decision makers imposed by the power of judicial review. 212) Discuss privative clauses, parliamentary supremacy, and the role of the courts in supervising government decision makers. 213) Discuss what constitutes a fair hearing. 214) Consider the alternatives that are available to going to court and suing someone, and discuss the relative merits of these different courses of action. 215) Describe business relationships where it would be advantageous to use alternative methods of dispute

resolutio n. 216) Summarize and compare litigation and other methods of dispute resolution.

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1) C 2) E 3) D 4) C 5) C 6) B 7) C 8) C 9) C 10) C 11) D 12) B 13) E 14) C 15) A 16) B 17) D 18) D 19) D 20) B 21) A 22) A 23) A 24) A 25) C 26) C 27) E 28) C 29) E 30) C 31) C 32) B 33) A 34) A 35) D 36) D 37) D 38) A 39) B 40) D 41) E 42) A 43) B 44) B 45) A 46) C 47) B 48) E 49) D 50) E 51) E

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52) C 53) D 54) E 55) E 56) E 57) A 58) D 59) C 60) D 61) A 62) C 63) E 64) C 65) D 66) D 67) D 68) E 69) A 70) TRUE 71) TRUE 72) TRUE 73) FALSE 74) FALSE 75) FALSE 76) FALSE 77) FALSE 78) TRUE 79) FALSE 80) FALSE 81) FALSE 82) FALSE 83) TRUE 84) FALSE 85) TRUE 86) FALSE 87) FALSE 88) FALSE 89) TRUE 90) TRUE 91) TRUE 92) FALSE 93) FALSE 94) FALSE 95) TRUE 96) FALSE 97) FALSE 98) FALSE 99) TRUE 100) FALSE 101) FALSE 102) TRUE 103) TRUE

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104) TRUE 105) FALSE 106) TRUE 107) TRUE 108) TRUE 109) TRUE 110) FALSE 111) FALSE 112) FALSE 113) FALSE 114) TRUE 115) FALSE 116) FALSE 117) TRUE 118) FALSE 119) TRUE 120) TRUE 121) FALSE 122) FALSE 123) TRUE 124) TRUE 125) FALSE 126) FALSE 127) TRUE 128) TRUE 129) FALSE 130) When children are involved or in rare circumstances where the security of the nation is threatened, the court will hold "in camera hearing" or simply prohibit publication of the evidence. This can be done in circumstances where to publish some evidence might prejudice another procedure. The ban on publication does not prohibit the public from attending, and so this method of control is more common. 131) A criminal trial involves a prosecutor acting on behalf of the state, prosecuting an accused to the end that that person will be punished for his offence against the state. The status of the victim is as a witness. In a civil action (often referred as a private action), one person is suing another with the end that the court will award compensation for injury suffered or some other remedy requested by the plaintiff. The standard proof is also different in a criminal action, where the matter must be proved beyond a reasonable doubt, while in a civil action the standard is upon the balance of probabilities. 132) Balance of probabilities. 133) Beyond a reasonable doubt. 134) The Crown. 135) The Plaintiff. 136) Plaintiff and defendant. 137) Appellant and respondent. 138) Usually questions of law only. Questions of fact are to be decided at the trial. 139) A question of fact relates to what happened. (For example: Is the sky blue? Who was driving the car? Where did the accident happen?), whereas a question of law relates to the rules that are applied to that fixed fact pattern by the courts. (For example: When someone provokes you verbally, can you respond physically? Or, will consent will excuse a battery? 140) This will vary from province to province. In British Columbia, the bottom level is Provincial Court, consisting of the Small Claims Court, the Family Court, and the Criminal Division. The next level is the B.C. Supreme Court; the highest level is the Court of Appeal. 141) This will vary from province to province. For example, in British Columbia and Alberta, it is civil matters up to $25,000.

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142) There are no general limitations except for areas that are specifically assigned to other courts or bodies by statute, so that there is unlimited monetary jurisdiction and regional jurisdiction within the province. 143) Supreme Court of Canada. 144) They have unlimited jurisdiction to hear appeals from any court in the land, both criminal and civil. 145) There are 9. 146) The Federal Court deals with disputes between the federal government and individuals or deals with matters that fall exclusively within federal jurisdiction, such as copyrights, patent trademarks, and admiralty matters. 147) It hears appeals from the Federal Court and appeals from various federal administrative tribunals such as the Employment Insurance Commission. 148) Supreme Court of Canada, Federal Court, Federal Court of Appeal and Tax Court. 149) The federal government appoints judges in all superior courts in the provinces, as well as the judges to all federal courts, including the Supreme Court of Canada. 150) The Federal Court deals with matters that fall into the federal sphere of power under the Constitution Act (1867). The Federal Court of Appeal hears appeals from the Federal Court and from federal administrative tribunals. 151) They have complete jurisdiction to hold trials concerning any amount of money occurring within the province. They generally don't hear appeals. 152) The judge decides question of law and gives the jury instructions with respect to those matters and their duty. The jury will decide questions of fact. 153) The courts will only be closed to the public if the security of the country is at stake. Even with juveniles, the courts are open to the public, although there will likely be a ban on the publication of the identities of the parties. 154) When juveniles are involved, where the security of the nation may be in question or when the disclosure of the information might have a negative effect on another case. 155) Justice must not only be done; it must be seen to be done. 156) Just more likely to be right than not in a civil matter ("balance of probabilities"), but "beyond a reasonable doubt" in a criminal matter. 157) In a civil trial, the victim is usually the one suing the defendant, whereas in a criminal trial, the victim is a witness and the Crown or government is prosecuting. 158) R stands for Rex or Regina, depending on whether a king or queen is on the throne. 159) Small claims courts have a limited, sometimes small monetary jurisdiction and the procedure is simple and informal. In the superior courts, the jurisdiction is limited only to matters occurring within the province, with no monetary limit, and the procedure is quite involved and formal. 160) A judgment debtor's property can be seized and eventually sold to satisfy the judgment. A judgment creditor may also garnish funds, such as wages earned or money in a bank account. 161) The most common remedy requested is damages (monetary payment). General damages are based on estimates, special damages are designed to reimburse the plaintiff for specific costs incurred, and punitive (or exemplary) damages are intended to punish the wrongdoer. Other remedies that may be requested include an accounting (payment over of profits wrongfully obtained), an injunction (ordering that wrongful conduct be stopped), specific performance (compelling performance of a legal obligation). and declarations (as to the law or legal rights of the parties). 162) It is simplified and shortened procedurally. 163) In some jurisdictions, a writ of summons is issued and served on the other party (for example, in B.C.). In other jurisdictions, a statement of claim is simply issued (for example, in Ontario). 164) An appearance is the document filed by the defendant that indicates that he wants to contest an action after he receives the writ of summons. This must be filed within a short period of time 165) The statement of claim is the document where the allegations that must be established in the court action are set out. This gives notice to the defendant as to what case he must meet. It is not an argument, rather a summary of allegations. 166) The statement of defence sets out what allegations contained in the statement of claim are agreed to and also any further allegations advanced by the defence that later may be relied on in court to counter the allegations contained in the statement of claim. Again, this in not an argument. The statement of defence may also contain a counterclaim, which is in effect a statement of claim where the defendant reverses the process and seeks a remedy against the plaintiff.

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167) If the defence feels that they not only have a defence but rather have an action against the plaintiff, once they have received their statement of claim, they can respond by filing a statement of defence with a counterclaim. The counterclaim in effect is a statement of claim initiating a claim against the plaintiff for compensation for the injury suffered in the events described. 168) Each party can inspect documents in the other party's possession that may be used as evidence at trial. 169) The examination for discovery involves the plaintiff being examined by the lawyer for the defendant under oath in the presence of a court reporter, and the defendant being examined by a lawyer for the plaintiff in the same way. They are entitled to ask any questions that may be relevant in relation to the matter at hand. The answers are under oath and are taken down. 170) Often admissions are made in the examination for discovery process that cause the action to be abandoned or make it clear what is to happen in the current settlement. Since this information is taken under oath, it can be used later at the trial. 171) Delays are caused by these procedural steps. The procedural steps are there to encourage the parties to settle, and it is the delay that encourages parties to settle most of their disputes before they ever get to trial. 172) Lead the witness or ask leading questions. 173) The winning party usually is compensated for his legal fees in addition to whatever remedy he received from the losing party. It should be noted, however, that these legal fees awarded are not enough to cover his legal costs. 174) This is the term used to describe a situation where you proceed to judgment and then the person you are suing, the defendant, now called the judgment debtor, cannot pay. 175) Examination in Aid of Execution. (In Alberta, Examination in Aid of Enforcement.) 176) The judgment debtor is examined under oath to determined what assets he has or what kind of dealing he is involved in which may have been an attempt to hide assets and make them not available to the judgment creditor. He is asked about bank accounts, boats, cottages, homes, etc., to determine what assets can be seized to satisfy the judgment, and the court may issue an order for the seizure of those goods. 177) Funds that are owed to the judgment debtor can be intercepted by the creditor by serving a garnishment order on the bank or employer, etc., who owes that money to that judgment debtor. On receipt of such an order, the money must be paid into court to the Court Clerk, where the judgment creditor will make application to have it paid out to them. 178) Most provinces have set a maximum that can be taken from the wages from the employee to satisfy a judgment (20-25%, for example). 179) Rarely will this be allowed. Usually a person has to go through the process of obtaining judgment before he obtains such rights. However, if there is some sort of indication that the funds or property might be lost, the court will in rare circumstances allow the attachment of those funds (garnishment). They are usually limited to bank accounts or other forms of deposit or debts, not wages. 180) This sets a time limit, from the time of the event complained of, within which an action must be startedfor example, 2 years for an automobile accident. 181) Once the limitation period has expired, the claimant cannot sue. 182) Normally the victim can bring an action where the cause of action arises or where the defendant resides. 183) The superior trial court is a court and the judges are appointed by the federal government. The human rights tribunal is an administrative tribunal and part of the executive branch of government (as opposed to the judicial branch). The commissioners are appointed by the relevant level of government (provincial or federal, as the case may be). 184) Regulatory offences are sometimes called quasi-criminal offences. These are offences under the provincial power, such as motor vehicle offences, where provincial law is involved and a penalty is assessed for violation. Because only the federal government has the power to pass criminal law under the Constitution, these are called regulatory offences. 185) The legislative branch is parliament, including the House of Commons and the Senate. The executive branch consists of the government bureaucracy, all the government departments, the cabinet, the police, the military, etc 186) Did the bureaucrat act within his authority? Was the conduct of the decision maker and the conduct of the process proper? 187) When a statute is passed, it often contains a provision authorizing a department, or likely the Cabinet, to make specific rules to accomplish the goals of the legislation. These are called regulations.

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188) That the person being affected by the decision be given a fair hearing, which requires that he be notified of the nature of the matter he must answer. 189) A fair hearing with adequate notice, that the decision be heard by the decision maker, and that the decision maker be free of bias. 190) What constitutes a fair hearing will vary with the circumstances, ranging from an opportunity to put your case before the decision maker in person to merely the right to write a letter. In any case, it requires that you be notified as to a decision that will affect you and be given an opportunity to put your case forward. 191) 1. Where the decision maker has no authority to make the decision. 2. Where the process itself didn't live up to the rules of natural justice. 3. If the decision maker incorporates a remedy beyond his powers to grant. 4. Where there is no legal evidence to justify the conclusion. 5. Where there is an abuse of power. 6. Where there has been an error of law on the face of the record. 192) Certiorari involves a court order that makes the decision of an inferior administrative body null and void and of no effect. 193) Prohibition is an order by the court ordering a decision maker or bureaucrat not to go through with the decision making process and to halt the process. 194) This is an order ordering a decision maker to make the decision that he's empowered to make. 195) A privative clause is a clause included in legislation with the objective of prohibiting the courts from reviewing in any way the decision made by the decision maker empowered in the legislation. 196) The courts are reluctant to have their power taken from them in this way; therefore, the privative clause is extremely carefully examined to make sure that it is unambiguous and clear. Typically, if the courts don't want to follow it, they will find a way to get around it. 197) Certiorari involves an order that declares the decision of no effect or void. Mandamus is an order to the decision maker to do his or her job and make the decision. They are empowered to do it; time is of the essence. 198) Negotiation, mediation, mini-trials, and arbitration. 199) Mediation involves someone trying to help the parties to get a settlement, but any recommendations are not binding, and the mediator has no power to impose an agreement. Arbitration involves a third party deciding the matter, and that decision is binding on the parties. 200) Negotiation requires an understanding of the issues and a willingness to cooperate and compromise. 201) Any legal concession, admission, or compromises made during negotiations when made "without prejudice" will not hurt the parties if the negotiations fail and litigation results. 202) Mediation requires a balance of power and willingness to act in good faith. 203) Parties must be required to honour the decision made by the arbitrator. 204) He can negotiate through a representative. 205) Less confrontation, less breakdown in relationship, cheaper, less time consuming, more expertise by the arbitrator as opposed to a judge. 206) Students should review the variety of innovations in court systems in place in various jurisdictions across the country. For example, drug treatment courts, designed to prevent addicts from reoffending, emphasize treatment over incarceration. Domestic violence courts, which deal with abuse of spouses, children and the elderly, offer specialized services. Unified family courts have been created in several provinces to simplify the court process in this area. The Nunavut Court of Justice represents an innovation in that it is Canada's first single-level court. Sentencing circles, while not courts, suggest restorative community sentences. In addition to these recent developments, good students will also discuss future possibilities in this area, such as the proposed specialized court to deal with gun-related offences. 207) Historically, judicial review involved obtaining a prerogative writ from the court. The three main ones are the writs of certiorari (an order declaring that the decision of a tribunal is void), prohibition (ordering a tribunal not to proceed), and mandamus (ordering a tribunal to make a decision). In addition, the courts could make a declaratory judgment (declaring the law), and providing such remedies as damages or an injunction to enforce that declaration. Today, many provinces have simplified this procedure by statute. In any case, remedies provided by the court are discretionary. 208) Students should describe in some detail the process of civil litigation in the superior court of the province. A bonus

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woul an action in the superior court and small claims. Students should point out that usually there is a period of d be negotiation and that the action must be commenced within the limitation period. The action is commenced with wher the issuance and service of particular document, which varies with the jurisdiction (e.g. a writ of summons or e statement of claim). Once the action has started, the defendant must respond with an appearance and then the stud plaintiff responds with the statement of claim. The defendant then must file a statement of defence, and sometimes ents a counterclaim will be launched at this time. This concludes the pleadings. Discovery of documents then takes place, descr being eliminated in some jurisdictions where the claim is for a lower amount. Then the examination for discovery ibe takes place. There may be payment into court or an offer to settle. In many jurisdictions there is a pre-trial hearing the to promote settlement. The trial then takes place, judgment is rendered, and remedies ordered. Steps can be taken to diffe enforce the judgment, including an examination in aid of execution. Enforcement tools may include garnishment of rence wages or seizing property. betw The question does not limit itself to the pre-trial process, and so students should deal with the trial and the een enforcement of judgment as well. 209) In fact, there are arguments on both sides of this question, and good students should indicate both the pros and cons. The process of civil litigation creates the delay, but the process encourages all information to be revealed so there are no secrets. That in turn encourages the parties to settle the matter so that a trial can be avoided. Since few trials actually take place compared to those started, this is very cost-effective from the point of view of the public. But much of the current delay is not associated with this pre-trial process. Such long delays create considerable expense for the litigants, creating other hardships ("justice delayed is justice denied"). Many jurisdictions now are reforming their process, streamlining it and simplifying it to reduce delay. Students should go beyond simply explaining the reasons for the delay and explain what the courts are doing to overcome it. 210) Here students are asked to concentrate on the post-trial enforcement of the judgment. Good students will not only list what can be done but also indicate whether those options are worth pursuing. Obtaining judgment does not ensure payment. It may be foolish to spend money if a "dry" judgment may result. But the judgment is enforceable for a considerable period of time, and the future prospects of the judgment debtor should be considered. An important element of this process is the examination in aid of execution, which can be held where the judgment debtor is examined under oath. Property such as a car or boat can be seized by a court official and sold, with the proceeds being distributed to the creditors. Some types of property are exempt, such as food, clothing, and some furnishings. Note that property used as security can be seized before judgment and, if a different creditor holds that security, that property will likely not be available after judgment. Funds such as bank accounts and wages can be garnisheed after judgment. Only a portion of a person's wages can be garnisheed in this way. The sale of real property such as land and building can also be forced to satisfy the judgment debt. The enforcement process is expensive and good students will note that it may not be worth incurring the added expense where the judgment debtor refuses to cooperate. They should also note the importance of determining whether any property has been transferred illegally to others and the possibility of bankruptcy interfering with the collection process. 211) Here students should show an understanding of the idea of the rule of law; these government regulators can do only what they have been authorized to do by law. Students should discuss limitations on regulators' power in the form of the content of the statutes and regulations that create their position and authorize their conduct, as well as the Charter of Rights and Freedoms and the division of powers under the Constitution Act (1867). They should also deal with abuses in the way regulators exercise their power, as determined by the principles of due process and the rules of natural justice. The principal idea is that these government regulators cannot act arbitrarily but are under severe restrictions in what they can do and how they can do it. 212) Over the years, as the role of the bureaucracy grew, a considerable friction developed as the legislators attempted to wrest power away from the courts in favour of these administrative tribunals. The courts always resisted this, and when faced with privative clauses included in the legislation creating these bodies, they would interpret them in a way so as to overcome their effect. This clashed with the principle of the supremacy of parliament, and so the courts would always give lip service to that principle but still strictly limit the effect of such privative clauses. Eventually, the Supreme Court of Canada took the position that the decisions of these administrative tribunals should be reversed only where they are patently unreasonable. To answer this question, students must demonstrate an understanding of the role of parliament and how its supremacy has been qualified in Canada over the years. They must also show an understanding of the role of the

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court ding the distinction between an appeal and a judicial review and their role in statutory interpretation, as well as an s, understanding of how the courts have used that role to get around the supremacy of parliament. inclu 213) This question requires students to show a clear understanding of the rules of natural justice and apply them to the decision making process. They must examine not only the hearing itself but also the requirement of notice and what that entails. They must examine the process of the hearing, including the status and involvement of those who decide as well as the requirement of cross-examination and when that should be made available. They also should deal with when a lawyer can be involved. It is important that they understand that the hearing need not be a formal meeting but may be no more than an opportunity to write a letter, depending on the circumstances. Students can also extend the discussion to an examination of the application of the Charter to such hearings, as well as a look at the authority of the decision maker in terms of constitutional law, the division of powers, the statute, and the regulations. A paper might also examine what can be done when a fair hearing does not take place. 214) The first alternative is for the parties to negotiate directly with each other to try to come up with a solution that is agreeable to both parties. When there is a higher level of conflict and a need for compromise, each party may agree to hire a mediator to facilitate the resolution of the dispute, encouraging each party to compromise and to come to a reasonable solution. Both parties must go into the mediation process voluntarily with a desire to settle and be willing to disclose all information necessary to reach an equitable agreement (subject to a confidentiality agreement). This process is not appropriate where there is in an unequal balance of power, where the dispute involves sexual assault or abuse, where there is a need to set a legal precedent, or when one or both of the parties is likely to hide important information. The third possibility is to hire an arbitrator, present all the evidence, and agree to be bound by his/her decision in the matter. In this case, the arbitrator is usually an expert and can deal with the matter quickly and efficiently. The disadvantage is that there is no appeal, and the case sets no precedent for future cases. The advantages with each of these processes is that they are faster, less costly, to some extent less formal, and more convenient for the parties, and although there is still usually a winner and loser, the decision is usually easier for the parties to live with. The difficulty is that there is no means to enforce the agreements. Courts will often enforce the terms of such an arrangement if the matter ends up in court. In a lawsuit, because the action is adversarial, the process will likely destroy the possibility of future personal or business relationships. The judgment is usually an all-or-nothing proposition since there is little room for compromise, but the case does follow precedent and is therefore more predictable and may have an impact on future cases. A court case is open to the public and so it is not possible to keep such conflicts private. 215) International business dealings are more appropriately mediated or arbitrated because of the different laws in different jurisdictions. Court adjudicated disputes when large projects are involved would incur delays and high costs and require the time of managers that could be put to more efficient use. In order to maintain positive relations between vendors and customers, it is a good idea to avoid the negative publicity and strain on the business relationship that a court dispute usually entails. Most remedies other than financial compensation are not within the power of the court to enforce. It is more likely that the parties closest to a dispute can develop positive solutions, and if they both agree, it is more likely that the decision will be complied with. Disputes within a corporation would be better resolved within the company to avoid negative publicity. 216) Students should identify that, in addition to litigation, other methods of dispute resolution exist, including negotiation, mediation, and arbitration. Each method of dispute resolution should be described, including the roles of the negotiators, mediators, and arbitrators. Each method of dispute resolution should be assessed on the basis of such issues as control, delay, cost, privacy, flexibility, good will, predictability, appealability, and visibility. In particular, alternative methods of dispute resolution offer parties greater control, less delay, less distraction, less expense, the opportunity to preserve relationships, and greater overall flexibility. There are disadvantages to ADR, however, in that ADR does not ensure full disclosure, does not always remedy an imbalance of power, cannot ensure consistent outcomes, and may lack enforceability/appealability.

Chapter 4

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following best describes the primary purpose of tort law? 1) _______ A) To force people to do good, e.g., rescue those in trouble B) To punish wrongdoers C) To ensure that contractual promises are kept D) To prevent crime E) To compensate victims of wrongful conduct 2) _______

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2) Mrs. Kahn arranged a trip to Europe for herself and her two children. Her husband couldn't go. She spent hours with the travel agent, Mr. Tobin, deciding on the vacation package. She asked him and wrote a note asking again what documents, shots, etc., would be needed for the trip. Tobin said and wrote that all they would need would be their passports. Tobin forgot to tell her that a new regulation required a note from the father allowing the children to leave Canada, although he had received a memo in red warning him to alert travellers of the new regulation. When Mrs. Kahn and the children reached Toronto to embark on a plane for London, they were stopped because she did not have the required note from Mr. Kahn. They lost their reservations for both the plane and the tour with no refund. On these facts, which of the following is true? A) There could be a civil action against Mr. Tobin and against his employer, although the employer did no wrong. B) A travel agent owes no duty of care to his customers. C) Mr. Tobin could sue for false imprisonment. D) There is no possibility of suing Mr. Tobin because he had no intention of hurting anyone; his oversight was just an accident. E) Libel is the only tort available for persons injured by another's words.

3) Ms. Reed attended the zoning offices of the city. She explained to the chief zoning officer, Mr. 3) _______ Shore, that she was interested in a piece of property, but only if it were zoned "multiple family dwelling." Mr. Shore checked the property himself and assured her it was zoned "multiple family dwelling," but he had not checked the new regulations properly. Relying on his statement, Reed invested $300 000 in the purchase and the development of the property. When the apartment building was half finished, she was informed by the city that her building was unacceptable because the property was zoned "duplex." Upon hearing this news, she rushed to the city zoning offices and approached Mr. Shore, started yelling, and threw her briefcase at him. He ducked; she missed. When she persisted in yelling, he threw some cold water in her face. On these facts, which of the following is true? A) Reed could not sue Shore for saying the property was zoned "multiple family dwelling" because he did not intend to make the error; it was just a mistake. B) Shore could successfully sue Reed for assault. C) Reed could successfully sue the city for negligence. D) Reed could successfully sue Shore for assault and battery. E) Reed could successfully sue Shore for defamation. 4) Which of the following actions would result in a successful tort action by the person or persons wronged? Assume that all the persons involved learn these facts. A) Ed became sick from consuming too much alcohol that he had purchased from the store. B) Mr. Meen wrote a letter to the editor of the Vancouver Sun in which he criticized the mayor of Vancouver. C) An accountant accurately prepared the financial statements of a corporation that he knew would be used by a potential investor, Mr. Lam. Lam, relying on the statements, invested

4) _______

$10 000 and

lost it all. D) A store detective stopped Joan after she left the shop because he saw her leave with candy she didn't pay for. She had slipped the unpaid-for candy into her pocket. He detained her for 20 minutes until the police came. E) When Jed accidentally dropped a board and broke Al's glasses, Al threw a cup at Jed, but Jed saw it coming and moved away in time to avoid being hit. 5) _______

6) Mr. and Mrs. Hampton went to a restaurant and ordered roast duck dinner for two. When they began their dinners, they found that the duck was frozen in the middle. They ate what they could of the dinner but complained to the waiter. The waiter listened but merely gave them the bill for the entire cost of the dinner. Mr. Hampton put half of that amount on the table and began to leave. The waiter and the manager caught up to him before he reached the front door, and although they allowed Mrs. Hampton to leave, they restrained Mr. Hampton. Furthermore, the manager called the police, who, after listening to the waiter and Mr. Hampton explain just what happened, arrested Hampton and took him to jail. Mrs. Hampton bailed him out within three hours. On these facts, which one of the following is true? A) Mr. Hampton could not sue the police who arrested him. B) The Hamptons could sue the employer of the waiter for the tort of nuisance. C) Mr. Hampton could sue the waiter and the employer for the tort of false imprisonment. D) Mr. Hampton could sue only the waiter. E) Mr. Hampton could also sue for defamation.

6) _______

7) Bubba, an angry, foul-mouthed fan, yelled insults at Rob, a professional athlete, as Rob was leaving the field. The fan suddenly rushed toward Rob, and although Rob tried to defend himself by throwing his gym bag at Bubba, Bubba hit him above the eye, causing a serious cut requiring stitches. Bubba was arrested, convicted, and sentenced in a criminal action for his attack. Rob, a starting player, missed ten games because of the injury. On these facts, which of the following is true? A) Rob could succeed in an action against Bubba for the tort of nuisance. B) If Bubba sued Rob for hitting him with the gym bag, Rob would most likely argue that it was justified on the basis of self-defence. C) The insults yelled at Rob would in themselves, give Rob the right to hit Bubba with his gym bag. D) Although Rob suffered damages because of the attack, he could not sue Bubba in a civil action because a criminal action had been taken and the same incident cannot result in both types of proceedings. E) The attack by Bubba shows the elements of the torts of assault and battery: the assault was the hit; the battery was the sudden rush towards Rob.

7) _______

8) Which of the following is an intentional tort?

8) _______

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5) Which of the following is true with regard to the torts of assault and battery? A) A person will always succeed with the defence of self-defence even if he used excessive force. B) The amount of damages paid to Joe, injured by another's battery, will be an amount to cover the extent of injury suffered by a normal person regardless of Joe's actual injuries. C) Both torts are "actionable per se"; that is, a person can successfully sue without having to prove damages. D) For consent to be an effective legal defence to a claim of battery, the person hit must have been surprised by the incident. E) Although assault and battery are often both present in an incident, it is technically possible to be assaulted without being battered.

A) Duress and undue influence. B) Negligence C) Defamation D) Frustration E) Breach of contract 9) _______

9) Clark was at Computerheaven Ltd. and asked for a box of the highest grade computer paper. Don, the employee, went to the back to get it, but he didn't know which was the best grade paper of the five choices available. He took out a box of paper called "superstuff" and told Clark that was the highest grade paper, even though he wasn't sure it was. Clark bought it. On the way out, Clark, a successful freelance computer programmer for the last five years, asked Don some questions about a new laser printer on display. Don started giving Clark his sales pitch, and Clark said with a smile, "I don't think you know what you're talking about." Don flushed and yelled, "You go to %^&%. You call yourself a programmer and you don't know anything about programming. You're a first class fraud!" A client of Clark's overheard this conversation. Clark called Don a "jerk" and left to go. As he was walking out the door, Don threw a hard disk at him and hit Clark in the back of the head. Considering the legal meaning of the following, indicate which of the following would be successful based on these facts. A) An action against Computerheaven Ltd. for the tort of trespass. B) An action against Computerheaven Ltd for the tort of defamation. C) An action for the tort of nuisance D) An action against Clark for the tort of negligence. E) An action against Computerheaven Ltd. for the tort of battery

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10) Read the following and indicate the true statement. 10) ______ A) If falling over boxes wrongfully left in his garage by a delivery company injured a person, the cause of action could be breach of contract. B) If a person were given a blood transfusion after making it clear that she didn't want one, the cause of action would be negligence. C) If a person suffers damage because of wiring improperly installed by John for his employer, World Wires Ltd., only John could be sued for negligence. D) If the odour from a neighbour's smokehouse made it impossible for you to use your pool, the proper action is nuisance. E) If a person suffers a loss because a salesman knowingly made a false statement that he knew the other would rely on to his detriment, the cause of action could be defamation. 11) With regard to the law of tort, which of the following is false? A) If the court finds the plaintiff contributorily negligent, causing 20% of his loss, he must suffer that portion of the loss and will not be compensated for it by the defendant. B) Although a signed consent form appears to be a defence to a claim of battery, the court will look to see if it was informed consent, that is, if the person was told all the relevant facts that would allow a reasonable person to make a decision. C) An act must be intentional to be classified as a tort. D) Although a person was not careless and intended no harm, he could still be sued successfully by someone harmed by a dangerous substance that escaped from his property. E) A negligent person causing physical injury to another is responsible to the full extent of the injury suffered, even though the injured person suffered more than would reasonably be expected because of a special weakness.

11) ______

12) When a court hears a breach of contract dispute, its job is to A) compensate the victim of the breach. B) punish the offender.

12) ______

C) help the plaintiff. D) protect the state. E) reward the defendant. 13) ______

14) An exotic dancer, Jasmine, jumped from the stage onto the lap of a patron. The chair broke, and in the fall, a disc in the plaintiff's back was broken. Jasmine maintained that she would jump on the lap of a patron only if he indicated he wanted her to do so and offered a tip. Which of the following is incorrect with respect to the legal position of the parties? A) Jasmine's best defence would be that the patron voluntarily assumed the risk. B) Jasmine owes a duty of care to patrons, as they are foreseeable victims. C) The patron would bring an action relying on the Occupiers' Liability Act. D) The employer would not be liable since Jasmine was on a "frolic of her own." E) The patron would sue not only Jasmine for negligence but the employer as well for vicarious liability.

14) ______

15) In January, a driver accidentally caused a snowplough to go off the road, crash into a house, and enter the livingroom. No one was hurt, but the incident caused extensive damage to the house. If the driver of the snowplough was charged with the crime of driving while impaired, and convicted, which of the following is true? A) The owners of the house would have no civil action against the driver because no one was hurt. B) The owners of the house could also proceed in a civil action against the driver for the tort of nuisance. C) The driver would be found liable in a civil action only if the prosecutor could prove he was guilty beyond a reasonable doubt. D) The owners of the house could also proceed in a civil action against the driver for the tort of negligence. E) The owners of the house could not proceed in a civil action, because the driver had already gone through a criminal action and he cannot be forced to go through two proceedings for the action.

15) ______

16) A person could be liable for the tort of trespass A) for sleeping in the garage with the owner's permission. B) for leaving packages in the wrong person's garage. C) for attending the "garage sale" at the designated time. D) for accidentally knocking down the garage in a car out of control. E) for leaving the wrong packages in the right person's garage.

16) ______

17) When Mr. P dropped his wife off at work, the driver behind him, Mr. H, angered by the slight delay in traffic, approached Mr. P's car, called him names, and then punched Mr. P in the nose and mouth area with a closed fist. Mr. H was convicted and sentenced in criminal proceedings

for on. his Given acti these

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13) Which of the following is false with respect to the law of tort? A) For consent to be an effective legal defence to a claim of battery, the person consenting must have been given sufficient information to make a rational decision. B) A negligent person causing physical injury to another is responsible to the full extent of the injury suffered even though the injured person suffered more than would reasonably be expected because of a special weakness. C) With assault and battery, a person can successfully sue without having to prove damages. D) A customer battered by an employee on the job can sue only the employee, not the employer, because it was the employee who did the wrong. E) A person may not succeed with the defence of self-defence if he used excessive force.

facts, 17) which of the followin g is true? A) Mr. P could also proceed in a civil action against Mr. H for the tort of nuisance. B) Mr. P could not take a civil action because a criminal action had taken place, and the same behaviour or action cannot be the subject matter of both types of proceedings. C) Mr. P could ask for special damages, but not for general or punitive damages. D) Mr. P could also proceed in a civil action against Mr. H for the tort of battery. 18) Which of the following incidents describes the legal meaning of the tort of assault (without battery)? A) I accidentally drop a hammer on your foot. B) Unknown to you, I threw a hammer at your head but missed. C) I come up from behind you without your seeing me and hit the back of your knees, causing you to fall down. D) I threw a hammer at your head, but you saw it coming and ducked out of the way. E) When you are asleep in the house, I sneak up and throw a hammer through your garage window.

___ ___

18) ______

19) ______

20) Although nothing at all had been stolen, the store detective thought Al and Ed had stolen some records. After they exited from the store, the detective said to both of them, "Hold it! You'll have to wait right here for the police; you'll be charged with theft!" While Ed stopped and protested, Al just hurried off and drove away. Ed felt compelled to submit to the detective. After some time the police finally arrived. It was only then that the detective realized that no crime had been committed. Ed was released. On these facts, which of the following is true? A) Both Al and Ed could sue for the tort of false imprisonment because there had been no crime committed. B) Neither Al nor Ed could sue because neither was confined in a closed space. C) Only Ed has a cause of action for false imprisonment (i.e., a legal right to sue). D) Both Al and Ed could sue for the tort of false imprisonment because both had been falsely accused of committing a crime. E) Both Al and Ed could sue for assault and battery.

20) ______

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19) Clark was at Computerheaven Ltd. and asked for a box of the highest grade computer paper. Don, the employee, went to the back to get it, but he didn't know which was the best grade paper of the five choices available. He took out a box of paper called "superstuff" and told Clark that was the highest grade paper, even though he wasn't sure it was. Clark bought it. On the way out, Clark, a successful freelance computer programmer for the last five years, asked Don some questions about a new laser printer on display. Don started giving Clark his sales pitch, and Clark said with a smile, "I don't think you know what you're talking about." Don flushed and yelled, "You go to %^&%. You call yourself a programmer and you don't know anything about programming. You're a first class fraud!" A client of Clark's overheard this conversation. Clark called Don a "jerk" and left to go. As he was walking out the door, Don threw a hard disk at him and hit Clark in the back of the head. Considering the legal meaning of the following, indicate which of the following would not be successful based on these facts. A) An action for the tort of nuisance B) An action for the tort of deceit C) An action for the tort of battery D) An action against Computerheaven Ltd. E) An action for the tort of defamation

21) ______

22) Jim was assigned to a different workroom at the factory. During the day, he became increasingly upset with one of his new co-workers, Mr. Saur, who criticized everything he did. After several hours of this, Jim said, "I could do a little better in here if you kept your mouth shut." Saur answered, "You young @#$%%, you make me sick," and with that he intentionally knocked over a machine that would have hit Jim if he hadn't jumped out of the way. Jim picked up a paper cup of water and threw its contents at Saur, saying, "Cool down, old man." Some of the water hit Saur, who then ran over and hit Jim hard with a piece of pipe. Charlie, another worker, grabbed Jim by the hair and pulled him out of the room, away from Saur. On these facts, which of the following is true? A) If Jim sues Saur for battery, he will have to prove his case "beyond a reasonable doubt." B) If Jim sues Saur for battery, Saur could defend successfully on the ground of self defence. C) Charlie could be sued successfully for battery even though he was acting in Jim's best interest. D) If Saur sued Jim for battery, Jim could defend successfully on the ground of provocation. E) Jim could not sue Saur for assault because Jim was not hurt by the falling machinery.

22) ______

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21) Jed played hockey for his company's team. During the playoffs, three seconds after a play, he was deliberately hit in the back with a stick by Ed, a player on the opposing team. The hit broke Jed's rib. If Jed sued Ed, which of the following is true? (Keep in mind the technical, legal meanings of the words.) A) The plaintiff's most likely cause of action would be negligence. B) The defendant's best defence would be that the plaintiff consented to the hit. C) The plaintiff's most likely cause of action would be malicious prosecution. D) The defendant's best defence would be provocation. E) The defendant's best defence would be qualified privilege.

23) Trevor and Roger, employees of Ezon Ltd., accidentally dropped a crate that they were 23) ______ unloading. The crate just missed an 80-year-old lady, Mrs. Sloe, who was on her way to the bus stop. She was not hurt at all, nor upset because it fell behind her. Just to be sure she wasn't hurt or upset, Trevor said, "Let me take your arm and help you to the bus." She agreed, so he took her by the arm and walked with her for the rest of the block. When they arrived at the bus stop where others were waiting, she then turned to him, screaming, "Let go of me! You have no right to touch me!" With that, she hit him with her purse. On these facts, which of the following is true? A) In a negligence action, the standard of care owed by workers is to do the best they can. B) Mrs. Sloe could successfully sue Trevor and Roger for negligence. C) In law, the battery was committed by Mrs. Sloe. D) To avoid a negligence action, the standard of care owed by workers is to act sincerely and with goodwill. E) Mrs. Sloe could successfully sue Trevor for battery. 24) The plaintiff, M, quit her job because her employee, Mr. C, made unwelcome sexual advances and her career was not advanced as promised. Subsequently, Mr. C, on his own initiative, called her past employer, her present employer, and an instructor at vocational school and said that M was a thief, a false statement. As a result of that call, M lost her new job. Which of the following is true? A) Mr. C could successfully use the defence of fair comment. B) Mr. C could successfully use the defence of qualified privilege. C) Mr. C's statement is defamatory by innuendo. D) Technically, M could sue Mr. C for libel. E) Mr. C could be sued successfully for defamation even though the defamatory words were not written down.

24) ______

25) ______

26) A person could be liable for the tort of trespass A) if he delivered a package to the owner at poolside as instructed by the owner. B) if, in the middle of the night, he was carried onto the neighbour's property and thrown in their pool. C) if he lost control of his bike and accidentally went onto his neighbour's property and into their pool. D) if he swam in the pool with the owners' permission. E) if he stood in the lane and threw a tire in the pool.

26) ______

27) After the McLeans filled their swimming pool, recently built in their backyard, swarms of bees came regularly for water. The bees stung everyone including the dog and made it impossible for the McLeans to enjoy the use of their pool. Unknown to the McLeans when they had the pool installed, their neighbour Springborn had bee hives on his property. On these facts, which of the following is true? A) The McLeans have an action against Springborn for nuisance and also under the Occupiers' Liability Act. B) The McLeans have an action against Springborn for nuisance. C) Springborn would successfully use the defence of absolute privilege. D) The McLeans have an action against Springborn for nonfeasance. E) The McLeans have an action against Springborn under the Occupiers' Liability Act.

27) ______

28) Rob bet Joe $300 that the Chicago Bears would beat the San Francisco 49ers. The day after the Bears lost, Joe went to Rob's office. He created quite a scene. He got the $300 and yelled nasty remarks about the Bears team and coach. Rob was furious. He lied to the onlookers by saying that Joe passed himself off as an accountant but that he never passed the required exams and had forged the documents. Joe lost several clients because of Rob's false statements. On these facts, which of the following is true? A) Rob could successfully sue Joe for defamation because of the statements Joe made about the Bears team and coach. B) Rob could sue Joe for nuisance. C) If Joe sues Rob for defamation, Rob would be able to use successfully the defence of qualified privilege. D) Rob's statements about Joe were defamation by innuendo. E) Joe could successfully sue Rob for defamation.

28) ______

29) You and your friend recently bought a duplex. You rent out the downstairs and live in the

ups tairs

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25) Which of the following actions would not result in a successful tort action by the person or persons wronged? Assume that all the persons involved learn these facts. A) When Jed accidentally dropped a board and broke Al's glasses, Al threw a cup at Jed, but Jed saw it coming and moved away in time to avoid being hit. B) Ed became sick from contaminated juice bought by his mother. C) An accountant made an error in financial statements that he knew would be used by a potential investor, Mr. Lam. Lam, relying on the erroneous statements, invested $10,000 and lost it all. D) Mr. Meen wrote a letter to the editor of the Vancouver Sun in which he falsely alleged that the mayor of Vancouver took a bribe. The editor and ten others on staff read it but decided not to print it. E) A store detective stopped Joan after she left the shop because he saw her leave with candy she didn't pay for. She had slipped the unpaid-for candy into her pocket. He detained her for 20 minutes until the police came.

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suite. As 29) the owner and occupier, you have acquired certain rights and responsi bilities. Which of the followin g statemen ts about the law relating to land is false? A) The use of your property is partly governed by the Occupiers' Liability Act. B) If you bring something onto your property that is inherently dangerous and it escapes causing damage to others, you will be liable even if you were very careful and did not intend to harm anyone. C) You could sue for the tort of private nuisance if someone used his property in such a way that it interfered with your use and enjoyment of your property. D) Your tenants have a duty to take reasonable steps to make sure that any person is reasonably safe when in their suite. E) If there were an accident out front and a car was knocked onto your yard, you could sue the driver in that car for trespass.

30) ______

31) After the Leans began to use their new swimming pool, they found that they could not use it because of the smell coming from their neighbour's chicken coop. They knew of the chickens when they moved in but had no idea that the smell could be so overpowering, especially during the summer. Which of the following is true with regard to the legal position of the parties? A) There is nothing the Leans can do. B) The Leans would have to sue in nuisance if they hope to succeed. C) The Leans could sue for assault. D) The Leans can sue for trespass. E) This is an example of strict liability and there is nothing the neighbour can do to avoid liability in these circumstances.

31) ______

32) Which of the following actions would not result in a successful tort action by the person suing?

Ass ume

30) Which of the following actions constitutes an assault? A) A rude gesture from another motorist B) A car accident where you are hit by an impaired driver C) A bystander struck by a ball during a baseball game D) Bumping into another in a crowded hallway E) Pointing an unloaded gun at another who does not know whether or not the gun is loaded

that all 32) the persons involved learn these facts. A) A waiter, then the police, detained a restaurant patron because he did not want to pay for wine that was brought to the table but was cloudy and undrinkable. The patron sued for false imprisonment. B) An accountant made an error in financial statements that he knew would be given by his client to a potential investor, Mr. Lam. The investor, relying on the erroneous statements, invested $20,000 and lost it all. Mr. Lam sued the accountant. C) When Jed accidentally dropped a board and broke Al's toe, Al threw a rock at Jed, but Jed saw it coming and moved in time to avoid being hit. Al sued; Jed counterclaimed. D) Jayne was doing aerobic exercises. She looked up and saw the gas meter reader in the backyard. She sued him for trespass. E) Mr. Meen wrote a letter to the editor of the Vancouver Sun in which he falsely stated that the mayor took a bribe. The editor and ten others on staff read it but decided not to print it. The mayor sued Mr. Meen.

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33) Read the following and indicate the false statement. 33) ______ A) If the odour from a neighbour's smokehouse made it impossible for you to use your pool, the proper action is nuisance. B) If a person suffers a loss because a salesman knowingly made a false statement that he knew the other would rely on to his detriment, the cause of action could be deceit. C) If a person were given a blood transfusion after making it clear that she didn't want one, the cause of action would be defamation. D) If falling over boxes wrongfully left in his garage by a delivery company injured a person, the cause of action could be trespass. E) If a person suffers damage because of wiring improperly installed by John for his employer, World Wires Ltd., the cause of action against John could be negligence, and World Wires Ltd. could be sued as well. 34) ______

35) In the case of Bahner v. Marwest Hotel Co., the Court held that Mr. Bahner A) had been falsely imprisoned, but only by the police who arrested him in the absence of a criminal act. B) had been falsely imprisoned, but only by the restaurant security guard who detained him without authority. C) had been falsely imprisoned twice, once at the restaurant security guard and once by the police. D) had not been imprisoned at all. E) had been imprisoned, but only in a lawful manner.

35) ______

34) In the Alberta Court of Queen's Bench decision in Costello v. Calgary (City), the Court held that a trespass occurs if A) an authority enters onto land pursuant to a court order. B) an authority takes possession of land without exercising good intentions. C) an authority takes possession of land pursuant to an expropriation that is subsequently determined to be invalid. D) an authority enters onto land pursuant to an intra vires legislative enactment. E) an authority enters onto land with the consent of the owner.

36) ______

37) In the case of WeGo Kayaking Ltd. v. Sewid. A) Sevid successfully argued the defence of qualified privilege. B) Sevid successfully argued the defence of fair comment. C) there was no defamation because the people alleging defamation were dishonest. D) malice defeated the defences of qualified privilege and fair comment. E) there was no defamation because innuendo cannot be defamatory.

37) ______

38) Internet defamation is addressed in the case of Crookes v. Wikimedia Foundation Ltd. According to this case, the mere creation of a hyperlink in a website A) can result in the Internet Service Provider being held liable for defamatory statements. B) can be defamatory because the hyperlink is technically published. C) can be defamatory because the hyperlink is generally believed. D) does not lead to a presumption that persons reading the content of the website will access the hyperlink to access defamatory words E) can be defamatory because the hyperlink is always true.

38) ______

39) Businesses that deal directly with the public, especially in service industries, may find their employees becoming involved in altercations with customers in the course of their work. Such altercations A) can lead to employees being held liable, but will not impact the business itself. B) should be ignored so as to avoid attracting liability. C) are extremely rare and so are not worthy of concern. D) may be inconvenient, but do not expose the business to liability. E) can result in actions against the business on the basis of vicarious liability.

39) ______

40) Which of the following statements regarding inducing breach of contract is false? A) Inducing breach of contract requires establishing that there was a contract that was breached and that the person being sued knew about the contract and intentionally induced the breach. B) Inducing breach of contract can be committed when a supplier is persuaded to abandon one customer in favour of another. C) Inducing breach of contract occurs when one party has contractually agreed to perform certain obligations, and then fails to perform. D) Inducing breach of contract can be committed when a customer is persuaded to breach its contract with a competing supplier. E) Inducing breach of contract usually involves an employer persuading an employee of another business to leave that employment and work for him or her.

40) ______

41) According to the case of Ahmad v. Ontario Hydro, when a company puts extensive pressure on another to breach its employment relationship with a long-term employee, damages may be

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36) In Carley v. Willow Park Golf Course Ltd., what did the Court find? A) The presence of a driving range could not be considered a nuisance, only a minor annoyance, for which there is no remedy. B) The presence of a driving range constituted a private nuisance and issued an injunction prohibiting golf balls going onto their property. C) The presence of a driving range could not be considered in the context of tort law, as the owners did not intend to cause harm. D) The presence of a driving range constituted a private nuisance, but there is no remedy for a mere nuisance at law. E) The presence of a driving range constituted negligence, as driving ranges are unreasonable.

41)

______ A) deceit. B) inducing breach of contract. C) conversion. D) passing-off. E) injurious falsehood. 42) ______

43) All of the following are examples of unfair competition except A) one business seeking confidential information from the employees of another. B) one restaurant sending employees to the door of another to redirect customers to the first. C) one business intentionally lowering its prices to encourage customers to purchase its products. D) intimidation to discourage someone from opening a business in a particular area. E) intimidation to discourage someone from selling a product at a lower price.

43) ______

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42) Interference with economic relations is actionable even where no breach of contract has taken place, but A) no damages can be awarded in such an action. B) the conduct complained of must have been unintentional, otherwise the action will not succeed. C) the conduct complained of must not have result in actual harm, otherwise the action will not succeed. D) there must be some instance of negligence associated with the complaint, such as a product liability claim. E) there must be some other unlawful conduct associated with the complaint, such as bribery or defamation.

44) ______

45) Azar had been working for the Burger Baron for a number of years, most recently under Lai, the latest in a series of managers. Azar became ill and had to take repeated sick days, both to rest and to attend appointments with various specialists. It became impossible for Azar to continue working there, and Lai gave her notice of termination. While Azar was working out the last days of her notice period, Lai continued to harass her over and over again for her previous absences. Lai could face an action for A) conversion. B) conspiracy to injure. C) malicious prosecution. D) negligence. E) intentional infliction of mental suffering.

45) ______

46) The tort of deceit involves A) the fraudulent and intentional misleading of another person, causing damage. B) use of the criminal justice to improperly attack a competitor. C) misleading the public as to the origin of a particular good. D) the intentional misappropriation of the property of another.

46) ______

44) Where it forces a businessperson to do something that harms the business, even the threat of violence or some other illegal activity can constitute a tort. This tort is known as A) malicious prosecution. B) intimidation. C) deceit. D) injurious falsehood. E) conversion.

E) a negligent misstatement by a professional. 47) ______

48) Malicious prosecution occurs when a person A) maliciously sues a person who has acted carelessly and caused damage. B) threatens or harasses a someone vulnerable. C) takes advantage of a trust relationship. D) initiates a criminal or quasi-criminal prosecution with malice and without reasonable grounds. E) forces a businessperson do to something to harm their business.

48) ______

49) Intentionally appropriating the goods of another can give rise to an action in A) conversion. B) trade slander. C) passing-off. D) deceit. E) product defamation.

49) ______

50) Conversion takes place in all of the following instances except A) a person sells or wrongfully disposes of goods belonging to someone else. B) a person intentionally takes the goods of another person for her own purposes. C) a person acquires possession of goods through deceit and the goods are destroyed. D) a person comes into possession of goods lawfully, but refuses to return them after a proper request. E) a person steals goods belonging to another.

50) ______

51) Which of the following statements is correct? A) Detinue occurs when some attacks the reputation of another's product or business. B) Conversion involves someone inadvertently appropriating the goods of another. C) Any direct intentional interference causing damage to the goods of another is a trespass to chattels. D) Wrongful interference with goods is not actionable as a business tort. E) Product defamation involves the wrongful possession of someone else's goods.

51) ______

52) Marco is a clothing designer whose business is failing. He believes that he will be able to sell more of his clothing if he puts a Calvin Klein label on them. Why is this not a good idea? A) Marco could face an action in injurious falsehood. B) Marco could be sued for a negligent misstatement. C) Marco could face an action in conversion. D) Marco could be sued for trade slander. E) Marco could be sued for passing-off.

52) ______

53) Zoe sets up a private meeting with her lawyer, Will, to get his advice on how to protect a secret recipe she has devised. Later that day, Will gives a copy of the recipe to his wife, to use in her restaurant. Which of the following is true?

53) ______

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47) Where two or more persons act together using unlawful means to hurt the business interests of another, this is referred to as the tort of A) intentional infliction of mental suffering. B) malicious prosecution. C) conversion. D) conspiracy to injure. E) deceit.

A) Because a recipe cannot constitute confidential information, any action Zoe might bring would likely fail. B) Zoe cannot sue her own lawyer. C) Because Will only provided the information to his wife, the exchange is protected by spousal privilege. D) Because Will did not misuse the information himself, no action will result. E) Because Will has misused information of a confidential nature that was given to him in confidence, Zoe can sue for a breach of confidence. 54) The Alberta Court of Appeal decision in Walter Stewart Realty Ltd. v. Traber involves a breach of confidentiality. What does this case illustrate? A) Using information obtained from someone else will always result in a legal action, regardless of the type of information or the manner in which the information was obtained. B) A breach of confidence requires that confidential information be conveyed to someone else; using it inappropriately for one's own purpose is not sufficient. C) Using confidential information is unethical, but cannot be the basis for a civil action. D) Using confidential information is a good idea, as it can provide significant business and legal advantages. E) A breach of confidence not only involves conveying that confidential information to someone else but can also include using it inappropriately for one's own purpose.

54) ______

55) ______

56) In the case of Procor Ltd. v. U.S.W.A., what did the Court find? A) While making unfounded accusations is unethical, it does not constitute tortious conduct. B) The fact that the officials were wilfully blind to the truth was enough to establish malice. C) A finding of malice could not be supported because it always requires an outright lie. D) A proven false statement is sufficient to support a claim of injurious falsehood, as long as some damage has resulted. E) While making unfounded accusations is poor business practice, only nominal damages can be awarded for such conduct.

56) ______

57) In Braintech v. Kostiuk, the Court confirmed that in Internet disputes the action should be brought in a jurisdiction having A) a technology-friendly court system. B) no limitations legislation. C) stringent online security laws. D) a civil or central code. E) a real and substantial connection to the case.

57) ______

58) Invasion of a person's property may take the form of all of the following except A) a physical intrusion. B) unauthorized access to information.

58) ______

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55) Which of the following is true in respect of privacy law in Canada? A) Privacy protection is found primarily in the common law. B) The Personal Information Protection and Electronic Documents Act is designed primarily to regulate the government in its collection, use and disclosure of personal information. C) Organizations in the private sector are subject to legislated responsibilities with respect to the personal information they collect. D) Privacy laws are generally considered unnecessary because voluntary privacy protection has been so successful. E) The power to enact privacy legislation has been exclusively granted to the federal government.

C) surveillance. D) misuse of an image or name. E) detinue. 59) ______

60) The federal legislation that regulates the collection and use of personal information in the private sector is known as the A) Act for the Protection of Private Information. B) Privacy Act. C) Personal Information Protection and Electronic Documents Act. D) Code of Personal Information. E) Private Sector Privacy Act.

60) ______

61) The federal government's Personal Information Protection and Electronic Documents Act A) does not apply to personal information collected over the Internet. B) create a general right to sue in tort for a violation of its provisions. C) applies in all provinces except where legislation that provides for equivalent protection has been passed by the province. D) gives people right of access to personal information held by the government and government agencies. E) provides suggested guidelines, but there is no sanction for violations.

61) ______

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59) Which of the following statements regarding privacy law is false? A) In common law, there is no tort of invasion of privacy. B) Several provinces have passed legislation creating a tort of invasion of privacy. C) Self-regulation has proven most effective in the area of privacy law. D) Legislation has been enacted at both the federal and provincial levels to control the collection, use, and distribution of personal information. E) E-commerce has resulted in increased abuse of personal information.

T or F

63) A civil court can assess only compensation and not punitive damages.

T or F

64) An act that breaches a contract is inherently wrong.

T or F

65) The primary purpose of tort law is to punish wrongdoers.

T or F

66) Once acquitted of a crime, a person cannot be sued in tort.

T or F

67) When an employee commits a tort in the process of his employment, the principle of vicarious liability states that the employer is liable, not the employee.

T or F

68) In tort, damages are a remedy attempt to put the victim in the position he would have been in had the tort never taken place.

T or F

69) A person can be assaulted even when there is no physical contact.

T or F

70) Some people have implied permission to be on your land.

T or F

71) You cannot trespass in a public mall.

T or F

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 62) It is possible for wrongful conduct to be both a tort and a crime.

T or F

73) A published false statement that injures the reputation of the person it concerns is called defamation.

T or F

74) A person can be sued for trespass when they accidentally crash onto another person's property after losing control of their car.

T or F

75) When a person throws a hammer at another and that person ducks, this is an example of an assault.

T or F

76) A person will not succeed in an action for defamation unless the falsehood has been told to some third party.

T or F

77) A person could commit a trespass even without coming onto your land.

T or F

78) Health information is not specifically protected by legislation in any province.

T or F

79) The federal government's Personal Information and Electronic Documents Act applies in all provinces except where legislation that provides for equivalent protection has been passed by the province.

T or F

80) Employee surveillance may violate privacy rights and, depending on how the information is obtained and used, may also violate human rights legislation.

T or F

81) "Cookies" are embedded devices that track a user's Internet activities and allow others to read private information about their online browsing.

T or F

82) Because the Internet is uncontrolled, tort law does not apply to online activities.

T or F

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72) A continuing trespass can be remedied by damages.

T or F

84) Interference with economic relations can be actionable even if no breach of contract has taken place.

T or F

85) Injurious falsehood is often called trade slander or product defamation.

T or F

86) If Bree lends Gabby a blender, but then Gabby refuses to return it, Bree could bring an action in detinue for compensation.

T or F

87) The tort of spoiliation grants remedy where evidence has been destroyed.

T or F

88) A telephone used to harass people on the other side of the city, interfering with the enjoyment of their property can be seen as evidence of trespass to land.

T or F

83) Malicious prosecution requires a criminal conviction to have taken place.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 89) Explain the principle of vicarious liability and give an example. 89) _____________ 90) What is a tort?

90) _____________

91) Distinguish a crime from a tort.

91) _____________

92) Distinguish between a tort and a breach of contract.

92) _____________

93) The term that is used in tort law to describe a situation where an employer is held responsible for the conduct of the employee is ________.

93) _____________

94) Explain what is meant by vicarious liability in the employment context.

94) _____________

95) Explain any limitation on the principle of vicarious liability in the employment context.

95) _____________

96) Explain what is meant by punitive damages and when such remedies would be available in a tort action.

96) _____________

97) Distinguish between assault and battery.

97) _____________

98) "In order for a person to successfully sue for an assault and battery, damage or injury must be demonstrated." Comment on the accuracy of that statement.

98) _____________

99) "The person who committed the assault and battery must have intended to hurt the other person." Comment on the accuracy of that statement.

99) _____________

100) When a doctor treats or operates on a patient, explain why that patient cannot sue for battery.

100) ____________

101) Explain how your right to defend yourself is limited.

101) ____________

102) ____________

103) Joe wandered onto Sam's land, not realizing that he crossed the property line. Sam found him there and sued him for trespassing. Explain the likely outcome.

103) ____________

104) Joe was chased onto Sam's land by a group of ruffians and hid behind Sam's rose bush to escape them, causing some damages. Sam sued for trespass; will he win?

104) ____________

105) Joe is struck by a car driven by a careless driver and thrown 30 feet unto Sam's property, causing damages to his prize rose bush. Is Joe responsible?

105) ____________

106) Explain what is meant by a continuing trespass.

106) ____________

107) What elements must be established in order to sue another for false imprisonment?

107) ____________

108) Regarding the tort of false imprisonment, will anything short of complete restraint amount to imprisonment?

108) ____________

109) Joe went to Sam the barber for a haircut. When Sam finished, Joe looked in the mirror and was horrified; he refused to pay and got up to leave. Sam refused to let him go, this being the third customer that day who tried to get out without paying. He insisted that Joe stay while he phoned the police. Joe did so. When the police arrived and Sam explained the situation to them, they told him that they wouldn't arrest Joe, and Sam would have to pursue some other remedies. Joe later sued Sam for false imprisonment. Explain the likely outcome.

109) ____________

110) Under what circumstances would one sue for nuisance?

110) ____________

111) Define defamation.

111) ____________

112) Distinguish between libel and slander.

112) ____________

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102) In order to sue for trespass to land, what two elements must be established?

113) ____________

114) Explain what is meant by innuendo.

114) ____________

115) Words that are basically innocent such as "Mary had a baby yesterday" can become defamatory when combined with information that the hearer has, such as the fact that Mary is a Catholic nun. This hidden meaning is referred to as ________.

115) ____________

116) Joe is a publisher for a newspaper and relied on Harry's account when he published an article stating that a councillor, Sam, had been caught making indecent telephone calls. It turned out later that Joe had misunderstood, and it was someone else that had made the calls. Sam sued for defamation. Will he succeed?

116) ____________

117) Historically, libel was seen as more deliberate and more permanent and therefore more harmful. Today, means of mass communication give slander a potentially huge audience, so the rationale for distinguishing between them is breaking down. Explain how the law is changing in light of this.

117) ____________

118) Explain in what circumstances the defence of absolute privileges is available in defamation action.

118) ____________

119) Explain the difference between qualified and absolute privilege.

119) ____________

120) Explain under what circumstances qualified privileges are available.

120) ____________

121) Explain under what circumstances the defence of qualified privileges can be lost.

121) ____________

122) Explain where the defence of fair comment would be available.

122) ____________

123) Explain under what circumstances the defence of fair comment can be lost.

123) ____________

124) Following an account broadcast on the TV station the night before about a particular city councillor having been pulled over for drunk driving, Joe, a political cartoonist, drew a political cartoon of the councillor, obviously drunk and with his clothes in disarray, having difficulty walking down a straight line on the road with a sober police officer looking on. This was published the next day in the paper for which Joe works. The city councillor involved had disagreements with Joe in the past and intensely disliked him. It turned out that the story published on TV was an error, but the city councillor chose not to sue the TV reporter and the station; rather he sued Joe for defamation. What would Joe's best defence be? Indicate the likely outcome.

124) ____________

125) When someone intentionally scratches your car, for what can you can sue?

125) ____________

126) When you loan your camera to someone, and he sells it to a third party, for what can you sue the person to whom you loaned it?

126) ____________

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113) Joe was jogging along a deserted jogging trail beside a river when he met Sam coming the other way. Joe stopped, and in conversation with Sam, accused him of stealing and shoplifting from the store. Sam was appalled, got extremely irate, and struck Joe in the nose. In the resulting fight, Joe was injured, suffering a broken nose and significant bruises. Finally, after some time, another jogger came along on the trail and broke up the fight. Joe sued Sam for battery and Sam sued Joe for defamation. Explain the likely outcome.

127) ____________

128) When someone spreads false information about another product, he can be sued for what?

128) ____________

129) Explain the requirements under the Personal Information Protection and Electronic Documents Act.

129) ____________

130) Name three torts that deal with the wrongful interference with goods.

130) ____________

131) What is conversion?

131) ____________

132) What is trespass to chattels?

132) ____________

133) What is detinue?

133) ____________

134) Outline the elements required for a breach of confidence.

134) ____________

135) When is a passing-off action appropriate?

135) ____________

136) What is the tort that arises when a person attacks the reputation of another's product or business by spreading a false rumour?

136) ____________

137) In cases involving the Internet, in which multiple jurisdictions might be involved, where should the action be brought?

137) ____________

138) Name two examples of federal privacy legislation.

138) ____________

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127) If someone sells imitation Seiko watches without permission, for what can she be sued by Seiko ?

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 139) Discuss the various kinds of remedies that are available in tort actions. In your answer, discuss any limitations on the availability of those remedies.

140) Discuss the position of a doctor when faced with a patient refusing life-saving medical treatment. 141) Discuss the position of a political cartoonist in terms of defamation law. 142) Businesses that deal directly with the public may find their employees becoming involved in altercations with customers. Explain, providing examples, how these altercations may lead to actions against the business. 143) Discuss privacy concerns and legal protection against invasion of privacy today. 144) Discuss the principles underlying the Personal Information Protection and Electronic Documents Act and its application. 145) Discuss the particular legal issues that can arise through the use of the Internet.

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1) E 2) A 3) B 4) E 5) C 6) C 7) B 8) C 9) E 10) D 11) C 12) A 13) D 14) D 15) D 16) B 17) D 18) D 19) A 20) C 21) B 22) C 23) C 24) E 25) E 26) E 27) B 28) E 29) E 30) E 31) B 32) D 33) C 34) C 35) C 36) B 37) D 38) D 39) E 40) C 41) B 42) E 43) C 44) B 45) E 46) A 47) D 48) D 49) A 50) D 51) C

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52) E 53) E 54) E 55) C 56) B 57) E 58) E 59) C 60) C 61) C 62) TRUE 63) FALSE 64) FALSE 65) FALSE 66) FALSE 67) FALSE 68) TRUE 69) TRUE 70) TRUE 71) FALSE 72) TRUE 73) TRUE 74) FALSE 75) TRUE 76) TRUE 77) TRUE 78) FALSE 79) TRUE 80) TRUE 81) TRUE 82) FALSE 83) FALSE 84) TRUE 85) TRUE 86) TRUE 87) TRUE 88) FALSE 89) Vicarious liability is where one person is responsible for the wrongful acts of another. For example, an employer is vicariously liable for the wrongful acts committed by an employee during the course of the employment. 90) Civil wrong 91) They both involve conduct that is inherently wrong or unacceptable. However, criminal process involves prosecution by the state and punishment of the wrongdoer, whereas a tort involves a process whereby the injured party sues the other and receives compensation. The standard of proof is also different. 92) A tort involves conduct that is inherently wrong, whereas in breach of contract, the conduct is wrongful only because it violates the promise set out in the contract. 93) Vicarious liability 94) An employer can be held responsible for the acts of an employee committed during the course of the employment. This is referred to as vicarious liability. 95) An employer is responsible only for those acts of an employee committed during the course of the employment. 96) Punitive damages are monetary compensation that the defendant must pay to the plaintiff, intended to punish the wrongdoer rather then compensate the victim. They are available in rare circumstances, such as when dealing with serious intentional torts like a sadistic battery or false imprisonment.

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97) A battery involves actual physical contact, whereas an assault involves situations where the physical act complained of creates a fear or apprehension in the mind of the victim of imminent physical contact. Note that the answer "attempted battery" would be only partially right. 98) It is not necessary for injury or damage to be present in an action of assault and battery. 99) It is only necessary that the act be wilful or intended, not the results. The act may be motivated by the best of intentions, but if it interferes with the other person, it is still actionable. 100) The patient has consented to the procedure; therefore, it is not actionable. 101) You are permitted to use only reasonable force to defend yourself. 102) First, intrusion onto somebody's land either personally or with some object, and second, that it was done without authority. 103) It is no excuse to say that you didn't know that you were on the other person's land, as long as you intended to be where you were; it is trespass if you were on another's land without authority. 104) Yes he will; this was a voluntary act, and Joe is responsible for the damages he has caused. 105) No, Joe is not a trespasser since the act was not voluntary. 106) Some building or other structure permanently encroaching unto another's property would amount to a continuing trespass. 107) 1. There was an imprisonment. 2. It was done without authority. 108) Yes, when one person surrenders to the control or authority of another voluntarily, thinking that they have no choice, an imprisonment has taken place even though there is no physical restraint. 109) Joe would win. The time he was held by Sam, waiting for the police, was an imprisonment without authority. This was a civil dispute, and unless it can be shown that Joe never intended to pay for the haircut, Sam had no right to arrest or hold him but was limited to an action of breach of contract. 110) This is a tort action available where property adjoining or nearby is used in such a way that it interferes with someone's enjoyment of their own property. For example, where noise, noxious fumes, water, toxic substances, etc., escape, making it difficult to enjoy your property, you would sue that adjoining property owner for private nuisance. 111) Defamation is a false statement about someone to his detriment that is shared with a third party. 112) Libel is written defamation (in some jurisdictions, libel includes any form of broadcasted defamation), and slander is spoken defamation. 113) Joe would win his battery action since his words of provocation would not justify Sam's violent response. Joe was defending himself; Sam was the aggressor. Sam would be liable for the damages Joe suffered, although the provoking words that Joe spoke would be taken into consideration in determining the damages. In Sam's defamation action against Joe, he would lose, since the words were not published to anyone else. No third party heard; the other jogger coming along subsequently to break up the fight did not hear the statement. 114) An innuendo involves a hidden meaning that makes a basically innocent statement defamatory because of this hidden meaning. 115) Innuendo 116) Yes, mistake is no defence to a defamation action. 117) Statutory changes in some provinces have eliminated this distinction altogether. In other provinces, defamation that has been broadcast is considered to be libel, not slander. 118) Absolute privilege is available in relation to court proceedings, testimony at a trial or in court documents, parliamentary debate at the provincial or federal level, and in some limited circumstances, communication between high government officials. 119) Where absolute privilege is involved, it doesn't matter what the motivation, whether the person knew what he was saying was false, or how damaging the statement is. It is absolutely privileged and no defamation action can be taken. With qualified privilege, however, that privilege can be lost if it can be demonstrated that there was an ulterior motive for making the statement, that the statement was published too broadly, or that the person who made it did not believe in what they were saying. 120) When defamatory communications are made pursuant to an obligation or duty such as employment (e.g., a job reference) or public position, it can be protected by qualified privileges. 121) Where it can be shown that the person making the statement did not believe it to be true or was motivated by a

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mali cious purpose, or where it is communicated to an audience wider than the duty requires. 122) Where someone is a public figure or some event becomes a matter of public interest, such as a play, a movie, etc., people are entitled to have opinions about that public matter and express them. It must be clear that the comment is the expression of an opinion based on a fact that is available to the public. 123) If the statement is motivated by malicious purposes, if the person who states the opinion doesn't honestly believe it, if the stated facts upon which stated opinion is based are incorrect, or if it is more a statement of fact and incorrect than it is an opinion. 124) Joe's best defence would be fair comment here. Unfortunately for Joe, the fact upon which the comment or opinion is made must be correct; here it was not, and so he would be liable for defamation. It doesn't matter that the city councillor chose to sue Joe instead of the TV station; he has that right. It would be no defence for Joe that the city councillor was motivated by malice against him, because the councillor was defamed. 125) Trespass to chattels 126) Conversion 127) Passing off 128) Injurious falsehood (trade slander or product defamation) 129) This federal statute regulates the collection, use and disclosure of personal information, requiring that consent be obtained for these purposes. Organizations must limit use, disclosure and retention of personal information, ensure the accuracy of such information, protect it with security safeguards, and be open about their relevant policies and practices. Rights regarding access and complaints are also included. 130) Conversion, trespass to chattels, detinue 131) Conversion involves one person intentionally appropriating the goods of another for his or her own purposes. 132) Any direct intentional interference causing damage to the goods of another. 133) Detinue involves the wrongful possession of someone else's goods in cases where the person wrongfully retaining the goods does so subsequent to a legal possession. 134) A breach of confidence takes place where (1) the information is of a confidential nature, (2) is given in confidence, and (3) is misused by the person to whom it was conveyed. 135) When a business or product is presented to the public in such a way as to lead the public to believe that the product is being provided by another. 136) Injurious falsehood (also trade slander or product defamation) 137) In a jurisdiction having a real and substantial connection to the case. 138) Privacy Act, Personal Information Protection and Electronic Documents Act 139) The primary remedy is damages or monetary compensation, but students should point out that these damages are to put the person in the position they would have been in had the tort not been committed (looking back). Good students might point out how damages in contract law look forward and try to put the person in the position he would have been in had the contract been properly performed. Also, it should be pointed out that, with some torts, punitive damages may be available. An or specific performance may be available where damages would not provide an appropriate remedy. Students should also discuss the effect of contributory negligence that will reduce the damages payable on the basis of apportioned responsibility for the loss. Voluntary assumption of risk should also be discussed. Here they should indicate that the defendant must demonstrate that the plaintiff voluntarily assumed the legal risk, not just the physical risk, and that in the few cases where this is present, this will be a complete bar to recovery. 140) This is the problem of consent and a doctor's dilemma about saving a life in face of instructions otherwise. Students have difficulty with this problem, but it is a good question because it forces them to look at both sides and clearly understand that interference with another person's body without their consent is a battery. This problem often arises with blood transfusions and people who are Jehovah witnesses (Malette v. Shulman), but there are many other examples of situations where people choose to refuse medical treatment for religious and other reasons. Good students will point out that an adult has control over what happens to his or her body, but the same does not apply to children, who are considered too young to be capable of making such decisions. In these situations, if the court is not satisfied that an adult parent of guardian is acting in a child's best interests, the court can make the child a ward of the court and arrange for the appropriate medical treatment. 141) This requires an understanding of the law of defamation, in the form of libel, and the defence of fair comment. Students should explain what defamation is, distinguish between libel and slander, indicate what an innuendo is,

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and cal cartoon that normally features exaggeration could be considered defamatory. They should explain how, when show people run for public office, they place themselves before the public and have to face legitimate criticism; this is fair how comment. Students should then explain the rules associated with fair comment. Good students would also a comment on the statutory modification to the rules when newspapers are involved and the effect of a published politi apology. 142) Actions may result on the basis of vicarious liability for assault and battery, negligence, trespass, and even false imprisonment. When customers enter the business premises, occupiers' liability comes into play. Students should provide examples. Possible examples include the arrest of shoplifters, the issue of bouncers in night clubs, dealing with problem customers who have been asked to leave, etc. It is important that students raise the concept of vicarious liability, noting in particular that employers can be held liable for tortious acts of employees committed in the course of their employment. 143) Technological advances facilitate the collection, use and disclosure of personal information, which has led to increased concerns regarding issues of privacy. Because there is no clearly recognized tort of invasion of privacy at common law, privacy protection is to be found in legislation. Good students will discuss examples of provincial and federal privacy statutes that protect personal information from abuses in both the public and private sectors. Federal examples include the Privacy Act and the Personal Information Protection and Electronic Documents Act. Provincial examples will vary province to province. 144) This legislation governs the collection, use and disclosure of personal information and applies to all organizations, including private corporations. The legislation deals with notice requirements, the need for consent, limits on use and disclosure, accuracy of information, security safeguards, access to information, as well as complaints and violations. The central core of the legislation is the CSA Model Code for the Protection of Personal Information. This legislation applies in all provinces except where substantially similar legislation has been passed by the provinces. This statute does not create a general right to sue for invasion of privacy in tort. 145) Here, students should discuss the increased opportunity for defamation, injurious falsehood, breach of confidential information, negligent misrepresentation, fraud, and invasion of privacy that can arise when conducting business through the Internet. Good students might explore other issues as well, including the liability of internet service providers, the difficulty in tracing online messages to their source, privacy and security of personal information, and jurisdiction.

Chapter 5

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A seven-year-old boy followed his dog into Mr. Howe's backyard. He fell into a large hole dug 1) _______ by Mr. Howe in preparation for a tree that had been ordered. The boy broke his arm in the fall. At the hospital, the boy was treated by a doctor employed there for four years. The doctor did not set the boy's arm because he made a mistake in reading the x-ray. Because the arm was not treated correctly, it healed improperly. When the boy kept complaining, his mother took him to their family doctor, who discovered the error. The boy had to have his arm rebroken so that it could be set properly. On these facts, which of the following is true? A) The hospital, not the doctor, would be solely liable for any harm suffered due to the negligence. B) The case law that developed over hundreds of years on the duty of care owed by occupiers of land has priority over any subsequent legislation on the point. C) The owner of the land owed no duty of care to the boy because the boy was a trespasser. D) The doctor owed a duty of care to the boy, but he only had to meet the standard of care expected of the average man. E) In an action against the land owner, if the boy were found to be partially at fault for his injury, the court would apportion the award of damages as it apportioned the fault.

2) _______

3) Which of the following is true with respect to the law of tort? A) With assault and battery, a person can successfully sue only if they can prove damages. B) A negligent person causing physical injury to another is responsible to the full extent of the injury suffered even though the injured person suffered more than would reasonably be expected because of a special weakness. C) A customer battered by an employee on the job can sue only the employee, not the employer, because it was the employee who did the wrong. D) For fair comment to be an effective legal defence to a claim of defamation, the person making the comment must have been made in Parliament. or court. E) A person will always succeed with the defence of self-defence even if he used excessive force.

3) _______

4) You and your friend recently bought a duplex. You rent out the downstairs and live in the upstairs suite. As the owner and occupier, you have acquired certain rights and responsibilities. Which of the following statements about the law relating to land is true? A) If you bring something onto your property that is inherently dangerous and it escapes causing damage to others, you will be liable even if you were very careful and did not intend to harm anyone. B) Your tenants have no duty to take reasonable steps to make sure that any person is reasonably safe when in their suite.

4) _______

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2) Which of the following statements with regard to the tort of negligence is true? A) A possible defence to the plaintiff's claim of negligence is that the plaintiff volunteered to take the risk. B) If the court finds contributory negligence, the defendant has no liability at all. C) If a person is injured by a defective product that he himself did not purchase, he cannot sue the manufacturer for negligence. D) The test used to determine whether a duty of care is owed is this: would a below than average person foresee that the plaintiff could be affected by the acts of the defendant? E) If physical injury can be foreseen as the result of a person's actions, the wrongdoer will be not be liable for all the injury suffered.

C) You could sue for the tort of negligence if someone used his property in such a way that it interfered with your use and enjoyment of your property. D) The use of your property is partly governed by the Personal Property Securities Act. E) If there were an accident out front and a car was knocked onto your yard, you could sue the driver in that car for trespass. 5) _______

6) Which of the following statements describes the standard expected of experts? A) Must exercise skill with degree of care expected from a reasonable person in that profession. B) Common practice always sets the appropriate standard. C) Inexperience excuses incompetence. D) The standard of an expert need be perfection. E) Require skills and abilities expected of an average person.

6) _______

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5) Stella bought a cup of coffee at the drive-through window at a coffee-shop. Holding the cup between her knees and attempting to take off the lid to add cream, she spilled the coffee. She suffered burns to her thighs. If this happened in Canada, which of the following is true? A) If the coffee-shop claims there was no way to reasonably foresee that Stella would be harmed, the plaintiff's case would be dismissed even though she suffered burns. B) If Stella sues the coffee-shop, the company's best argument is that it didn't owe her a duty of care. C) If Stella sues the coffee-shop for negligence, she will only have to prove that the company owed her a duty of care. D) To succeed with the defense that she volunteered to take the risk, the coffee-shop would have to prove that she deliberately spilled the coffee. E) If the court finds the plaintiff contributorily negligent causing 60% of her loss, she must suffer that portion of the loss and will not be compensated for it by the defendant.

7) An investor who wanted to build a duplex asked the city zoning officer whether Lot A of Plan 16, 7) _______ known as 1 Street, was zoned for a single-family house or a duplex. The zoning officer was distracted by a news report on the radio and accidentally gave the investor a printed copy of the zoning for the wrong lot that said "duplex," although 1 Street was only zoned for single-family houses. After the investor began building a duplex, the city stopped him for building contrary to the zoning by-laws. He lost $50 000. On these facts (assume all can be proven) which of the following is true? A) The zoning officer can be sued even though the investor did not have a contract with him, i.e., he didn't pay for the information. B) The cause of action most likely to be taken by the investor in this case is "deceit." C) The zoning officer could not be sued successfully since he had no intention of hurting anyone; his error was just an accident. D) A person can only be sued for actions that cause physical injury. E) The employer of the zoning officer could not be sued since the employer did no wrong. 8) Which of the following situations could result in a successful action for negligence? A) A doctor, acting in the best interest of his patient Alex (who had lost blood after a serious cut), gave him a transfusion even though Alex told him explicitly not to do so. B) George deliberately broke an expensive camera when he yanked on a large cable. C) An employee of the bank mistakenly wrote to Sean saying that the bank had approved his loan. Relying on that letter, Sean made contracts he could not honour when the bank refused to forward the money. Sean lost $10 000 because of the bank's carelessness. D) Dr. Jones used the skill of a reasonable doctor in that field, but the patient did not respond to the treatment and lost sight in one eye. She sued the doctor.

8) _______

E) When Eric was setting up the lighting in a backyard rented for a night shoot, he fell into a hole and broke his leg. The owner had previously notified the director that he had been digging a hole to plant an apple tree. 9) _______

10) As a result of careless driving, Mr. Boz accidentally knocked Mr. Alder, a seventy-year-old man, off his bike. Mr. Alder broke his arm and collar bone. Because of a rare disease, there was little likelihood that the breaks would heal properly, if at all. In effect, unlike most who would suffer those breaks, he lost the use of his right arm. Mr. Alder sued Boz for negligence. The court held Boz liable. With regard to the question of the amount of damages to be paid by the defendant, which of the following is correct? A) An amount to cover the extent of injury that would have been suffered by the average man B) An amount to cover the full extent of the injury suffered C) No compensation at all because of Mr. Alder's rare condition D) An amount to cover the extent of injury that would have been suffered by a reasonable man E) An amount to cover the extent of injury that would have been suffered by the average seventy-year-old man, because a reasonable man would not have foreseen the extent of injury actually suffered

10) ______

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9) Two real estate agents, pressed for time, stopped at the bakery for some muffins that would suffice as lunch. John bought the muffins and gave one to Mary. They both began to eat the muffins as they hurried to the car. When Mary looked at the muffin she had just bitten, she saw that the raisins had little worms in them. John's muffins were the samewith little worms. Based on these facts, which of the following possibilities is true? (Read each independently from the others.) A) Since Mary did not buy the muffins, she could not sue in contract, but if she were injured, she could sue in tort. B) If Mary sued the baker of the muffins or the packer of the raisins, she would have to prove only one thing to win her casethat there were worms in the muffin. C) Mary can do nothing as she did not purchase the muffins. D) Mary has a cause of action against the baker of the muffins only if she can prove that the baker used bad raisins on purpose. E) Even if Mary was not injured by eating the worms, she could sue the baker of the muffins for nuisance.

11) The provincial government thought that the only way to make businesses competitive with those from other countries was to make more information available to them about market conditions, currencies, etc., around the world. It began a program of incentives that included a government office that would give people not only the business information but also advice on how the businesses could link up to the government's database that held the updated information. Mr. Su relied on some information given to him by Alex Chec, an employee of the government. The information was wrong due to a mistake made by an operator entering data. It was Mr. Chec's job to cross-check that information before it was released to the public. He forgot to do it. Mr. Su suffered a $10,000 loss because of the error. Which of the following is true? A) If Mr. Su sues the government on the principle of vicarious liability, he cannot also sue the employee, or employees, at fault. B) Mr. Su could not take any action because he had not entered into a contract with the government for this information. C) The operator may be found liable for negligence if Su, the plaintiff, can prove, among other things, that she owed him a duty of care. D) Mr. Su could not take any action because he suffered no physical injury. The case only deals with information.

11) ______

E) The court must find only one party liable and that party must pay for all of the damages. 12) ______

13) In Hall v. Hebert, an individual was severely injured when he allowed his intoxicated friend to drive his car. The Supreme Court of Canada had to deal with whether volenti non fit injuria would apply. What did the Court hold? A) The plaintiff assumed only the physical risk, but this is all that is required for volenti non fit injuria to apply. B) The plaintiff assumed the legal risk, but there was no indication he had assumed the physical risk as well. C) The plaintiff assumed only the legal risk, but this is all that is required for volenti non fit injuria to apply. D) The plaintiff assumed neither the physical risk nor the legal risk in the circumstances. E) The plaintiff assumed the physical risk, but there was no indication he had assumed the legal risk as well.

13) ______

14) Raheel wants to sue a manufacturer who he believes was careless during the manufacturing process. What do the courts do to make this easier on people like Raheel? A) The courts are willing to award legal costs to plaintiffs who bring forward these claims, regardless of their success at trial. B) The courts are willing to construe the evidence in favour of the plaintiff, using the contra proferentum rule. C) The courts are willing to disregard the requirement of a duty of care. D) The courts are willing to waive the usual rules of evidence, in the favour of the plaintiff. E) The courts are willing to imply a breach of duty from the circumstantial evidence of the injury or loss.

14) ______

15) Which of the following situations could not result in a successful action for negligence? A) When Todd was setting up a tent for a backyard wedding, he fell into a hole and broke his leg. The owner forgot to tell the wedding planner that he had been digging a hole to put in a fish pond. B) An employee of the bank mistakenly wrote to Maria saying that the bank had approved her loan. Relying on that letter, Maria made contracts she could not honour when the bank refused to forward the money. Maria lost $10,000 because of the bank's carelessness. C) A real estate agent, fed up with his client, punches him in the nose when he changes his mind about selling his condo. D) A driver, trying to see what a movie crew was doing, accidentally plowed his car into the side of a catering truck. E) Nikki accidentally upset a glass table and broke an expensive vase when she yanked on a large cable without checking what was blocking its path.

15) ______

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12) In Cooper v. Hobart, the issue was whether or not the Registrar of Mortgage Brokers owed a duty of care to investors. The Supreme Court of Canada held that A) there was insufficient proximity to found a duty of care, but that even if there had been a prima facie duty of care, it would have been negated for overriding policy reasons. B) there was insufficient proximity to found a duty of care, but that the Registrar was negligent nonetheless. C) there was insufficient proximity to found a duty of care, but that the investors should be entitled to compensation from the Registrar this notwithstanding. D) the Registrar owed the investors a duty of care, but public policy grounds cannot be argued in a civil matter. E) the Registrar owed the investors a duty of care, and the tremendous cost to the taxpaying public was irrelevant.

16) ______

17) People who see a child drowning have no duty in tort law to resue that child, unless a particular relationship existed. This is an example of: A) Contributory negligence B) Misfeasance C) Strict liability D) Reasonable person test E) Nonfeasance

17) ______

18) Mr. Reasoner was looking out his livingroom window and saw his next-door neighbour, Jon Bon, trying to burn leaves. Bon threw gasoline on the damp leaves, and when he lit a match, there was an explosion that sent flames in every direction. Luckily, no one was around, and the flame that shot onto Reasoner's property caused no harm whatsoever. Reasoner was upset by this carelessness and sued Bon for negligence. Which of the following is the best argument for the defendant Bon? A) He didn't owe the plaintiff a duty of care. B) There were no damages suffered. C) Reasoner had voluntarily assumed the risk. D) He was not below the standard of care. E) Reasoner was contributorily negligent.

18) ______

19) A seventy-year-old woman, using the escalator at the airport, dropped a glove. When she attempted to pick it up, she lost her balance and fell. As a result of the accident, she suffered a fractured vertebra (back-bone). In an action by her against the company that had the responsibility of maintaining the escalator, the defendant company would argue which of the following for its best defence? A) It did not owe her a duty of care. B) Provocation. C) Qualified privilege. D) It was not below the standard of care. E) There were no damages suffered.

19) ______

20) Sarah Iris, a middle-aged woman, was struck down as she crossed the street at 41st and Knight streets, by a car whose driver accidentally went through the red light. She was not killed, but badly injured. Unfortunately, she was suffering from osteoporosis, a condition in which her bones had lost most of their mass and were fragile and brittle. Consequently, the bones in her legs were not expected to heal at all. She lost the use of her legs. She successfully sued the driver for negligence. With regard to the amount of damages to be paid by the defendant, which of the following is correct? A) Special damages only B) An amount to cover the extent of injury that would have been suffered by the average

20) ______

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16) Creative Farming Ltd. manufactures fertilizer from organic matter, a by-product of which is explosive methane gas. During the processing, some of this gas escaped and drifted onto the adjacent property, where it caused an explosion, extensively damaging a building owned by XYZ Co. Creative Farming Ltd. would be liable for the loss under which one of the following principles? A) Strict liability B) Product liability C) Occupiers' Liability Act D) Vicarious liability E) Contributory negligence

middle-aged because a reasonable person would not have foreseen the extent of injury actually suffered woman, C) Maximum $75,000, the legal limit in personal injury cases D) An amount to cover the full extent of the injury suffered E) An amount to cover the extent of injury that would have been suffered by the average person 21) ______

22) Hank rented a new ground-floor condominium for four months before the owner offered to sell it to him. Hank accepted the offer. After Hank became the owner, he built a small patio off the living room. At a house-warming party, one of his friends caught the heel of her shoe between some patio bricks and fell, breaking her arm. It took an abnormally long time to heal because she suffered from an unusual bone disease. Hank has heard the following assertions about liability and asks you about them. Which of the following statements is true? A) The standard of care set by statute is that the occupier has a duty to take reasonable care to see that any guest on the property is reasonably safe. B) If found liable, he would be responsible only for the damages incurred by a normal person who had suffered from such a fall and not for the greater damages actually suffered by this guest. C) Under the governing statute, he owed a duty of care because he now owned the property; he would not have had any duty of care if he had still been renting it. D) He owed no duty of care to persons who came to his place; people must take responsibility to look after themselves. E) The standard of care owed to this visitor is governed by a federal statute and is therefore the same for all provinces.

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22) ______

23) With regard to the law of negligence, which of the following is false? A) To win his action in negligence, a plaintiff must prove, among other things, that the defendant owed the plaintiff a duty of care. B) If you hurt someone and are sued for negligence, a possible defence is that you didn't intend to hurt the person. C) If the court finds that the plaintiff was 40% and the defendant 60% responsible for the loss suffered by the plaintiff, the plaintiff cannot recover the 40% from the defendant.

23) ______

21) Celebrating the end of the fall term, Mr. C had already drunk six beers before he arrived with his friends at the Spoke Tavern, run by the student council. After he had two more beers, he was refused more and told he would be asked to leave if he did have more. He returned to the table and continued to drink. He was ordered to leave. While being escorted out, he resisted but was ejected. He snuck back in, "spoiling for a fight," and was removed once more. He returned, and when pushed through the doorway, he stumbled. His hand went through a small window, and he had to undergo surgery to repair a tendon in his wrist. Mr. C sued the tavern, the bouncer, and the student council (as operators of the tavern) under the Occupiers' Liability Act. Read each of the following separately and indicate which is false. A) The Occupiers' Liability Act in this province provides that an occupier of land owes a duty to take reasonable steps to make sure that any person will be reasonably safe. B) If the court holds that Mr. C was contributorily negligent, Mr. C could get no compensation from the defendants. C) Under our Occupiers' Liability Act, a tenant could be liable, not just the land owner. D) To successfully use the defence of volenti no fit injuria (he volunteered to take the risk), the court must find that the plaintiff knew the risk, volunteered to take the risk, and expressly or impliedly waived his right of action. E) If the court holds that Mr. C voluntarily took the risk, Mr. C will get no award of damages from the defendants.

D) Some occupiers' liability acts set the standard of care owed by the occupier, namely, to take reasonable care that any person is reasonably safe. E) If you are negligent and cause damage to another, a possible defence is that the other voluntarily took the risk. 24) Al bought a case of beer because his friends were coming over to watch the Grey Cup game. During the game, Al opened a beer, poured about a third of it into Bob's glass, and handed the can to Chuck. Bob noticed the strange orange colour of the beer and called everyone's attention to it; unfortunately, Chuck had drunk most of the beer from the can before he heard Bob. There had been a small battery in the can that contaminated the beer. Chuck was seriously injured. On these facts, which of the following is true? A) Chuck could sue Al successfully for negligence, because Al handed the contaminated beer to Chuck. B) Because Chuck did not buy the beer, he could not sue the seller for breach of contract, but he could sue the beer manufacturer in tort. C) Bob could successfully sue the manufacturer for negligence because he need only prove that the manufacturer owed him a duty of care and need not prove damages. D) Bob could sue Al successfully for negligence, because Al poured the contaminated beer in Bob's glass. E) Since Chuck did not buy the beer, he has no cause of action against anyone.

24) ______

26) Which of the following statements with regard to the tort of negligence is false? A) If the court finds contributory negligence, the defendant has no liability at all. B) The test used to determine whether a duty of care is owed is this: would a reasonable person foresee that the plaintiff could be affected by the acts of the defendant? C) If a person is injured by a defective product that he himself did not purchase, he can sue the manufacturer for negligence. D) A possible defence to the plaintiff's claim of negligence is that the plaintiff volunteered to take the risk. E) If physical injury can be foreseen as the result of a person's negligence, the wrongdoer will be liable for all the injury suffered although the person injured was unusually weak and infirm.

26) ______

27) The director of the children's zoo, Mr. Watson, was appalled to see an employee, Jake, throwing a pitchfork like a javelin in an area where there were both animals and children. Luckily, no one was hurt. He yelled to Jake to get busy and feed the birds so that the birds would come closer to the children. Jake opened a new sealed bag of feed and threw some to the birds. It happened that the manufacturer of the feed, ordered by Watson, had accidentally mixed some caustic substance with the feed, so that later in the day Jake's hand began to blister badly. Jake sued Watson for negligence because of the burns he suffered; Watson sued Jake for negligence because of the way

JakeOn use these d facts, the which pitc of the hforfollowi k. ng is

25) ______

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25) Sam and John drank beer and watched the Olympics for hours. When John left, he did not feel impaired, but the alcohol in his system affected his driving. He lost control of the car, which crashed through Mr. Mitsu's fence and into Mr. Mitsu's garage. Mitsu's neighbour, Mr. Watson, called the police. John was charged with driving while impaired and was found guilty in the criminal proceedings. Given these facts, which of the following is true? A) Since no one was physically injured, there could be no civil action. B) Mr. Watson, the neighbour, could sue John for negligence. C) Mr. Mitsu could sue John for negligence. D) Because John was charged with an offence, Mr. Mitsu cannot sue him in a civil action for compensation. One court action is all that is allowed. E) If Mr. Mitsu sued John, he would be entitled only to punitive damages.

true?

27)

___ ___

A) Watson owed Jake a duty of care and Watson will, therefore, be liable for negligence. B) Jake will be found liable for negligence because he was careless with the pitchfork; a reasonable person would not have done what he did. C) Jake could not sue the manufacturer because he did not buy the feed. D) Children attending a zoo are voluntarily assuming any risk. E) The test the court will apply to determine whether or not Jake owed a duty of care is this: would a reasonable person foresee that his acts could affect the children? 28) ______

29) In which of the following would the plaintiff not succeed in an action for negligence? A) An accounting firm made a mistake in the audited financial statements, which caused an investor to lose $20,000. The firm knew the investor was going to rely on the statements to invest. B) May was made sick by drinking a contaminated cola, bottled by Black, bought for her by her friend Fred from Green. C) Nick was a willing passenger when Alex was driving at 140 km/h. He was hurt when the car slid on the wet pavement and crashed. The court found Nick took the physical risk, but never took the legal risk. D) Dr. Zotsky used the skill of a reasonable doctor in that field, but the patient did not respond to the treatment and lost sight in one eye. E) A zoning officer carelessly told Mr. Lee that the lot was zoned "commercial," but it was really zoned "duplex." Lee lost $85,000 by relying on this information.

29) ______

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28) Because of the North American Free Trade Agreement and increasing world competition, a provincial government decided to help businesses by providing more information about market conditions, currencies, etc., around the world. It opened small offices throughout the province that provided business information retrieved from the government's database, which was frequently updated. Mr. Hill relied on some information given to him by Alex Chec, an employee of the government. The information was wrong due to Chec's mistake; it was his job to cross-check that information before it was released to the public, but he forgot to do it. Mr. Hill suffered a $15,000 loss because of the error. Which of the following is true? A) Mr. Hill could not take any action because he suffered no physical injury. The case only deals with information. B) On these facts, Mr. Hill could sue successfully on the principle of strict liability. C) Mr. Hill could not take any action because he had not entered into a contract with the government for this information. D) If Mr. Hill sues the government on the principle of vicarious liability, he cannot also sue the employee at fault. E) To win in an action against the government, Hill must prove that the government owed him a duty of care, fell below the standard of care owed, and thereby caused him a foreseeable loss.

30) In which of the following would the plaintiff not succeed in an action for negligence? 30) ______ A) A real-estate agent accidentally forgot to lock the back door of the house he had just shown. Before the owner returned, someone broke in and stole the TV. The owner sued the agent. B) Pradeep was hurt when a driver of a Gino's pizza truck carelessly ran through a yellow traffic light on his way to deliver a pizza. Pradeep sued the driver and Gino, his employer, although Gino wasn't even in the truck. C) Shunan was made sick by drinking a contaminated cola bought for her by her friend Fred. She sued the manufacturer. D) Dr. Alberts used the skill of a reasonable doctor in that field, but the patient did not

respond to the treatment and lost hearing in one ear. She sued the doctor. E) A real-estate agent failed to check the zoning and assured the purchasers that they could build a duplex on the property. Relying on that statement, they purchased the property. 31) ______

32) Last month, Rueben removed a tall tree in his backyard. He left the large hole because he intended to plant a new tree when the rains began. Sunday, he invited his neighbour, Joe, to come over to watch the Olympics. When Joe came, he cut through the backyard and fell into the hole and broke his arm. Which of the following is true with regard to the liability of an occupier of land? A) There is no duty of care owed to persons who come onto another's property whether invited or not; persons must take responsibility to look after themselves. B) The standard of care imposed on the occupier is set by provincial statute. C) A tenant cannot be liable; only the owner can be sued. D) An occupier owes a duty only to "licencees." E) The standard of care is set by a federal statute and is therefore the same for all the provinces.

32) ______

33) Ms. Lam bought a lot next to a house owned by Mr. Dodson. She asked Mr. Dodson for permission to use his electricity while building a house on her property. He refused. He feared his house was too old to handle the electricity load needed. Later, a carpenter employed by Ms. Lam accidentally broke a window of Mr. Dodson's while moving lumber. Furthermore, the carpenter removed part of Dodson's fence to make room for needed materials, used Dodson' house to support the lumber and drove some nails into Dodson's tree to hold some wires. Dodson complained to Ms. Lam. Irritated by his stand on the electricity and his complaints, Lam began a civil action against him for the tort of defamation, although she had absolutely no grounds for alleging defamation. Which of the following is not supported by the facts given above? A) Dodson has an action against the carpenter for negligence. B) Dodson has an action against Lam on the grounds of strict liability (the rule of Rylands v. Fletcher). C) Dodson could sue Lam for trespass even if there was no damage. D) Dodson has an action against Lam on the principle of vicarious liability. E) Dodson has an action against the carpenter for trespass.

33) ______

34) For his Superbowl Sunday party, Jack bought, among other things, some Francisco mustard. Even before the game began, one of the guests, Fred, made himself a sandwich using that mustard. When Fred saw another guest, Tad, making a sandwich with that mustard, Fred warned him that the sandwich did not taste right and that he (Fred) didn't feel too well. Tad ate everything else on his plate, but left the sandwich. Fred became quite ill and had to go to the hospital. It was determined that the mustard was contaminated when it was made. Jack had bought the mustard just an hour before game time from Big Store, which had bought it from DB

Dist bought ribu it from tors the Ltd.,manufa whi cturer ch New had Foods

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31) Ms. J was severely injured as the result of a fall sustained when a portion of a fence surrounding a private cemetery gave way as she was attempting to climb over to visit a grave site. Which of the following is true with regard to an occupier's liability? A) The standard of care required of the occupier is set by provincial statute. B) The standard of care is set by a federal statute and is therefore the same for all the provinces. C) The duty imposed by the statute is on the landowner not the tenant. D) An occupier owes no duty of care whatsoever to a trespasser. E) There is no duty of care owed to persons who come onto another's property whether invited or not; people must take responsibility to look after themselves.

Ltd. On 34) these facts, which of the followin g is true? A) Tad could successfully sue Jack for negligence. B) Fred could successfully sue the manufacturer New Foods Ltd. for negligence but could not successfully sue Big Store for negligence. C) Since Fred did not buy the mustard himself, he must suffer his loss; i.e., he cannot sue anyone. D) Fred could successfully sue Jack for negligence because Jack bought the mustard. E) Fred could successfully sue the distributor for negligence because the distributor delivered the case of mustard to Big Store.

___ ___

35) ______

36) When Joan visited her friend Clive, who was renting a small farm in Langly, she was injured by some dangerous cleaning solvent that Clive stores in very large quantities for Soapo Ltd. The solvent had leaked from just one of the massive 1000-litre drums. When she had walked toward the side door of the farmhouse, she stepped through a puddle of what turned out to be solvent. The solvent not only ruined her shoes, but also burned the skin when some splashed onto her legs. The solvent also drained down into the fish pond on the adjacent property owned by the Nelsons. Read each of the following separately and indicate which is true. A) If Joan sued Clive, she would not sue on the rule of strict liability but under the Occupiers' Liability Act. B) If Joan sues for any loss, she must sue the owner of the farm. C) If the Nelsons sued on the rule in Rylands v. Fletcher, the defendant could succeed by showing that there was no intention to harm anyone and reasonable care had been taken to contain the solvent. D) If the Nelsons sued on the rule in Rylands v. Fletcher, they are barred from also pleading negligence as an alternative cause of action. E) If the Nelsons sue for any loss, they would not succeed against Clive because he is just the tenant of the farm, not the owner.

36) ______

37) Which of the following statements best describes the standard used by the courts to measure socially acceptable behaviour?

37) ______

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35) Paul invited several friends over to celebrate Ann's birthday. About an hour before the guests arrived, Paul bought some sparkling wine and put it in his refrigerator. When all the guests were assembled, Paul lifted the chilled bottle of wine from its gift box. Before it was completely out of the box, the bottle exploded, sending glass in all directions. The glass cut Paul's hand and also the eye of one of his guests, Joan. No one else was hurt at all. Assuming all these facts could be proved, which of the following is true? A) Because Joan did not buy the wine, she has no cause of action against anyone. B) Only Joan has a right to sue in contract. C) If Joan sued the manufacturer for negligence, the court could draw, from the circumstantial evidence of the injury, a conclusion that someone must have been negligent, leaving it to the manufacturer to produce evidence to the contrary. D) All the guests, including Joan, could successfully sue the manufacturer for negligence; they need only prove that the explosion was the fault of the manufacturing process. E) Joan could sue Paul successfully for the tort of negligence for buying and serving sparkling wine.

A) The best possible response to the circumstance B) A reasonably prudent person acting in a careful manner C) An average person acting normally D) A careful person acting to the best of his ability E) When you cause injury you are always liable. 38) ______

39) Which of the following statements with regard to the tort of negligence is false? A) For a person to completely escape liability for negligence on the grounds that the plaintiff volunteered to take the risk, the court would have to find that the plaintiff volunteered to accept the physical risk and the legal consequences as well. B) In negligence cases, the special provision of res ipsa loquitor must be applied in order to establish liability. C) To win his negligence case, the plaintiff must prove that the defendant owed him a duty of care, was below the standard of care the law requires, and thus caused him foreseeable damage. D) In most provinces, the standard of care imposed on an occupier has been modified by statute. E) If a person is injured by a defective product that he himself did not purchase, he can sue the manufacturer for negligence.

39) ______

40) A land appraiser prepared an appraisal of a property for a real-estate development company. The appraiser had been told that the appraisal would be used by the company to attract potential investors. Because the appraiser forgot to check the recent changes in the zoning by-laws, the appraisal was not accurate; the investor, a party unknown to the appraiser, was misled about the value of the land and, consequently, suffered a financial loss. On these facts, which of the following is true? A) A land appraiser owes a duty of care to his client, the company, but not to any potential investors. B) A land appraiser owes a duty of care to his client, and to potential investors only if he knows the name of the investor. C) The investor must suffer his own loss, because an investor takes the risk and so must take care. D) A person cannot be sued for words that cause loss, only for actions that cause physical injury. E) The investor might sue the appraiser for "negligent misstatement causing economic loss."

40) ______

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38) Pete and John had been hired by the same computer consulting company. They worked a 3-hour shift and walked to a pub, where they had several beers. John said he'd drive Pete home. Pete knew John had been drinking but agreed to go with him anyway. The alcohol affected John's driving. He lost control of the car, which crashed through Mr. Britt's fence and Britt's garage. Pete was injured. John was not injured. Britt's neighbour, Mr. Watson, called the police. John was charged with the offence of driving while impaired and was found guilty in the criminal proceedings. Given these facts, which of the following is true? A) The principle of vicarious liability is relevant here because John was an employee at the time of the accident. John was charged with an offence; no one could sue him in a civil action for compensation. B) Mr. Watson, the neighbour, could successfully sue John for negligence. C) One court action is all that is allowed. D) Since Mr. Britt was not physically injured, he could not sue. E) Pete could sue John for negligence, but if the court held that Pete volunteered to take the risk (volenti non fit injuria), Pete would get no award of damages.

41) ______

42) To have the schools valued for insurance purposes, a school district hired a firm of surveyors to give them a statement of value. To prepare the report, the surveyors took the relevant measurements, which were then given to a statistical tabulating company that does the calculations based on the measurements. Surveyors always use the services of such tabulating companies. An error was made in the calculations, so the surveyor's report was wrong. Therefore, the buildings were under-insured. When one of the school buildings was destroyed by fire, the school district did not get sufficient funds from the insurance company to rebuild the school. On these facts, which of the following is true? (Assume that the school district has the ability to sue and be sued in court.) A) The school district can successfully sue the statistical tabulating company for negligent misstatement causing economic loss. B) This action would most likely be commenced in the Small Claims Court. C) The insurance company can successfully sue the statistical tabulating company for nuisance. D) The school district could successfully sue the surveyors for nuisance, for subcontracting the calculating work. E) The statistical tabulating company cannot be sued by the school district.

42) ______

43) Although there was no carelessness on the part of Mr. Tam, and although he had no intention of harming anyone, he could still be sued by someone harmed by dangerous substances that escaped from his property. This is an example of what tort or what principle of tort law? A) Defamation B) Vicarious liability C) False imprisonment D) Contributory negligence E) Strict liability

43) ______

44) In Hodgkinson v. Simms, an accountant advised a client to invest in a real estate development while also acting for the developers. What did the Supreme Court of Canada find? A) A fiduciary relationship could not arise in circumstances where an investor acted of his own accord. B) The presence of a financial risk was the identifying feature of a fiduciary relationship but, in this case, did not impose a fiduciary duty. C) The presence of loyalty, trust and confidence were identifying features of a fiduciary relationship and, in this case, imposed the fiduciary duty. D) The presence of a financial risk was the identifying feature of a fiduciary relationship and, in this case, imposed the fiduciary duty. E) A fiduciary relationship could not arise in commercial circumstances, such as those found in this case.

44) ______

45) Sumanthra, an accountant, prepared financial statements for ZeeTech Ltd. A cutting edge technology company, ZeeTech was actively seeking private investment in order to finance a new electronics device. Despite the fact that Sumanthra followed Generally Accepted Accounting Principles (GAAP), the statements she prepared were misleading. Arif and Alena, both potential investors, relied on the statements Sumanthra had prepared. As a result of their reliance, Arif

and investe Ale d in na ZeeTec bot h and h lost a

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41) In which of the following cases is a duty not owed? A) It would be apparent to a prudent person that the conduct was likely to cause injury B) A person making a misstatement knew that it would be relied on by a member of a group C) A visitor comes on your property D) A person sees another in desperate need of assistance E) A person undertakes to rescue someone in danger

___ ___

46) An employee prepared an appraisal of a property for his real-estate development company. The employee had been told that the appraisal would be used by the company to attract a potential investor, Mr. Jones, for the company's client, Mr. Lee. Because the appraiser carelessly forgot to check the recent changes in the zoning by-laws, the appraisal was not accurate. Mr. Jones was misled about the value of the land and suffered a financial loss of $20,000. On these facts, which of the following is true? A) If Jones sues the appraiser, he cannot also sue the employer companyone or the other. B) To win in an action against the appraiser, Jones must prove that the appraiser owed him a duty of care, fell below the standard of care owed and thereby caused him a foreseeable loss because of his reliance on the information. C) The cause of action most likely to be taken by the investor is defamation. D) A person cannot be sued for words that cause loss, only for actions that cause physical injury. E) Mr. Jones could not take any action because he had no contract with the company or the appraiser.

46) ______

47) Jack works as a financial-planning consultant for Adco Ltd., a company that provides financial advice to its clients. At a three-martini lunch with Benson, one of Adco's clients, and Carson, a friend of Benson's, Jack mistakenly advised Benson to buy shares of Moose Jaw Mining because he thought that Adco had investigated the prospects of the company. In fact, Adco had investigated Goose Jaw Mining and was recommending it to its clients. As it turned out, Benson ignored Jack's advice but Carson bought a lot of Moose Jaw shares and lost all of his money when the mining operation went broke. Which one of the following statements accurately describes Carson's legal situation? A) Jack cannot be held liable for Carson's loss, but Adco can be because it employed Jack.

47) ______

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consider 45) able sum of money. Indepen dently, Arif and Alena decided to sue Sumanth ra for their financial loss. Which of the followin g is true? A) Sumanthra will not escape liability because accountants are automatically liable for losses arising from the use of financial statements they prepare. B) Sumanthra has nothing to worry about, because accountants are immune from liability. C) Sumanthra has nothing to worry about, because an accountant who follows GAAP could not have breached the standard of care. D) Sumanthra has nothing to worry about, because negligence requires proof of more than mere financial loss. E) Sumanthra will not escape liability simply because she followed GAAP.

B) Jack can only be held liable if Carson can establish that Jack owed him a duty to be careful. C) Carson will have to sue Benson and then Benson can turn around and sue Jack under the principles of vicarious liability. D) Because there was no contractual connection between Carson and anyone else, he has no legal right to compensation. E) Jack cannot be held responsible for Carson's loss because someone who is incapacitated at all by alcohol cannot be held liable in tort for actions while incapacitated. 48) ______

49) Which of the following statements does not describe the standard expected of experts? A) Require skills and abilities expected of a professional in that field. B) Inexperience does not excuse incompetence. C) Must exercise skill with degree of care expected from a reasonable person in that profession. D) Common practice always sets the appropriate standard. E) The standard of an expert need not be perfection.

49) ______

50) In Walton v. General Accident Insurance Co. of Canada, the home the Waltons lived in was destroyed by fire. The Saskatchewan Court of Appeal found that the Waltons had no legal or equitable right to the property. What was the result? A) The Waltons had no contra proferentum, and therefore had no right to payment from the insurance company. B) The Waltons had no insurable interest in the home, and therefore had no right to payment from the insurance company. C) The Waltons had exercised their right of salvage, and therefore were entitled to payment from the insurance company. D) The Waltons had co-insured the property, and therefore were entitled to payment from the insurance company. E) The Waltons had subrogated their interest, and therefore had no right to payment from the insurance company.

50) ______

51) In Heitsman v. Canadian Premier Life Insurance Co., an insurance company denied coverage on the basis of an ambiguous exclusion of liability clause. What did the Court find? A) The contra proferentum rule did not apply, because the insurance contract was in standard form. B) The contra proferentum rule was applied, and the exclusion was broadly construed. C) The contra proferentum rule did not apply, because the insured had signed the contract voluntarily. D) The contra proferentum rule was applied, and the exclusion was narrowly interpreted. E) The contra proferentum rule was applied, so the interpretation favoured the insurance company.

51) ______

52) In Mueller v. Wawanesa Insurance Co. , insurance had been taken out on a house when it was being used as a residential dwelling. The building was occupied by three members of a

mot ycle orc gang.

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48) To win his action in negligence against a professional person, the plaintiff must prove, among other things, that the defendant's conduct was below an acceptable standard of care. Which of the following is the legal standard of care demanded of a professional person? A) That he act to the very best of his ability B) That he act sincerely and with goodwill C) That he act as may reasonably be expected of the normally skilled professional in that class D) That he act as a reasonably prudent person E) That he act sincerely and as may reasonably be expected of a skilled professional

The 52) insuranc e company was not notified of the change. What was the result when the house was destroye d by fire? A) The failure to notify of the change voided the policy, but the insurance company still had to cover the loss. B) The failure to notify of the change voided the policy and the insurance company did not have to pay. C) The failure to notify of the change resulted in the insured being charged higher premiums. D) The failure to notify of the change was immaterial, because there was no proof that is what caused the fire. E) The failure to notify of the change was immaterial, because there was no misrepresentation at the time the policy was taken out.

53) ______

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53) Which of the following is correct with respect to the meaning of an insurable interest? A) This term describes when a person has taken out insurance on something. B) An insurable interest means that the person causing the loss is required to show enough interest in what he is doing to be careful. C) The insurance company must have received a premium before it can be said to have an interest in the agreement and be bound to pay when a claim is made. D) The beneficiary or person receiving payment must have an ownership interest in the thing being insured. E) The person taking out the insurance contract must be in a position that he will suffer a loss equal to the amount claimed if the insured-against event occurs.

___ ___

54) In which one of the following would Joe be able to collect the entire amount of insurance claimed? 54) ______ A) Joe insured the club house of a Hell's Angels motorcycle club located in the next block for $75,000; the house is valued at about that amount. The club house is subsequently destroyed in a fire. Joe claims $75,000. B) Joe took out a life insurance policy on his wife for $500,000, and shortly thereafter, during a fight when he was in a drunken rage, he struck his wife, causing her death. Joe claims $500,000. C) Joe's house suffers $20,000 damage, and he only had it insured for $100,000, when the actual value was over $250,000. Joe claims $20,000. D) Joe owns a one-half interest in a house valued at $100,000 that is completely destroyed in a fire. The house is insured for that amount and Joe makes a claim for $100,000. E) Joe insured his law partner's life for $500,000 and the amount he actually lost when the partner died was only $100,000. Joe claims $500,000. 55) Which of the following is correct with respect to the principle of subrogation as it relates to

ins urance

law?

55)

___ ___

A) Subrogation refers to the principle that, if an insurance company pays out on a policy, they assume all of the rights of the insured against the person causing the loss. B) Subrogation refers to the practice of the insurance companies taking out their own insurance where the policy involves potentially large losses or high risk. C) Subrogation refers to the principle that, if the insured does not take out enough insurance, he will be taken to be responsible for a portion of any loss incurred. D) Subrogation refers to the principle that the insured cannot benefit from his own wrongdoing. E) Subrogation refers to the insured's right to demand payment from the insurance company if the insured-against event takes place. 56) ______

57) Which one of the following explains the effect of a co-insurance clause? A) A co-insurance clause provides for the insurance claim to be split between two or more beneficiaries. B) A co-insurance clause provides for several different properties being insured under the same policy. C) A co-insurance clause provides for the insured to assume part of the responsibility for any loss. D) A co-insurance clause provides for more than one person paying the premium. E) A co-insurance clause provides for the insurance company arranging their own insurance on a large policy.

57) ______

58) Where a person owns a half interest in a house valued at $200,000 and has insurance on that property in the amount of $400,000, if the house burns down, causing a loss of $100,000, how much will that person collect? A) $50,000 B) $200,000 C) $400,000 D) $100,000 E) Nothing

58) ______

59) Business interruption insurance is designed to cover which of the following situations? A) A person owns a restaurant business and the restaurant is destroyed by fire. The insurance coverage pays for the repair of the building. B) A person is an employee at a restaurant business and gets ill. The insurance coverage pays him his wages while he is off work sick. C) A person owns a restaurant business and the restaurant is destroyed by fire. The insurance covers the losses caused by the business being closed down for several months. D) A person operates a restaurant business and some customers suffer injury due to food poisoning. The insurance coverage provides for payment to cover any losses incurred because of claims by the restaurant arising from damages paid out to these customers. E) A person has a partner in his restaurant business and that partner catches a disease and dies. The insurance provides for coverage of the death of the partner.

59) ______

60) Joe entered a store and approached a display of china. He was examining an extremely valuable vase and carelessly dropped it, destroying it. Which of the following is correct with respect to his liability?

60) ______

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56) Which of the following is not an appropriate matter for insurance coverage? A) Insurance against lost profits B) Insurance against loss of life C) Insurance against fire in a home D) Insurance against the wrongful conduct of the insured, e.g., theft E) Insurance against damage to property

A) If the store does not have insurance coverage, they should have and so Joe has no responsibility in these circumstances. B) Joe cannot be sued for the loss because Joe is not a party to the insurance contract. C) Joe is responsible only if the store has no insurance coverage. D) If the store has insurance coverage, the insurance will pay the store for the loss but can go after Joe for repayment by suing him for negligence. E) If the store has insurance coverage, the insurance will cover his careless conduct and he doesn't have to worry about anything. 61) ______

62) Which of the following statements is correct with respect to bonding? A) Bonding provides protection against losses incurred because of fluctuations in the financial markets. B) Bonding provides protection to the victim injured by the wrongful conduct of the person bonded. C) Bonding is a government certification system whereby the government guarantees that a person so bonded or certified will do the job he is hired to do as set out in the bonding certificate. D) Bonding is another term for insurance. The two terms, bonding and insurance, are interchangeable. E) If a person is bonded and that person commits some wrongful act such as stealing a client's money, the bonding company is bound to compensate him for any losses he suffers from being caught.

62) ______

63) Property insurance should correspond to the actual value of the property for all of the following reasons except A) no insurance means no compensation for loss. B) if the property is insured for less, there is a danger of being a co-insurer. C) if the property is insured for less, the insured will only receive partial compensation. D) if the property is insured for more, the insured will pay too high a premium. E) if the property is insured for more, there will be no compensation for loss.

63) ______

64) Some jurisdictions have instituted "no fault" insurance programs.Which of the following statements is true? A) Under common law, if a person is not at fault, damages can always be recovered in tort. B) No fault insurance means no compensation for loss. C) No fault insurance assumes there is a voluntary assumption of risk.

64) ______

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61) In which of the following situations will the insured be able to collect the entire amount of the insurance claimed? A) Joe has his house insured for $100,000 when the actual value of the house is $200,000. When it burns down, Joe claims $200,000. B) Joe and his wife both own a one-half interest in their house, worth $100,000. Joe took out an insurance policy in his own name for the $100,000 and the house is destroyed by fire. Joe claims the $100,000. C) Joe owns a house on a lot in Regina, and although the property would sell for $100,000, the value of the house is only $50,000. Joe takes out a $50,000 policy against loss to the house, which is subsequently destroyed by fire. Joe claims $50,000. D) Jane had a compact disc player worth $300. It was portable and it was stolen from her car. She had a house policy and a car policy, both of which provided coverage. Jane claimed $300 from each policy. E) Joe takes out insurance on his neighbour's house for $50,000 because his neighbour is notoriously careless. Sure enough, the house burns down with $50,000 loss.

D) Uner no fault programs, people are treated the same and compensated for their injuries whether they are at fault or not. E) There is always an assumption of contributory negligence under no fault insurance programs. 65) Which of the following statements is correct with respect to bonding? A) Bonding is another term for insurance. The two terms, bonding and insurance, are interchangeable. B) Bonding provides protection to the victim injured by the wrongful conduct of the person bonded. C) Bonding is a government certification system whereby the government guarantees that a person so bonded or certified will do the job he is hired to do as set out in the bonding certificate. D) If a person is bonded and that person commits some wrongful act such as stealing a client's money, the bonding company is bound to compensate him for any losses he suffers from being caught. E) Bonding provides protection against losses incurred because of fluctuations in the financial markets.

65) ______

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 66) The court determines the standard of care required and whether or not there was a failure to live up to that standard.

T or F

68) Absent a statutory provision to the contrary, parents are not responsible for their children's torts unless there was obvious failure to control, instruct, or supervise.

T or F

69) If a person is injured while attempting to rescue someone, he or she may have a claim against the person who caused the situation that endangered the victim and the rescuer.

T or F

70) At common law, a mother owes a duty of care to an unborn child.

T or F

71) Strict liability means that liability can be established even when there is no fault.

T or F

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67) Children are not held liable for their torts.

72) A reasonable person is one who is prudent and careful.

T or F

73) A principle established in Donoghue v. Stevenson is the test used to determine the standard of care that must be exercised by the defendant to escape liability.

T or F

74) We owe a duty to anyone we can reasonably anticipate might be harmed by our conduct.

T or F

75) If a person attempts to help, there is a duty to exercise reasonable care.

T or F

76) A person has to prove only that another caused his injury to succeed in a negligence action.

T or F

77) The standard of care that is required of a professional in a negligence action is that she acts to the best of her ability.

T or F

78) Insurance agents owe important obligations to their principals, but do not owe any specific duty to their customers.

T or F

80) The forfeiture rule will not allow a criminal to profit from a crime, but does not affect those claiming through the criminal's estate.

T or F

81) Innkeepers at common law were required to protect their guests from the wrongful acts of others, even when the innkeeper or servant was not at fault.

T or F

82) The occurrences of professional malpractice actions have decreased dramatically in recent years, due largely to the increased availability of liability insurance.

T or F

83) It is up to an insured whether the insurer rebuilds, repairs or replaces damaged goods.

T or F

84) No fault personal liability automobile insurance is an attempt to distribute losses among the most accident-prone drivers.

T or F

85) The institution of no fault insurance programs in some jurisdictions allows people to be compensated for their injuries only if they are not at fault.

T or F

86) Business interruption insurance covers the policy-holder when an unforeseen event causes a business to permanently cease operation.

T or F

87) Insurable interest means that the insured must have a personal stake or interest in whatever is being insured and can only claim on the insurance to the extent of the value of that interest.

T or F

88) Once it has paid out on the loss, an insurance company can step into the shoes of the insured and pursue a claim against the person who caused the loss.

T or F

89) A surety bond provides assurance that the party to a contract will perform its part of the contract.

T or F

90) A fidelity bond is when the employee pays the employer a fee to cover themselves while they are on the job.

T or F

91) An insurable interest refers to the fact that the insurance company has to have been paid a premium so that they have an interest in the contract.

T or F

92) An insurance company's right to subrogation refers to their right to refuse to pay where the insured is responsible for his own loss.

T or F

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79) When there is ambiguity in the meaning of a limitation clause in an insurance contract, the courts defer to the party who drafted the contract.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 93) Tom was complaining about the carelessness of his neighbour and asks you if you think 93) _____________ he could sue him for negligence and win. Explain what a plaintiff must prove in order to sue successfully for the tort of negligence and have the defendant pay 100% of his loss. 94) What elements must be established in order to succeed in a negligence action?

94) _____________

95) Explain what is meant by the "reasonable person" test.

95) _____________

96) Explain how the courts determine whether a duty of care exists in a negligence action.

96) _____________

97) In Canada, in order for a manufacturer to be held liable for injury caused by his product

to an ultimate

consume 97) r, what must be shown?

___ ___ ___ ___ _

98) Distinguish between misfeasance and nonfeasance.

98) _____________

99) In determining duty, what kind of factors would the court take into consideration in determining whether the defendant lived up to the standard of a reasonable person?

99) _____________

100) Explain how the standard of care imposed varies when particular expertise is involved (e.g., a doctor).

100) ____________

101) Distinguish between a licensee, an invitee, and a trespasser.

101) ____________

102) Explain the importance of the distinction between an invitee, licensee, and trespasser.

102) ____________

103) Explain the standard of care that must be imposed on the occupier of the property toward a visitor on that property in your province.

103) ____________

104) ____________

105) Joe was driving his automobile when Sam came from a side street and went through a stop sign without stopping, almost causing an accident. Joe swerved to avoid Sam and was successful in doing so. He wrote down Sam's licence number and sued Sam for his negligent driving. Indicate the expected result.

105) ____________

106) Mary was driving down the road when Sam came out from a side road, went through a stop sign, and struck the side of her car. Upon later examination of Mary's car, it was determined that the brakes were worn down beyond the point of safety. Sam sued her for negligence. Explain the likely result.

106) ____________

107) Explain under what circumstances the defence of remoteness can be used as a defence in a negligence action.

107) ____________

108) Joe, a concert pianist, was walking down the street when he was struck by Harry, a careless skate boarder, knocking him down and crushing his hand. When Joe sued Harry for his negligence, claiming the loss of income from his profession (he could never play the piano again), Harry countered with the defence that there is no way he could have anticipated that the person he was going to hit was a concert pianist. Explain his likelihood of success raising this defence.

108) ____________

109) Indicate under what circumstance the defence of voluntary assumption of risk or volenti will be available.

109) ____________

110) Joe was drunk and driving his car. When he saw Sam on the side of the road hitch-hiking, he opened the door and offered Sam a lift. Sam got in despite the fact that he could smell alcohol on Joe's breath. Subsequently, Joe was in as accident, in which Sam was injured. Sam has sued him for negligence. Indicate what likely defence Joe would use in these circumstances and whether it would be successful.

110) ____________

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104) Give three examples where tort standards have been modified by legislation.

111) ____________

112) Harry operated a game farm in the suburbs of a large city. He had taken all reasonable precautions to keep the animals, some of which were dangerous, within the confines of that game farm. One night, a group of protesters came onto the property, releasing all the animals as an act of protest against the incarceration of such wild creatures. One of the animals, a cougar, went onto a neighbour's property and killed a pet dog before it could be destroyed. That neighbour sued Joe. Explain his likelihood of success.

112) ____________

113) What test is used to establish a duty of care?

113) ____________

114) What is the reasonable foreseeability test used for?

114) ____________

115) What test is used to determine the standard of care?

115) ____________

116) What is the reasonable person test used for?

116) ____________

117) Does liability vary with age? Explain.

117) ____________

118) What is the test used for physical causation?

118) ____________

119) What is the "but for" test used for?

119) ____________

120) What is the test used for legal causation?

120) ____________

121) What is the remoteness test used for?

121) ____________

122) The principle that we must take our victims as we find them is often referred to as ________.

122) ____________

123) When the Court recognizes pre-existing frailties and the award of damages aims at restoring the plaintiff to that position, we say the Court is applying ________.

123) ____________

124) What is the last clear chance doctrine?

124) ____________

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111) In Canada, under what circumstances will the owner of property be held strictly liable for his conduct?

125) Because of the devastating losses and injuries associated with automobile collisions, what have many provinces done?

125) ____________

126) To what does "errors and omissions" insurance refer?

126) ____________

127) What is the role of self-governing professional bodies?

127) ____________

128) In insurance, what do comprehensive policies cover?

128) ____________

129) What is the typical result when spouses have overlapping extended benefits coverage, such as dental and disability?

129) ____________

130) Does a shareholder have an insurable interest in the assets of a corporation?

130) ____________

131) What is the role of an adjuster?

131) ____________

132) ____________

133) Historically, how did the law treat negligent misstatement differently than negligent misconduct?

133) ____________

134) How is negligent misstatement treated in Canada today?

134) ____________

135) How are professionals treated differently under the rules of negligence?

135) ____________

136) In order for an insurance agreement not to be declared void as an illegal contract, what must be demonstrated?

136) ____________

137) Explain what is meant by an insurable interest.

137) ____________

138) Joe owned a house that would cost $200,000 to replace. He took out an insurance policy for only $100,000, reasoning that any damage that would take place would likely be under that amount. In fact, there was a fire and the total loss was $50,000. Indicate what problems Joe might run into when he tries to collect.

138) ____________

139) Describe three different types of insurance that a business person might obtain in relationship to his business.

139) ____________

140) Joe was a customer in Sam's store when he carelessly dropped a very expensive vase, but he was relieved when he found that Sam had insurance to cover the loss. Explain Joe's legal position in these circumstances.

140) ____________

141) Explain what is meant by bonding.

141) ____________

142) Distinguish between a fidelity bond and a surety bond.

142) ____________

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132) What is the forfeiture rule?

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 143) Explain what must be established in order to succeed in a negligence action. 144) Discuss how legislation has impacted in the field of negligence.

145) Indicate why the Donoghue v. Stevenson case (the snail in the ginger beer bottle) was so important in the development of negligence law. 146) Discuss the development of legal liability for negligent misstatement, and how and why the approach to negligent misstatement differs from the approach to negligent conduct. 147) Explain the potential liability faced by professionals, and how the risks associated with such liability can be minimized. 148) Explain the role of self-governing professional bodies, including a discussion of their disciplinary function. 149) Discuss the role of insurance, especially compulsory insurance, and how it relates to tort law. 150) Explain what is meant by an insurable interest and how the existence of this principle impacts on the right to collect on an insurance claim.

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1) E 2) A 3) B 4) A 5) E 6) A 7) A 8) C 9) A 10) B 11) C 12) A 13) E 14) E 15) E 16) A 17) E 18) B 19) D 20) D 21) B 22) A 23) B 24) B 25) C 26) A 27) E 28) E 29) D 30) D 31) A 32) B 33) B 34) B 35) C 36) A 37) B 38) E 39) B 40) E 41) D 42) A 43) E 44) C 45) E 46) B 47) B 48) C 49) D 50) B 51) D

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52) B 53) E 54) E 55) A 56) D 57) C 58) A 59) C 60) D 61) C 62) B 63) E 64) D 65) B 66) TRUE 67) FALSE 68) TRUE 69) TRUE 70) FALSE 71) TRUE 72) TRUE 73) FALSE 74) TRUE 75) TRUE 76) FALSE 77) FALSE 78) FALSE 79) FALSE 80) FALSE 81) TRUE 82) FALSE 83) FALSE 84) FALSE 85) FALSE 86) FALSE 87) TRUE 88) TRUE 89) TRUE 90) FALSE 91) FALSE 92) FALSE 93) Tom would have to prove that a duty was owed by his neighbour to him, that the neighbour failed to live up to that duty, and that this failure caused an injury or loss for to Tom. Also, if brought up by the neighbour, Tom would have to show that the damage was not too remote and that there was no contributory negligence on his part. 94) 1. A duty of care owed to the plaintiff. 2. Breach of that duty (failure to live up to the standard of care). 3. Causation (physical and legal - not too remote). 4. Damage. 95) This test is used in many areas but is especially important in determining the standard against which the defendant's conduct is measured in a negligence action. The reasonable person here is a careful, prudent person going about the activities, not the average person. The test is analogous to par in the game of golf. Par is not what an average golfer would obtain as a score, but the score one would expect from a good golfer having a good day.

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96) The test of reasonable foreseeability applies; that is, could a reasonable person have anticipated that his conduct could cause harm to another? If the answer is yes, the duty exists. However, note that today, because of the Anns case, there may be some factors to reduce or alter the nature of that duty. 97) That there was a duty to be careful in manufacturing that good, and that there was a failure to live up to the standard of a reasonable person in that manufacturing process (assuming of course that some sort of injury had resulted and that injury resulted from the normal use of those goods). 98) Nonfeasance involves a person failing to do something that could have prevented injury to another. Misfeasance involves an act or conduct that causes injury to another. As a general rule, nonfeasance is not actionable unless there is some particular duty, such as if the person being sued were a guardian, father, relative, or had an occupation such as lifeguard that demanded him to act. 99) The risk involved, the dangerous nature, the type of activity involved, the public benefit of such an activity, the expense of adhering to a higher standard. 100) The reasonable person test is really the reasonable person in the circumstances; therefore, the standard imposed with medical malpractice is what a reasonable doctor would have done in those circumstances. With other professions, what would a reasonable accountant or reasonable plumber or electrician have done in the circumstances? 101) An invitee is a person who comes on the property for a business purpose. A licensee is one who is there with permission such as a visitor or guest. A trespasser is one who is on the property without legal right. 102) In some provinces, the standard of care imposed on the occupiers towards those who are using the property varies with the status of the visitor. The obligation owed to an invitee is to take reasonable steps to protect the invitee from unusual danger on the property. The duty owed to a licensee, however, is to inform or warn that licensee of any hidden danger on the property, and the duty owed to the trespasser is simply not to wilfully or recklessly cause that trespasser injury. Note that this standard has been changed by statute in many provinces and by court cases in specific provinces. 103) The standard of care and the relevant exceptions vary from province to province. Most provinces have enacted legislation in the form of occupiers' liability statutes that impose a single standard of care on visitors, usually to take reasonable care to keep such visitors reasonably safe. 104) 1. Motor Vehicle Act 2. Innkeepers (Hotelkeepers) Act 3. Occupiers' Liability Act 4. In some circumstances, human rights legislation 5. Consumer protection acts 6. Environment protection acts 105) He will fail because there was no material loss; there was no accident. 106) If Mary didn't notice Sam and didn't touch the brakes, then her poor brakes had absolutely nothing to do with the accident and did not cause it. It was Sam's negligence that caused the accident when he went through the stop sign. If, however, she did see Sam coming through the stop sign and was unable to stop because of her defective brakes, she at least contributed to the accident by her negligence. 107) Where some sort of injury or damage was reasonably foreseeable, but in fact the way that the injury took place was strange to the point of being completely unexpected, or unusual so that the type of damage itself was not foreseeable, then the injury may be too remote and therefore not actionable. 108) You take your victim the way you find him, and the fact that the damages are unusual because of the special circumstances of the victim is no defence. 109) The person being sued for negligence will be able to raise the defence of voluntary assumption of risk on the part of the plaintiff only where that plaintiff has voluntarily put himself in harm's way, to the extent that he not only assumed the physical risk but the legal risk as well, somehow conveying to the other party that he is absolved with that person of legal liability for any injury suffered. 110) He would use voluntary assumption of risk, and it would not likely be successful, because in these circumstances Sam assumed the physical risk but not the legal risk. There is no indication by Sam in these circumstances that when he got into the car he was absolving Joe of responsibility for any injury that might result. 111) Where he brings something inherently dangerous on the property and it escapes, causing injury to someone off the property.

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112) This is an unusual use of property, a game farm. The dangerous animals created a situation of strict liability for Joe. When they escaped, although it was not his fault and he could not have anticipated this kind of interference, he would still be held strictly liable for the loss. 113) Reasonable foreseeability test 114) To establish a duty of care 115) The reasonable person test 116) To determine the standard of care 117) While a standard does not diminish in the case of an elderly person, the standard required of children is the level of conduct that would be expected of a reasonable child of the same age. 118) The "but for" test 119) Physical causation 120) Remoteness test 121) Legal causation 122) The thin skull rule 123) The crumbling skull rule 124) Historically, this doctrine held that the person who had the last opportunity to avoid the accident and failed to do so completely responsible. 125) Many have turned to compulsory insurance schemes, while some have gone further instituting no-fault programs. Ontario has passed controversial legislation setting a threshold for physical injury before non-pecuniary damages can be awarded. 126) This is the name often given to the specialized liability insurance that professionals carry. 127) Typically, these bodies have varying degrees of control over the relevant practice. This can extend to granting licences, determining membership, setting standards of conduct, setting educational qualifications and continuing training requirements, and disciplinary matters. 128) Everything except what is specifically excluded (typically, acts of war, riots, illegal activities). 129) Usually, there is a deductible amount that must be paid or a limitation on the coverage. When there are two policies, one can often be used to cover the the shortfall of the other (but not to overpay). 130) They do, even though they do not have a direct legal claim to them. 131) An adjuster values the loss for the insurance company after the insured-against event takes place. 132) A criminal should not be permitted to profit from a crime; also extends those who claim through the criminal's estate. 133) Negligent misstatement was not actionable unless some specific duty existed, as in a contract or employment relationship. There was no general duty which allowed an action for negligent words. 134) The case of Haig vs. Bamford established that people could be sued for their careless words. (Note, however, that the test to determine duty may be narrower than when dealing with conduct.) 135) The standard required of a professional or expert in their field is much higher; that is, they must live up to the standard of a reasonable accountant, a reasonable lawyer, a reasonable doctor, etc. 136) That the insured has an insurable interest in the property or matter being insured. 137) An insurable interest is an interest that the insured has in the property or matter being insured, such that if the insured against event takes place, he will be economically hurt, resulting in the insurance payment compensating him for a loss (indemnity) rather than being a windfall profit. 138) If the value of the house is $200,000 and he has only $100,000 coverage on it, then he may be considered a co-insurer for the difference, depending on the terms of the contract. (For example, if the contract requires him to keep at least 80% of the value covered by insurance and he has only 50% coverage, he would be the co-insurer for the difference of 30%.) On any claim, therefore, he will have to bear a portion of the loss himself. 139) Property insurance, business interruption insurance, life insurance (for key personnel and partners), health insurance with respect to the personnel involved, and liability insurance. 140) Joe should not be so relieved. When the insurance company pays for the loss, they step into Sam's shoes (subrogation) and could sue Joe, just like Sam could have for his negligence, and Joe may be required to pay. 141) Where a person dealing with another person or company can be assured that they will be compensated if that person or company fails to properly perform their obligations. But note that the person or company that has acted wrongfully will still be required to repay the bonding company if possible; thus, this is quite different from

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insur ance. 142) A fidelity bond involves a person or an employee being bonded against his own wrongful conduct for actions such as theft. A surety bond is intended to provide assurance that one party to a contract will properly perform their side of the contract, for example, a contractor on a construction project. 143) Here the students are expected to outline the elements that must be present for negligence. They should show that a duty of care exists, explaining reasonable foreseeability and the modernization through the Anns case. They should explain how to determine the standard applicable. This is the reasonable person test, and they should indicate that it is the reasonable person in the circumstances (i.e., reasonable doctor, etc.). The action must show that the conduct of the defendant fell below this standard and caused the injury complained of. Whether the damage was caused by the conduct complained of is determined by applying the "but for" test. The injury or damage that resulted now can be emotional and economic injury. Students should also note the effect of contributory negligence and voluntarily assuming the risk. They can also deal with the problem of remoteness, although this is likely dealt with today through the Anns case tests. 144) Here students would be expected to give some examples of legislation that has specifically modified the law of negligence, and how this was done. In the process, students should demonstrate an understanding of the law as it was and indicate how the statute changed those rules. Some examples would be the Occupiers' Liability Act, the Contributory Negligence Act, the Innkeepers Act, and depending on what point in the course this was asked, they might deal with statutes placing duties on directors, partners, merchants, etc. 145) Here students should display an understanding of what happened in the case and should explain how the reasonable foreseeability test was developed. The concept of a duty owed to your neighbour was modified so that you owed a duty to take steps not to injure anyone you could anticipate might be harmed by your actions. Good students will also discuss how the case expanded the law, particularly with respect to product liability. Good students will go on to explain how this has since been further developed by the Anns case, which is good law in Canada. 146) Here students are expected to demonstrate an understanding of how the law with respect to negligent words has developed differently from negligent conduct. This should lead to a discussion of Donoghue v. Stevenson and how the reasonable foreseeability test for determining duty that developed in that case related to conduct not words. Negligent words were initially thought not actionable, but that was changed in England and then in Canada (Haig v. Bamford). Students should show that they understand that the test to determine a person's responsibility for their careless conduct, as developed in these cases, was different from the test to determine whether a person was responsible for their careless words. Finally they should talk about the Anns case and how this can be applied so that the system is brought together. The second part of the Anns case test is applied to words and the duty reduced, etc. (as was demonstrated in the Hercules case). 147) Here students are expected to discuss professional liability related to contract, negligence, and fiduciary duties. In the area of contractual duties, students should note, at a minimum, that a professional is expected to provide a reasonable level of performance. In discussing tort liability, students should identify that the standard is that of a reasonable member of the profession. (Good students will note that common practice may not measure up to the reasonable standard.) When a person places trust in a professional, the professional has a fiduciary obligation to act in the client's best interests. In addition to conducting oneself in a professional manner, and seeking legal advice when necessary, a professional can also obtain insurance (required in many cases). 148) Examples of self-governing professional bodies include the Law Society, Medical Association, the Teachers' Association, and the various accounting organizations. Typically, these bodies have varying degrees of control over the relevant practice. This can extend to granting licences, determining membership, setting standards of conduct, setting educational qualifications and continuing training requirements, and disciplinary matters. The disciplinary process may vary, but whatever process is used must adhere to the rules of procedural fairness or the decision will be subject to judicial review. In particular, a fair hearing is required. The Charter may apply and the compliance with human rights statutes is necessary. The penalties that such bodies may impose are usually limited to suspension or expulsion. 149) This is a little more difficult, requiring that students understand that tort law is based on finding one party at fault and requiring that party to pay the damages. Insurance, on the other hand, is based on the principle of sharing the risk. Students should discuss the disadvantage of torts placing overwhelming and ruinous financial liability on one party, and how insurance can avoid that outcome. This leads to compulsory insurance, especially in motor vehicle

cases, the introduction of no-fault systems. Students could also discuss the requirement of insurance for professionals. and 150) Discussion: One of the most important aspects of insurance law is the requirement that the person taking out insurance have an insurable interest in the thing insured. Students should demonstrate an understanding of what an insurable interest is and why it is so important. The insurable interest requirement is simply that it be clear that the person purchasing insurance coverage will lose something if the insured against event happens. Thus, when the insurance is paid, there is no windfall to the person taking out the insurance; rather, there is simply compensation for a loss. Otherwise, it would be like gambling. You place a wager that the house in question will burn down, and when it does, you win. Of course, you don't win, and the insurance is just a way of spreading the risk; however, if you could insure something you didn't have such an interest in, such as your neighbour's house, you could get a windfall, and it would be like gambling. Students must first show they understand this and then could explain how insurable interest works in different situations. Where you have an interest in property and insure it, you can collect only what you can lose (to the limit of that interest). Where life insurance is involved, the extent of the interest is assumed to be the amount of insurance coverage purchased. With a relative, the presence of an insurable interest is clear, but with others, permission is normally needed. Often the life of key employees or the principal of the business will be insured to cover against the loss to the business were that key employee to die suddenly.

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Chapter 6

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is an ingredient necessary to form a contract? 1) _______ A) Exemption clauses B) Fairness C) Assignment D) Privity E) Capacity 2) _______

3) Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his electric guitar. On Monday, October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocaster guitar for $400, the offer to be open until Friday noon, November 2. Jed told the store owner to send a letter of acceptance since he (Jed) would be away for a few days. The store owner examined his inventory and mailed a letter of acceptance on Thursday, November 1. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for breach of contract. Which of the following is true? A) The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract. B) Sending a letter by mail was not a reasonable method of acceptance. C) The offer lapsed before the store owner accepted. D) The offer was revoked before the store owner accepted. E) The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner.

3) _______

4) The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800. The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller, 5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking. Which of the following is true? A) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create legal relationship. B) There is no contract because Lloyd's last offer had been rejected by a counter-offer. C) There is no contract because Lloyd's last offer was revoked. D) There is no contract because Lloyd's last offer had lapsed after a reasonable time. E) There is a contract because at one point in the conversation Lloyd was willing to sell and the owner was willing to buy four trees.

4) _______

5) Roberts has the chance to buy three adjacent city lots zoned "duplex." The most profitable return

would be

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2) An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $4 000!!! Pick it up today." This is an example of which of the following? A) Invitation to treat B) Unilateral contract C) Bilateral contract D) Offer E) Gratuitous promise

__ __ __ _

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the 5) building of four townhou ses across the three lots, but that would necessita te getting permissi on from the city, and that procedur e takes time. If Roberts buys a 60-day option from the seller of the propertie s for $400, which of the followin g is true?

A) The offer for the properties will expire before the end of the designated 60-day period, if another person offers a higher price. B) By buying the option, Roberts has bought a period of time during which she must accept the land offer. C) If Roberts does not exercise the option, she will get her $400 back because she didn't get what she was bargaining for. D) The seller is bound by contract neither to sell the property to any other party nor to revoke the offer within the option period. E) If Roberts does not exercise the option during the option period, she can later force the seller to sell that property to her at that price. 6) Which of the following would best satisfy the requirements for a good legal offer? A) "The purchaser will pay $1,000 for one of the seller's laser printers, the exact model to be determined at a later date." B) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky." C) "I'll give you $1 for your new green bike." D) "I'll drive you to Seattle on Saturday." E) On a flyer placed on your windshield):"We have the best offer in town! A mint 1956 Chevrolet for $20,000."

6) _______

7) _______

8) Indicate the correct statement about consideration. A) In a bilateral contract, the exchange of promises does not provide consideration for both parties. B) In a unilateral contract, the performance of the promisee provides no consideration to the promisor. C) An altered course of action, e.g. forbearance, is not good consideration. D) The common law holds that consideration must be adequate to insure that contracts are fair bargains. E) Consideration is "the price for which the promise (or the act) of the other is bought."

8) _______

9) Which of the following is an offer as opposed to an "invitation to treat"? A) A sweater displayed in the window of a shop with the price tag attached and showing. B) The display of goods on the shelves of Safeway. C) An ad in a real-estate paper: "Best offer in Vancouver! 3 bedroom home in Kitsilano for only $350,000!" D) A notice in the Toronto Star: "I will pay $100 to whoever finds and returns my lost female calico cat which answers to the name Marx." E) A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January."

9) _______

10) The postbox rule applies when which of the following means of communication is used? A) Electronic mail B) Fax C) Messenger D) Telephone E) Mail

10) ______

11) Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is true? A) In order for there to be a binding contract, there must be an offer and receipt of the letter. B) The acceptance was effective before it was received, so there was a contract between Carlos and his friend. C) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract. D) All methods of acceptance are effective upon receipt by the offeror.

11) ______

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7) Franz bought a round trip ticket to Germany to visit relatives. Unfortunately, a week before flight time, he broke his leg. He offered his co-worker, Joe, the ticket for 80% of the full price, offer to remain open until 10:00 p.m. on December 15. Indicate to Joe which of the following is true with regard to the law of offer and acceptance. A) If Franz sells to someone else, it is too late for Joe to accept the original offer. B) A letter of acceptance is always effective when it is dropped in the mailbox. C) To create a contract, an offer must be in writing. D) Franz could revoke the offer anytime before acceptance, even before 10:00 p.m. on December 15. E) If Joe makes a counteroffer of 50% of the full price, and Franz rejects the counteroffer, Joe can still accept the original offer.

E) Sending an acceptance by mail was not a reasonable method of acceptance in this situation. 12) ______

13) Which of the following is an example of a unilateral contract? A) Joe agrees to paint Sam's house for $500. B) Sam orders a meal in a restaurant. C) C returns a lost dog and claims the $50 reward. D) Joe promises to give Harry his old boat when he gets his new one. E) Joe pays $50 for groceries at a grocery store.

13) ______

14) Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of which of the following? A) Invitation to treat B) Bilateral contract C) Offer D) Gratuitous promise E) Unilateral contract

14) ______

15) Which one of the following is enforceable? A) Ms. Jones promised to pay an additional $100 to Mr. Wood if Wood finished the existing contract on time, according to the terms of the contract. B) Ms. Goode promised to send $10 to Mr. Paul, who kindly came and warned her when he saw a tow truck approach her car. C) Mr. Baker was so sick of an old chair that, when Mr. Venson offered him $10 for it, he agreed (i.e., promised to sell it to him), although the market value of the chair was $80. D) An ad in the paper promises to pay $5 for the return of a lost ring, but the person who finds and returns the ring never saw the offer in the newspaper. E) Mr. Ho promised to give his needy friend Mr. Jahn $100.

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15) ______

16) When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they promise to use the funds for their summer camping program, this is an example of which one of the following? A) Promissory estoppel B) When accepted by the club, a unilateral contract C) Inadequate consideration D) When accepted by the club, a bilateral contract E) Gratuitous promise

16) ______

17) In contract cases, the court generally A) does not look to see if the bargain is fair. B) will rewrite an agreement for the parties if their existing agreement did not include all the essential terms. C) will require the recipient of a service to pay a reasonable price where it is determined that

17) ______

12) Which of the following is not an example of a contract? A) An implied promise to pay for a meal when you order it B) A verbal agreement to work for someone starting next week C) A verbal agreement for the sale of a car where neither the money nor the car has yet changed hands D) An agreement not to sue someone for negligence in exchange for their promise to pay you a specified amount E) A written promise to give your husband a ring for Christmas

the

agreed-upon price was too low. D) attempts to punish the party in breach of the contract by imposing a sentence. E) will enforce all promises. 18) Which of the following would best satisfy the requirements for a good legal offer? A) On a flyer placed on your windshield: "We have the best offer in town! A mint 1956 Chevrolet for $20,000." B) "I'll drive you to Seattle on Saturday." C) "The purchaser will pay $1000 for one of the seller's laser printers, the exact model to be determined at a later date." D) "I'll give you $1 for your new green bike." E) "I'll pay you at least $300 for your horse, Blackie, and even more if the horse is lucky."

18) ______

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19) Sarah wanted an antique lamp for the bedroom. While in a second-hand shop, she saw a lamp 19) ______ that she really wanted marked $100. She offered the owner $75 for it. He said "I'll take $95." She answered "$80!" He said, "Lady, you're pushing me a bit, aren't you? I'll take $90, that's it." She said "OK I'll pay $90 if you throw in this old 'Vote-for-Trudeau' button." He said, "Forget it, lady, my shop is closed," and asked her to leave. She said, "OK, I accept your offer of $95." He made no response. If she sues for breach of contract, which of the following is true? A) There is no contract because his offers to sell the lamp for $95 and $90 were revoked and he didn't accept her offers. B) There is no contract because his offer to sell the lamp for $95 was rejected by counter-offer, and her offer to buy it for $95 wasn't accepted. C) There is no contract because his offer to sell for $95 lapsed after a reasonable time. D) There is a contract because he wanted to sell the lamp for $95 and she was willing to pay that much. E) There is a contract because at one time he offered to sell the lamp for $95 and she accepted it. 20) ______

21) Four days ago, Pete was reading the newspaper and saw the following: "Best offer in town! Zenith XX Laser Printer - $1,000! When he went to the store this afternoon and said he wanted one, they replied that they didn't have any left, nor could they get one. On these facts, which of the following is true? A) The offer by the store had lapsed before he tried to accept. B) The store had revoked the offer before he tried to accept. C) The wording in the newspaper was merely an invitation to the public to do business, and no contract was formed. D) Pete could sue for breach of an option contract. E) Pete could sue them for breach of contract because he was accepting the offer in the

21) ______

20) Mary bought a new Macintosh computer and advertised her old computer system for $1,500. Mr. Jones offered to pay $1,000. Mary said no, she wanted $1,500. Mr. Jones offered $1,250. Mary rejected that and said she wanted $1,500, but then said to him, "I withdraw my offer, I've decided to give it to school and apply for the tax benefit." Mr. Jones said, "All right, I'll accept your offer of $1,500." Which of the following is true? A) There is a contract, because once a seller makes an offer she cannot change her mind; she is bound to receive an acceptance. B) There is no contract because Mary revoked the offer before Mr. Jones attempted to accept it. C) There is a contract and Mr. Jones has to pay a reasonable price for Mary's old computer. D) There is no contract because the last offer had lapsed. E) There is a contract because at some point in time Mary was willing to sell and Mr. Jones was willing to buy the computer system for $1,500.

newspaper. 22) ______

23) Sylvia had contracted with Produce Palace to sell her entire crop of elephant garlic (100 kilograms) and her entire crop of tomatoes (100 kilograms). On the day for delivery, Produce Palace took the garlic but not the tomatoes. In her effort to mitigate her loss, Sylvia called the owner of Val's Veggies and offered her the tomatoes at a reduced price with the words, "Let me know quickly; they are ripe and must be moved out today." That afternoon, Val sent Sylvia a letter accepting the offer. On these facts, which is the most likely outcome? A) There is no contract between Sylvia and Val because Sylvia had revoked the offer. B) There is no contract between Sylvia and Val because the offer has probably lapsed before the acceptance was received by Sylvia. C) If the postbox rule does not apply, there would be a contract as soon as Val mailed the letter unless Sylvia had sold the tomatoes to someone else. D) There is a contract between Sylvia and Val the moment Val dropped the letter of acceptance in the postbox. E) There is a contract between Sylvia and Val the day the letter of acceptance was received by Sylvia.

23) ______

24) Mr. Goode, a neighbour of your parents, offered to sell you his house for $200,000, a bit below market value. You are definitely interested but would like to see if your employment contract will be renewed and to check about financing. Mr. Goode says that he'll hold the offer open for you until May 1, 2011. On these facts, which of the following is false? A) If you buy an option to buy a house, you still don't have to buy the house. B) Mr. Goode will be bound to hold it open if you pay him and he accepts some money to hold it open until that date. C) Mr. Goode's promise to hold it open is sufficient; the offer is safe until May 1, 2011, when it will expire. D) Mr. Goode will be bound to hold it open if you offer and he accepts your offer to wash his car every Saturday morning for two months in exchange for his promise to hold it open. E) Mr. Goode will be bound to hold it open until that date if his promise to do so was written and under seal.

24) ______

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22) Ann was offered a job that would pay $20,000, that would provide for 18 days vacation after one year of employment, and that would begin one week after her graduation. She wrote back that she would accept the job, but that she would not begin until three weeks after graduation and needed at least a 21-day vacation after the first year of work. On these facts, which of the following is true? A) There is no contract because an acceptance must be unconditional, and her counteroffer has not been accepted. B) Since she accepted the offer, there is a contract. C) If she had not responded, there would have been a contract because silence is the standard form of acceptance. D) She is still free to reconsider and take the original offer even after the prospective employer received her letter. E) There is a contract as soon as she drops her letter in the mailbox.

25) Martin offered to buy the property for $200,000, "offer to remain open until 5:00 p.m. on 25) ______ Thursday, January 21, 2011." Which one of the following situations will not cause the offer to end? A) A counter-offer from the offeree B) Martin sells the property to another party before the expiration of the period stipulated and before hearing from the offeree. C) Death of offeror

D) The offeree has not accepted and the stipulated time has expired. E) Insanity of the offeror before the offer is accepted 26) ______

27) Which of the following is correct with respect to the operation of the postbox rule? A) If the postbox rule applies, an acceptance must be communicated and heard by the offeree before it is effective. B) If the postbox rule applies, the acceptance is effective at the point of mailing. C) For the postbox rule to apply, the offer must be made by mail. D) If the postbox rule applies, the only way for an acceptance to be effective is to send it by mail. E) For the postbox rule to apply, the offeror must make that clear when the offer is made.

27) ______

28) An ad in the morning paper read: "Brand new 2011 Ford Focus $19,499. No payment until January 2012. We make your first payment." This is an example of which of the following? A) Invitation to treat B) Bilateral contract C) Unilateral contract D) Offer E) Gratuitous promise

28) ______

29) An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll give you an IBM-compatible PC with a Roland PR-1011 printer for only $1,000!!! Pick it up today." This is an example of which of the following? A) Gratuitous promise B) Unilateral contract C) Bilateral contract D) Invitation to treat E) Offer

29) ______

30) Bob in Burnaby called Ed in Toronto and offered to sell him 40 kilograms of smoked salmon at $15 per kilogram. He requested that Ed phone him back by noon the next day. That way, Bob could offer it to someone else if Ed wasn't interested. Instead of phoning, Ed sent a letter of acceptance, in which he said that he would have his agent pick up the fish. On these facts, which of the following is false? A) If using the mail was unreasonable, the acceptance could not be effective until it was received. B) If using the mail was unreasonable, the acceptance was effective when it was mailed. C) Although a response by phone was requested, a response by mail would be effective if received before noon the next day. D) The place of formation of the contract, if there was one, was Toronto if the use of the mails was reasonable. E) The place of formation of the contract, if there was one, was Burnaby if the use of the mails was unreasonable.

30) ______

31) Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his

elec tric

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26) Which one of the following will not end an offer? A) The offeror communicates a revocation of the offer. B) The offeree makes a counter offer. C) The offeror sells the goods being offered to someone else. D) The offeror dies. E) The offer is said to be open for 3 weeks and the 3 weeks expire.

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guitar. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that On afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for Monday, breach of contract. Which of the following is true? October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocas ter guitar for $400, the offer to be open until Friday noon, Novemb er 2. Jed told the store owner to send a letter of acceptan ce since he (Jed) would be away for a few days. The store owner examine d his inventor y and mailed a letter of acceptan ce on Thursda y, Novemb er 1.

31) ______

A) The offer was revoked before the store owner accepted. B) Sending a letter by mail was not a reasonable method of acceptance. C) The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract. D) The offer lapsed before the store owner accepted. E) The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner. 32) ______

33) The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800. The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller, 5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking. Which of the following is true? A) There is no contract because Lloyd's last offer was revoked. B) There is no contract because Lloyd's last offer had lapsed after a reasonable time. C) There is a contract because at one point in the conversation Lloyd was willing to sell and the owner was willing to buy four trees. D) There is no contract because there is a presumption in law in these circumstances that the parties did not intend to create legal relationship. E) There is no contract because Lloyd's last offer had been rejected by a counter-offer.

33) ______

34) If an offeror makes an offer that states, "This offer to be open until noon tomorrow," which of the following does not, in law, end the offer? A) Lapse of the offer at the time specified B) A counter-offer by the offeree C) The insanity of the offeror D) An inquiry by the offeree E) Revocation of the offer by the offeror before the time specified, i.e., before "noon tomorrow"

34) ______

35) Jon was developing a computer program for use by owners of track clubs, which would aid them in keeping records of the members, their runs, times, injuries, etc. Eager to finish the program, Jon, in Edmonton, called his friend Sam, in Calgary, and offered him $4000 to help: five hours a working day, five days week, for five weeks. Sam said that he would have to think about it. Jon told Sam that he was eager to get going, but that he would hold the offer open until Friday, February 6, 2011, at noon. Which of the following is true? (Read each separately.) A) If Jon revokes his offer before Friday noon, Sam could sue him for breach of contract because he promised to hold it open. B) If Jon goes ahead and hires Betsy from Edmonton at noon on February 3, it would be too late for Sam to accept. C) If Sam accepts by phone within the time specified in the offer, the place of contract would be Calgary. D) If the court held that acceptance by mail was reasonable in the circumstances, if Sam

35) ______

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32) If an offer is made by mail and an acceptance by mail is requested, when does a letter revoking the previous offer actually take effect? A) At the time that it is received, if before acceptance B) At any time before a letter of acceptance is received by the offeror C) At any time before actual performance of the contract has begun D) Never. A revocation must be done in person. E) At the time that it is posted

accepts by

mail the place of contract is Edmonton. E) If Sam wants to ensure the promise to keep the offer open until noon, February 6, he should give Jon some consideration (that is, allow him to purchase an option). 36) ______

37) Which of the following is false with regard to contract law? A) A counter-offer ends an offer. B) A newspaper notice offering to pay a reward for the return of lost kittens is an invitation to treat. C) A revocation is effective only when received. D) An option is a contract in which one person is buying a period of time within which he may accept the offer contained within the option. E) An important criterion for determining the place of the contract is the place where the acceptance is effective.

37) ______

38) Jones was a caterer; Smith was a florist. Jones won a contract to provide a banquet for a convention of florists. He wanted to decorate the hall with flowers. He sent a letter to Smith describing what he wanted and asked for a price quote. Smith responded by a letter dated January 5, offering to supply the flowers for $5,000. Jones received the letter on January 10 and responded on the same date saying his price was too high and that he would pay $4,500. While that letter was in the mail but before it had been received by Smith, Jones learned that the convention was on artificial flowers and the organizers wanted no real flowers on display. On January 13, Jones quickly sent another letter telling Smith to ignore the letter of January 10 and that he wouldn't need any flowers at this time. This letter of the 13th was received on the 18th. Smith had received the letter of January 10 on January 15 and sent his letter of acceptance on the same day, and he had placed orders to his suppliers for the flowers. The letter of acceptance was received by Jones on January 20. Which of the following is true? A) If the postbox rule does apply, there is a binding contract. B) The postbox rule is irrelevant; there is no contract simply because Jones can't use the fresh flowers. C) If the postbox rule does not apply, there is a binding contract. D) Jones's offer in the letter of January 10 lapsed before acceptance. E) If the postbox rule applies, there is no contract because the letter of revocation was mailed before the letter of acceptance.

38) ______

39) Roberts has the chance to buy three adjacent city lots zoned "duplex." The most profitable return would be the building of four townhouses across the three lots, but that would necessitate getting permission from the city, and that procedure takes time. If Roberts buys a 60-day option from the seller of the properties for $400, which of the following is false? A) By buying the option, Roberts has bought a period of time during which she may or may not accept the land offer. B) The seller is bound by contract neither to sell the property to any other party nor to revoke the offer within the option period.

39) ______

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36) If you pay $1000 for a 90-day option on property offered at $200,000, which of the following is true? A) The seller of the land can revoke the offer of the land any time before acceptance. B) You have bought a 90-day period of time within which you may or may not accept the offer of the land. C) You have agreed that you will accept the offer of land within the 90-day period. D) With the signing of the option agreement, you have entered into two contractsa contract for time and another for land. E) If you do not exercise the option, you can get your $1000 back.

C) If Roberts does not exercise the option during the option period, she cannot later force the seller to sell that property to her at that price. D) If Roberts does not exercise the option, she will get her $400 back because she didn't get what she was bargaining for. E) The offer for the properties will expire at the end of the designated 60-day period. 40) ______

41) The postbox rule applies when which of the following means of communication is used? A) Electronic mail B) Mail C) Telephone D) Fax E) Microsoft Instant Messenger

41) ______

42) Carlos visited Vancouver last summer and instead of going back to Ontario he stayed and enrolled at Simon Fraser University. He needed money but didn't need things left in Ontario, including his car. In mid-December, he wrote a friend and offered to sell the car for $4,000 and told him to send him a letter with his answer. His friend received the letter on January 2, checked his financial situation, and sent a letter of acceptance January 3. Meanwhile Carlos, short of cash and not hearing from his friend, sold the car to Mr. Reno on December 31. Carlos received his friend's letter January 8. On these facts, which of the following is false? A) In order for there to be a binding contract, there must be an offer and an acceptance. B) The letter of acceptance was effective when it was received, and by then Carlos had sold the car, so there was no contract. C) Sending an acceptance by mail was a reasonable method of acceptance in this situation. D) Not all methods of acceptance are effective upon receipt by the offeror. E) The acceptance was effective before it was received, so there was a contract between Carlos and his friend.

42) ______

43) The owner of a large restaurant wanted four large pots of flowers in front of the restaurant. Laura, a landscaper, submitted her offer: four large pots with flowers for $800. The owner said he would pay $600 for that. Laura said, "For $600, I'll provide four smaller pots with flowers." The owner said, "$600 for the smaller pots with flowers plus an arrangement for the front desk." Laura said, "Forget it," and started to leave. The owner said, "All right, I'll accept your offer of $600 for the four smaller pots with flowers." Laura didn't answer; she just got into her truck and drove off. On these facts, which of following is true? A) There is a contract because at one point in the conversation Laura was willing to sell and the owner was willing to buy four smaller pots with flowers for $600. B) There is no contract because Laura's last offer had lapsed after a reasonable time. C) There is no contract because Laura's last offer had been rejected by a counter-offer, and the owner's offers had been rejected or were not accepted. D) There is no contract because Laura's last offer was revoked. E) There is no contract because there is a presumption in law in these circumstances that the

43) ______

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40) Which of the following is an offer as opposed to an "invitation to treat"? A) A notice in the catalogue from the gift shop of the Edmonton Aquarium: "15% off the price of all jewellery until January." B) A sweater displayed in the window of a shop with the price tag attached and showing. C) A notice in the Toronto Star: "I will pay $100 to whoever finds and returns my lost female calico cat which answers to the name Marx." D) An ad in a real-estate paper: "Best offer in Vancouver! 3 bedroom home in Kitsilano for only $350,000!" E) The display of goods on the shelves of Safeway.

parties did not intend to create a legal relationship. 44) ______

45) An agreement for the purchase and sale of property included the following words: "Subject to the purchaser obtaining satisfactory financing by 5 p.m. on Friday, February 22, 2011." If the court held that this subject-to clause was so vague that "the entire contract was void for uncertainty," this would mean that A) the contract was in existence but could not be enforced. B) the contract was never in existence. C) the contract was in existence but one party has the right to repudiate the contract. D) the contract is in existence but the court will not do anything to help the parties. E) the court will impose a reasonable alternative for the term in question.

45) ______

46) Berman made a documentary on the life of musician Artie Shaw. Shaw was cooperative and gave her permission to use certain songs if she received proper permissions from the copyright holders. The cost of the film was funded by her own savings, a private investor, the Canada Council, the Ontario Arts Council, and deferred salaries and material costs. In March of 1987 the film won an academy award as the best feature documentary for 1986. In November of 1987 Shaw's lawyer contacted Berman's lawyer: "... This letter states that Artie Shaw has a 35% profit participation in the motion picture... ." Which of the following accurately sets out the legal position of the parties? A) Shaw has no claim since there was no such agreement. B) The court will award Shaw a reasonable profit because it is fair. C) A public celebrity has the right to prevent this kind of exploitation if Berman refuses this demand. D) The court will imply an agreement to this effect between the parties. E) Shaw has a right to this share because the movie is about him.

46) ______

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44) The ad in the Real Estate Weekly read: "Best offer in Toronto! 3-bedroom home in the Annex for only $300,000!" This is an example of which of the following? A) Unilateral contract B) Bilateral contract C) Invitation to treat D) Legal offer E) Gratuitous promise

47) X contracted with Z. X promised to pay $500; Z promised to build a cabinet to hold X's DVD's. The essential terms included the type and quality of the wood, the dimensions, and the date of completionFebruary 13, 2011. The work went more easily than expected and Z said to X, "If you pay me another $85, I will have this finished and be out of here by February 10." X agreed. If the cabinet was done to specifications by the 10th, but X refused to pay anything, Z would be entitled in law to A) $585. B) nothing. C) $500. D) a "fair price." E) only $85.

47) ______

48) Joe contracted with Sam, agreeing to pay Sam $400 if Sam would build him a bookcase. The essential terms included the type and quality of the wood, the dimensions, and the date of completionFebruary 14, 2012. The work went more easily than expected and Sam said to Joe, "If you pay me another $50, I will have this finished and be out of here by February 8." Joe agreed. If the bookcase were done to specifications by the 8th, but Joe refused to pay anything,

Sa entitled m in law wo to uld be

48)

______ A) $450. B) nothing. C) $400 plus damages. D) $400. E) only $50. 49) ______

50) Read the following and indicate which agreement would not be a binding contract because of a problem with the requirement of consideration. Assume all the other requirements for a binding contract have been met. A) Peter agreed to pay Ace Computers Ltd. $50 above the contract price if the company would have his new computer ready ten days earlier than the date specified in the original contract. B) Mary promised in writing and under seal to give Planned Parenthood a donation of $100. C) Mr. Kooner sold a farm valued at $190,000 to his nephew for only $50,000. D) Len agreed to sell and Karen agreed to buy four of Len's records for "some money." E) John, late for work, found his car battery was dead. He flagged down a passing truck and told the driver he would pay him $8 if he would agree to do him the favour of jump-starting the car. The driver of the truck agreed.

50) ______

51) XYZ company, a distributor of auto parts, is in debt to the bank for $35,000 due on February 25, 2012. The company is having difficult times and wants to negotiate with the bank to pay only $33,000 as payment in full. With these facts in mind, which of the following statements of the law is false? A) If the bank agrees to accept the $33,000 as payment in full if paid early, by February 15, and the company does as requested, the bank could not later sue for the remainder because the company gave good consideration for the bank's forgiveness of the debt. B) If the company obtained from the bank the bank's promise to forgive the $2,000 under seal, the bank could not later sue for the remainder. C) At common law, if the bank accepted the $33,000 as payment in full, even absent additional consideration, it could not later sue for the remainder because such promises are always binding. D) So long as they don't take the money, the bank can still sue for the entire amount. E) In some jurisdictions, a statutory provision provides that the creditor who accepts less than full payment as payment in full cannot later sue for the remainder.

51) ______

52) Which of the following shows the use of the doctrine of promissory (equitable) estoppel? A) A defendant can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive the defendant some of his obligation. B) If Ho requests services from Jones and there is no mention of price, if Ho doesn't pay Jones, this doctrine can be used to force Ho to pay a reasonable amount. C) If Nancy accidentally ran her car over her neighbour's bushes, she could use the doctrine as

52) ______

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49) Which of the following is false with regard to contract law? A) A contract is unenforceable if it is required to be evidenced in writing under the Statute of Frauds and is not. B) To form a contract, there must be an offer that is accepted unconditionally. C) An exchange of promises can be consideration adequate to form a contract. D) A contract for a $50,000 boat does not have to be evidenced in writing to be a valid contract. E) The parties to a contract can always go to court and have the court declare a contract void if the consideration is not adequate, i.e. fair, even if there is no evidence of fraud, duress, undue influence, or mental incapacity.

a defence. D) Ralph told Mary that he would give her his old boat. If he doesn't, Mary could use the doctrine to force him to do so. E) This doctrine can be used by a plaintiff to enforce a written promise signed and sealed (i.e., a seal has been affixed next to the signature of the promisor). 53) ______

54) Which of the following could not be used as consideration? A) Work that was done in the past B) 50 cents C) A kilogram of green beans D) A promise to give up a legal right E) A promise to deliver three tons of steel

54) ______

55) If you owe Mr. Storr $900 for goods received and Mr. Storr agrees to take $800 in full satisfaction of the debt, which of the following is true? A) Under these circumstances, you only have to pay a reasonable price for the goods. B) At common law, such a one-sided promise is always binding and Mr. Storr could sue for the remaining $100. C) Many jurisdictions have passed legislation preventing Mr. Storr from suing you for the difference if he actually takes the $800. D) The issue of consideration is irrelevant when dealing with satisfaction of a debt. E) Even if you take the $800 to him, Mr. Storr can later sue you for the $100 on the principle of quantum meruit.

55) ______

56) George contracted with Bob to have a racing bike modified for him to be delivered on February 20, 2011, for a race on February 22. The price for the modification was agreed on$100. About February 10, George became nervous about the bike being finished on time and went to see Bob. Bob said that he was very busy, but if he really wanted to be sure that it would be finished on time, George would have to pay him an extra $25 so he could pay his employees overtime. George agreed and Bob completed the modifications as requested, on time. How much does George legally owe? A) $125 because Bob gave consideration for George's promise to pay the additional $25. B) $100 plus whatever it cost for the overtime. C) $25 because past consideration is no consideration. D) Only $100 because Bob had an existing duty to modify the bike and the price was settled. E) A reasonable amount only.

56) ______

57) Although the contract called for the delivery of three manuals, the writer had put so much effort into the first two that the buyer agreed to pay the whole contract price, $3,000, for the two instead of the three manuals. Which of the following stops the buyer from later suing the writer for breach of contract and demanding the completion of the third manual? A) No consideration given by the writer

57) ______

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53) Which of the following statements is correct with respect to the law of consideration? A) For a contract to be binding something valuable must have changed hands. This consideration may have been paid before the agreement (past consideration) or at the time of the agreement (present consideration), but future consideration is no consideration. B) Consideration need not be specific, just so both parties got something out of the deal. C) Without consideration or a seal, there can be no contract. D) The amount of consideration to be paid in a contract must be reasonable (that is, fair) from the point of view of each party. E) Consideration must have some value but need not be specific.

B) He doesn't have to pay anything because the job was not completed, and so he can even get back what he paid. C) Promissory (equitable) estoppel D) He only has to pay a reasonable price for the work done. E) Doctrine of quantum meruit 58) With regard only to the requirement of consideration, which one of the following would be a binding contract? A) An agreement between a contractor and a homeowner that the owner would pay an additional $1,000 if the contractor would complete the existing contract according to all its terms B) A promise by Mr. Brent to pay $25 to John who found and returned Brent's wallet, which Brent didn't even know he had lost until John delivered it C) A promise to give $10 exchanged for a promise to give a can of pop D) A promise by Tom to drive a co-worker to Timmins, Ontario E) A written promise, but not under seal, to give John $50 on Saturday

58) ______

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59) Indicate which of the following is the correct statement about the effect of promissory estoppel 59) ______ on a promisor. A) Promissory estoppel must be distinguished from equitable estoppel. B) Promissory estoppel has no effect on a promisor because it only relates to statements of fact, not promises. C) When a victim relies on the promise and suffers injury, he can sue the promisor for compensation even where no consideration has been given in return for that promise. D) Promissory estoppel can be used as a defence only against a promisor who reneges on his promise. E) Promissory estoppel is known as injurious reliance in the United States and has the same effect in both American and Canadian law. 60) ______

61) Which of the following is correct with respect to consideration? A) It must be reasonable. B) It is binding even though a duty to so act already exists. C) It is to compensate for an act that happened in the past. D) It must be specific. E) At least some money must be involved.

61) ______

62) Which of the following shows the use of the doctrine of promissory (equitable) estoppel? A) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee

62) ______

60) Which of the following shows the use of the doctrine of promissory (equitable) estoppel? A) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee relied on that promise. B) George wants to force Elaine to honour her promise to pay him $2. After he paid for a video they watched, she was so moved by the movie she said she would pay half the cost. C) George told Hans that he would give him his printer. If he doesn't, Hans could use the doctrine to force him to do so. D) If Lam requests services from Jones and there is no mention of price, if Lam doesn't pay Jones, this doctrine can be used to force Lam to pay a reasonable amount. E) This doctrine can be used by a plaintiff to endorse a written promise signed and sealed (i.e., a seal has been affixed next to the signature of the promisor).

relied on that promise. B) George rented a video and watched it with Elaine. She thought the movie was great and said she'd pay half the rental price. George could use the doctrine to force her to pay as she promised. C) This doctrine can be used by a plaintiff to enforce a written promise that has been signed and sealed (i.e., a seal has been affixed next to the signature of the promisor). D) Lam contracted to supply Jones with steel. Before the steel was delivered, Lam's supplier increased the price. Lam could use the doctrine to force Jones to pay more to Lam. E) Val told Jim that she would give him her printer. If she doesn't, Jim could use the doctrine to force her to do so. 63) ______

64) Which of the following statements is correct with respect to promissory estoppel (equitable estoppel)? A) Promissory estoppel refers to the principle that, where a document is in writing and under seal, it is enforceable even where there is no consideration. B) Where Barbra relies on Raylene's promise and suffers a loss, Barbra can sue Raylene for compensation even though the promise is gratuitous. C) Where Able requests services from Cain, the doctrine of promissory estoppel requires a reasonable price to be paid even where no specific amount was agreed. D) Promissory estoppel means that Donna cannot revoke her offer where she has promised to hold it open for a specific period of time. E) Where Hank and Jim have a contract and Hank releases Jim from part of Jim's obligation, Jim can use that release, even though it was given without consideration, as a defence if Hank sues for breach of contract.

64) ______

65) Sam owed Joe $6,000 due January 12, 2012. On January 1st, Joe said he'd take $5,000 in full satisfaction of the debt if Sam paid him $5,000 on January 5th instead. Sam paid on January 5th. A week later, Joe wants to sue Sam for the $1,000 he (Joe) was legally owed. Which of the following is true? A) Joe would win because his forgiveness of the loan was gratuitous, i.e. unsupported by consideration. B) Joe would lose because of the doctrine of quantum meruit. C) Joe would lose because early repayment constituted consideration to support the new arrangement. D) Joe would win because they cannot change the original deal. E) Joe would lose because of the rule that past consideration is no consideration.

65) ______

66) As property manager of a 15-unit apartment block, you receive rent payments on the first of every month from each tenant. Mrs. Lone, in apartment 105, whose rent is $500 per month, lost her job and was in dire financial difficulties. You agreed to take only $400 per month. For the last ten months, she has paid only $400 a month, but you have learned that for 4 months she has had a new and even better-paying job. You are angry that she failed to tell you this and you want to sue her for the entire amount of back rent ($1,000). Which of the following arguments could she use most effectively against you? A) Promissory estoppel

66) ______

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63) Which of the following is not correct with respect to the adequacy of consideration? A) Existing duty: a change in the contract requires new consideration B) Must be of some value; love and affection are not enough C) Need not be fair, unless there are extenuating circumstances, i.e., insanity or fraud D) Need not be present if the agreement is under seal E) Need not be legal if both parties clearly consent

B) Undue influence C) Mistake D) Breach of contract E) Duress 67) ______

68) In Bawitko Investments Ltd. v. Kernels Popcorn Ltd., what did the Court of Appeal hold? A) Oral agreements do not constitute contracts within the meaning of legislation. B) A "contract to make a contract" is enforceable at law. C) A handshake is of no force or effect unless it accompanies a written agreement. D) A "contract to make a contract" is not a contract at all. E) A handshake "seals the deal", even if essential provisions have not been determined.

68) ______

69) Why is the case of Dickinson v. Dodds important? A) It illustrates the nature of an offer. B) It clarifies that when an offeror says an offer will remain open, it must remain open. C) It confirms that contracts must be in writing to be valid. D) It says that property can be sold to two different purchasers. E) It determines that offers, once made, can never be revoked.

69) ______

70) In Martel Building Ltd. v. Canada, what did the Supreme Court of Canada decide? A) There is no requirement that bidders be treated fairly, as caveat emptor applies. B) In a call for tenders, standard form contracts must always be used. C) A call to tender is an offer to contract and a binding contract may arise when a bid is submitted. D) A call for tenders is an invitation to treat which carries with it no legal status. E) In a call for tenders, there can be no discretion.

70) ______

71) The decision in Zynik Capital Corp. v. Faris confirms A) option agreements are, by their very nature, illegal. B) a Memorandum is not a binding contract, as it is missing an essential term. C) option agreements are, by their very nature, unenforceable. D) a Memorandum is sufficient to create a binding contract. E) a Memorandum satisfies all the elements of a contract.

71) ______

72) In Lanca Contracting Ltd. v. Brant (County) Board of Education, what was the issue facing the Court and what did the Court decide? A) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be, but only if the acceptance were

72) ______

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67) You owe Mr. Store $900 for goods received and want him to take $800 in full satisfaction of the debt. Which of the following is false? A) If he agrees with you and does take the $800, even if it is paid early at his request, he can still later sue you for the $100 forgiven. His promise not to demand the $100 from you was a gratuitous promise and therefore not binding. B) If Mr. Store agreed to take the $800 as full payment, but before taking it changed his mind, he would be entitled to the entire $900. C) If he actually takes the $800 in full satisfaction of the debt, statute law in many jurisdictions prohibits him from suing you for the $100. D) If Mr. Store agreed to take the $800 as full payment in exchange for your promise to sweep the floor of his store, he cannot sue for the $100. E) If you pay the $800 before the actual due date in consideration for his taking this as full payment, he cannot sue for the other $100.

communicated in writing. B) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be. C) The Court had to decide whether a bid could result in a binding contract, and the Court decided it could not be. D) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided it had been. E) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided that only actual notice could ever suffice. 73) ______

74) What did the Court decide in Entores Ltd. v. Miles Far East Corp.? A) Because fax machines are becoming more popular, the Court created a new rule known as the fax rule exception. B) Because mail is the most common form of communication, the postbox rule does not need to be extended to telegrams. C) Because telex was instantaneous, there was no need to extend the postbox rule exception to that form of communication. D) Because the postbox rule is archaic, it should be abolished in its entirety. E) Because of the postbox rule, there is no need to specify a method of acceptance in contractual negotiations.

74) ______

75) In Gilbert Steel Ltd. v. University Construction Ltd., what did the Court find on the issue of consideration? A) A one-sided agreement is, in law, a form of unilateral contract. B) Because commercial parties dealing at arms' length were involved, a one-sided agreement is valid. C) A one-sided agreement is only binding if its essential terms are reduced to writing. D) A one-sided agreement is not enforceable. E) Because the Court will not look into the adequacy of consideration, a one-sided agreement is enforceable.

75) ______

76) Anmool verbally agreed to build a deck for Nikki for $1,000 by the 15th of September, in time for a lavish backyard barbecue she was planning. On September 13th, Nikki became concerned at Anmool's lack of progress. Anmool told Nikki he would complete the deck on time, for an additional $200. Nikki agreed and Anmool completed the deck on time. Which of the following is correct? A) Nikki does not owe Anmool anything, because his lack of professionalism vitiated the contract. B) Nikki owes Anmool $1,200, because that is what she agreed to, and such contracts are binding. C) Problems of consideration can be raised only in the commercial context, not when the parties involved are both individuals.

76) ______

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73) What was significant about the case of R. v. Commercial Credit Corp.? A) It abolished the postbox rule in Canada. B) It confirmed that acceptance by post is always appropriate. C) It determined that consideration is unnecessary in cases where consensus has been achieved in writing. D) It determined that the postbox rule should be extended letters of revocation as well as letters of acceptance. E) It is one of the few cases where the postbox rule has been extended beyond communication by mail or telegram.

D) Nikki owes Anmool $1,000; there is no binding obligation with respect to the additional $200 because Anmool had an existing duty to complete the deck on time. E) No legal obligations arise because the agreement is not in writing. 77) "Quantum meruit" means A) "as much as deserved". B) "the ultimate freedom to contract". C) "to stand on decision". D) "a shield but not a sword". E) "a meeting of the minds".

77) ______

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 78) A formal contract is one that is signed and sealed.

T or F

79) A contract is a single promise, made by one person to another, enforceable in court.

T or F

80) Only the person or group to whom an offer is made can accept it.

T or F

81) An acceptance of an offer applies when and where it is received except when it is communicated by telephone.

T or F

83) Only the essential terms of a contract must be set out in the offer.

T or F

84) All of the essential terms of a contract must be clearly specified.

T or F

85) Even though a person promises to hold an offer open for a specified period of time, the offeror can revoke that offer before that time if he feels like it.

T or F

86) Once a person has promised to hold an offer open for a specified period of time, he cannot change his mind.

T or F

87) An offer will end when the subject matter of the offer is sold to someone else.

T or F

88) The postbox rule makes it clear that, when people choose to communicate by mail, they take the risk of delay or loss, and the acceptance as a result will be binding only when or if received.

T or F

89) For the postbox rule to apply, the offer must be made by mail.

T or F

90) An invitation to treat is an offer published in the newspaper.

T or F

91) When the postbox rule applies, the place of mailing of the acceptance may determine the place of the contract.

T or F

92) If the postbox rule applies, a letter of revocation takes effect at the time of mailing.

T or F

93) A letter of revocation takes effect when received by the offeree.

T or F

94) An ad in the newspaper providing for a reward of a lost dog is an example of an invitation to treat.

T or F

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82) Generally, acceptance must be communicated to the offeror to be effective unless there has been a history of similar relations between the parties.

95) If a person offers to hold his offer open for a period of time, he can still revoke it before that time if he changes his mind.

T or F

96) When you pay for an option, this prevents a person from revoking his offer before the expiration of the specified time.

T or F

97) A revocation of an offer is effective only when it has been communicated to the offeree.

T or F

98) The courts may enforce an unfair bargain.

T or F

99) A person is required to honour a gratuitous promise if made under seal.

T or F

100) For the requirement of consideration to be satisfied, at least one of the parties must have performed what they promised.

T or F

101) The existence of a seal eliminates the need for the elements of a valid contract.

T or F

102) The promise of "love and affection" can constitute adequate consideration to support a contract.

T or F

103) The requirement of consideration is satisfied if "some money" is promised in exchange for an act.

T or F

104) The courts will use quantum meruit to determine what should be paid when a person providing services is not allowed to finish by a breaching party.

T or F

105) The courts will examine the fairness of consideration when insanity, drunkenness, or undue influence may have affected the transaction.

T or F

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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 106) Why is an understanding of contract law important for a business person? 106) ____________ 107) ____________

108) Distinguish between a formal and a simple contract.

108) ____________

109) Distinguish between a void and a voidable contract.

109) ____________

110) Distinguish between a bilateral and a unilateral contract.

110) ____________

111) If the mail is a reasonable means for accepting an offer, is there a contract formed when the offeror drops a letter of revocation in the mailbox at the very same instant that the offeree drops a letter of acceptance in the mailbox? Explain.

111) ____________

112) Jones was a caterer; Smith was a florist. Jones won a contract to provide a banquet for a convention of florists. He wanted to decorate the hall with flowers. He sent a letter to Smith, describing what he wanted and asked for a price quote. Smith responded by a letter dated January 5, offering to supply the flowers for $5,000. Jones received the letter on January 10 and responded on the same date, saying his price was too high and that he would pay $4,500. While that letter was in the mail, but before it had been received by Smith, Jones learned that the convention was on artificial flowers and the organizers wanted no real flowers on display. On January 13, Jones quickly sent another letter telling Smith to ignore the letter of January 10 and that he wouldn't need any flowers at this time. This letter of the 13th was received on the 18th. Smith had received the letter of

Janu letter of ary acceptance on 10 the same day, on and had placed Janu orders to his ary suppliers for 15 the flowers. and The letter of sent acceptance was his received by

107) List the five ingredients necessary to form a contract.

Jones on 112) January 20. Is there a contract between Jones and Smith? Explain.

____ ____ ____

113) ____________

114) Distinguish between an offer and an invitation.

114) ____________

115) What must be present in an offer before it qualifies as such?

115) ____________

116) "A good example of an offer is goods placed on the shelves in a self-service merchandising situation, so long as they are clearly marked in price." Explain the accuracy of that statement.

116) ____________

117) Sam had been a friend of Joe's for a considerable period of time and had often accompanied him as he sailed his classic yacht. Sam had often communicated to Joe how much he would like to have it. On Friday night, a friend told Joe that Sam had suffered some business reverses and was going to have to get rid of the yacht. Joe immediately wrote Sam a letter offering to purchase the yacht for $25,000. Unknown to Joe, Sam had written Joe a similar letter offering to sell the yacht for $25,000. These two letters had passed in the mail. Joe received Sam's letter about 12 noon on Saturday, and Sam received Joe's letter about 2:30 p.m. on Saturday. Are these people bound in contract? Explain.

117) ____________

118) Joe drove his car to a shopping mall and parked it there to attend a movie. The place where he parked was designated as a one-hour parking space on a sign at the entrance where Joe drove in. There were many similar signs around the shopping mall stating that people were parking their cars at their own risk. But this particular sign said that the time limit for parking there was one hour, and as a term of the contract anyone parking over this one-hour limit would have to pay a fee of $60. When Joe got out of the movie, he found a ticket on his car (a demand for payment of the $60). He refused to pay and was sued. What would be Joe's defence in these circumstances?

118) ____________

119) Joe offered to sell Harry his car and agreed to hold the offer open for one week, expiring Saturday at noon. The following Sunday, Harry phoned Joe to tell him that he decided to accept his offer and purchase his car. Joe said at that time that he had decided to keep the car and was just about to phone Harry to revoke the offer. Harry said, "Too bad," and demanded performance of the contract. Explain the legal responsibilities of the parties.

119) ____________

120) Joe offered to sell Harry his car for a specific price, and Harry indicated that he needed some time to think about it. Two days later, Joe sold the car to a third party. That afternoon Harry phoned up and told Joe that he decided to accept the offer and that he'd buy the car. Joe told him that it was too late; he had sold it to someone else. Harry said

that ed to him first, it and he insisted was that he go offer through with

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113) "For a contract to be binding, both parties must have a clear understanding of all the terms of that agreement." Discuss the accuracy of that statement.

the 120) contract. Explain the legal liability of the parties.

____ ____ ____

121) Joe offered to sell Harry his car for $500, but Harry said he needed some time to think 121) ____________ about it. A couple of days later, Harry phoned back saying that he'd give Joe $450 for the car. Joe refused to take this. Then Harry said, "All right, I'll accept your offer for $500." Joe said that he'd changed his mind and refused to go through with the deal. Harry sued. Explain Joe's legal liability. 122) ____________

123) Joe offered to sell Harry his car for $500. Harry responded by saying, "I accept, providing you install a new radio in that car." Explain the legal relationship between the two parties.

123) ____________

124) Mary received a non-solicited selection of compact discs in the mail, with a letter informing her that she was now a member of the CD of the month club. It also said that if she didn't want these CDs, she could simply send them back; otherwise, she would be billed $10 for each CD at the end of the month. She simply put them away, and did not respond. They continued to send her more CDs each month until she had received 100 of them over a period of 10 months. The club then sent her a letter demanding payment; otherwise, they would take legal action. Explain her legal obligation in these circumstances.

124) ____________

125) Explain the nature of the postbox rule.

125) ____________

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122) Indicate how consumers are protected in standard form contract situations.

126) Harry saw Joe in his classic Buick at a local drive-in restaurant, and told Joe that he'd 126) ____________ like to buy it. He offered him $1,500. Joe said he had to think about it and that he'd let Harry know. Two days later, Joe decided that he needed the money and couldn't afford to keep the car. He wrote Harry a letter accepting his offer and mailed it that afternoon. The next day, Harry phoned telling Joe he'd changed his mind and that he needed the money for something else. Joe told him about the letter, and in fact Harry received the letter that day after the telephone conversation in which he attempted to revoke the offer. Joe insisted on going through with the deal. Explain the legal liability of the parties. 127) Harry saw Joe in his classic Buick at a local drive-in restaurant and talked about wanting to buy it. Joe offered to sell it to him for $1,500. Harry said he needed some time to think about it and that he would send him a letter. The next day, Joe changed his mind and mailed Harry a letter of revocation. The day after that, before Harry had received the letter of revocation, he sent a letter of acceptance to Joe. The next day the two letters arrived at their various destinations, Joe receiving Harry's letter of acceptance just after Harry received Joe's letter of revocation. Explain the legal liabilities of the parties.

127) ____________

128) Is an "agreement to agree" binding?

128) ____________

129) What are the ways in which an offer can come to an end prior to acceptance?

129) ____________

130) When is an offer incapable of being revoked?

130) ____________

131) What is "quantum meruit"?

131) ____________

132) What is promissory estoppel?

132) ____________

133) What is a "gratuitous promise"?

133) ____________

134) To what does a "standard form contract" refer?

134) ____________

135) What is an interim agreement?

135) ____________

136) What is a "subject-to clause"?

136) ____________

137) What would be the result if a police officer arrived at the scene of crime in progress and demanded money from the victim to arrest the offender?

137) ____________

138) From the point of view of consideration, would there be an issue if an off-duty police officer were hired to provide security services?

138) ____________

139) A reasonable price paid for requested services is referred to in law as ________.

139) ____________

140) There is a principle that says when a gratuitous promise to do something in the future causes someone to incur an expense, the promisor may be liable for failing to live up to that promise. What is this principle known as?

140) ____________

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141) ____________

142) A contract with fixed terms prepared by a business is known as ________.

142) ____________

143) A binding contract that will subsequently be put into a more formal document is known as ________.

143) ____________

144) A term making a contract conditional on future events is known as ________.

144) ____________

145) On Friday, Harlan offers to sell Lily his motorcycle for $1,000. When Lily hesitates, Harlan tells her to take her time deciding, promising her he would give her the weekend to make up her mind. On Saturday, Harlan runs into Lily at the mall and informs her he has sold the bike to Angie instead. What recourse does Lily have?

145) ____________

146) Discuss the implications of a creditor agreeing to take less in full satisfaction of a debt.

146) ____________

141) A one-sided promise the courts will not enforce is known as ________.

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 147) In the Pharmaceutical case, it was decided that goods displayed on the shelf in a self-service merchandising situation were an invitation to treat, rather than an offer. Discuss. 148) Explain the postbox rule and discuss its relevancy in the modern business world. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 149) One of the requirements in a contract is that there be an exchange of consideration 149) ____________ between the parties. Explain what is meant by consideration.

150) ____________

151) "One of the basic precepts in contract law is that any bargain struck must be fair to be enforceable." Explain the accuracy of that statement.

151) ____________

152) Joe, a university student, parked his car near Harry's garage and went away to attend classes. Harry had noticed that there was glass on the street when he came to work that morning and was not surprised when he saw that several of the students' cars parked in that location subsequently had flat tires. He went around when he had time during the day, to each of those cars, fixed the tires and put a bill on each vehicle charging $15 for the service. Joe had come back during the day and noticed his flat tire, and when he came back that evening was grateful that it had been fixed. He went over to the garage to thank Harry and told him that he would be happy to pay the $15, but he couldn't do it until next week. In fact, he failed to pay the money, and Harry sued him for breach of contract. Explain the likely outcome.

152) ____________

153) Joe owed Sam $500. Two days before the money was due, he came to Sam and told him he couldn't pay the $500, but if Sam would accept $300 right then, in full satisfaction of the debt, he would pay him that amount. Sam agreed, then later sued for the other $200. Will he win?

153) ____________

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150) Joe made an offer to sell his car to Harry, promising to keep the offer open for a week. However, he changed his mind, sold the car to someone else, and phoned Harry to inform him that he was withdrawing his offer because he had sold the car to someone else. Harry was angry and said that he wanted the car and was going to hold him to his promise to hold the offer open for a week. He sued for breach of contract. Will he win? Explain.

154) ____________

155) Joe drove his car into Sam's garage to have some repair work done on the motor. He told Sam to fix the carburetor. Sam worked on it most of the afternoon and found he had to rebuild the carburetor. He presented Joe with a bill for $250 when he returned. Joe refused to pay, saying that he had taken a law course and knew that, because they didn't agree to a specific consideration ahead of time, he was not bound in contract. Was he correct? Explain.

155) ____________

156) Explain any limitations on the availability of promissory estoppel.

156) ____________

157) Joe was a contractor and hired subtrades to help build his houses. Sam was a framer and had agreed to frame four houses for Joe for a set price. Joe was to supply the materials. After two houses were completed, Joe's suppliers increased the cost of lumber, and Joe told Sam that he could no longer pay him the amount that they'd agreed. Sam agreed to take 15% less for the other two jobs, which were then completed. During this time, regular payments were made from Joe to Sam, but the total amount received was 15% lower than the originally agreed on price for the last two jobs. Sam sued Joe for the original contract price, claiming that he'd received no consideration for his agreement to take less for the last two jobs. Explain what defences may be available to Joe under these circumstances and his likelihood of success.

157) ____________

154) Joe owed Sam $500. Two days after the money was due, he came to Sam saying he couldn't pay the $500, but if Sam would accept $300 as full payment, Joe would pay him right then and there. Sam agreed and the money was paid. Sam then sued for the other $200. Will he win?

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 158) Discuss the requirement of consensus in the formation of contract. In your answer, consider the role of offer and acceptance, and also look at the degree of understanding required between the parties. 159) Explain the principle of promissory estoppel and how it relates to the requirement of consideration in contract law. In your answer, explain any limitations on its availability. 160) Discuss the requirement of consideration and its role and value in the formation of contracts. In your answer, make sure to deal with the issue of fairness in the bargaining process. 161) Discuss the "freedom of contract," explaining what the implications and limitations are in the context of contract law. 162) Discuss the requirements for a valid offer, explaining both how an offer is to be communicated and how such an offer can be brought to an end.

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1) E 2) A 3) E 4) B 5) D 6) C 7) D 8) E 9) D 10) E 11) B 12) E 13) C 14) E 15) C 16) D 17) A 18) D 19) B 20) B 21) C 22) A 23) B 24) C 25) B 26) C 27) B 28) A 29) D 30) B 31) E 32) A 33) E 34) D 35) E 36) B 37) B 38) A 39) D 40) C 41) B 42) B 43) C 44) C 45) B 46) A 47) A 48) A 49) E 50) D 51) C

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52) A 53) C 54) A 55) C 56) D 57) C 58) C 59) D 60) A 61) D 62) A 63) E 64) E 65) C 66) A 67) A 68) D 69) A 70) C 71) B 72) D 73) E 74) C 75) D 76) D 77) A 78) TRUE 79) FALSE 80) TRUE 81) FALSE 82) TRUE 83) TRUE 84) TRUE 85) TRUE 86) FALSE 87) FALSE 88) FALSE 89) FALSE 90) FALSE 91) TRUE 92) FALSE 93) TRUE 94) FALSE 95) TRUE 96) TRUE 97) TRUE 98) TRUE 99) TRUE 100) FALSE 101) FALSE 102) FALSE 103) FALSE

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104) TRUE 105) TRUE 106) Most commercial transactions have contracts at their base. 107) Consensus (including offer and acceptance), consideration, capacity, legality and intention. Writing is not a requirement. 108) A formal contract is under seal. Simple contracts are either written and not under seal or oral agreements. 109) A void contract never was a contract and the agreement is simply of no effect. A voidable contract is a binding contractual agreement, but one of the parties has the right to get out of it. Until that right is exercised, it is binding. This can have a significant effect on the position of a third party. 110) A unilateral contract is one where the acceptance is made by the performance of the consideration requested in the offer. A bilateral contract involves a separate offer and acceptance, independent of the actual performance of the agreement. 111) The revocation is effective only when received; however, the acceptance is effective when mailed because of the postbox rule. Hence, this is a binding contract. 112) Because the parties are communicating by mail, acceptance by this method is appropriate. The revocation sent January 13 was effective only when received on January 18. The acceptance of the counter-offer sent on January 15 was effective when mailed; hence, a contract existed as of that time. 113) It's only necessary that the terms of the agreement are clear and unambiguous. One party's failure to read or understand the clear provisions of a contract will not effect the validity of that agreement. 114) An invitation to treat is an advertisement or other form of inducement to encourage someone to come and deal or negotiate and has no legal significance. An offer is a clear indication by one of the parties that they are willing to be bound by certain terms if the other party accepts. The offer is the first stage of the creation of the contract, whereas the invitation to treat is merely the communication process that takes place to bring the parties to the point where one makes the offer. 115) All of the important terms of the offer must be stated. The lesser terms can be implied, providing there is nothing in the offer indicating that something has been left out. Usually the important terms involve a description of the parties involved, the price involved, and the property or item. 116) This is inaccurate according to the case The Pharmaceutical Society of Great Britain vs. Boots Cash Chemists. Goods displayed in such a manner are invitations to treat, not offers. 117) No, they are not. There must be meeting of the minds. These letters merely indicate that one is willing to sell and the other willing to buy. There must be an indication that both understand that the deal has been made. There must be an offer and an acceptance. Here it's just an exchange of offers. 118) Joe would either claim that there was no contract or that, if there was, these terms did not bind him, as they have not been properly brought to his attention. The sign at the entrance way to that area of the parking lot was too similar to the other signs, and he had no reason to suppose that what was set out on it was different. The owners should have known that he'd be driving past and couldn't take the time to stop and look; therefore, he's not bound by the terms and doesn't have to pay the $60. 119) There is no contract. The offer expired at the end of a specific time (Saturday at noon) before there was an attempt to accept it. 120) This is a binding contract, assuming that the offer had been accepted within a reasonable time. The fact that the car was sold to someone else does not automatically revoke the offer. Such a revocation by conduct must still be communicated to be effective. 121) In this case, when Harry said he'd give him $450, that was a counter-offer, which wiped out the original offer. It was too late for Harry to accept the original $500 offer, since it had lapsed. At most, his supposed "acceptance" was another offer to purchase for $500, which was not accepted by Joe. 122) These contractual terms are strictly interpreted and must be extremely clear where they bestow a benefit on the merchant at the expense of the consumer. Also, legislation has been passed, such as the Sale of Goods Act and various forms of consumer protection legislation, protecting the position of the consumer. 123) This is not a contract. The acceptance was qualified or conditional; therefore, it was a counter-offer and not an acceptance. Joe is free to accept it or reject it. 124) There is no contract under these circumstances. Her silence was not an acceptance. Had she already joined the CD of the month club, however, and then failed to send back CDs she didn't want, she would have likely been liable

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beca use of the ongoing relation she had established. 125) When it is appropriate to respond by mail, the acceptance is effective when and where dropped in the mailbox. 126) This can really go both ways. If it was reasonable to respond by mail in these circumstances, then the postbox rule applies. The contract came into existence when the letter was posted, and there is a binding contract. If it wasn't reasonable to respond by mail, then the acceptance must be communicated, and so the acceptance would not be effective until received, which was after the attempted revocation. Therefore, there would be no contract. 127) There is a legally binding contract here. Although the letter of revocation was sent before the letter of acceptance, the letter of revocation cannot be effective until received. Because the parties understood that they'd be communicating by mail, the letter of acceptance is effective when dropped in the mailbox, because of the postbox rule. Therefore, the contract came into existence at that time, before any letter of revocation was received. 128) No. An offer must include all of the important terms, and be accepted, before a binding agreement will result. 129) (1) End of a specified time, (2) end of a reasonable time, (3) death or insanity of the offeror, (4) revocation of the offer, (5) rejection and counteroffer. 130) Where an option exists, where a subsidiary contract is implied, or where performance has begun in a situation involving a unilateral offer. 131) The term means "as much as is deserved". It is a reasonable price paid for requested services. 132) A principle that when a gratuitous promise to do something in the future causes someone to incur an expense, the promisor may be liable for failing to live up to that promise. 133) A one-sided agreement the courts will not enforce. 134) To a contract with fixed terms prepared by a business. 135) A binding contract that will subsequently be put into a more formal document. 136) A term making a contract conditional on future events. 137) Such a contract would be against public policy and void. 138) Such a contract would likely be valid, as the officer is on his or her own time and not otherwise obligated to provide such services. 139) Quantum meruit 140) Promissory estoppel 141) A gratuitous promise 142) A standard form contract 143) An interim agreement 144) A subject-to clause 145) Lily is out of luck. Harlan's promise to keep the offer open was a gratuitous promise and not binding. If Lily had wanted Harlan to be legally bound to keep the offer open, she would have needed to give him something in return. 146) Under the common law, a gratuitous debt reduction is not enforceable; even if the partial payment is made, a creditor can still sue for the remainder. Many jurisdictions have passed legislation overruling this common law position, if there is actual payment of the lesser sum. 147) This question gives students the opportunity to deal with the whole subject of offer and acceptance, including invitation to treat in the bargaining process. In fact, it is very difficult to determine at what point an invitation ends and an offer starts. It can be argued that the Pharmaceutical case goes too far, that the judge's reasoning was flawed, and that these goods should have been an offer, not an invitation. In any case, students should distinguish between an invitation and an offer, clearly indicating that an invitation is just a method of encouraging the prospective customer to enter the bargaining process, bestowing no rights on the parties. The offer, on the other hand, is the first stage of the process bestowing on the offeree a legal power he didn't have beforethat is, the right to accept and create a binding contract. Students should indicate that they know what difference it makes if the goods on the shelf are an invitation or an offer. This essay question is less difficult, but it does give students an opportunity to demonstrate that they understand the essential elements of the bargaining process. 148) This question requires students to demonstrate an understanding of the postbox rule, and in the process, also demonstrate a clear understanding of how the bargaining process works and the elements of offer and acceptance. Students should demonstrate an understanding of the rule itself: it only applies to an acceptance, and when applied, it makes the acceptance effective when and where sent, as opposed to the normal requirement that an acceptance is effective only where communicated to the offeror. It should also be clear that they understand that the rule can affect not only when a contract comes into existence (especially the problem of whether the offer was accepted

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befor made (which can determine what law applies and whether a court has jurisdiction). They must show an e it understanding that the postbox rule is an exception, and that it likely only applies to an acceptance. In any case, it expir clearly will not apply to other communication from the offeror, such as a revocation (Henthorn v. Fraser). I would ed) expect students to give an indication of how the rule arosethat it was simply to facilitate the needs of business but when communicating at a distance, giving certainty to their dealingand is not buried in some great principle of also jurisprudence. Students should show that they understand that the rule only applies when it is appropriate to wher respond by mail, not every time the postal service is used. It is vital that students discuss the implications of the e the rule in our modern electronic society. They should indicate an understanding of the principle developed in the contr Entores case; that is, where instantaneous communications such as the telephone are in use, the rule will not apply. act It is highly unlikely that the postbox rule will be applied to fax and e-mail, even though it was extended to was telegrams in the past. 149) Consideration is usually thought of as the price one pays for what has been bargained for in the contract. Both sides must pay a price and both sides must receive a benefit. But consideration is better thought of as the commitment of the parties to pay that price, whether it be in the form of money or some other benefit. 150) No, he won't. The offer was effectively revoked before the acceptance was made. The promise to hold the offer for a week is not binding unless there is some added consideration making it an option. 151) It's only necessary that the consideration involved has some value. It's not necessary that it be fair or reasonable. 152) Harry would lose. This is an example of past consideration, and past consideration is no consideration. At the time the work was done, no bargain had been struck. 153) He received payment two days early; this is sufficient consideration to support the lower payment 154) Probably not (depends on the jurisdiction). Most provinces have a statute in place, such as BC's Law and Equity Act, which says that, if you agree to take less in full satisfaction of a debt and in fact take the money, you can't sue for the difference. 155) This is an example of a request for services, and in such circumstances, there is an obligation to pay a reasonable amount (quantum meruit). He could challenge the reasonableness of the charge, but he must pay a reasonable amount for the services requested and rendered. 156) It can be used only as a defence, not as a cause of action ("as a shield but not a sword"). 157) Promissory estoppel. Sam agreed to take less for the services that were performed on the last two jobs. This promise was relied on by Joe; therefore, he can use Sam's promise as a defence. 158) Consensus is the first element discussed that must be present for a contract to exist. Usually most attention is focused on offer and acceptance, and to answer this question, students should show a good understanding of these requirements. This discussion should include the difference between an offer and an invitation to treat, as well as an understanding that it is the offer that contains the terms of the contract and that all major terms must be clear in that offer, although some minor ones can be implied. As far as acceptance is concerned, it should be clear that students know that consensus is not effective until communicated, thus completing the connection between the minds of the parties. They should also show an understanding of the operation of the postbox rule. But a vital component of the answer should relate to the concept of the meeting of the minds between the parties. It is not necessary that all parties understand the agreement or even that they have read the agreement, only that the terms are clear and that, had they read it, they could have understood it. This is an objective rather than a subjective test. Students can also deal with the problems of mistake, if they have read the relevant chapter. They then will discuss how the court deals with a mistake over the terms where both parties have a different understanding. Here the court will apply the principle that the reasonable expectations of the parties are to be enforced, and will apply whichever version is more reasonable. When both are equally reasonable, consensus is destroyed and there is no contract. 159) Here students are expected to show an understanding of the requirement of consideration in the law of contract. Consideration requires commitments or promises be made by both parties in order for there to be a binding contract. Where only one of the parties makes a commitment, this is a gratuitous promise and is not enforceable as a contract. Promissory estoppel, which is an equitable principle developed in the courts of England, provides that in some limited circumstances a person might be bound even by his gratuitous promise. Usually this is best illustrated by example. The vital point to make is that, in Canada at least, promissory estoppel can be used only as a defence, not as a cause of action. It is difficult to come up with a situation where it can be used because it requires that the person suing must be the person who made the promise to be enforced. This can only happen where there is some

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prior the parties that was modified by the gratuitous promise and then the person making the promise is ignoring that legal promise and trying to sue to enforce the original right prior to the modification by the promise. Usually this is oblig simply a situation where a prior contractual right is being discharged or modified by the gratuitous promise. It will ation take a bright student to explain this properly but a very bright student should also indicate that promissory existi estoppel can only be used where the person using it relied on the promise in some way that they will suffer a ng detriment if it is not honoured. The essentials are that the student demonstrate that this principle will only be used betw where there is a one-sided promise and where it is being used as a defence, not as a cause of action. een 160) Here students should deal with the nature of consideration. The essential nature of a bargain is that parties negotiate, eventually reaching a point where they are willing to exchange commitments that are to their mutual advantage. This is the heart of the marketplace, and contract law and the concept of consideration are key. A free bargaining process and the role of bargaining in the marketplace require that the courts don't try to make bargains for the parties. The courts can't interfere, or it would disrupt that market function. The courts, as a general rule, won't concern themselves with whether a bargain was fair or not, or worry about the adequacy of the consideration given; that is the objective of bargaining. But if there is no consideration at all, it is clear there has been no bargain struck, and so the courts will find no contract. Students' answers should show an understanding of this bargaining nature of contract law and also an understanding of why consideration is required but that it does not have to be fair. But there are exceptions. Where there have been unconscionable contracts, the courts will look at the fairness of the bargain. Where there is a question of undue influence, insanity, or misrepresentation, the courts will look at the fairness of the consideration. But all of these relate to a breakdown in the market system, where the parties bargaining are not functioning at the same level, and so there is a consistency in the courts' approach to the need for consideration even in these exceptions. 161) Here students should first identify that what parties agree to in terms of contract law is generally unrestricted. It is important to note that this has implications in that the Courts do not look into the overall fairness or wisdom in a particular contract, but there are limits. As long as certain basic common law and statutory requirements have been met, parties are free to enter into whatever contractual arrangement suits them. The bargain struck does not need to be inherently "fair", as long as it meets the fundamental requirements of consensus, consideration, capacity, legality and intent. It is also important to raise that the freedom of contract is restricted somewhat by legislation. Good students will note that sale of goods, consumer protection, employment and other legislation do place limits on this freedom. 162) A valid offer must contain all of the essential terms to be included in the contract (although some insignificant terms can be implied). Offers must be distinguished from invitations to treat (which are part of the pre-negotiation process and without legal effect). An offer may be implied by conduct. Offers, however, must be communicated and can only be accepted by someone to whom the offer was made. Important terms, especially exemption clauses, must be disclosed. For an offer to be accepted, it must be in force at the time of acceptance. An offer can come to an prior to acceptance in a number of ways: end of a specified time, expiration of a reasonable time, death or insanity of the offeror, revocation of the offer, or rejection or counteroffer. Other factors can affect the existence of an offer as well, such as if an activity contemplated by the contract becomes illegal or if the subject matter of the contract is destroyed. Some offers cannot be revoked, such as where an option exists, where a subsidiary contract may be implied, or if performance has begun in respect of a unilateral offer.

Chapter 7

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which one of the following categories of persons do not have their capacity to enter into 1) _______ contracts limited? A) Infants B) Married women C) Status Indians D) Bankrupts E) Insane or intoxicated persons 2) _______

3) A provision in a contract for the sale and purchase of a business read as follows: "The vendor (Jones) shall not, directly or indirectly, in any capacity whatsoever, carry on a similar business in any location for one year." Six months later, Kates found that Jones was competing directly by opening up a similar business, contrary to the contract drafted by Kates. Kates sued Jones for breach of contract, namely, breach of the restrictive covenant. Which of the following best describes the legal position of the parties? A) Such provisions are always void, being an illegal restraint of trade. B) Agreements such as these are always binding, being the result of a free bargain between the parties. C) Although this provision would be void, the remainder of the contract for the sale of the business would be enforceable. D) This provision is in restraint of trade and causes the whole contract to be void. E) Although this type of provision is illegal, this particular one would be enforceable because it is reasonable between the parties and not contrary to public policy.

3) _______

4) Given the provisions of the Statute of Frauds, which of the following contracts should be evidenced in writing? A) A sale of goods involving $4 B) A sale of land C) Domestic agreements D) A retainer with a lawyer E) An employment contract

4) _______

5) Mr. Buyer, the plaintiff in the action, was attempting to enforce a contract in which the defendant, Mr. Seller agreed to sell to buyer his property, Blackacre, for $100,000. Which of the following, by itself, would be sufficient to allow Mr. Seller to get out of the contract? A) The $100,000 was not enough, not fair.

5) _______

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2) Which of the following is true with regard to the intention of the parties to an agreement to enter into a legal relationship? Where appropriate, assume that all the other elements necessary to form a contract are present. A) Parties may expressly state their intention to be legally bound, in which case the court need not rely on presumptions. B) An intention to be legally bound is not a necessary element of a contract. C) The court makes presumptions about the intention of parties to be bound, whether that presumption may be rebutted by evidence to the contrary, makes no difference to the court. D) Since family matters are private matters, an agreement between a husband and wife to transfer property from the husband to the wife could not be a contract even if all the other elements of a contract were present. E) The court will presume there is always an intent to be legally bound in family situations.

B) At the time of the contract, unknown to Mr. Buyer, Mr. Seller did not understand the quality and nature of this act because of mental incapacity. C) Mr. Buyer referred to essential terms in a letter sent to Mr. Seller. D) There was only a verbal agreement between Mr. Seller and Mr. Buyer. E) Although both parties agreed to this, there had not actually been any money paid on the contract, not even a deposit or a down payment. 6) _______

7) Which one of the following is an example of a contract that is binding on an infant in jurisdictions other than British Columbia? A) A contract to purchase a new stereo B) A contract for rent C) A contract for baseball tickets D) A contract for a camera E) A contract for professional hairstyling

7) _______

8) Which one of the following is an example of a contract that is binding on an infant in British Columbia? A) A contract for a student loan B) A contract to purchase a new stereo C) A contract for a camera D) A contract for rent E) A contract for baseball tickets

8) _______

9) Parents are responsible for their children's actions in which one of the following situations? A) Where an infant borrows money for college tuition B) Where a child purchases a needed new jacket C) Where the child carelessly breaks a window in a neighbour's house D) Where an infant was acting as agent for the parents E) Where the child enters into a contract for a new stereo

9) _______

10) All of the following contracts would be illegal, and not binding on the parties, except A) a contract in which lawyer agrees to represent an accused where the accused did commit the crime. B) a contract whereby one person agrees to spread false and damaging information about another. C) the act of paying for sexual favours (prostitution). D) a contract whereby one person agrees to sell a banned substance (e.g., cocaine) to another. E) a contract between camera dealers whereby they agree not to sell a specific model of camera below a specified price.

10) ______

11) Joe was in a bar and saw his friend Sam. Sam had a considerable amount to drink. Sam offered to sell Joe his Porsche automobile for only $15,000. Joe made sure to have Sam sign a written agreement to that effect. The next day, Joe went to pick up the car, but Sam didn't remember

any about it. thin Even g when

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6) Which of the following contracts is void? A) Any contract with a status Indian. B) A contract containing an exculpatory clause limiting the liability of one of the parties. C) A contract with an insane person for a T.V., where the insane person, or his legal representative, can prove that he was insane at the time of the contract but cannot prove anything else about the incident. D) A contract to sell a crop of marijuana growing in a particular field. E) A contract with an insane person for necessaries such as food and shelter.

___ ___

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Joe 11) showed him the written agreeme nt signed by him, Sam refused to deliver the car. Joe sued. Which of the followin g correctly states the legal position of the parties? A) Sam will not have to go through with the deal because no money has yet changed hands. B) As long as Joe can produce the agreement in writing, there is nothing Sam can do to get out of the deal. Once Sam has signed the document, he is responsible for its contents. C) If Joe can show that there was no indication that Sam was drunk, even though Sam was completely incapacitated, he will be required to go through with the deal. D) Sam just has to show he was legally intoxicated, and he will not be bound. E) Being drunk is no excuse; the contract is binding.

12) ______

13) Requirements of a contract include capacity of the parties to contract, legality, and intention of the parties to be legally bound. Which of the following is false with regard to these elements? A) A restrictive covenant prohibiting one party to the contract from competing with the other is enforceable if it is reasonable between the parties and not contrary to public policy. B) A seller that contracts with an infant cannot avoid the difficulties of enforcing the contract by suing him in tort instead of breach of contract. C) The court can presume the intention of the parties to be legally bound, but a party to the contract can bring forward contrary evidence to rebut the presumption.

13) ______

12) When John bought a car from his father's old classmate, Joe, he was only seventeen years old. The price of the car was $5000. He paid $1000 down and was to pay the remaining $4000 over time. With these facts in mind, which of the following statements is true? (Read each statement separately.) A) If Joe didn't realize John was only 17 years old, he can enforce the contract against him no matter what his age. B) Even if the car is defective, John could not sue Joe. C) If John has an accident and refuses to pay the balance, Joe could successfully sue John for breach of contract. D) If John has an accident because of his negligent driving and he refuses to pay, Joe could successfully sue him in negligence to get around any difficulty in suing him in contract. E) If the car is defective, John could sue Joe for breach even though Joe could not sue him.

D) A person with mental incapacity might still be held to a contract even if, at the time of the contract, he didn't understand the nature and quality of his act. E) If an adult cannot sue the other party to the contract because he is a minor, neither can the infant sue the adult. 14) ______

15) Which one of the following correctly indicates the position of the parties in respect to contracts involving minors? A) Contracts with minors are unenforceable by the infant against the adult and by the adult against the infant. B) All contracts with minors are void. C) An infant can enforce a contract made by an adult with him despite that fact that he is a minor. D) Contracts with minors are void, except beneficial contracts of service. E) An adult cannot sue the infant on the contract even if the infant affirms the contract after reaching the age of majority.

15) ______

16) Which of the following is incorrect with respect to the law of infants and their parents? A) As a general rule, parents are not responsible for the contracts of their children. B) A parent can be liable for a tort committed by her child if it can be shown that the parent was negligent as well. C) A parent is responsible for the debt of his child if that parent has guaranteed the loan. D) As a general rule, parents are not responsible for the torts of their children. E) A parent is responsible for the obligations of her children in both tort and contract law.

16) ______

17) In jurisdictions other than British Columbia, which of the following is correct with respect to the law of infants? A) An adult cannot enforce any contract against an infant while the infant is still under age unless the contract is made binding by another statute (e.g., government student loans). B) An infant is not bound to repay his government student loan. C) If the adult did not know he was dealing with an infant, the adult is not bound by the contract. D) A contract with an infant is "absolutely void" except those contracts for necessaries and beneficial contracts of service. E) An infant is bound by his contract for necessaries and beneficial contracts of service.

17) ______

18) In British Columbia, which of the following is correct with respect to the law of infants? A) An adult cannot enforce any contract against an infant while the infant is still under age

18) ______

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14) Clem had wanted a piano for a long time. Although he was a minor, his mom gave him $300 and he took this with some savings and made a $500 down payment on a $3,000 piano. The balance was to be paid over a three-year period. His mom signed the contract as a guarantor. Clem made the first three payments, but he damaged the piano trying to move it from the living room to his upstairs bedroom. He didn't have the money to get it fixed. He quit playing, lost interest, and quit making his payments. On these facts, which of the following is false? A) Unless Clem affirms the contract or partly performs the contract after he reaches the age of majority, the seller cannot get any compensation from him. B) Because Clem is an infant, he cannot sue the seller, even if the piano is defective. C) Clem's mother will be liable on the guarantee only if it is in writing. D) Although the contract is unenforceable against Clem, if he affirms the contract after he reaches the age of majority, the seller will be able to sue him for breach of contract. E) If Clem's mother guaranteed the deal, she would be liable on her guarantee even if the contract were unenforceable against Clem.

unless the

contract is made binding by another statute (e.g., government student loans). B) If the adult did not know he was dealing with an infant, the adult is not bound by the contract. C) A contract with an infant is "absolutely void" except those contracts for necessaries and beneficial contracts of service. D) An infant is not bound to repay his government student loan. E) An infant is bound by his contract for necessaries and beneficial contracts of service.

19) Which of the following is incorrect with respect to the law of incapacity? A) Married women are no longer incapacitated. B) Even after the passage of the Charter of Rights and Freedoms, some contracts entered into with status Indians cannot be enforced. C) Trade unions may have limited capacity to contract. D) Some Crown corporations have limited capacity to contract. E) To escape a contract on the basis of insanity, the insane person need only show that he did not know what he was doing at the time the contract was formed.

19) ______

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20) In his last year of high school, Larry, a minor, saw a friend's computer and felt that the 20) ______ word-processing function would help him get through high school. He visited Computer Heaven Ltd. and contracted for an Apple Macintosh, printer, paper, and the program. The total cost was $4,000. He paid $1,800 down and promised to pay another $300 next July 3, his birthday, the remainder to be paid in monthly installments of $100. Larry made the July 3 payment and some of the monthly payments, but by then had graduated, thanks to his passing mark in English, and didn't have a use for the computer anymore. Furthermore, he wanted to save his money for a down payment on a compact disc player and speakers. When he quit making payments to Computer Heaven, the balance outstanding was $1,700. On these facts, which of the following is true? A) Computer Heaven Ltd. can enforce the contract even though he is a minor because Larry has paid over one half of the agreed-upon price. B) Computer Heaven Ltd. can sue Larry for breach of contract if it sues Larry after he reaches the age of majority. C) Computer Heaven Ltd.'s only chance for any money would be if Larry accidentally causes the computer to break down. In that instance, it could sue Larry for negligence to get around the difficulties in contract law. D) If the July 3 payment was made after he reached the age of majority, Computer Heaven Ltd. can successfully sue Larry for breach of contract. E) Computer Heaven Ltd. must suffer the loss because all contracts with minors are void. 21) One afternoon while Mr. Reston was going home on the bus, his neighbour, Mr. Outovit, offered to sell Reston his car for $4,000, a bit below the market value. Reston said, "You might change your mind on that. Better not be too hasty with your offers." Outovit answered, "I want to sell it quickly," and wrote on the back of an envelope, "I hereby offer my neighbour, Reston, my 2011 Chevrolet for $4,000 cash." He signed his name. Reston wrote, "I accept." The next day, Reston went to his neighbour's house to pay the money and get the car. He learned that Outovit was in hospital suffering from a reaction to medicines given him the day before. If Outovit (or his legal representative) refuses to honour the contract on the basis of mental incapacity, which of the following is true? A) If it is established that Reston didn't know Outovit was incapacitated at the time of contract and that the deal was fair, Outovit will be bound by the contract even if he didn't understand the nature and quality of his act. B) If Reston can show the written contract, Outovit has no argument and will be bound to honour the contract.

21) ______

C) To get out of a contract on the basis of insanity you have to be institutionalized. D) Outovit need only prove that he didn't understand the nature and quality of his act to void the contract. E) Outovit won't be bound by the contract because there hadn't yet been the payment for, or delivery of, the car. 22) ______

23) A requirement for the existence of an enforceable contract is that the parties have the legal capacity to contract. Which of the following is incorrect with respect to the law of incapacity? A) The law governing contracts with persons intoxicated by alcohol or drugs is the same as the law governing contracts with the insane. B) If a mentally impaired person cannot avoid a contract on the basis of insanity, the court could still set the contract aside for being an "unconscionable" transaction. C) A contract by an insane person for necessities, such as food, is binding. D) If someone contracts with an insane person but there was no indication of mental illness, the contract can be binding. E) If you knew that you were negotiating a new lease, but that you weren't being as effective as you wanted to be because you had been drinking, you can have the resulting contract set aside.

23) ______

24) Randy, as two older brothers before him, moved out of the house when he was quite young. When he was 17, he and his older brother, Ted, wanted to buy a condominium in Nelson. They both had jobs and the bank was willing to lend them money and take a mortgage on the condo. Which of the following is a correct statement about the law governing this situation? A) These contracts would be binding on Randy only if he disclosed the fact that he was a minor to the other parties. B) The mortgage agreement would be binding on Randy as an adult if he continued to make payments after reaching the age of majority. C) All contracts with infants are void. D) All infants' contracts are enforceable as soon as they become adults. E) A mortgage granted by Randy to the bank is effective until a court orders otherwise.

24) ______

25) Ted, a seventeen-year-old high school student, was hired to perform in four episodes of Gossip Girls. To keep up with his schoolwork, he contracted with Mr. Tech, of Technoland, for a $2,000 laptop computer. He agreed to pay $500 down and the balance by monthly payments of $250. Read each of the following separately and indicate which is true. A) If this contract is in writing and Ted doesn't make his payments, Tech can sue Ted for breach of contract. B) This contract is a legal contract enforceable by Ted. C) If Ted doesn't make his payments, Tech can sue Ted's parents, because parents are liable for the debts of their minor children. D) This contract is a legal contract enforceable against Ted. E) This contract is void; therefore, Tech can repossess the laptop which is technically still his whether Ted makes the payments or not.

25) ______

26) In his last year of high school, Larry saw a friend's computer and felt that the word-processing

fun ction

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22) Which of the following are in no way incapacitated when entering into contracts? A) Children B) Mentally disabled C) Trade unions D) Status Indians E) Women

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would English, and had no more use for the computer. Furthermore, he wanted to use his $500 help him birthday/graduation present for a down payment on a compact disc player and speakers. He get failed to make his July 3 payment or any other to Computer Heaven. The balance outstanding at through the time he quit making payments was $2300, including unpaid interest. On these facts, which of high the following is true? school. He visited Compute r Heaven Ltd. and contracte d for an Apple Macintos h, printer, paper, and the program. The total cost was $2500. He paid $500 down and promise d to pay another $500 next July 3, when he reached the age of majority, the remaind er to be paid in monthly installme nts of $250. By July 3, Larry had graduate d, thanks to his passing mark in

26) ______

A) Larry had no intention of making payments after July 3, so a valid contract did not exist after that date. B) If Larry doesn't pay, Computer Heaven Ltd. can sue Larry's parents because parents are liable for the debts of their minor children. C) Computer Heaven Ltd. can sue Larry for breach of contract if it sues Larry after he becomes an adult. D) Because a contract with a minor is void, Computer Heaven Ltd. has never passed title and can just go get the computer, printer, paper, and program even if it has been resold to someone else. E) Although the contract is unenforceable against Larry, if he affirms the contract after he reaches the age of majority, the seller will be able to sue him for breach of contract. 27) In which of the following situations would an infant be bound by the contracts he has entered into? A) A contract for the purchase of theatre tickets. B) A government student loan. C) A contract for the purchase of a new leather jacket, where the merchant was not aware that he had several other jackets at home. D) A written contract for the purchase of a new stereo. E) A contract for the purchase of a bike with which to race.

27) ______

28) ______

29) Which of the following attempts to form a contract would the court hold to be void? A) One of the parties was an infant at the time the agreement was formed. B) An oral agreement for a lease of land for two years. C) An oral agreement for the sale of land. D) A promise by one person to pay another to defame a third. E) A written promise to guarantee the debt of another person.

29) ______

30) A provision that restricts the seller from competing with the buyer in a contract for the sale of a business is A) always unenforceable because any attempt to restrict competition is an illegal restraint of trade. B) always enforceable because the parties to a contract have the freedom to contract as they see fit.

30) ______

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28) Jones entered into a contract for the sale of his barber shop to Harry Cutter. One of the terms of the contract was that Jones would never open up a similar business within 50 kilometres of the location of the barber shop being sold. About two weeks after the sale, Cutter noticed a new barber shop opening across the street with brand-new facilities and equipment. When he learned that the owner of the new shop was the very Jones who sold the business to him, he sued for breach of contract. Which of the following correctly indicates the legal position of the parties? A) If the 50 kilometres is determined to be reasonable, this restriction will be valid and Harry Cutter will succeed. B) These terms are enforceable no matter how unreasonable because they are part of the bargain struck. C) Any such attempt to restrict competition is illegal and, no matter how reasonable the terms are, the provision will be void. D) The term is too broad and would be found to be void or non-enforceable. E) The whole contract for the sale of the business is void because of the illegal term, and therefore Harry will be able to force Jones to take his barber shop back and return the purchase price.

C) enforceable if it is reasonable between the parties and not contrary to public policy. D) fatal to the whole contract, i.e., it causes the whole contract to fail. E) enforceable if it is reasonable between the parties, which means that it must be limited in time (e.g., one year) but need not be limited in area. 31) ______

32) Assuming that all other elements of a contract are present, which of the following would most likely be held to be a binding contract, considering only the requirement that the object of a contract must be legal and not contrary to the public interest? A) An insurance policy paid by a shareholder to insure the business premises of a company he holds shares in B) A life insurance policy bought by Harvey insuring the life of his neighbour Kneival without Kneival's consent C) A provision in a contract of employment where the employee agrees that, upon leaving, he will not work in a similar business anywhere for 5 years D) An agreement to pay $500 to Mildred if Mildred spreads the false rumour that Helen, a nurse, has AIDS E) An agreement in which Fred agrees not to bother his father anymore

32) ______

33) Which of the following statements is correct with respect to the legality of contracts? A) Insurance taken out on property you don't own is valid as long as the insurance company has been informed that you have no interest in the property. B) An agreement that one merchant won't open up a business in competition with another is enforceable as long as there is consideration on both sides. C) When two merchants agree not to sell a certain product below an agreed price and the product is not readily available from others sources, this is legally permissible as long as they intend their promises to be legally binding. D) An agreement where one party agrees to pay another to sue a third for tort is legally enforceable. E) A judge can refuse to enforce a contract that involves conduct that is not prohibited by law but which the court considers morally unacceptable.

33) ______

34) A provision in a contract for the sale and purchase of a business read as follows: "The vendor (Jones) shall not, directly or indirectly, in any capacity whatsoever, carry on a similar business in any location for one year." Six months later, Kates found that Jones was competing directly by opening up a similar business, contrary to the contract drafted by Kates. Kates sued Jones for breach of contract, namely, breach of the restrictive covenant. Which of the following best describes the legal position of the parties?

34) ______

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31) Smith ran a software-design business. He needed someone to handle some of the product demonstrations, so he hired Janet to do this work. In the employment contract, he insisted that Janet promise that if she left the firm, she would not work for Smith's competitors within a stated period of time and within a stated geographical region. If Janet now wishes to leave the job, indicate the statement that accurately describes the likely effect of her promise. A) If the court holds such a promise to be invalid, then the whole employment contract is necessarily void as well. B) Such promises are in restraint of trade and thus the courts invariably hold them to be invalid. C) Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job. D) Such promises are valid only if given under seal. E) If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged, then it will enforce it.

A) Such provisions are always void, being an illegal restraint of trade. B) Agreements such as these are always binding, being the result of a free bargain between the parties. C) Although this provision would be void, the remainder of the contract for the sale of the business would be enforceable. D) This provision is in restraint of trade and causes the whole contract to be void. E) Although this type of provision is illegal, this particular one would be enforceable because it is reasonable between the parties and not contrary to public policy.

35) Lawer entered into a contract for the sale of his business, a barbershop, to Cutter. The contract 35) ______ provided that Lawer would not open up a similar business within 25 kilometres of the barbershop being sold. About two weeks after the sale, Cutter noticed a new barbershop opening across the street in brand-new facilities. When he learned that the owner of the new shop was the very Lawer who sold the business to him, he sued for breach of contract. Which of the following correctly indicates the legal position of the parties? A) To determine whether or not the restriction is binding, the court asks only one question: does it reduce competition? B) The provision will be void as it is broader than necessary to protect the goodwill of the business. C) Any attempt to restrict competition is illegal, and no matter how reasonable the terms are, the provision will be void. D) The court needs to determine only that the distance of 25 kilometres is reasonable; if it does, the restriction is valid and Cutter will succeed. E) If the restriction is illegal, the whole contract for the sale and purchase of the business is necessarily void and Cutter can return the barbershop for the return of the purchase price.

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36) Which of the following contracts is void? A) A contract with an insane person for a T.V., where the insane person, or his legal representative, can prove that he was insane at the time of the contract but cannot prove anything else about the incident. B) A contract containing an exculpatory clause limiting the liability of one of the parties. C) A contract with an insane person for necessaries such as food and shelter. D) A contract to sell a crop of marijuana growing in a particular field. E) Any contract with a status Indian.

36) ______

37) The court may hold that a contract is "void," "voidable," "unenforceable," or "illegal." Which of the following is true with regard to these terms and the court's use of them? A) If a contract is unenforceable, it means it doesn't exist. B) If a contract is held to be void, it was a contract, but for some reason, one party can end it. C) If a contract is held to be void, it never was a contract. D) If a contract is held to be illegal, the plaintiff will get some help, because the court will try to put the parties back to their original position. E) "Void" is the same as "unenforceable."

37) ______

38) A void contract means that A) there is no contract. B) the infant can escape the contract. C) the contract cannot be enforced. D) the contract is illegal. E) the adult can escape the contract.

38) ______

39) Joe was unable to find work in the city where he lived and had to go to the mining camps up

north to

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find 39) work. When he left, he agreed to send his wife $500 a month from his pay for the support of her and the children. In fact, he had some unexpect ed expenses and failed to send the promise d funds for two months. Which of the followin g correctly states the legal position of the parties? A) Since this is a domestic relationship, there is a presumption that there is no contract. B) Because of the marital obligation, there is always an enforceable contract in these circumstances. C) The court will make no presumptions in these circumstances because there is never a contract between husband and wife. D) Since this is a domestic relationship, there is a presumption that there is a contract. E) The court will enforce the promise only if they determine it to be reasonable. 40) A necessary element of a contract is that the parties must have the intention to be legally bound. Which of the following is true with regard to this element of a contract? A) The court can presume the intention to be legally bound, but a party to the contract can bring forward contrary evidence to rebut the presumption. B) In contract cases, the court hears evidence as to what the parties actually had in their minds at the time of contract.

40) ______

C) If the parties fail to state expressly in their contract their intention to be legally bound, there is no contract. D) Family members can never have the intent to be legally bound in their agreements because family matters are private matters. E) The court always just presumes an intention to be legally bound, so this is never an issue in a contract case. 41) Which of the following is false with regard to the intention of the parties to an agreement to enter into a legal relationship? Where appropriate, assume that all the other elements necessary to form a contract are present. A) Since family matters are private matters, an agreement between a husband and wife to transfer property from the husband to the wife could not be a contract even if all the other elements of a contract were present. B) Although the court makes presumptions about the intention of parties to be bound, the presumption may be rebutted by evidence to the contrary. C) The court will presume there is no intent to be legally bound in social situations. D) An intention to be legally bound is a necessary element of a contract; without it there is no contract. E) Parties may expressly state their intention to be legally bound, in which case the court need not rely on presumptions.

41) ______

43) Mrs. Johnson is thinking of selling some property to her son. Which of the following is correct with respect to intention when entering into such a contract? A) When intention is the issue, there is never any presumption for or against intention; the courts will always apply the reasonable person test. B) In commercial arrangements, there is always an intention to be bound by agreements no matter what the parties state to the contrary. C) Since domestic relationships are serious, there is a legal presumption that in such relationships there is an intention for the parties to be legally bound by their agreements. D) Commercial contacts are always binding, no matter what the stated intention. E) In domestic agreements, there is a presumption that there is no intention to be legally bound.

43) ______

44) The contract signed by XYZ Ltd. and Charles provided that the company would receive a licence to use the computer program that Charles was creating, that Charles would complete the program by January 15, 2012, that Charles would retain copyright, and that Charles would receive $10,000 on completion of his work. Two weeks before the due date, Charles told the president of the company that he was not going to complete on time. The president said, "Don't worry about it; get it done as soon as you can." Charles was 10 days late in completing the work. The delay caused the company to lose money, so it sued Charles for damages. On these facts

(wh e can ich be you proved sho ), uld which ass of the um followi

42) ______

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42) Which of the following is correct with respect to the law of intention? A) Where intention is the issue, there is never any presumption for or against intention; the courts will always apply the reasonable person test. B) Since domestic relationships are serious, there is a legal presumption that in such relationships there is an intention for the parties to be legally bound by their agreements. C) In domestic agreements, there is a presumption that there is no intention to be legally bound. D) In commercial arrangements, there is always an intention to be bound by agreements no matter what the parties state to the contrary. E) Since domestic relationships are serious, the parties to such relationships are always bound by their contracts with each other.

ng is false?

44)

___ ___

A) Charles could enter his defence and could also enter a counterclaim if he felt he had an action against the company. B) If this case were heard in the B.C. Supreme Court, the judge would have to follow a precedent on the point set by the B.C. Court of Appeal. C) Charles could use equitable (promissory) estoppel as a defence. D) The company doesn't have the right to sue because the law would presume that the parties did not intend to be legally bound. E) The company has the right to sue even though it is not a natural person. 45) ______

46) In which of the following situations would the contract relating to land not be enforceable? A) An unwritten sale of land where the seller allowed the buyer to to enter of the property and commence construction thereon. B) An unwritten sale of land but where the sale was acknowledged in subsequent correspondence, signed by the party denying the existence of the sale. C) An unwritten lease of a lawn mower used to maintain the land. D) An unwritten agreement to have a garage built on the land. E) An unwritten lease for a term of five years.

46) ______

47) (Modify this question for your jurisdiction.) Bill, a college graduate, rented office space under a two-year lease. He needed the space because he contracted with the provincial government to create a program to integrate the various inventories of different government agencies. Bill hired Janet and Fred as full-time programmers for one year. He bought three desks for cash. He bought a $2,000 laser printer, for which his dad signed as a guarantor. He bought another computer from a different seller under a conditional sales contract. Which of these contracts should be evidenced in writing to be enforceable? A) The dad's guarantee B) The employment contracts C) The contracts for the desks D) The contract with the government, because it will take more than a year to complete E) The lease

47) ______

48) Joe saw an ad in a paper for the sale of a house in a residential area of Victoria. He approached Sam, the owner, and after some negotiation Sam orally agreed to sell the house to Joe for $50,000. Joe gave Sam $10,000 cash as a partial payment, the rest to be given upon transfer of the house. Two days later, Sam changed his mind and sent Joe a letter referring to the deal and stating that he would not honour the agreement. Which of the following is correct with respect to the legal position of the parties? Assume all the facts can be proved. A) Sam will not be bound because no oral agreement is ever enforceable. B) Sam is not bound by the agreement as the contract was not in writing. C) The contract is void unless it has been partially performed. D) Even if the letter gives evidence of the deal in writing, it cannot satisfy the requirement of writing. It is the whole contract that must be in writing.

48) ______

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45) Which one of the following is required to be evidenced in writing under the Statute of Frauds or its equivalent? A) A contract of employment B) Any contract involving goods C) A guarantee D) Any contract involving money over $1,000 E) A contract to incur debt

E) If the letter mentions the important terms (such as price) and identifies the specific property, Sam must go through with the contract. 49) Given the provisions of the Statute of Frauds, which of the following contracts should be evidenced in writing? A) A sale of land B) A retainer with a lawyer C) An employment contract D) A sale of goods involving $4 E) Domestic agreements

49) ______

50) Which of the following agreements has to be in writing under the original Statute of Frauds in order to be enforceable? A) An agreement for the sale of a building lot. B) An agreement for the sale of a farm animal. C) A lease of a vehicle for a term commencing on November 1, 2011, and expiring November 1, 2013. D) An agreement to sell a car on January 1 of the following year. E) An agreement by a creditor to accept $800 in full satisfaction of a debt in the amount of $1,000.

50) ______

51) ______

52) In which of the following situations would there be an enforceable contract despite the lack of a written contract? A) Contractor Joe agreed to build a $250,000 home for Sam on Sam's land, to be completed no later than 9 months from the date of signing. B) Sam agreed to guarantee a loan for his friend Joe. C) Jack agreed to build a garage for Sam after he finished the remainder of his 2-year army hitch (he has 14 months left). D) Sam agreed to trade his vacation cottage with Joe in exchange for Joe's yacht. E) Jack leases a storage facility for duration of his 2-year army hitch.

52) ______

53) Zlotnik incorporated a company shortly after graduation. The company bought a truck and a computer. Short of operating capital, the company, through its agent Zlotnik, borrowed $10,000 from the bank. In consideration for its loan, the bank took, in addition to the company's promise to pay the bank both principal and interest, a mortgage of its truck and computer. The company made its payment each month without incident. For reasons still unknown, the stock market took a tremendous fall, which caused the officer of the bank to call Zlotnik and ask him to guarantee the company's debt. The company was doing very well, so Zlotnik agreed to be guarantor of the debt. His oral assurances were sufficient for the bank officer. On these facts,

whi true? ch of the foll owi ng is

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51) Negotiations between Dave and Mary resulted in the following agreement: Dave would sell his property to Mary for the sum of $150,000, closing date to be August 10, 2011. When the two completed their discussion, Mary paid Dave $5,000 as part payment of the purchase price and received a receipt. The contract was not in writing. On August 10, Mary tendered the remainder of the money, but Dave refused to convey the property. Mary sued Dave for breach of contract. On these facts which of the following is true? (Assume all facts can be proved.) A) Mary cannot enforce the agreement because she had not paid Dave all of the money. B) Mary can enforce this contract if the receipt specified the part payment was for the property in question. C) Mary cannot enforce the agreement because all of the consideration was not paid. D) Mary cannot enforce this contract because the contract was not evidenced in writing. E) Mary cannot enforce this contract because the contract was not in writing.

53)

______ A) Zlotnik's promise to guarantee the debt is enforceable wholly on the grounds that the Statute of Frauds with its writing requirement has been repealed. B) Because Zlotnik's promise is a guarantee and not an indemnity, he automatically becomes the legal person primarily liable on the debt; the company becomes secondarily liable. C) Zlotnik's promise to guarantee the debt is unenforceable because it is not supported by any consideration flowing from the bank to Zlotnik. D) All guarantees and indemnities must be in writing and under seal to be binding. E) Zlotnik's promise to guarantee the debt is void because the guarantee itself is not in writing. 54) ______

55) What does the decision in Bayview Credit Union Ltd. v. Daigle illustrate? A) A person under the age of majority cannot intend to enter into a contract. B) Parents are responsible for contracts made by their children. C) When a minor enters into a contract, there is no consideration. D) Businesspeople are at a risk when dealing with minors as if they were adults. E) Contracts made by children are void.

55) ______

56) In Royal Bank of Canada v. Holoboff, the Bank sued Holoboff, a minor, who had sold his client card and personal identification number (PIN) to a third party who defrauded the bank. What was the result? A) Holoboff was found liable for breach of contract, despite being a minor. B) Holoboff's parents were automatically liable for Holoboff's tort. C) Holoboff was found liable for the tort of conspiracy to commit fraud. D) Holoboff's parents were automatically liable for Holoboff's breach of contract. E) Holoboff was not liable for anything, as minors can never be liable.

56) ______

57) The case of Canadian Imperial Bank of Commerce v. Milhomens examined the effect of one party's insanity on a contract. What did the Court find? A) If a insane person enters into a contract, that contract is automatically void. B) Contracts are not enforceable by either party if one party can establish a mental defect. C) For a contract to be voidable because of insanity, one party must be insane and the other party must have known (or ought to have known) of the insanity. D) If a person has the mental faculties to sign a contract, that person cannot be insane. E) The relevant test for insanity is simply whether one party believed the other to be insane, at the moment the offer was made.

57) ______

58) Sue had a beautiful lakeside cottage that had been in her family for years. Times became a little tight, and Sue decided she had no choice but to sell the property. Sue agreed to sell the cottage property to her neighbour Bob for the sum of $250,000. Although Sue was ecstatic about the

pric y on, e she earl soon

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54) Mr. Buyer, the plaintiff in the action, was attempting to enforce a contract in which the defendant, Mr. Seller agreed to sell to buyer his property, Blackacre, for $100,000. Which of the following, by itself, would be sufficient to allow Mr. Seller to get out of the contract? A) The $100,000 was not enough, not fair. B) Although both parties agreed to this, there had not actually been any money paid on the contract, not even a deposit or a down payment. C) The parties clearly stated that they did not want the agreement to be legally binding. D) At the time of the contract, unknown to Mr. Buyer, Mr. Seller did not understand the quality and nature of this act because of mental incapacity. E) Although there was a letter from Mr. Seller referring to its essential terms , the contract itself was not in writing.

___ ___

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changed 58) her mind. There were too many memorie s for her to give the property up. Which of the followin g, by itself, would be the biggest barrier to Bob enforcin g the agreeme nt? A) Bob and Sue had an agreement that their contract was not to be enforceable. B) No money had yet exchanged hands. C) Unknown to Bob, at the time of the agreement Sue was mentally incapacitated. D) Although Sue had written a letter to Bob that discussed the essential terms of the agreement, Bob and Sue had not executed a written agreement. E) The $250,000 price was not adequate, under the circumstances.

59) ______

60) In Transport North American Express Inc. v. New Solutions Financial Corp., various payments were found to be "interest" within the meaning of s. 347 of the Criminal Code. The interest rate applied was illegal. The Supreme Court applied "notional severance", resulting in a reduction of the interest rate. The Supreme Court of Canada outlined four factors to consider when deciding whether to declare an illegal contract void, or to partially enforce it. Which of the following is not one of those factors? A) whether the parties entered into the agreement for an illegal purpose or with an illegal intention B) whether the contract was a standard form agreement C) whether the purpose or policy of s. 347 would be subverted by severance

60) ______

59) In Ascent Financial Services Ltd. v. Blythman, the Court decided A) that Anna and Art were in neither in breach of the sale of goodwill agreement nor the non-competition agreement. B) that Anna only and not Art was in breach of her fiduciary duty. C) that Anna and Art were in breach of both the sale of goodwill agreement and the non-competition agreement, as well as their fiduciary duty. D) that Carolyn and Don were in breach of both the sale of goodwill agreement and the non-competition agreement, as well as their fiduciary duty. E) that Carolyn and Don were in breach of only their fiduciary duty.

D) whether the debtor would be given an unjustified windfall E) the relative bargaining positions of the parties and their conduct in reaching the agreement 61) ______

62) In the classic case of Carlill v. Carbolic Smoke Ball Company, the defendants manufactured a product they claimed would protect against influenza. The company advertised that it would pay a specific sum of money to anyone who contracted influenza while using their product, and put money on deposit to demonstrate their sincerity. When Mrs. Carlill claimed the money, the company argued that these statements were not intended to be taken seriously. What did the Court decide? A) Intention is irrelevant to whether or not a contract is valid. B) There was intention because Mrs. Carlill took the advertisement seriously. C) There was no intention because the claims made by the company were not put into a standard form agreement. D) There was no intention because the company did not intend for the statements to be taken seriously. E) There was intention because a reasonable person would have thought that the advertisement was serious.

62) ______

63) Which of the following best describes an illegal contract? A) A contract that lacks consensus, consideration, capacity and intention B) A contract that has been breached by one of the parties C) A contract that is illegal in the way in which it was performed D) A contract that results in civil litigation E) A contract that is illegal at the time it was formed

63) ______

64) Which of the following types of contracts would not be considered illegal? A) Contracts that obstruct justice B) Contracts that promote litigation C) Contracts to commit a tort D) Contracts preventing someone from marrying E) Contracts that reasonably restraint trade

64) ______

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61) A woman forged her husband's signature on dozens of cheques. In an attempt to protect her from prosecution, the husband signed a letter prepared by the Bank agreeing to assume all liability for the forged cheques. What would the Court find in relation to this agreement? A) Because the husband acted improperly, the agreement was voidable by the Bank on the basis of illegality. B) The agreement was unenforceable because the husband was under duress at the time he signed it. C) While the Bank acted improperly, "freedom to contract" establishes that the agreement must be enforced. D) The agreement was unenforceable because the Bank lacked capacity to enter into such an agreement. E) As an agreement to stifle a criminal prosecution, it was an illegal contract and therefore void.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 65) Whenever an adult enters into a contract with an infant, the adult is bound.

T or F

66) Neither party is bound by a contract with an infant.

T or F

67) When parents have led a merchant to believe that their infant child is acting as their agent, the

parents

are liable.T or F T or F

69) A person who has voluntarily become intoxicated by drugs or alcohol cannot escape a contract on the basis of his incapacity.

T or F

70) An insane person can escape a contract on the basis of incapacity only if the other person knew or ought to have known of the insanity.

T or F

71) Because of the Charter of Rights and Freedoms, status Indians no longer have their capacity to contract limited.

T or F

72) Married women are no longer considered incapacitated in contract law.

T or F

73) An adult can't sue an infant in tort to get around the infant's contractual incapacity.

T or F

74) Once infants become adults, they are liable for any contract they made while they were infants.

T or F

75) Only contracts that involve the commission of a crime or tort are void on the basis of illegality.

T or F

76) All contracts to restrict competition are void.

T or F

77) Contracts that unduly restrict competition are void.

T or F

78) Contracts involving domestic relationships are presumed to be binding.

T or F

79) Contracts to commit a crime or a tort are void.

T or F

80) All contracts that have the effect of restricting competition are void.

T or F

81) If a person says that he had not intended to be bound by an agreement when he entered it, there can be no contract.

T or F

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68) The nature of the legislation governing incorporation in each jurisdiction determines whether a corporation has its capacity to contract limited or not.

82) Even in commercial relationships, if the parties make it absolutely clear that they don't intend the arrangement to be legally binding on them, the agreement will not be enforceable in court.

T or F

83) An unwritten contract that the Statute of Frauds requires to be evidenced in writing is still valid; it is merely unenforceable by the courts.

T or F

84) All contracts must be in writing to be enforceable.

T or F

85) Only contracts involving significant sums of money must be in writing to be enforceable.

T or F

86) All contracts must be written to be binding.

T or F

87) A contract that has been partially performed will be enforceable even though it is not in writing as required under the Statute of Frauds.

T or F

88) If a contract is not evidenced in writing this does not make it void, only unenforceable.

T or F

89) All commercial contracts must be evidenced by writing to be enforceable.

T or F

90) Contracts may be in writing, under seal, verbal, or even implied.

T or F

91) Legislation is now in place in several jurisdictions to give digital records and electronic signatures the status of written documents.

T or F

92) Contracts involving activities that, while not illegal, are considered immoral or contrary to public interest, may also be void.

T or F

93) Corporate bodies created by special legislation invariably lack capacity to enter into binding agreements.

T or F

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 94) Why was the Statute of Frauds originally passed? 94) _____________ 95) When will the court waive the requirement of writing?

95) _____________

96) Provide an example of something that would constitute acceptable part performance when land has been sold.

96) _____________

97) When a restriction is excessive and deemed to be an unreasonable restraint of trade, what is the usual result?

97) _____________

98) What is the effect if an agreement that is required to be in writing under the Statute of Frauds is not?

98) _____________

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99) _____________

100) How do the courts determine whether a customer should have taken an exaggerated claim seriously?

100) ____________

101) If the relationship between the contracting parties is primarily commercial in nature, what do the courts presume?

101) ____________

102) What is the term for a primary obligation of a third party to pay a debt along with a debtor?

102) ____________

103) What is an indemnity?

103) ____________

104) What is the term for a written commitment whereby a person agrees to pay a debt if the debtor does not?

104) ____________

105) What is a guarantee?

105) ____________

106) From the perspective of contract law, why might the distinction between a guarantee and an indemnity be important?

106) ____________

107) In the legal sense, to what does "insanity" refer?

107) ____________

108) What is the term used when a person cannot understand the nature or consequences of

his or her actions?

99) How do the courts determine whether it is reasonable for the parties trying to enforce the agreement to think that a legally binding contract has been created?

108)

____________ 109) ____________

110) Kashif agreed to sell his acreage to his coworker, Melinda, for $400,000. Because the two worked together, they did not see the need to put the agreement in writing. Nonetheless, Kashif sent Melinda a note that referred to the essential terms of their agreement, to which Melinda replied acknowledging their deal. Without any other writing, can this contract be enforced? Explain.

110) ____________

111) When at war, what happens to contracts with residents of an enemy country if they are detrimental to Canada?

111) ____________

112) When at war, what happens to contracts with residents of an enemy country if they are not detrimental to Canada?

112) ____________

113) How is a person of weakened intellect or who is otherwise vulnerable (but not insane or mentally incompetent) protected in terms of contract law?

113) ____________

114) What is an "executory contract"?

114) ____________

115) What is an "executed contract"?

115) ____________

116) What is the age of majority in your province?

116) ____________

117) Explain the legal position of an infant who enters into a contract with an adult.

117) ____________

118) Indicate what types of contracts are binding on infants.

118) ____________

119) Explain what is meant by "necessary."

119) ____________

120) Indicate under what circumstances parents are responsible for the contracts entered into by their children.

120) ____________

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109) When a person is declared mentally incompetent by a court, who is appointed and for what purpose?

121) "If an infant can't be sued in contract because of his age, the adult can often sue in tort instead, thus avoiding the protection given to the infant in a contract law." Discuss the accuracy of this statement.

121) ____________

122) "Because of the Charter of Rights and Freedoms and various human rights legislation in all jurisdictions, status Indians no longer experience limited capacity in contract law." Discuss the accuracy of that statement.

122) ____________

123) Indicate 4 categories of persons that have their capacity to enter into contracts limited to some extent.

123) ____________

124) What must a person establish in order to escape contractual obligations on the basis on insanity?

124) ____________

125) Distinguish between an infant's liability for torts and for contracts.

125) ____________

126) Indicate any limitation on the ability of status Indians to contract.

126) ____________

127) ____________

128) Joe had a classic Buick automobile, and he agreed to trade it to Sam for a specified amount of cocaine. Sam took the car and, three days later, before he could deliver the cocaine to Joe, his cocaine was seized by the police and he was arrested. Joe is now bringing this action claiming that he's entitled to the car back. Indicate what arguments are available to Joe and the likelihood of him obtaining his car back.

128) ____________

129) Explain how an insurance contract avoids being void as a wager.

129) ____________

130) "Some contracts are considered illegal even though the conduct involved is not prohibited by any law." Explain the accuracy of that statement.

130) ____________

131) Joe sold Harry his barbershop, but Harry wanted a commitment on Joe's part that he would not open up another barbershop in the area after he got the money. Explain how the parties could include a clause in their agreement, to that end, without it being void as a restraint of trade.

131) ____________

132) A husband started a small business and agreed to pay his wife $700 a month for her bookkeeping services. This was primarily a method of income-splitting for tax purposes. Unfortunately, the business was not as successful as they had imagined, and the husband couldn't afford to pay his wife that much money from the business. The marriage went sour, and after separation, the wife brought an action against the husband demanding back pay for the last 11 months, as well as compensation for loss of future earnings. Explain what defence the husband could best raise in these circumstances.

132) ____________

133) Advertisers often use exaggerated claims, such as "This is the best little Buick in Canada." What test is used to determine whether such claims become part of the contract or not?

133) ____________

134) "A person's intention to be bound by contracts is presumed." Discuss the accuracy of that statement.

134) ____________

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127) Give three examples of contracts that would be considered void because of illegality.

135) "A verbal contract is every bit as binding as a written one." Discuss the validity of that statement.

135) ____________

136) Describe three situations in your jurisdiction where a contract must be evidenced in writing to be enforceable.

136) ____________

137) Joe advertised his house for sale, and Sam came to have a look at it. While there, they haggled and struck a bargain that Sam would purchase the house for $200,000. They shook hands on the deal and Sam went home. That night, while thinking about it, he realized that it wasn't exactly what he wanted, and so the next day he wrote a letter to Joe stating, "I'm writing this note to let you know that I've changed my mind with respect to the purchase of your home for $200,000, and since the contract isn't valid in any case, I don't expect to hear any more of the matter. Sincerely, Sam." Joe sued Sam for breach of contract. Discuss the legal position of the parties, including any defences available to Sam.

137) ____________

138) Just what has to be in writing to satisfy the requirements of the Statute of Frauds?

138) ____________

139) Indicate the distinction between a guarantee and an indemnity.

139) ____________

140) Joe entered into a contract to sell his house to Sam for $200,000. Explain under what circumstances this contract would be binding on the parties even where it was not in writing or evidenced by writing.

140) ____________

141) Sam agreed to sell his house to Joe for $200,000, and although the agreement was not in writing, Joe gave Sam $25,000 as a deposit. Sam gave Joe a receipt for the $25,000, indicating that it had been received but not stating for what purpose. In the absence of any other writing, is this contract enforceable? Explain.

141) ____________

142) "Where the Statute of Frauds applies and the requirement of writing is not met in an agreement between two parties, the contract is void." Discuss the validity of this statement.

142) ____________

143) "Contracts must be in writing to be enforceable." Discuss the accuracy of that statement.

143) ____________

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 144) Describe how infants are treated in contract law in Canada.

145) Discuss how some persons are incapacitated in contract law in various jurisdictions and the justification for such a treatment. 146) Discuss the importance of putting contracts in writing, both from a legal perspective and from a practical business business point of view.

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147) Discuss, providing examples, situations in which an agreement would be invalid due to a lack of intention, including any presumptions that arise. 148) Discuss agreements that restrict competition or that are a restraint of trade and how they are treated in contract law.

149) "The purpose of contract law is to give effect to the reasonable expectations of the parties to a contract." Discuss this observation in terms of the five elements that are required for the creation of a legally binding contract. 150) Discuss the Statute of Frauds as it relates to contract law. In your answer, consider the justification of requiring some contracts to be evidenced in writing, and also how and why the Statute of Frauds has been modified or repealed in several jurisdictions.

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1) B 2) A 3) C 4) B 5) D 6) D 7) B 8) A 9) D 10) A 11) C 12) E 13) E 14) B 15) C 16) E 17) E 18) A 19) E 20) D 21) A 22) E 23) E 24) B 25) B 26) E 27) B 28) D 29) D 30) C 31) E 32) A 33) E 34) C 35) B 36) D 37) C 38) A 39) A 40) A 41) A 42) C 43) E 44) D 45) C 46) E 47) A 48) E 49) A 50) A 51) B

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52) A 53) C 54) C 55) D 56) C 57) C 58) A 59) C 60) B 61) E 62) E 63) E 64) E 65) TRUE 66) FALSE 67) TRUE 68) TRUE 69) FALSE 70) TRUE 71) FALSE 72) TRUE 73) TRUE 74) FALSE 75) FALSE 76) FALSE 77) TRUE 78) FALSE 79) TRUE 80) FALSE 81) FALSE 82) TRUE 83) TRUE 84) FALSE 85) FALSE 86) FALSE 87) TRUE 88) TRUE 89) FALSE 90) TRUE 91) TRUE 92) TRUE 93) FALSE 94) To prevent fraudulent transactions. 95) If the parties can produce evidence to show that a contract dealing with an interest in land has been partially performed. 96) A typical good example would be the start of construction. 97) Normally, only that provision is void. It will usually be severed and the rest of the agreement will be enforced. 98) It is still valid, just unenforceable. 99) They use the reasonable person test. 100) They use the reasonable person test. 101) That the parties intended to be legally bound by their agreement. 102) An indemnity.

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103) A primary obligation of a third party to pay a debt along with a debtor. 104) A guarantee. 105) A written commitment whereby a person agrees to pay a debt if the debtor does not. 106) Because in most provinces, the Statutes of Frauds requires that a guarantee be in writing, but not an indemnity. 107) When a person cannot understand the nature or consequences of his or her actions. 108) Insanity 109) A trustee is appointed to handle that person's affairs. 110) Yes. To satisfy the Statute of Frauds, the entire agreement need not be in writing, only the essential terms. 111) Absent legislation to the contrary, the contracts are void. 112) Absent legislation to the contrary, the contracts are suspended for the duration of the hostilities. 113) The legal principle protecting against unconscionable transactions provides some protection. 114) A contract yet to be performed; a contract at the stage when an agreement has been made but before performance is due. 115) A fully performed contract; a contract at the stage when both parties have performed or fulfilled their obligations. 116) The age of majority is 18 or 19, depending on the province. 117) Varies with the province. In most provinces, they are only bound to honour contracts involving necessities or beneficial contracts of service. In B.C., all contracts with infants are unenforceable except those made specifically enforceable by statutes (student loans). 118) Necessaries and beneficial contracts of service. (Except in B.C., where all contracts with infants are unenforceable, except those that may be enforceable by statute.) 119) Food, clothing, lodging, tuition, and other requirements necessary to maintain life. 120) There is no such general responsibility; only where the child was acting as an agent for the parent will the parent be bound in contract, or where the parent has co-signed or guaranteed the transaction. 121) Although an infant is responsible for the torts he commits, if an adult may not be permitted to sue the infant because of the contract, the adult can't get around that protection by suing in tort instead. 122) The statement is inaccurate. Under the Indian Act, status Indians still experience limited capacity to enter into contracts, in some circumstances. 123) Infants, the insane, corporations, status Indians, unions, and bankrupts. 124) That he was insane at the time of the contract, to the extent he didn't know what he was doing; that the other person knew or ought to have known of that insanity; and that the contract was repudiated quickly on regaining that person's senses. 125) Infants are only bound by contracts for necessities and beneficial contracts of service (note difference in B.C.), but they are responsible for any torts they commit. Note, however, that an adult cannot get around the protection given infants in contract law by suing in tort instead. 126) The Indian Act, supported by the Charter, provides that status Indians living on reserves can have their capacity to contract limited to some extent (e.g., transferring property, selling produce). 127) Contracts to commit a tort or crime; contracts to obstruct justice; contracts involving immoral acts; contracts to injure the state; some contracts that restrain trade or restrict competition unduly. 128) Joe would either claim that the contract was breached and therefore he is entitled to his automobile back, or that the contract was illegal and therefore there was no contract and he's never given up title of his Buick. It's likely, however, that the courts will consider this is an illegal contract, since both parties knew that they were involved in an illegal act, and refuse to assist him in obtaining the return of his automobile. 129) The insured must have an insurable interest in the thing insured and not obtain a windfall when the insured-against event takes place. 130) It's true that some types of conduct, such as prostitution, are considered to be against public policy, even though not prohibited by law. 131) As long as the provision goes no farther than is necessary to protect the value of the good willthat is, there is a reasonable time restriction and a reasonable geographic limitation, and the public interest is not harmedsuch a provision would be valid. 132) Probably the best defence here is that this was a domestic relationship and there was no intention to create a binding contract. There would be a presumption, because of the husband-and-wife relationship, that there was no intention to create such a binding contract.

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133) The courts will apply the reasonable person test to determine whether the merchant ought to be bound by such a claim or not. The purpose of contract law is to enforce the reasonable expectations of the parties. 134) It is inaccurate. Where contracts involve people in domestic relationships, an intention not to be bound is presumed. 135) The Statute of Frauds requires that contracts for things such interests in land, etc., must be evidenced in writing. Otherwise, the statement is correct. 136) (Depending on the jurisdiction.) Contracts not to be performed within one year, contracts dealing with interests of land, guarantees and indemnities, promises in consideration of marriage, the promise of an executor to be personally responsible for the debts of the estate, and possibly the sale of goods over a certain amount must be evidenced in writing. 137) The letter that Sam sent satisfied the requirement of writing under the Statute of Frauds; therefore, there is an enforceable contract. 138) Some evidence consistent with the existence of the contract, not necessarily the contract itself. Thus a memorandum, a note, or a confirmation, etc., would be sufficient. 139) A guarantee is a contingent obligation where one party agrees to be responsible for the debt of another, if that other person does not pay. An indemnity, however, is a concurrent liability. That is, both the original contracting party as well as the indemnitor are bound in the same way on that agreement. 140) Where there has been part performance, that is, one of the parties has partly performed their part of the contract (e.g., Sam has moved in and Joe has moved out). 141) This depends on the jurisdiction. In most provinces, adhering to the classic Statute of Frauds provisions, this deposit would not be sufficient part performance since it is not consistent only with the purchase of the house. The money could have been paid for some other purpose. In B.C., such part performance by deposit would be binding. 142) When the requirements of the Statute of Frauds are not met, it does not result in the contract being void; rather, the contract is unenforceable. Thus, if the parties have performed their obligations under the contract, the courts will not assist them by providing a remedy. The courts would not have forced them to perform, but once they have performed, they've only done what they should have. 143) This statement is not accurate. Verbal contracts are as binding as written ones. It is a good idea to put them in writing, but not required. Only contracts specifically required to be evidenced in writing by statute, such as the Statute of Frauds, need be evidenced in writing, and even then the actual contract is not required to be written. 144) This is a relatively easy question but does require students to show an understanding of this aspect of contract law. They should indicate who is an infant and how this varies from jurisdiction to jurisdiction. They should show that, in most jurisdictions, infants' contracts are voidable except for necessities and beneficial contracts of service. They should explain what those items are as well. Because the question requires them to deal with Canada, the student should show how infants' contracts are treated differently in B.C.; that is, all contracts including necessities and beneficial contracts of service are unenforceable there. They should show an understanding of the difference between voidable and unenforceable. Somewhere in their answer they should also make it clear that it is only the infant that is benefited. The adults are bound and the infant can enforce the contract. 145) Here students must examine the basic idea that contract law presumes the parties to be in an equal bargaining position and the essential bargaining nature of the contract process. Some people in society are not able to look after their own interests in this kind of environment, and need protection so they will not be taken advantage of. Others have limited capacity to prevent abuses or to protect others. Infants, the insane, status Indians, corporations, bankrupts, and trade unions are some examples. Note that this is an all-or-nothing approach, and if students, when answering, have taken the next chapter as well, they can deal with situations where some people are vulnerable but not so much as to be incapacitated. Undue influence and duress are examples. Similarly, the courts will look at situations where the agreement itself is considered unconscionable because of some particular vulnerability and the contract itself is unfair. 146) Here students should outline the instances under the Statute of Frauds in which a contract must be evidenced in writing in order to be enforceable. Students should make clear that writing has no impact on the validity of the agreement, only on whether or not the courts will enforce it. Examples include contracts not to be performed within one year, land dealings, guarantees, etc. (bearing in mind the situation in the relevant province). This question, however, goes further and requires students to address practical issues. Good students will note that people may remember things differently over time, making it critical that there is a permanent record of some form. The

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exist document may help to prevent litigation or may be useful in narrowing down issues in a lawsuit. A verbal ence agreement may be binding, but a written contract can provide important evidence of that agreement. of a 147) Students should note that the Courts will enforce the stated intentions of the parties. When parties are engaged in the pre-negotiation process, communications between the parties may not necessarily create legal obligations (as in the case of a non-binding letter of intention). If the relationship between the parties is commercial in nature, the Courts will presume an intention to be legally bound. When the agreement involves domestic and social relations (friends and family), a presumption of no intention will arise. The presumptions that arise are rebuttable. A reasonable person test is applied when there is overlap between social and business relations. Finally, in situations dealing with exaggerated claims, the reasonable person test is also used. 148) The operation of the free market is at the heart of contract law that is based on the bargaining process. Open competition is considered vitally important to this system. In common law, anything that interferes with this free competition unnecessarily is to be discouraged and so in contract law is void. It is recognized, however, that there must be some interference with trade in some types of business relations, and so contract law prohibits undue restraint of trade or unreasonable restriction on competition. Some examples of where such interference is permitted are where one person sells a business to another. To allow that seller to compete with the purchaser might be unfair competition and so can be restricted as long as that restriction goes no further than necessary to protect the seller's interest. Hence the need for a time and area limitation in clauses that keep the seller from opening a similar business. The same holds true with some employees who can do particular damage to the employer when they leave that employ by working for a competitor. Note as well that students should mention that these principles are enshrined in statute law in the form of the federal Competition Act. 149) Here students would be expected to show an understanding of each one of the elements required for the formation of a contract: consensus (including offer and acceptance), consideration, capacity, legality, and intention. They should even show that they understand that writing is not required. More important would be to show some understanding of how each of these elements relates to the general principle that it is the object of the court to enforce the reasonable expectations of the parties. Each one of these elements can be related to that principle. Offer and acceptance go to the creation of consensus in the first place, without which there would be no reasonable expectation. Consideration relates to the bargaining nature of the process. Capacity relates to the requirement that each party be on an equal footing for the expectation to be reasonable. Legality is really a matter of public policy, showing the courts are not willing to encourage anti-social activities. Intention probably relates most closely to the concept of reasonable intentions; it doesn't matter so much whether one person intended to be bound, so much as that the courts enforce the other party's reasonable expectations. The presumptions involved with respect to domestic and commercial relationships relate to what are reasonable expectations in those circumstances. This question requires a little more abstract evaluation on the part of students, but it does require them to try to understand some of the purposes behind the basic rules they're exposed to in the text. 150) One of the mistakes made most often about contract law is the assumption that there is only a contract if it is in writing. It should be clear that students understand conceptually that the contract is the relationship and obligations between the parties embodied in the agreement, and the written document is just the evidence of that agreement. Students might examine whether unwritten contracts ought to be required to be in writing and then discuss the Statute of Frauds, which requires that some contracts actually must be evidenced in writing. They should point out which types of contracts must be evidenced in writing, indicating that this varies from province to province; also that some provinces have eliminated this requirement and why. The main discussion ought to centre on whether there is any justification for keeping this rule, especially since the way the courts approach the subject is to first determine if there is a contract and then to look if it is enforceable due to no writing. Using this approach, if they ever apply the statute, it will be to refuse to enforce a contract that they are sure exists. This leads to more wrong than it corrects. This discussion should do more than simply list what satisfies the requirement of writing and what types of contracts are covered. Students should go beyond this by providing the justification for such rules.

Chapter 8

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Jones offers to sell Smith his car. Smith thinks Jones is selling his 2011 Toyota, and Jones thinks 1) _______ he is selling his 2009 Pontiac. This is an example of which of the following? A) Misunderstanding B) Common mistake or shared mistake C) Fraudulent misrepresentation D) Non est factum E) Unilateral mistake or one-sided mistake 2) Which of the following is an example of duress? A) Joe refuses to sell Harry his car unless Harry offers him more money. B) Joe counteroffers Harry's original offer. C) Joe wants to purchase Smith's car from him, and Smith sells it to someone else. D) Joe, knowing of Harry's financial situation, refuses to sell him his car. E) Joe threatens to smash Harry's car if Harry won't sell it to him.

2) _______

4) With regard to the law concerning misrepresentation, which of the following is true? A) A misrepresentation can be a false assertion of fact that induces (persuades) the party to contract, and need not be an assertion about a term of the contract. B) For fraudulent misrepresentation, the buyer could ask only for the equitable remedy of rescission. C) A statement of opinion can be a one-sided mistake. D) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that the misrepresentation was true. E) The case law provides a remedy for a wildly exaggerated claim, such as "This is the best car ever built."

4) _______

5) Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is true with regard to these areas of the law? A) Independent legal advice given to a person is good evidence of undue influence. B) If a seller persuades a person to buy something by a innocent misrepresentation, the buyer could ask for rescission and damages for the tort of deceit. C) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that his misrepresentation, which persuaded the buyer to buy, was true. D) A person can successfully argue non est factum and avoid his obligations under a contract only if he was misled about the very nature of the document and was not careless. E) Where, a written document embodies the the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification.

5) _______

6) Keri went to Crandon's computer outlet with her brother Paul, who was buying a laser printer.

W hile she

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3) When two parties are involved in a misunderstanding as to the meaning of a term of the contract, 3) _______ which of the following is usually applied by the court to settle the matter? A) The equitable remedy of rectification B) The most reasonable interpretation of the terms. C) Caveat emptor D) The court will find that there is no contract because there is no meeting of the minds. E) Non est factum

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was collecting for the student's computer. Later Paul and Keri learned that neither statement was waiting truethe printer didn't interface with Paul's computer and the store was doing nothing for the for him, studentand that the seller didn't believe that either statement was true when he made them. she saw On these facts, which of the following is true? a poster saying the store was collectin g funds for a special compute r for a student recently disabled in an accident. The seller induced Paul to buy the model "X" printer by stating as a fact that the printer could interface with his Macintos h clone. Paul paid $900 for the printer. Also, Keri gave $15 to the student fund after the seller confirme d he was

6) _______

A) Keri could sue for damages due to a misunderstanding. B) Paul could sue for rescission because of the misrepresentation. C) The court would rescind Paul's contract only with proof that the seller knew his statement was false. D) Paul could sue for damages due to an innocent misrepresentation. E) Only Keri has a remedy because she had been fraudulently misrepresented. 7) _______

8) Which of the following is true with regard to the law of contracts? A) An employee sent by his employer to do a routine job for one of the employer's customers is in a contractual relationship with the customer. B) Assignments are modifications of the Privity of Contract Rule, since they do allow a one person to take over the obligations of another. C) The assignor for value of a negotiable instrument may acquire better rights than the assignee has. D) A party to a contract for services can assign both his contractual obligations and his contractual rights. E) A statutory assignment is easier to enforce than an equitable assignment.

8) _______

9) Mary has a little scam most everywhere she goes; she sells by saying anything. Her buyers just have woes. Which of the following is true with regard to misrepresentation? A) In some types of misrepresentation there are no remedies available. B) For fraudulent misrepresentation, the buyer can be granted the equitable remedy of only rescission. C) There are several remedies available in case law for an exaggerated claim made by Mary. D) If Mary induces the buyer to buy by making a misrepresentation that she honestly thought was true, the buyer has no remedy in law or in equity. E) A misrepresentation can be made about a term of a contract and result in an award of rescission and/or damages.

9) _______

10) An 80-year-old woman signed, in the presence of a solicitor, a contract for land by which she sold property to her daughter. She later asked the court to set the contract aside on the grounds of non est factum (mistake) and undue influence. Which of the following is true with regard to these grounds for the contract? A) She can successfully use the plea of non est factum if she was not misled about the very nature of the document. B) If the court presumes that undue influence was used by the adult who gained from the contract with an aged parent, the contract is automatically set aside. C) She can successfully use the plea of non est factum if there is evidence that she was careless when she signed the document.

10) ______

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7) With regard to the law governing privity of contract and assignment, which of the following is true? A) Novation refers to the modifications of the privity of contract rule since it allows a stranger to the contract to receive benefits from the contract. B) An employee sent by his employer to do a routine job for one of the employer's customers is not in a contractual relationship with the customer. C) Assignments are modifications of the privity of contract rule since they allow ending the original contract and entering into a new contract with changes in terms, such as substituting one party for another. D) A party to a contract for services can assign both his contractual obligations and his contractual rights. E) A statutory assignment is more difficult to enforce than an equitable assignment.

D) If the lawyer were the daughter's husband, his advice would be seen as independent legal advice. E) If the aged mother received independent legal advice, it would be good evidence for the daughter that the mother's transferring the property was done freely, without undue influence being exerted. 11) ______

12) With regard to the law governing privity of contract and assignment, which of the following is true? A) Where the assignor assigns the same debt to two or more persons, if the promisor (debtor) pays out, in good faith, to the first assignee to give him notice, he has no further obligation. B) Novation refers to the voiding of the original contract and substituting another. C) An equitable assignment is easier to enforce than a statutory assignment. D) If a promisor (debtor) accidentally pays out to the assignor after receiving notice of the assignment, he is free from any obligation to the assignee; the assignee must look to the assignor for payment. E) An exception to the doctrine of privity of contract is a contract selling a car.

12) ______

13) When two parties are involved in a mutual mistake (misunderstanding) as to the meaning of a term of the contract, which of the following is usually applied by the court to settle the matter? A) The reasonable person test B) The equitable remedy of rectification C) Non est factum D) The court will find that there is no contract because there is no meeting of the minds. E) Caveat emptor

13) ______

14) Which one of the following mistakes voids a contract? A) Two parties contract for a shipload of coal, but unknown to both parties, at the time of the contract the ship had sunk and the coal had been lost. B) When Mr. and Mrs. Houston put their property up for sale, Sam without speaking to the Houstons or their agent about the land, offered close to the asking price because he thought it was suitable for growing wheat. After his offer was accepted, he learned it was not suitable for wheat. C) Two parties contracted for the sale and purchase of a painting for the price of $800. When the contract was written up, the price was incorrectly stated as $900. D) Sally and Mary had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was that of Sally. E) Sam bought three gallons of paint, but found he had made a mistake; two would have been sufficient.

14) ______

15) Clive and Bill were not friends but worked in the same firm. Both worked with computers and

had comput

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11) With regard to the law concerning misrepresentation, which of the following is true? A) Rescission is available as a remedy for misrepresentation only if it is innocent misrepresentation. B) If the buyer realizes the seller persuaded him to contract by a misrepresentation, he will not be able to get the remedy of rescission if he was tainted with wrongdoing himself, i.e., not coming with "clean hands." C) Damages as a remedy are not available where the misrepresentation becomes part of the contract. D) A misrepresentation can be a true assertion of fact that induces (persuades) the party to contract. E) The case law allows a remedy for an opinion given by a non-expert.

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ers at time of the contract, the program disk had been destroyed by some coffee accidentally spilled on home. it by a friend of Clive's wife. Bill refused to go through with the deal. On these facts, which of the They following is true if Clive sues Bill? entered a contract in which Clive agreed to sell Bill his "Apple, printer, and a compatib le word-pr ocessing program for $3,000." When Bill went to take delivery of goods, he realized that there had been a great mistake. He thought Clive was selling his Apple Macintos h. By "Apple" Clive meant his Apple IIe. Further more, unknow n to both of them at the

15) ______

A) With regard to which computer is the subject matter of the sale, the court will examine which interpretation is the more reasonable; if they are equally reasonable, that part of the contract, at least, will be void. B) Since the parties to the contract have a different understanding as to the subject matter of the sale, they can ask the court for rectification, that is, for the court to rewrite the contract. C) With regard to the program disk, since all the elements of a contract existoffer, acceptance, consideration, etc.Bill must pay for it. D) With regard to which computer is the subject matter of the contract, the court will determine which computer was meant to be sold by the seller and declare that one to be the subject matter of the sale. E) This is an example of caveat emptor and the purchaser has no remedy. 16) ______

17) Which one of the following will be excluded by the parol evidence rule? A) Evidence of implied terms B) Extrinsic evidence C) A condition precedent D) Express terms E) Evidence of a collateral agreement

17) ______

18) Mr. Frank, a foreman supervising some 43 employees, was asked by his secretary to sign a form requesting additional supplies needed on the factory floor. He was not careless when he examined the form, but his secretary had cleverly arranged the signature line so that instead of signing a request for supplies he signed a cheque payable to his secretary. What plea, if any, would be used to defend against her action on the cheque? A) Illegality of object B) Rescission C) Rectification D) Mistake E) Non est factum

18) ______

19) Len's new secretary came in and asked him to sign four letters that she said concerned general office matters. One of the "letters" was, in fact, a cheque for $500, payable to the secretary. The secretary cashed the cheque at her bank, and when her bank presented the cheque for payment, Len refused to pay it. He said he had been tricked and it was all a mistake. On these facts, which of the following is true? A) He may be able to avoid his obligation on the cheque on the basis of non est factum. B) Even if he was careless, he will not have to honour the cheque. C) He would be obligated to honour the cheque no matter how careful he was.

19) ______

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16) Which of the following will have the likely consequence of the court finding the contract void on the grounds of mistake? A) Mr. Ideer bought some property, erroneously thinking that the province was planning to put a highway nearby, even though the seller had never made any such suggestion. B) The parties signed a document that stated the consideration as $1,200 instead of the $1,100 that the buyer and seller had contracted for, but the buyer cannot prove the terms of the original contract. C) Mr. Ille, although using due care, signed a cheque for $100 in favour of his secretary, who had told him it was a receipt for money received. D) Mr. Twigg carelessly signed a mortgage for $24,000, which he was told was a mortgage for only $14,000. This was assigned to Mr. Jones. E) Mr. Jones, without reliance on a salesperson, purchased a palm organizer from a store, thinking it ran the regular Windows operating system.

D) He may be able to avoid his obligation on the cheque on the basis of duress. E) He may be able to avoid his obligation on the cheque on the basis of unconscionability. 20) ______

21) Which of the following situations gives rise to the application of the equitable remedy of rectification? A) A written instrument, because of an obvious mistake, does not embody the unchanged terms of an original oral agreement. B) Both parties to a contract agree that they want to change some of its terms and thus apply jointly to the court to have the relevant terms altered. C) The two parties to a contract have made a mutual mistake and one of these parties is asking the court to choose the more reasonable meaning of the terms in question. D) The defendant has a justifiable defence of non est factum. E) The contract is one requiring "utmost good faith."

21) ______

22) Which of the following will have the likely consequence of the court's finding the contract void on the grounds of mistake? A) Mary contracted to buy "the Acura car" from a collector of cars. He was selling his 2011 model but she thought she was buying the 2012 model. The court, looking at all the evidence, found that his interpretation was the more reasonable. B) Annette bought a suit thinking she would be invited back for a second interview. She wasn't and now wants to return the suit on the basis of mistake. C) Mr. Armstrong accepted the offer by Sidhu, who was selling a "computer program," but learned that they had different understanding of what program was meant. The court cannot say that one interpretation is better than the other. D) The parties signed a document that stated the consideration as "$1,100" instead of the $900 that the buyer and seller had contracted for, but the buyer cannot prove the terms of the original contract. E) Ms. Hunt bought some property erroneously thinking that the province was planning to put a highway nearby, even though the seller had never made any such suggestion. She wants out of the contract.

22) ______

23) A week after signing a contract, you became aware that you and the other party, Sheldon, seemed to have a different understanding of one of the provisions of the contract. Before you said anything to him, you reread it to see if your interpretation was valid. As you reread it, you noticed that not only was that provision vague, but also other terms and provisions were ambiguous or left out. Which of the following is false with regard to the methods used by the courts to interpret contracts? A) Evidence of a condition precedent agreed upon by the parties but not included in the

23) ______

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20) In which of the following instances would the court most likely hold the contract to be void on the basis of a mistake? A) Two parties contracted for a shipload of fish, but unknown to both parties, at the time of the contract the ship had sunk and the fish had been lost. B) Although the seller said nothing to the buyer about the characteristics of the answering machine, the buyer bought it, thinking that it would tell him the date and time of the call. Later, he learned that it did not perform that function. C) Barry and Mary contracted for the sale and purchase of a boat for the price of $1,200. When the contract was written up the price was incorrectly stated as $1,700. D) Sarah bought three rolls of wallpaper, but found she had made a mistake; two would have been sufficient. E) Carson and Leno had a serious misunderstanding about a term in the contract; the court found that the more reasonable interpretation was that of Leno.

written

contract is admissible despite the parol evidence rule. B) The parol evidence rule holds that when a contract is in writing, the court will not allow evidence to contradict, vary, add to, or subtract from the written contract. C) The court will do its best to give effect to the intention of the parties. D) Evidence of misrepresentation will not be admissible because of the parol evidence rule. E) To interpret express terms, the courts will look first to the plain meaning of the term (e.g., the dictionary meaning.)

24) The longer Adolph stayed on this job, the more he hated it. He thought the boss was too demanding. He especially disliked being reprimanded for being late. One afternoon, he was asked by a secretary to take a letter to the boss for his signature. The boss had had an eye operation and was recuperating at home. Adolph got two signatures, one on the letter and one on a note promising to pay Adolph $1,000 in consideration for services rendered. The boss was not careless, but couldn't read the papers. What plea or argument, if any, could the boss use to avoid paying on the promissory note? A) Unconscionability B) Duress C) Non est factum D) Shared mistake E) Rectification

25) ______

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25) In which of the following would the court find that the contract is void (i.e., not a binding agreement)? A) Ry and Ali, two parties to a contract, each had a different understanding about the term "royalties" in the contract. The court found Ali's interpretation the more reasonable. B) Kramer, thinking that the city was going to build a new school in the area, offered to buy a house. She had not talked with the seller or his agent about the possibility of a school. After the offer was accepted, she learned that there would be no such new school. C) After some negotiation, Paul accepted Monafo's offer to sell him the painting for $5,000. When the contract was put in writing, the price was incorrectly stated as $500. Monafo could prove the terms of the oral contract. D) Two parties contracted for a tanker of oil, but unknown to either of them at the time of the contract, the tanker had caught on fire and all the oil had burnt. E) Joe bought pizzas, but after eating one he realized that purchasing them was a big mistake.

24) ______

26) Len was behind in his work at the office. He decided to go in for a few hours on Sunday to catch up. He asked a secretary to come in for four hours. He turned on his office TV. Just then his secretary came in and asked him to sign four letters that she said concerned general office matters. He carelessly signed them without taking his eyes off the TV screen. One of the "letters" was, in fact, a cheque for $500 payable to the secretary. The secretary cashed the cheque at her bank, and when her bank presented the cheque for payment, Len instructed his bank not to honour it. He said that he had been tricked and that his signing it was all a big mistake. On these facts, which of the following is true? A) He could avoid his obligation on the cheque on the basis of duress. B) Undue influence would be his best defence on these facts. C) He could avoid his obligation on the cheque on the basis of unconscionability. D) Because Len did not know what he was signing, he cannot be held liable. E) Len's carelessness in failing to read what he was signing will likely defeat any claim of non est factum.

26) ______

27) When you went home for Thanksgiving dinner, your great aunt, now 80 years old, seemed very unhappy. You learned that she had just signed a contract buying an expensive condominium in

a rement reti commu

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nity. She 27) had attended a real estate "seminar " with her friend. In trying to think of a way for her to get out from under this contract, you review mistake, duress, undue influence, and unconsci onability. Which of the followin g is false? A) To avoid the contract on the basis of duress, she would have to show that she was forced into signing the contract against her will by serious threats. B) To avoid the contract on the basis of unconscionability, she would have to have evidence that the sellers of the property knowingly took advantage of their superior bargaining position and that the consideration was grossly unfair. C) To avoid the contract on the basis of undue influence, she would have to show that she was improperly pressured by a trusted person in a dominant position. D) To avoid the contract on the basis of non est factum, she would have to prove, among other things, that she did not understand the nature of the document signed. E) To avoid the contract on the basis of mistake, there is a presumption of mistake and she will automatically get out of the contract.

28) Mr. and Mrs. H were induced to sign a mortgage in favour of M Co. Ltd. by Johnston, a man 28) ______ living with their daughter. Johnston led them to believe that the document was an unimportant amendment to an existing mortgage, when in reality, it was a second substantial mortgage of their home. Neither read the document nor questioned it. When the payments were in arrears, the mortgagee took an action for foreclosure (to take their home). Which of the following is correct with respect to the legal position of the parties? A) If the court finds that Johnston has committed a fraudulent misrepresentation, Mr. and Mrs. H will not have to honour the mortgage. B) If the court finds that this is an example of duress by Johnston, Mr. and Mrs. H will not have to honour the mortgage.

C) They will likely have to honour the mortgage contract even though they didn't read it. D) If Mr. and Mrs. H can show they didn't read the document, they will not have to honour the mortgage contract. E) If the court finds that this is an example of undue influence by Johnston, Mr. and Mrs. H will not have to honour the mortgage. 29) ______

30) Damages as a remedy will not be available in which of the following situations? A) Jones makes a fraudulent misrepresentation, persuading Smith to enter a contract with him. B) Jones, although being careful, makes an innocent misrepresentation persuading Smith to enter a contract with him. C) A false statement made by Jones becomes a term of the contract. D) Jones makes a negligent misstatement, persuading Smith to enter a contract with him. E) Jones makes and intentional misrepresentation of fact in order to get Smith to sign the agreement.

30) ______

31) A computer salesman innocently misrepresented a fact about a Macintosh computer to a customer. Although this fact was not about a term of the contract, it did induce the customer to buy the computer. The customer has now learned the true facts and wants to return the computer. If the store refused to take it back, the customer would ask the court for which equitable remedy? A) Rectification B) Damages C) Rescission D) Injunction E) Restitution

31) ______

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29) A fraudulent misrepresentation which induces another person to enter into a contract can result in which of the following remedies? A) Rescission and/or damages B) Rescission only C) There is no remedy available for fraudulent misrepresentation. D) Damages only E) Rectification

32) The equitable remedy of rectification is granted by the courts in which of the following situations? 32) ______ A) The parties to a contract disagree as to the meaning of a term in their contract. B) A person buys something that he later learns he already owned. C) The seller made a fraudulent misrepresentation that induced the buyer to buy. D) Because of a mistake, a written document does not include a corrected term to which the parties had orally agreed. E) The seller of goods has made an innocent misrepresentation that persuaded the buyer to buy. 33) Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is false with regard to these areas of the law? A) If a seller persuades a person to buy something by a fraudulent misrepresentation, the buyer could ask for rescission and/or damages for the tort of deceit. B) Independent legal advice given to a person who wants to give a gift to a dominant person (e.g., his doctor) is good evidence to rebut a presumption of undue influence. C) A person can successfully argue non est factum and avoid his obligations under a contract

33) ______

only if he was misled about the very nature of the document and was not careless. D) A buyer could not be awarded the equitable remedy of rescission if the seller honestly believed that his misrepresentation, which persuaded the buyer to buy, was true. E) Where, because of a mistake, a written document does not embody the unchanged term of the original oral agreement, a party to the contract could ask the court for the equitable remedy of rectification. 34) ______

35) Jenny went to the store and asked to see an AM-FM clock radio with a tape deck. The salesman brought out a clock that he said had all the features that she wanted. After looking at the price tag and little else, she said she would think about it. The salesman said that this was the most popular model sold, that they sold 1000 of them during the World Series alone, that it had the highest rating in Consumer Reports, and that he only had that one left. Jenny bought it. Later she found out that all the statements made to her by the salesman were false, including the statement that the clock had all the features that she wanted, because it did not have an AM band. Which of the following is true? A) Jenny could obtain the remedy of rescission only if the statements made to induce her to contract were fraudulent. B) The equitable remedy of rescission is available only if Jenny were able to restore the clock to the seller. C) Jenny would only have a remedy for breach of contractnamely, the clock did not have an AM bandbecause none of the other statements was about the radio itself. D) The statements of the salesman are fraudulent only if the salesman knew they were false. E) Jenny could return this clock to the seller only if she could prove undue influence.

35) ______

36) A salesman innocently misrepresented a fact to a customer about a new printer. He honestly believed his statement was true and was not careless. Although this fact was not about a term of the contract, it did induce the customer to buy that printer. The next day, the customer learned the true facts and wanted to return the printer. If the store refused to take it back and the customer sued, which of the following would be the most likely result? A) The buyer's case would be dismissed. B) An order of rescission C) An award of damages D) An order of specific performance

36) ______

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34) The office manager of a real estate agency was at an office supply store to replace a filing cabinet when he saw a demonstration of a new Xerox copier. Undoubtedly, the agency would benefit from the copier, especially since it had the capability of enlarging the originala good feature when dealing with the small print of contracts. The next day, he called the manager of the store to discuss the machine further. The seller said that it was "ten years ahead of the competition," that it "was rated as maintenance-free by an independent consumer research group," and that he had "sold five to other real estate agencies in this area" and "had only one left." The agency, relying on these statements, asked to have it delivered. When it arrived, the office manager had learned that every statement made by the seller had been false; furthermore, the seller did not send out the machine discussed, but the old model. Which of the following is true? A) The agency would have a remedy for breach of contract, but no remedy for other statements that merely persuaded it to enter the contract. B) This is a "buyer beware" situation and the buyer has no remedy. C) The agency could have returned the machine even if it had been sent the right model, since the remedy of rescission was available to it for misrepresentations made. D) The agency would have to keep the machine, but could sue the seller for damages for the tort of deceit. E) Had the office supply store sent the right machine, the agency would have had no remedy.

E) An injunction 37) ______

38) The contract for the Surrey property had been signed by both parties. Which of the following is necessary for the contract to be set aside on the grounds of misrepresentation? A) The misrepresentation must have been a false statement of a fact; false statements of opinion are never misrepresentations. B) The misrepresentation must have induced the party to enter the contract. C) The misrepresentation must have been a term of the contract. D) The misrepresentation must have been made recklessly or wilfully. E) The misrepresentation must have been in writing.

38) ______

39) It came to your attention that your great-grandmother had signed a contract pursuant to which she would be paying $5,000 for an electronic organ that retails in reputable stores for $3,000. Furthermore, the interest being charged is 18%, even though today's rate fell to a 20-year low. This debt is totally out of line with her pension income. It is apparent that she was misled by the door-to-door salesman who came to her place. On these facts, which of the following laws is the most likely to help her? A) Undue influence only B) Misrepresentation only C) Non est factum D) Unconscionability only E) Both unconscionability and misrepresentation

39) ______

40) Mrs. Sharp, the owner of a restaurant, induced the Morissons to buy the business by a misrepresentation; the invoices made her costs appear less than they actually were, and thus her profits more than they actually were. On these facts, which of the following is false? A) The court could award the equitable remedy of rescission if the evidence showed she had fraudulently misrepresented the costs. B) The court could not award the equitable remedy of rescission if evidence showed that Mrs. Sharp really believed the invoices were accurate. C) The cause of action could be for the tort of deceit, if there was evidence that Mrs. Sharp

40) ______

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37) When Gary went into Computer Heaven, Ltd. to get a better manual for the program he was trying to master, he was caught by a demonstration of a computer created by Next, Mr. Job's new firm. He was fascinated by its performance. The salesman, Ross, told Gary that he should have this machine; that "it was the last computer, no other will ever be better"; that "UBC, Simon Fraser, and BCIT just ordered over 1000 of them"; that he only had "a few left and the demand is so great it will take almost a year for the next shipment to arrive." When Gary said he needed a computer with at least 100 Gigabytes, Ross said this model had 250 Gigabytes. Gary was persuaded and contracted for it. Later Gary learned that every statement made by the salesman Ross was untrue, including the statement about the memory capacity; the model only had 40 Gigabytes. On these facts, which of the following is true? A) Only if Ross, the salesman, knew that all the statements he made were false could Gary get a remedy. B) Such misrepresentations could only result in contractual remedies, legal or equitable, but not in tort remedies. C) Merely the exaggerated claim "it was the last computer, no other will ever be better" is enough, according to the case law, to allow Gary to get out of the contract. D) Statements that induced Gary to contract, but that are not the terms of the contract, are not significant enough for the courts to award a remedy by case law or by statute. E) Gary could be awarded the equitable remedy of rescission even if Ross, the salesman, honestly believed everything he said was true.

intended to

deceive them. D) The court could terminate the contract for breach of contract if the accurate statement of costs and profit were essential terms of the contract. E) The court could not award the equitable remedy of rectification because the argument is not about rectifying an erroneous written version of a previous oral contract. 41) ______

42) Mr. Copperfield, a collector of movie memorabilia, bid $50,000 on the Batmobile. After taking delivery, he discovered the car was not the car actually used in the film "Batman," it was merely one of five cars used to promote the film. He is suing the seller, Mr. Eisenberg. In which of the following cases would Mr. Copperfield not be entitled to a remedy? (Assume that in each case the facts could be proven.) A) Breach of contract by Mr. Eisenberg B) Fraudulent misrepresentation by Mr. Eisenberg C) Negligent misrepresentation by Mr. Eisenberg D) Innocent misrepresentation by Mr. Eisenberg E) Unilateral mistake by Mr. Copperfield

42) ______

43) When the courts find that undue influence is present, the resulting contract is A) voidable. B) unenforceable. C) illegal. D) binding. E) void.

43) ______

44) Randal embezzled $6,000 of his employer's money and then disappeared. The employer's accountant called at Randal's residence and found out that his wife had a $3,500 term deposit. When the accountant threatened to have her husband arrested and imprisoned if she did not agree, she assigned the term deposit to the employer to help to defray the loss from the embezzlement. If the wife were later to sue for return of the term deposit, what would be her ground for avoiding the assignment? A) Mistake of law B) Duress C) Fraudulent misrepresentation D) Undue influence E) Non est factum

44) ______

45) With respect to having the court set aside a contract on the basis of undue influence, which of the following is false?

45) ______

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41) Which of the following constitutes a misrepresentation that would not allow the courts to award the equitable remedy of rescission? A) The seller concealed the broken drawer of the desk from the buyer. He would not be able to see it until he got it home. B) The seller was persuaded to buy the car by a misrepresentation that it had the fewest repairs of any car of its class. After the buyer learned of the truth, he kept the car for three weeks to get some benefit from it before taking it back. C) A man who contracted for an insurance policy did not state on the application form that he had been treated for cancer. He died from the cancer two months later. D) The seller persuaded the buyer to buy the car by misrepresenting it as having just been serviced and passing the air care test. Neither had been done, but the seller honestly believed both had been done. E) None of the above.

A) Where undue influence is established, the resulting contract is voidable, not void. B) If you are a dominant person in relation to an aged relative who wants to sell you his house below market value, you should insist that the aged relative receive independent legal advice. C) If a client transferred property to his lawyer and later claimed the transfer was due to undue influence, the law would presume the transfer was due to undue influence. D) A contract made in favour of a dominant person who exerted undue influence over the weaker party is voidable at the option of the weaker party. E) If the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back. 46) ______

47) A woman sought to set aside a mortgage on the grounds of misrepresentation, undue influence, and non est factum. She had been persuaded to enter into that mortgage contract with a mortgage company by her doctor. Which of the following is true with regard to these challenges to the mortgage contract? A) If she were influenced to sign the mortgage by her doctor and the court found undue influence, the mortgage would be void and she wouldn't have to pay the mortgage company. B) If the court found that there was undue influence by her doctor, who obtained the money from the mortgage, she would not have to repay the mortgage company. C) If she failed to read the mortgage agreement, the mortgage would be void on the basis of non est factum. D) If she were influenced to sign the mortgage by her doctor and the mortgage benefited the doctor, the court would presume undue influence. E) If the person who misled her as to the contents of the mortgage agreement honestly thought what he was stating was correct, she could sue for only damages, not rescission.

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47) ______

48) The law attempts to help persons who may feel forced to enter contracts. Which of the following is false with regard to the law of undue influence, duress, etc.? A) A contract entered into because of a threat of violence is voidable at the option of the victim. B) Independent legal advice given to a person who wants to give a gift to a dominant person (e.g., his doctor) is good evidence to rebut a presumption of undue influence. C) If the court presumes the existence of undue influence, the person asking for the return of the property will automatically get it back. D) An unconscionable transaction is one in which one party has been seriously taken

48) ______

46) You and your parents were both surprised when grandmother said the doctor told her to come for weekly checkups, because she didn't seem sick. Nevertheless, you dutifully took her to and from her appointments for a period of about six months. She never talked about these sessions, but loved to go. Now she has come to the family and said that she is sorry that she gave him the oil paintings and sold him the farm. On these facts, which of the following is false? A) It would be easier for her to argue duress than undue influence. B) In a court action, if she claimed the return of her property on the basis of undue influence, the court would presume undue influence and the doctor would have to prove that the property was freely given. C) If a court held that the property was obtained by undue influence, the contract would be voidable at the option of grandmother, the weaker person. D) If grandmother had gone to her own lawyer for independent advice before conveying her property to the doctor, she would have more difficulty arguing undue influence. E) A presumption of undue influence doesn't mean the weaker party will automatically get her property back.

advantage of, and the courts, in their equitable jurisdiction, can set such a contract aside. E) If a contract favours the stronger party in a relationship (e.g. if a lawyer bought property from a client at far below the market value), the court would presume undue influence, i.e., that the stronger party abused his dominant position. 49) ______

50) Able Company contracted to sell to Baker Company 400 barrels of chemical C for $1,200. Able Company assigned the entire $1,200 in writing to Mr. Long, who sent a letter informing Baker Company of the assignment and directing Baker Company to forward money to him instead of Able Company. Unbeknown to both companies, at the time of the contract the ship carrying the chemical had sunk and all cargo was lost. Which of the following is true? A) Mr. Long, the assignee, will receive $1,200 from Baker Company. B) The assignment to Mr. Long would fail to be a statutory assignment. C) Mr. Long will receive nothing from Baker Company because nothing is owed to Able company. D) Since Able Company has breached the contract, they pay compensation for the damages of both Baker Company and Mr. Long. E) Mr. Long will receive part payment.

50) ______

51) Tong hired Hocaloski to design an ad for her business. Hocaloski assigned the work to Peppar, her employee. After the ad was run, it was noticed that Peppar made a serious error; he gave the wrong address and phone number of the business. On these facts, which of the following is true? A) For breach of contract, Tong could successfully sue only Hocaloski. B) Tong can sue either Hocaloski or Peppar, her employee, for breach of contract, but not both of them. C) If Hocaloski did not pay Peppar, Peppar could sue Tong for his pay because Peppar did do work for Tong. D) Only Peppar is liable since he made the mistake. E) Tong can sue both Hocaloski and Peppar for breach of contract, since they are both connected with the job.

51) ______

52) Privity of contract applies in which of the following situations? A) Where goods are being sold B) Where a trust is involved C) Where a trust has been created D) Where an interest in land is involved E) Where an insurance contract is involved

52) ______

53) The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr. Takemori for $2,000. The co-op assigned, in writing, its contractual right to receive the $2,000 to the Royal Bank, to which it was indebted. The Royal Bank gave written notice of the assignment to Takemori.

Un to the kno buyer wn and the

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49) With regard to the law governing privity of contract and assignment, which of the following is false? A) A statutory assignment is easier to enforce than an equitable assignment. B) If a promisor (debtor) accidentally pays out to the assignor after receiving notice of the assignment, he is free from any obligation to the assignee; the assignee must look to the assignor for payment. C) Where the assignor assigns the same debt to two or more persons, if the promisor (debtor) pays out, in good faith, to the first assignee to give him notice, he has no further obligation. D) An exception to the doctrine of privity of contract is a contract granting an interest in land. E) Novation refers to the ending of the original contract and entering into a new contract with changes in terms, such as substituting one party for another.

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seller, at 53) the time of the contract the grain had been destroye d because of a train derailme nt caused by the negligen ce of the train conducto r. On these facts, which of the followin g is true? A) The Royal Bank, the assignee, will receive the $2,000 because it could prove privity of contract with Takemori. B) The Royal Bank will receive part payment from Takemori. C) The Royal Bank will receive $2,000 from Takemori because there was an assignment in writing and that is the sole test for determining if the assignee will be paid the amount of the assignment. D) Because of the conductor's negligence, the railroad will have to honour Mr. Takemori's contract with the Royal Bank. E) The Royal Bank will receive nothing from Takemori, because Takemori owes nothing to the Co-op. 54) Mr. Jans owned a small building with four offices upstairs and a restaurant on the main floor. Jans contracted with a company, Signs Limited, to construct a sign indicating the names of his tenants and their room numbers. The sign was created and installed by John Monet, an employee of Signs Limited. Signs Limited assigned $500 of the $700 contract price to Ms. Franz, its landlord, when she called and pressed for the rent. Ms. Franz gave notice of the assignment in writing to Jans. Read the following statements, independently of one another, and indicate which is the true statement. A) If the assignment is not honoured by Jans, Franz' only recourse is to sue Monet, the employee who actually did the work. B) Franz cannot enforce this assignment because the assignment was not in writing, and only assignments in writing will be enforced by the courts. C) If the contract were completed satisfactorily, Franz could enforce the assignment, although it is a partial assignment. D) If Signs Limited fails to pay Monet's salary, Monet is legally entitled to sue Jans for it because Monet did work for Jans. E) If the sign were not done properly, Jans should sue Monet for breach of contract because

54) ______

Monet, as

employee, did the work.

55) Allen hired Beth to do a marketing survey. The contract provided that she would start the work on January 15 and finish it by March 15, the date for completion being a condition on the contract. She would be paid $2,000. After one month of work, when the work was half completed, Beth assigned the $2,000 contract price to Charlie, from whom she had bought computer hardware. Charlie gave written notice of the assignment to Allen on the same day. The second month's work went badly. Information entered into the computer was lost and Beth could not finish on time. She was five days late, and each day cost Allen $100. His total foreseeable loss was $500 because of her breach. On these facts, which of the following is true? A) Charlie could receive only $1,000 from Allen because half of the $2,000 project was finished when he gave notice of the assignment to Allen. B) Charlie could receive $2,000 from Allen because that is the amount owed to Charlie and the amount assigned by Beth. C) Charlie gets $0 from Allen because one can assign contractual obligations but not contractual rights. D) Charlie could receive only $1,000 from Allen because only half the work was done when the assignment was made. E) Charlie could receive $1,500, because when the contract was completed, that was all that was legally owed to Beth.

55) ______

57) On September 1, Beeton contracted to sell $4,000 worth of specified Kenyan lumber to Cairns. Beeton expected the arrival of the lumber soon, so the delivery date was set for September 8. On September 5, Beeton assigned, in writing, his contractual right to receive the $4,000 to his bank, which was pressing him to reduce his $17,000 debt. The bank sent a written notice to Cairns instructing him to forward the $4,000 to the bank and not to pay Beeton directly. Unknown to either Beeton or Cairns, the lumber had been lost at sea in August, before they had even entered the contract. On these facts, which of the following is true? A) The assignee would receive whatever the assignor had assigned to him, namely, the $4,000. B) Because the goods bargained for had perished before the parties had contracted for them, the court would hold the contract void. C) This assignment was not a statutory assignment; i.e., it failed to satisfy the statutory requirements for enforcement by the assignee against the debtor. D) Because the assignment was made by Beeton to his bank in good faith, Cairns must pay the bank $4,000. E) The time for determining the "equities between the parties" is always the time that notice of the assignment is given.

57) ______

58) Adam bought a boat from Charlie for $900 payable on November 6. On November 6, when Charlie came for the money, Adam didn't have it. Adam was, however, employed by Ms. Bey to

do e sommarket

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56) A real-estate agent, Jones, was owed a $7,000 commission, having sold property for Mr. Quick. Mr. Quick couldn't be found, but Jones did find his wife and learned that she had over $20,000 in treasury bills. Mr. Jones told her that if she didn't assign to him $7,000 of the $20,000, he would make sure her husband was imprisoned for his debts and "for other crimes" he knew about. If she did make an assignment in writing to Jones of the $7,000 but later tried to void the agreement, she would argue which of the following? A) Statutory assignment B) Duress C) Privity D) Non est factum E) Mistake

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research. had not finished his report. The contract provided that he would lose $100 for every week he He was was late. Adam was two weeks late in submitting his report. Which of the following is true? to be paid $1000 for his report, due on Novemb er 12. Charlie wanted an assignme nt of $900 of the amount Adam expected to receive Novemb er 12. Adam wrote out an assignme nt with all the essential informati on and signed it. Charlie gave written notice of the assignme nt with all pertinent informati on to Ms. Bey the next day, Novemb er 7. On Novemb er 12, Adam

58) ______

A) Ms. Bey must honour the notice of assignment by paying out the $900 on the day the notice was received. B) Charlie, the assignee, would receive $800 from Ms. Bey and have to look to Adam for the other $100 owed. C) This assignment is a statutory assignment. D) The assignment fails to be an assignment at all because Adam failed to get the consent of Ms. Bey. E) Charlie would get nothing because Ms. Bey owed less than the amount assigned. 59) ______

60) With regard to the law governing privity of contract and assignment, which of the following is false? A) A statutory assignment is easier to enforce than an equitable assignment. B) Assignments are modifications of the privity of contract rule since they do allow a stranger to the contract to receive benefits from the contract. C) An employee sent by his employer to do a routine job for one of the employer's customers is not in a contractual relationship with the customer. D) Novation refers to the ending of the original contract and entering into a new contract with changes in terms, such as substituting one party for another. E) A party to a contract for services can assign both his contractual obligations and his contractual rights.

60) ______

61) Although Zlotnic had been in business a long time, he had been forced to borrow heavily in the last few years. When his debt reached the limit of his line of credit, $100,000, the manager of the Regal Bank called him in for a talk. Subsequently, Zlotnic sold his house for $250,000 to the Johnsons. He contracted to buy another from the Scotts. From the proceeds he anticipated receiving from the Johnsons, he assigned $200,000 to the Scotts, the purchase price of Scott's house, and assigned $50,000 to the Regal Bank to reduce his debt. The assignment to the Scotts was in writing; the assignment to the bank was not. The Scotts gave written notice of the assignment to the Johnsons on March 1, the day the money was owed to Zlotnic. Johnson verified the assignment and paid out the $200,000 to the Scotts. On March 2, the Regal Bank gave written notice of its assignment to the Johnsons. Unfortunately, at that time only $45,000 was owing to Zlotnic because the Johnsons had paid $5,000 to the Canada Revenue Agency for Zlotnic. On these facts, which of the following is true? A) Regal Bank must take "subject to the equities" between Zlotnic and the Johnsons; i.e., it can't receive the whole $50,000. B) The assignment to the bank is not enforceable because it was not in writing. C) The bank has no claim since the Johnsons didn't owe Zlotnic the specified $50,000 at the

61) ______

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59) Mr. Zink hired Bruce Dorne to create a payroll program for his business. Bruce was to be paid $4,000 for the program. When Bruce was half-way finished, a creditor to whom he owed $2,000 pressed so hard for payment that Bruce assigned him $2,000 of the contract price, an amount he felt he had earned already. The creditor, Mr. Pressing, gave written notice that very day to Mr. Zink. On these facts, which of the following is true? (Read each statement separately.) A) If Bruce bungled the assignment and the court determined that nothing was owed to him, Pressing could still get $2,000 from Zink. B) Mr. Pressing is entitled to $2,000 from Mr. Zink when the contract is completed, if at least that much is owed to Bruce by Zink at that time. C) This type of assignment is not recognized by the courts because it is an assignment of contractual obligations. D) Mr. Zink must pay $2,000 to Mr. Pressing on the day that notice was given, because at that time Bruce had done half of the work on the $4,000 contract. E) This assignment is a statutory assignment, not an equitable assignment.

time of the

assignment. D) Zlotnic needed the permission of the Johnsons, the debtors, before he could make any assignments. E) The assignment to the bank is a statutory assignment. 62) ______

63) Misgana ran into Tarja at their local gym. Tarja, it turns out, operated an art gallery that did custom framing and mounting. Misgana had some beautiful prints she wanted to have put into special frames and agreed to pay Tarja $400 to have this done. Tarja passed the task along to her new assistant, Shandy. Shandy used the wrong adhesive when mounting the prints, which meant they did not stick properly to the backing. Which of the following is true? A) If Tarja doesn't pay Shandy, Shandy could sue Misgana directly for her pay because she worked on Misgana's prints. B) Misgana could successfully sue only Shandy or Tarja for breach of contract, whichever she chooses, but not both. C) Misgana could successfully sue Shandy and Tarja for breach of contract because both were connected with the job. D) Misgana could successfully sue only Tarja for breach of contract. E) Misgana could only sue Tarja because she is the one who did a poor job of the framing.

63) ______

64) With regard to the law governing privity of contract and assignment, which of the following is false? A) Novation refers to the ending of the original contract and entering into a new contract with changes in terms, such as substituting one party for another. B) Assignments are modifications of the Privity of Contract rule since they do allow a stranger to the contract to receive benefits from the contract. C) A statutory assignment is easier to enforce than an equitable assignment. D) A party to a contract for services can assign both his contractual obligations and his contractual rights. E) The Privity of Contract Rule states that only the parties to the contract have rights and obligations under the contract.

64) ______

65) Mike is given a bottle of wine as a gift. Josh, a neighbour, sees it and recognizes it as a very rare bottle. Knowing that Mike doesn't drink, Josh offers him $300 for it, which he believes to be a fair price. Mike happily agrees. Later, when Josh is looking up the price of the bottle on eBay, he realizes that it is not a valuable bottle of wine at all. He had confused it with another vintage. Josh, who is taking a law class, wonders whether or not he could have the contract set aside. Which of the following statements is true? A) A contract can never be set aside where a mistake has been made. B) It will automatically be set aside on the basis of the doctrine of mistake. C) It will only be set aside if Josh's mistake rendered the contract illegal. D) The contract will only be set aside if Josh's mistake was the result of willful blindness.

65) ______

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62) Which of the following is false with regard to the law of contracts? A) The assignee for value of a negotiable instrument may acquire better rights than the assignor had. B) An employee sent by his employer to do a routine job for one of the employer's customers is not in a contractual relationship with the customer. C) Assignments are modifications of the Privity of Contract Rule, since they do allow a stranger to the contract to receive benefits from the contract. D) A party to a contract for services can assign both his contractual obligations and his contractual rights. E) A statutory assignment is easier to enforce than an equitable assignment.

E) It is unlikely to be set aside unless Josh could show that it would be unfair or unjust to enforce it. 66) Al sells gravel to Bob on credit, and Bob sells it to Chuck, an innocent purchaser. Then Bob runs away with the money, without paying Al. Who will get the gravel if the court holds that the contract between Al and Bob was "void"? A) Chuck B) Al and Bob C) Bob D) Al E) Bob and Chuck

66) ______

67) A and B entered into a contract for the purchase and sale of three grams of cocaine. B delivered the goods, but A didn't pay. If B sued for payment, the court would not enforce the contract because of which of the following? A) Rectification B) Rescission C) Non est factum D) Illegality of object E) Mistake

67) ______

68) ______

69) Mr. Ho talked with Mr. Tarr, who ran a business called Roscali Roofing. Mr. Ho agreed to pay Tarr $250 for the repair of his roof. In time, Gene Fix, Tarr's employee, came to Mr. Ho's and worked on the roof. Fix used the wrong material in the repairs, which made all his effort worthless; during the next rain the roof leaked as before. Which of the following is true? A) If Tarr doesn't pay Fix, Fix could sue Ho directly for his pay because he worked on Ho's roof. B) Ho could successfully sue Fix and Tarr for breach of contract since they were both connected with the job. C) Ho could successfully sue only Tarr for breach of contract. D) Ho could only sue Tarr because he is the one who did a poor job of the roof. E) Ho could successfully sue only Fix or Tarr for breach of contract, whichever he chooses, but not both.

69) ______

70) Lars Jepsen, a fisherman from Tofino, regularly sells his catch to packing plants in Steveston. His shipment had already left dock last Monday, but he didn't contract for its sale until yesterday. He sold this shipment for $10,000 to B.C. Packers. Jepsen still owes Sam $3,000, part of his commission for having sold one of his waterfront properties. This morning he assigned to Sam, in writing, $3,000 of the $10,000 owed under the contract with B.C. Packers. Unknown to Jepsen or B.C. Packers, at the time they made the contract, his transporter had gone down in a storm and all the cargo was lost. Jepsen had no insurance for loss of his boat. Which of the following is correct with respect to his legal position?

70) ______

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68) Patrick paid the seller of a car with a worthless cheque. He then sold the car to an innocent person who paid him good consideration. Patrick took the money and left the country. The original seller found out who had the car and wanted it back. Who is entitled to the car if the court holds that the contract between the original seller and Patrick is voidable? A) The original seller, but he must pay compensation to the innocent party B) Innocent purchaser C) Original seller D) Patrick E) The innocent purchaser, but he must pay damages to the original seller

A) This is an example of a mistake causing the contract between Jepson and B.C. Packers to be void. B) Because of the frustration, Sam has no claim against either Jepson or B.C. Packers. C) Despite the frustration, Sam can collect the $3,000 from B.C. Packers. D) This is an example of a breach of contract by Jepson with B.C. Packers. E) This is an example of a frustrated contract. 71) ______

72) Selling the contents of the house in preparation for a move to a condominium, Mr. Lotski sold an antique desk to a Mr. Rogers who paid by a cheque later returned N.S.F. (not sufficient funds). Lotski later learned that Rogers had sold the desk to Mrs. Lee for cash, which he took and then disappeared. Who is entitled to the desk if the court holds that the first contract between Lotski and Rogers is voidable? A) Lotski B) Rogers C) Lee but she must pay compensation to Lotski D) Lee E) Lotski but he must pay compensation to Lee

72) ______

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71) Kassem was a real estate agent with his own firm. Because his agency was new in a competitive field, he hired the company of Barrett and Barrett Ltd. to advise on an advertising strategy and to design ads for the newspaper and for brochures. Jack Barrett, senior employee, was handling the market research, and the employee Armstrong was doing the illustrations. When the work was complete, the ads went to press; unfortunately, after the printing, it was discovered that in all the ads and in every brochure "Kassem" was spelled "Kassim." Armstrong had made the mistake in his copy. On these facts, which of the following is true? A) If the company did not pay Armstrong, Armstrong could sue Kassem for his pay because Armstrong did do work for Kassem. B) Kassem's only recourse is against Armstrong, the employee who made the mistake. C) Kassem can choose to sue either the company or its employee Armstrong for breach of contract, but not both. D) For breach of contract, Kassem could successfully sue only the company, Barrett and Barrett Ltd. E) Kassem can sue both the company and its employee Armstrong for breach of contract, since they were both connected with the job.

73) Back in the days when people in Vancouver sold houses as houses and not for demolition, Mrs. Reid prepared her house for the market by contracting with Silversteps Ltd. to have her front steps replaced for the sum of $800. Warren, an employee of the company, worked for days framing the stairs and pouring the concrete. Unfortunately, he had done the framing wrong and, in addition, the concrete mix was faulty, so all of his efforts were in vain; the stairs were worthless. On these facts, which of the following is true? A) Mrs. Reid could successfully sue only Silversteps Ltd. for breach of contract. B) If Silversteps Ltd. failed to pay Warren under the employment contract, Warren could sue Mrs. Reid directly for his pay because he worked on her stairs. C) Mrs. Reid could successfully sue the manufacturer of the cement for breach of contract because the cement was not fit for its purpose. D) Mrs. Reid could successfully sue only Silversteps Ltd. for breach of contract or Warren for breach of contract but not both. E) Mrs. Reid could successfully sue both Silversteps Ltd. and Warren for breach of contract because they were both connected with the job.

73) ______

74) In Works v. Works, what was the result where one party was mistaken about something

significant

in the 74) contract? A) The Court will exercise its discretion to set aside the contract only if satisfied that it would be unfair or unjust to enforce it. B) The Court will never set aside a contract where a mistake has been made. C) The Court will automatically set aside the contract on the basis of the doctrine of mistake. D) The Court will only set aside the contract if the mistake renders the contract illegal. E) The Court will exercise its discretion to set aside the contract only if satisfied the mistake was the result of willful blindness. 75) In Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., the defendant attempted to take advantage of a mistake made by the plaintiff. What did the Court hold? A) The defendant's conduct was improper, but there is no remedy available to address such a mistake. B) The defendant's conduct was sharp business, and the Court dismissed the plaintiff's claim. C) The defendant's conduct was equivalent to a fraud or a misrepresentation amounting to fraud, and the Court awarded damages in lieu of rectification. D) The defendant's conduct was admirable, and the Court ordered the plaintiff to pay costs. E) The defendant's conduct was essentially a breach of a fiduciary duty, and the Court ruled that the entire contract was void as a result.

75) ______

76) ______

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76) In AMJ Campbell v. Kord Products Inc., a comma was inserted into the contract with the effect that both "freight" and "rebates" would be deducted from the sale price, rather than simply "freight rebates". This resulted in a difference of price amounting to $759,000. What was the result? A) The Court allowed the request for rectification because one party had obviously made a mistake. B) The Court denied a request for rectification because a Court will not rectify a contract that is in writing. C) The Court denied a request for rectification because it was not clear both parties had the same intention. D) The Court denied a request for rectification because the appropriate remedy was rescission. E) The Court allowed the request for rectification because the price difference was significant.

___ ___

77) In Moss v. Chin, Chin's insurer, ICBC, made an offer to settle a claim that was accepted by the 77) ______ public trustee representing Mrs. Moss. ICBC was not aware that Mrs. Moss had died in the interim. ICBC made a unilateral mistake and yet the Court ordered that the contract be rescinded. What was the rationale? A) The public trustee lacked capacity to accept an offer, as only Mrs. Moss could do, and she had died. B) There was no consideration to support the claim, and therefore the contract was invalid. C) ICBC lacked capacity to make an offer, as only Chin had such a right. D) ICBC had not misled itself, rather the public trustee had deliberately set out to keep ICBC from discovering the truth. E) It is illegal to settle a claim when the claimant is not longer alive. 78) In 978011 Ontario Ltd. v. Cornell Engineering Co., a businessman signed a contract without reading it. He later discovered it contained a provision with which he did not agree. What did the Court hold? A) The Court held that the contract was void due to a lack of consensus. B) The Court refused to grant an equitable remedy to correct a mistake that the businessman himself had allowed. C) The Court ordered severance due to a lack of intention to be bound to the particular

78) ______

provision. D) The Court ordered rectification to correct the mistake in the contract. E) The Court held that the contract was unenforceable due to a lack of consensus. 79) ______

80) In the case Whighton v. Integrity Inspections Inc., the plaintiff had retained the services of an inspector to check the condition of the building. The inspector had assured them that the home was in good condition. Upon moving in, the plaintiff discovered major problems in the home. What did the Court find? A) The contract in question was partly verbal and partly written. B) There was negligent misrepresentation inducing a person to enter a contract, and the exculpatory clause did not apply. C) The contract in question was not in English. D) There were witnesses who testified under oath that the meaning of the intended agreement differed from what was written. E) The contract in question did not comply with the Statute of Frauds.

80) ______

81) In Rochdale Credit Union v. Barney, a lawyer persuaded his client to guarantee a loan. The relationship of solicitor/client leads to a presumption of A) undue influence. B) unconscionability. C) mental incapacity. D) lack of intention. E) duress.

81) ______

82) According to Braut v. Stec, what is the Courts' position when one enters into a contract where a claim is made that a bargain is unconscionable? A) When one party lacks the intellect to enter into a contract, the contract continues to be binding on both parties.. B) There is an automatic presumption of undue influence due to the relationship of the parties. C) Because a party to the contract is an uneducated immigrant, the contract is voidable. D) A presumption of fraud is raised when there is an inequality in the position of the parties due to the ignorance of the weaker party. E) A close relationship between business associates prevents a finding of unconscionability.

82) ______

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79) In Dansway International Transport Ltd. v. Lesway and Sons Inc., a disagreement arose as to the time for payment and delivery, neither of which were stipulated in the contract. What did the Court do? A) The Court severed the provisions in the agreement relating to payment and delivery. B) The Court implied the required terms into the agreement. C) Because even insignificant terms must be specified, the agreement was found to be void for a lack of consensus. D) Because issues surrounding the time of payment were in question, the agreement failed for a lack of consideration. E) The Court ordered rescission because the actual intention of the parties as to these terms was unclear.

83) According to Woods v. Hubley, a transaction can be set aside for unconscionability in certain cases. 83) ______ Which of the following would not be relevant to that determination? A) The agreement reached is substantially unfair to the weaker party. B) A stronger party has consciously used the position of power to achieve an advantage. C) There is inequality in the bargaining positions of the parties arising out of need or distress

of a weaker

party. D) The agreement reached was not reduced to writing. E) There is inequality in the bargaining positions of the parties arising out of ignorance of a weaker party.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 84) Misunderstanding occurs when each party has a different understanding of the terms of the agreement, in which case the courts apply a reasonable interpretation of the contract.

T or F

85) The purpose of contract law is to give effect to the reasonable expectations of the parties to an agreement.

T or F

86) The court will not allow the careless party to escape responsibility when a shared mistake is the result of the negligence of one of the parties.

T or F

87) When there is clear evidence that both parties agreed to something different than what was in the written document, the courts will rectify the document.

T or F

88) Non est factum is available as a defence even when there is negligence on the part of the person claiming it.

T or F

90) The victim of intentional misrepresentation can sue for damages but cannot ask for rescission.

T or F

91) Fraudulent misrepresentation is intentionally misleading another person into a contract.

T or F

92) The threat of violence makes a contract voidable.

T or F

93) Privity of contract is a principle that holds that a contract can only affect the immediate parties to it.

T or F

94) The original party cannot enforce a contract that bestows benefits on an outsider.

T or F

95) Novation is the term used when a new party is substituted for an original party to the contract.

T or F

96) An assignee is in no better position than the original contractor.

T or F

97) When a negotiable instrument is used, the drawer of the instrument cannot use the rule of privity to limit the claim of the holder.

T or F

98) A misrepresentation must be a false statement of fact unless it is a statement by an expert.

T or F

99) For a misrepresentation to be actionable, it must become a term of the contract.

T or F

100) In order to succeed in suing for a misrepresentation, that misrepresentation must have been in writing.

T or F

101) To avoid a contract on the basis of non est factum, the mistake must have gone to the entire nature of the agreement, not just some aspect of it.

T or F

102) Duress takes place when one person takes advantage of another's vulnerability because of a special

relation

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89) Rules of interpretation are guidelines used by the court to correct simple misunderstandings in relation to the contract.

ship with T or F that person. 103) Undue influence takes place when one person uses violence to force another to enter into a contract.

T or F

104) When it has been clearly established that one of the parties to the contract has been the victim of undue influence, that contract is void.

T or F

105) For a contract to be unconscionable, it is necessary that the victim was particularly vulnerable and that the bargain was unfair.

T or F

106) An assignee is "subject to the equities", means that a negotiable instrument can never convey more than existed between the original parties.

T or F

107) The doctrine of privity of contract is unique in that is has no exceptions.

T or F

108) A unilateral mistake refers a breach of a unilateral contract.

T or F

109) An assignee can be in no better position than was the assignor.

T or F

110) Negotiable instruments can sometimes convey better rights than existed between the original parties.

T or F

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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 111) "A misrepresentation involves one person making a false statement of fact that misleads 111) ____________ another and induces that person to enter into the contract." Discuss the accuracy of this statement. 112) ____________

113) Sam agreed to buy property from Joe to build a store of a certain design. Joe, the vendor, was aware of the design and knew that an easement across the back of the property would prevent such a building being erected, but said nothing. Sam purchased the property, later discovered the easement, and learned that Joe knew about it. He sued for misrepresentation. Discuss the likely outcome.

113) ____________

114) Explain what remedies are available to the victim where misrepresentation becomes a term of the contract.

114) ____________

115) Where the misrepresentation is innocent, explain the remedies available to the victim.

115) ____________

116) Distinguish between innocent and fraudulent misrepresentation, indicating why the distinction is important.

116) ____________

117) "Where fraudulent misrepresentation is involved, the victim can obtain rescission and/or damages but where innocent misrepresentation is involved, the only remedy is damages." Discuss the accuracy of that statement.

117) ____________

118) Indicate under which circumstances the remedy of rescission might not be available.

118) ____________

119) What is the significance of determining that the misrepresentation was negligent rather

than innocent?

112) "Misrepresentation involves a misleading statement of fact, not opinion." Discuss the accuracy of that statement.

119)

____________ 120) Distinguish between duress and undue influence.

120) ____________

121) Indicate three situations where the courts will presume a relationship to involve undue influence.

121) ____________

122) What's the effect of a court determining that undue influence has been present in a contractual relationship?

122) ____________

123) The facts of a case heard by the Supreme Court of Canada are as follows: Mr. and Mrs. H were induced to sign a mortgage in favour of M.C.R. Ltd. by Johnston, a man living with their daughter. Johnston led them to believe that the document was an unimportant amendment to an existing mortgage when, in reality, it was a second substantial mortgage on their home. Neither read the document nor questioned it. When the payments were in arrears, the mortgagee took an action for foreclosure (to take their home). Mr. and Mrs. H. pleaded non est factum. Would this defence succeed? If so, why; if not, why not?

123) ____________

124) Explain the impact of the principle of privity on contracts.

124) ____________

125) ____________

126) Joe, a student at the local college, had a one-year lease on a suite in a house owned by Sam. Sam sold that house to Jones without telling him about the lease. When he discovered Joe in the suite, he demanded that Joe leave. Explain the rights of the parties in terms of privity of contract.

126) ____________

127) Explain why agency is not really an exception to the privity rule.

127) ____________

128) Joe owned an apartment building and entered into a contract with Sam whereby Sam would operate that apartment building, but the proceeds from the rent and profits would be distributed among Joe's children. This is an example of what kind of an agreement?

128) ____________

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125) Explain what is meant by a novation.

129) Joe owned an apartment building and entered into a contract with Sam whereby Sam would operate that apartment building, but the proceeds from the rent and profits would be distributed among Joe's children. If Joe were to die and Sam were to refuse to pay out any profits to the children, what could they do?

129) ____________

130) Where one person transfers his rights to benefits under a contractual relationship to a third party, this is an example of ________.

130) ____________

131) What is the significance of an assignment being "statutory" rather than merely an "equitable" assignment?

131) ____________

132) Indicate what must be present in order for an assignment to qualify as a statutory assignment.

132) ____________

133) What is the significance of an assignment qualifying as a statutory assignment?

133) ____________

134) Joe agreed to paint Sam's house for $1,000. Joe then assigned the $1,000 claim to Harry,

who served notice

____ ____ ____

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on Sam 134) about the assignme nt. When it came time for payment, Harry was informed by Sam that he would not pay because the paint was peeling off his house. Harry said that that was nothing to do with him and demande d payment. Explain the legal position of the parties.

135) "Joe received a cheque from Sam for work he had done painting Sam's house, and Joe passed that cheque onto Harry. Harry took it, not knowing that the work done was defective. Because of the principle that an assignee of contractual rights is in no better position than an assignor, Harry would not be able to demand payment on that cheque from Sam." Discuss the accuracy of this statement.

135) ____________

136) Explain what is meant by "privity of contract".

136) ____________

137) The principle that contract terms apply only to the actual parties to the contract is known as ________.

137) ____________

138) Explain what is meant by a "trust".

138) ____________

139) A provision in equity whereby one person transfers property to a second person obligated to use it to the benefit of a third is known as ________.

139) ____________

140) ____________

141) A trust inferred by the courts to benefit a third party to a contract is known as ________.

141) ____________

142) Explain what is meant by a "chose in action".

142) ____________

143) The thing or benefit (such as a claim or the right to sue) that is transferred in an assignment is known as ________.

143) ____________

144) Explain what is meant by "vicarious performance".

144) ____________

145) Performance by another qualified person of the obligations under a contract is known as ________.

145) ____________

146) Explain what is meant by a "statutory assignment".

146) ____________

147) Explain what is meant by an "involuntary assignment".

147) ____________

148) Explain what is meant by a "negotiable instrument".

148) ____________

149) What is the status of the doctrine of privity today?

149) ____________

150) What does it mean that an assignee is "subject to the equities"?

150) ____________

151) In what way is a trust an exception to the privity rule?

151) ____________

152) Outline the restrictions on the ability of a person to claim non est factum.

152) ____________

153) What is meant by the term "non est factum"?

153) ____________

154) What is the term used to describe a claim which results in a court declaring a contract void because a party is unaware of the nature of the contract?

154) ____________

155) Explain what is meant by the "parol evidence rule".

155) ____________

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140) Explain what is meant by a "constructive trust".

156) The principle that courts will not permit outside evidence to contradict clear wording of a contract is known as ________.

156) ____________

157) Explain what is meant by a "collateral contract".

157) ____________

158) A separate contractual obligation that can stand alone, independent of the written contract, is known as ________.

158) ____________

159) Explain what is meant by "rectification".

159) ____________

160) Correction, by the court, of the wording of a mistake in the contract is known as ________.

160) ____________

161) Explain what is meant by "unjust enrichment".

161) ____________

162) A windfall that one party to a contract stands to make at the expense of the other is known as ________.

162) ____________

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 163) Discuss the principle of caveat emptor and how it relates to misrepresentation in contract law. 164) Discuss the various remedies that are available where one of the parties to the contract is a victim of misrepresentation. 165) Discuss how privity of contract affects the position of people who are not parties to a contract. In your discussion, include an examination of the Supreme Court decision in London Drugs Ltd. v. Kuehne & Nagel International Ltd. 166) Discuss the signs that the doctrine of privity may be breaking down. In your discussion, include a reference to the leading cases in this area. 167) Discuss the development and importance of the principle of unconscionable contracts. In your answer compare unconscionability to insanity, duress, and undue influence. 168) Discuss what happens when the parties to a contract make mistakes with respect to what they have agreed.

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169) Discuss the concept of an assignment, including an explanation of its significance in the modern business world.

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1) A 2) E 3) B 4) A 5) D 6) B 7) B 8) E 9) E 10) E 11) B 12) A 13) A 14) A 15) A 16) C 17) B 18) E 19) A 20) A 21) A 22) C 23) D 24) C 25) D 26) E 27) E 28) C 29) A 30) B 31) C 32) D 33) D 34) C 35) B 36) B 37) E 38) B 39) E 40) B 41) B 42) E 43) A 44) B 45) E 46) A 47) D 48) C 49) B 50) C 51) A

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52) A 53) E 54) C 55) E 56) B 57) B 58) B 59) B 60) E 61) A 62) D 63) D 64) D 65) E 66) D 67) D 68) B 69) C 70) A 71) D 72) D 73) A 74) A 75) C 76) C 77) D 78) B 79) B 80) B 81) A 82) D 83) D 84) TRUE 85) TRUE 86) TRUE 87) TRUE 88) FALSE 89) TRUE 90) FALSE 91) TRUE 92) TRUE 93) TRUE 94) FALSE 95) TRUE 96) TRUE 97) TRUE 98) TRUE 99) FALSE 100) FALSE 101) TRUE 102) FALSE 103) FALSE

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104) FALSE 105) TRUE 106) FALSE 107) FALSE 108) FALSE 109) TRUE 110) TRUE 111) The statement is accurate. 112) Misrepresentation can involve the statement of opinion when it comes from an expert. 113) He'll lose. Joe was under no obligation to tell him about the mistake. Silence or non-disclosure will not amount to a misrepresentation unless there is some sort of specialized obligation or relationship existing between the parties, which was not the case here. 114) Normal contractual remedies, including damages, injunctions, specific performance. 115) Rescission is the only remedy available where the misrepresentation is innocent. 116) Innocent misrepresentation is involved where the person who made the misleading statement honestly believed it to be true. Fraudulent misrepresentation is involved where the person making the statement knew it was false or didn't believe it was true. The distinction is important, since with innocent misrepresentation, the only remedy is rescission, whereas with fraudulent misrepresentation, the victim may obtain rescission and, or, damages. 117) It's incorrect. With innocent misrepresentation, the remedy is rescission, not damages. 118) Where the victim of the misrepresentation has affirmed the contract, where it's impossible to restore the parties back to the original positions, or where some third party is involved who might be harmed by the rescission. 119) The remedy of damages will be available as well as rescission. 120) Duress involves controlling somebody's actions through threat of violence or imprisonment. Undue influence involves controlling that person's actions through abuse of position and influence. 121) An adult with an infant child, the solicitor contract with a client, a doctor contracting with a patient, a religious advisor contracting with a parishioner, a trustee contracting with a beneficiary, and a guardian contracting with a ward. 122) That the contract is voidable. 123) The defence would not succeed as Mr. and Mrs H were careless and as a result cannot claim non est factum. 124) When two people enter into a contract, they bestow rights and benefits only on each other. The third parties, who are not party to the contract, cannot enforce the contract. 125) A novation occurs where two parties have a contractual relationship and another comes in, taking the place of one of those parties, but the terms of the contract remain the same. Note that the agreement of both of the original parties is necessary for such a substitution. 126) Joe is not party to the contract between Sam and Jones, but his rights embodied in the lease are said to run with the land, and Jones is bound by that lease and can't evict him. This is an exception to the privity rule. 127) When an agent acts on behalf of a principal in creating a contractual relationship with a third party, the contract is between the principal and the third party. The agent is merely a go-between; thus, there is privity between the principal and the third party. 128) Trust 129) They could enforce the trust agreement. This is an exception to the privity of contract rule and they, as beneficiaries, have the right to enforce the contract. 130) Assignment 131) A statutory assignment allows the assignee to sue directly, whereas if the assignment is equitable, the assignor must be joined in the action. 132) 1. The assignment must be absolute and unconditional. 2. It must be in writing. 3. There must be notice to the original debtor. 133) The assignee can sue the original party to the contract directly without involving the assignor as a party to the action. 134) An assignee is in no better position than was the assignor. In these circumstances, Joe, the original party in the contract, would not have been able to collect because the contract was breached. Harry is in no better position;

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there fore, Harry cannot collect. He must turn to Joe, the assignor, for any redress. 135) It is incorrect. Negotiable instruments are an exception to this rule. One of their unique features is that if a negotiable instrument, such as a cheque, gets into the hands of an innocent third party who qualifies as a holder in due course, that person will be able to enforce it even where there is some problem like this to the original contract. 136) A principle that contract terms apply only to the actual parties to the contract. 137) Privity of contract 138) A provision in equity whereby one person transfers property to a second person obligated to use it to the benefit of a third. 139) A trust 140) A trust inferred by the courts to benefit a third party to a contract. 141) A constructive trust 142) The thing or benefit that is transferred in an assignment; intangible personal property, such as a claim or the right to sue. 143) A chose in action 144) Performance by another qualified person of the obligations under a contract. 145) Vicarious performance 146) An assignment that meets certain qualifications and under which the assignee can enforce a claim directly without involving the assignor. 147) An assignment of rights that takes place involuntarily, as in the cases of death and bankruptcy. 148) A substitute for money that bestows unique benefits; vehicles for conveniently transferring funds or advancing credit. 149) The doctrine still applies, but there are signs that it is weakening. 150) This means that the assignee can be in no better position than was the assignor. 151) A third party beneficiary can enforce it even though he or she is not a party to the original agreement. 152) It must be shown that the mistake about the document went to the very nature of the document, not merely its terms. Negligence can defeat the defence. 153) "It is not my act"; grounds for a court to declare a contract void because a party is unaware of the nature of the contract. 154) Non est factum 155) The principle that courts will not permit outside evidence to contradict clear wording of a contract. 156) The parol evidence rule 157) A separate contractual obligation that can stand alone, independent of the written contract. 158) A "collateral contract". 159) Correction, by the court, of the wording of a mistake in the contract. 160) Rectification 161) A windfall that one party to a contract stands to make at the expense of the other. 162) Unjust enrichment 163) The answer here will likely be shorter, but the principle is important. At the heart of contract law is the principle of the bargain and the market place environment. Each party is in theory left to their own wits to bargain for the best deal they can, the idea being that a fair price will be determined best by both parties being in an equal bargaining position and trying for the best deal possible. Caveat emptor is consistent with that principle. All parties must be vigilant and take care to look after their own interests. That does not extend to the position of being the victim of fraud or deceit, or even being innocently mislead. Each party must be vigilant to protect their own interests, but they cannot mislead the other party; that would upset the balance. The principles of caveat emptor are not inconsistent with the protection provided against misrepresentation, but are really a manifestation of the more general principle of ensuring that there is a level playing field and that both parties are in an equal bargaining position in order to protect that. Students should appreciate that broader principle and how the law of misrepresentation on the one hand and caveat emptor on the other create that needed balance. 164) Students should show how misrepresentation applies primarily where one party is induced to enter a contract, not just when the misrepresentation becomes part of the contract. They should point out that, when the misrepresentation is without fault (not intentional or negligent), the remedy available is limited to the contract remedy of rescission, and they should explain what that means. Where the misrepresentation has been intentional,

this dy available is the tort remedy of damages for deceit. Where the misrepresentation becomes a term of the contract, is the remedies are the normal contract remedies including damages. Good students might point out that the damages frau awarded in contract law may be different than the damages awarded in tort law. That is, with tort you are put into d, the position you would have been in had the misrepresentation not taken place (backward), whereas in contract law and you are put into the position you would be in had the contract been properly performed (looking forward). Good the students will also note that where fraud or deceit are involved, punitive damages may also be available. reme 165) Privity of contract limits the rights and obligations under the contract to those who are immediate parties to the contract. Only those who are parties to the contract can have rights and obligations under it. The classic illustration is the Donoghue v. Stevenson case (snail in the ginger beer case) discussed in Chapter 4, where Mrs Donoghue could

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not sue the caf that served the contaminated ginger beer to her in contract because she did not buy it; her friend bought it for her. This question requires that students demonstrate a clear understanding of this basic principle as demonstrated in this case. Students should then show that they have an understanding of the number of exceptions, both apparent and real, set out in the chapter. Examples are agency, trust, land, modification through agreement including novation, and assignment. There should be some more lengthy discussion of assignment and why that does not violate the rules of privity. Finally, students should show an understanding of how privity of contract is breaking down. In the London Drugs Ltd. vs. Kuehne & Nagel International Ltd. case specifically mentioned in the question, the Supreme Court of Canada extended the protection of an exemption clause to employees of one of the parties, stretching the concept of privity even further. This is only one example of how the courts and legislatures have shown a willingness to abandon the principle of privity. 166) Case law, especially some recent Supreme Court of Canada authority has begun to erode the doctrine of privity. In London Drugs Ltd. vs. Kuehne & Nagel International Ltd., the Supreme Court of Canada extended the protection of an exemption clause to employees of one of the parties. In doing so, the Court created a "principled exception" to the common law doctrine of privity. In Fraser River Pile & Dredge Ltd. v. Can-Dive Services Ltd., the Supreme Court of Canada confirmed that when two contracting parties intend to extend the benefit to a third party, who relies on that contractual provision, and the activities performed by the third party are the very activities contemplated as being within the scope of the agreement, a principled exception to the privity of contract doctrine arises. Privity of contract may also be weakening in the area of product liability. Good students will note that in some jurisdictions, there have been law reform recommendations to relax the application of the doctrine of privity to allow third party beneficiaries to enforce their rights under contracts. 167) Unconscionable contracts are a relatively recent development in contract law, but are indicative of a modern trend towards protecting disadvantaged parties to a contract. Historically, rules relating to insanity and misrepresentation were all that were available to protect a person from being taken advantage of by an unethical merchant. Recently, however, there has been a great body of statute law introduced to protect consumers. These laws were necessary because one of the basic assumptions in contract law -- that both parties are in an equal bargaining position -- didn't really work when na ve consumers faced unscrupulous merchants. Consumers needed more protection than found in the rules associated with misrepresentation and insanity. The development of the concept of unconscionability is a reflection of the courts also reacting to that need. Students must show a clear understanding that this is not simply a protection given to all consumers who are taken advantage of. Here there must be some special vulnerability that creates an unequal bargaining position, and even that is not enough. Students also must make it clear that the other party has taken advantage of this vulnerability to the extent that the bargain that has been struck is grossly unfair. It must be clear that the other contracting party has taken advantage of this unique vulnerability. Students should give examples of what constitutes such vulnerability. Some examples might be simple-mindedness (short of insanity), poverty, not knowing the language, or some other physical or mental disability that interferes with the victim's ability to bargain on an equal footing. Note that students should show that simply taking advantage of a favourable economic situation is not enough to be unconscionable. So where one person is in poverty and the other charges a high rate of interest on a loan because of the risk, that by itself will not be unconscionable. Students should also distinguish unconscionability in contract law developed by the courts from the unconscionable transactions statutes that have been passed in many jurisdictions, which usually have a much narrower scope, often being limited to loan transactions. 168) This question requires a review of the whole area of mistake and also an examination of the requirement of consensus in forming a contract. Students can even include a discussion of misrepresentation when misleading

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state should distinguish the different forms of mistake, including shared mistake, misunderstandings, and one-sided ment mistakes, indicating the court's approach when each happens. The court will apply a reasonable person test and s apply the most reasonable interpretation when there is a disagreement over what the terms of a contract mean. indu Only where both explanations are reasonable will the court declare the contract void for lack of consensus. Where a ce shared mistake takes place -- that is where both parties make the same mistake -- it is only where the mistake is the important, such as a mistake about the existence of the subject matter, that it will be void. As far as a one-sided mist mistake, the principle of caveat emptor usually applies, and the person who made the mistake is out of luck. ake. However, the principle of non est factum is available in limited circumstances, and students should explain what this Stud means and when non est factum is not available. Students should also explain what happens when that one-sided ents mistake is induced by misrepresentation on the part of the other party. 169) A person who is entitled to receive a benefit under a contract has the ability to transfer that benefit (chose in action) to some third party, in what is referred to as an assignment of contractual rights. The ability to make such assignments is critical to the functioning of our modern day commercial world. Students should note that only the benefits, not the obligations, in a contract can be sold (assigned) to a third party. Those benefits are to be enforced through the original contracting party (the one who assigned the agreement). In some cases, an assignment will qualify as a statutory assignment. In cases such as this, the assignee is entitled to enforce the assigned rights directly, in his or her own name. Good students will also recognize that some rights (such as the right to collect support payments) cannot be assigned. In business, it is critical that assignments be taken with care and that the debtor be immediately notified (in the case that the assignor has fraudulently assigned the same claim to multiple parties). Students may also mention the concept of an involuntary assignment, arising in cases of death or bankruptcy. From a practical standpoint, students should note that in business a notice of assignment should not be ignored.

Chapter 9

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following statements is true with respect to the law of damages? 1) _______ A) Damages are an order from the court for the breaching party to perform the contract as he or she agreed to do. B) Damages are awarded for a breach of a condition but not for a breach of warranty. C) If a contract contains a liquidated damages clause, the party who has breached the contract has agreed to pay to the party wronged an amount equal to all the loss that directly and naturally flows from the breach. D) Damages are intended to punish the wrongdoer for breaching the contract. E) A deposit is an amount of money a party to a contract agrees to forfeit if he or she breaches the contract. 2) _______

3) Which of the following is one of the remedies generally available for a breach of contract? A) Novation B) Punitive damages C) Anticipatory breach D) Repudiation E) Specific performance

3) _______

4) Which of the following is true with regard to remedies for breach of contract? A) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss. B) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty. C) Non est factum is an equitable remedy forcing a person to comply with the terms of the contract. D) If the seller has committed a "fundamental breach" of the contract, an exemption clause absolves the seller from liability. E) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.

4) _______

5) Ellis agreed to paint Lee's house for a price of $1,500. A month before the performance was due, Lee called and told Ellis that she had changed her mind and was going to have her house restuccoed instead. Ellis insisted that they had a contract and that he was going to paint the house anyway. Lee repeated that she was not going to go through with it, but Ellis insisted the contract was still on. Before further steps could be taken by either party, Lee's house was destroyed by a freak airplane accident. Which one of the following statements describes the law applicable to these facts? A) Ellis's conduct amounted to repudiation, and Lee could have sued for breach of contract immediately after the phone call. B) Lee could have accepted Ellis's conduct as an anticipatory breach.

5) _______

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2) A contract is terminated by agreement in which of the following situations: A) The occurrence of a condition subsequent B) Frustration C) Unilateral release D) A written statement by one party to cancel an accepted order E) Breach

C) The contract has been discharged by frustration. D) Lee's conduct did not amount to a breach since she told him a month before performance was due that she didn't want the house painted. E) Ellis will be able to successfully claim as damages the amount that he would have made if the contract had been performed. 6) _______

7) Mike contracted to buy Rita's house in a written contract that provided for a deposit of $10,000 to be forfeited in the event of Mike's failing to go through with the deal. This deposit was an honest estimate of the damages Rita would suffer. On these facts, which of the following is true? A) A clause in a contract that provides for the forfeiture of a deposit is called an exemption clause. B) If the contract price agreed upon was $150,000 and Rita, after Mike breaches the contract, sells the house in one week for $138,000, she will still be able to recoup all her losses. C) If Mike breaches the contract, he will have to pay Rita all the damages that directly and naturally flow from the breach. D) If Mike breaches the contract, he would have to pay $10,000 even if Rita's actual loss was $40,000. E) If Mike breaches the contract, he would not have to pay $10,000 even if Rita suffered a substantial loss.

7) _______

8) Which of the following is true with regard to remedies for breach of contract? A) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable. B) Specific performance is the proper remedy to stop a person from doing something that he had promised in the contract not to do, e.g., not to compete, not to disclose secrets, etc. C) An injunction is an equitable remedy forcing a person to comply with the terms of the contract. D) The quantum (amount) of damages to be given to the victim of the breach may be limited to the amount specified in a liquidated damages clause of her contract. E) The victim of a breach can recover damages that he could have avoided if he had tried to mitigate his loss.

8) _______

9) Which of the following is true with regard to ending a contract by performance, agreement, or breach? A) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place. B) If a person properly tenders performance of a service that is rejected by the other party, he is required to try again and again. C) A contract can be ended by breach if there was a either a breach of condition or a breach of

9) _______

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6) Which of the following is true with regard to ending a contract by agreement? A) A contract cannot be ended by the happening of a "condition subsequent" provided for in the contract. B) A contract can be ended unilaterally by one party. C) A contract can be ended by one party if he finds a better deal, e.g., by cancelling an order that has been accepted, as long as this is done before performance. D) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract. E) A contract cannot be ended by agreement if neither party to the contract has performed his or her obligation.

warranty. D) A person has legally tendered performance if he pays a $500 debt in 25-cent coins. E) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off. 10) ______

11) When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract) A) the victim may sue immediately and not wait to see if the contract is performed or not. B) the victim can get someone else to do the job but then cannot sue the original party to the contract if it costs more. C) such a statement made before performance is due has no effect on the contractual obligations of the parties. D) the victim must wait to see if the contract is performed, but damages are calculated from the time of the refusal. E) the victim may not be able to recover damages that occur after the anticipatory breach.

11) ______

12) Gill, a wholesale fish seller, agreed to provide Blanchet's Restaurant with 1,000 pounds of fresh salmon per week throughout the months of July, August, and September. Things went as planned for July and August. However, Gill was unable to meet the requirements of the contract for the first two weeks of September because his boats simply did not catch that much, although other companies did better and the fish were available for Gill to purchase, but at a higher price than what Blanchet was paying him. Rather than sell at a loss, Gill simply did not supply during that two-week period. At the end of that period, the Federal Fisheries Department shut down the fishery altogether because of the depletion of fish. After that, no more fresh salmon were available at all. Blanchet sued Gill for breach of contract with respect to his failure to deliver any fresh salmon in September. Which one of the following statements accurately sets out the legal situation here? A) Gill was under a strict obligation to supply the fish and no excuses for failure are allowed. B) The doctrine of frustration does not apply here because this is a sale-of-goods situation. C) Gill is liable for breach of contract with respect to the first two weeks of September, but the second two weeks' failure was caused by frustration for which he was not responsible. D) By not suing Gill as soon as he failed to deliver in the first two weeks of September, Blanchet lost the right to complain, and then the subsequent governmental closure excused his failure to deliver any fish in September. E) The contract was frustrated for the whole month of September by Gill's inability to obtain fish in the way that he intended, and thus he is not liable at all.

12) ______

13) Which of the following would most likely result in the court finding the contract had been discharged by frustration? A) McDonald agreed to buy Thornburn's horse, but unknown to both of them, at the time of the contract the horse was dead. B) Cooper contracts to deliver ten bushels of ripe tomatoes to Haig's restaurant, and Cooper's

13) ______

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10) Which of the following statements is correct with respect to breach of contract? A) When a warranty is breached, the victim can treat the contract as ended. B) When a contract is repudiated before performance is due, the victim must wait until the time of performance before taking any action. C) When a condition is breached, the victim can treat the contract as ended. D) When a condition is breached, a person can only sue for damages but must perform their part of the contract. E) When a contract for the purchase of goods is breached, the warranty will require that the goods be repaired by the seller.

tomato crop is destroyed by hail a few days before the delivery date. C) McGee contracts to give a lecture at a convention on modern marketing, but the convention was cancelled because of an epidemic. D) Binks agreed to purchase the business from Kealy, but Binks suffered such great losses in the recent stock market crash that he couldn't afford to go through with it. E) Moore, a sculptor, was delivering a $15,000 work when he lost control of the car and the work was crushed. He had been drinking heavily and had not bothered to wrap or box the work. 14) ______

15) Smedlap, a trucker, and Dewdney, a farmer, entered into a contract under which Smedlap agreed to haul all of Dewdney's 2011 pumpkin crop to market in time for the Halloween sales. However, the day before Smedlap was to pick up the pumpkins, he called Dewdney and told him that, since he had received such a good offer to buy his truck, he had sold it and therefore was not able to haul Dewdney's pumpkins. There was not enough time for Smedlap to buy another truck, but he was sure that Dewdney could make other arrangements and he hoped that he hadn't unduly inconvenienced him. Unfortunately, Dewdney was not able to make arrangements in time for the Halloween market, and instead he had to sell his crop to a pie-filling canner for much less than he could reasonably have expected at the market. Furthermore, the market owners were so disappointed by Dewdney's failure to deliver that they refused to give him their usual order for Christmas turkeys, in contrast to previous years, where this had generated his major income for the year. He was forced to find another outlet for his turkeys, and again he ended up selling to commercial processors for a substantially lower price. As a result of these two events, Dewdney was unable to keep up his mortgage payments on the farm and eventually he lost it to the bank in a foreclosure action. Dewdney is now suing Smedlap to recover these losses. Identify the correct statement with respect to the question of whether Smedlap's conduct was a breach of contract. A) Smedlap simply cancelled the contract, which he was entitled to do as long as it was before performance was due. B) This was not a breach because Smedlap did not do it maliciously, and he gave Dewdney what he honestly believed was adequate notice to make other arrangements. C) The contract was discharged by frustration. D) This was a breach that consisted of self-induced frustration. E) Smedlap is not liable because it was not his fault that Dewdney was unable to make other suitable arrangements.

15) ______

16) In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause? A) There has been a breach of the fundamental obligation of the contract, and the court holds that, on its true construction, the parties did not mean it to cover a serious breach.

16) ______

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14) Which of the following is false with regard to remedies for breach of contract? A) Damages are awarded by the court to a person who has suffered loss because of a breach of an essential term of the contract, but are not awarded for a breach of an non-essential term, i.e., a warranty. B) Specific performance is an equitable remedy forcing a person to comply with the terms of the contract. C) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract. D) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss. E) A person who breaches a contract is liable for all the foreseeable loss that directly and naturally flows from the breach.

B) The exemption clause that covers the situation was posted in plain view and was brought to their attention at the place and time of contract. C) The purchaser of goods, after the sale, is sent an invoice on which the exemption clause is printed in boldface type at the top of the first page. D) The clause says there will be no liability for breach of a condition and the breach that occurs is minor in nature. E) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost articles in a fire that swept through the dressing rooms.

17) In all but one of the following situations, the contract is frustrated. Identify the exception. 17) ______ A) Frank has contracted to ride Emperor, a prize horse, in the Canada Day races on July 1, but on June 28 the horse breaks a leg and has to be destroyed. B) Jerry, a doctor, is due to perform a heart transplant operation on Mary, and the night before the surgery his arthritis becomes so painful that he cannot hold a scalpel. C) Gregory, a trucker with whom you contracted last month to haul potatoes tomorrow, phones to tell you that his truck has broken down. D) Rudolph is due to appear in a local variety theatre that has just been destroyed in a fire of unknown origin. E) Jack contracts with Bill to build a barn on his one-acre lot, but before the permit is obtained, a new law prohibits barns on less than three acres. 18) ______

19) On the February 1, Smyth contracted to buy Dupont's van. They had agreed that Smyth would pay the price of $7,000 on March 1 and take delivery and the risk on that date. Smyth then contracted to sell the van in Smithers on March 5 for $7,600. On February 22, Dupont called Smyth and said he wasn't going to sell it; he decided to keep it. On these facts, which of the following is false? A) Smyth could agree to call off the contract; neither of them had yet performed. B) Smyth could acknowledge that Dupont was in breach but has to wait until after the performance date to sue him for breach of contract. C) Smyth could refuse to acknowledge a breach and press Dupont to complete the contact. D) Smyth could refuse to acknowledge a breach, but that would result in the possibility that the contract could be breached later. E) Dupont's call is an express repudiation of the contract and is an anticipatory breach.

19) ______

20) Which of the following is true with regard to ending a contract by performance, agreement, frustration, or breach? A) If the court holds that a contract has been ended by frustration, the damages awarded by the court will be the same as if the contract was ended by a breach. B) An exemption clause that a seller claims absolves him from liability may be of no effect if the seller has committed a "fundamental breach" of the contract. C) The victim of a breach can recover damages even for the loss he could have avoided if he had tried to.

20) ______

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18) Pat O'Grady owes Robinson $5,000 in cash, but resented Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance. A) Deliver the money to his house instead of to his office at 3:00 a.m. on the due date. B) Pay him on time but with a cheque. C) Pay him on time in $5 bills. D) Not pay Robinson until Robinson came for it. E) Pay Robinson on time but pay it all in dimes.

D) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay. E) A person who breaches a contract is liable for all the loss that directly and naturally flows from the breach, no matter how unforeseeable. 21) ______

22) Which of the following is false with regard to ending a contract by agreement? A) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract. B) A contract can be ended by the happening of a "condition subsequent" provided for in the contract. C) A contract can be ended by agreement by "mutual release." D) A contract can be ended by one party if he finds a better deal, e.g., by cancelling an order that has been accepted, as long as this is done before performance. E) A contract can be ended by agreement if neither party to the contract has performed his or her obligation.

22) ______

23) Which of the following is true with regard to tender of performance? A) If Ivan attempts to pay his $25 debt to Jan in 25-cent pieces, that attempt constitutes a lawful tender of Ivan's obligation. B) If Pete shows up at Valley Service Station to fix the gas pumps on the date and at the time he was supposed to, but Valley's manager tells him to come back later, Pete has no further obligations and can sue for breach of contract. C) If the seller attempts to deliver the contract goods at the time and place designated in the contract, but the buyer refuses delivery, the seller will have to make another attempt to deliver before he can sue for breach of contract. D) If Walt attempts to pay Sarah the $750 debt he owes her with a cheque on the date and at the place designated in the contract, she will have to accept that cheque even though there was no mention of payment by cheque in the contract. E) If Sam attempts to deliver the truckload of strawberries at Frank's produce plant at 8:00 p.m. Saturday, they cannot be refused as long as the delivery was before the specified July 10 deadline.

23) ______

24) Cleo entered into a contract with Harvey in June to redecorate his apartment before Christmas. However, in the middle of October, she informed him that she would not be able to do his job because she had been offered a big contract in Japan that would take her away until spring. Which of the following is true with respect to this situation? A) Harvey must wait until Christmas to see if Cleo actually performs before he can take legal action. B) Cleo has repudiated the contract and Harvey can take legal action immediately. C) Their contract has been frustrated by circumstances outside their original contemplation,

24) ______

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21) Which one of the following is true with regard to the ending of a contract by performance? A) If a warranty is breached, the victim has no further obligation to perform under the contract. B) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay. C) If a person attempts to perform services in accordance with the terms of the contract, and the buyer refuses those services, the person attempting to perform can sue the buyer with no further attempt to perform. D) Legal tender consists of bills or coin in any amount. E) In law, a certified cheque is the same as cash.

and thus they are excused from their previous obligations. D) The most likely remedy would be for the court to award specific performance to make her do the job. E) Cleo could claim quantum meruit for any work she had done so far and that would be the end of the matter. 25) ______

26) Carson arranged with his brother-in-law, Waxman, that he would try to buy a famous old B.C. coastal airplane, the Spruce Ghost, which Waxman would then buy from him to display in his flight museum. Waxman promised to pay Carson a 10% commission over the price that Carson had to pay to buy the plane, so that their price would be 110% of Carson's purchase price. Carson and the owner, Wonka, agreed on a price of $80,000. After reconditioning the plane but before delivering it to Carson, Wonka decided to take it up for one last nostalgic flight and, because of his carelessness, he crashed it on take-off. Although Wonka escaped uninjured, the plane caught fire and was totally destroyed. Carson was able to locate a similar plane for only $60,000 but Waxman wasn't interested. Carson sued his brother-in-law and Wonka. What is the likely outcome of this suit? A) Waxman will have to pay Carson $8,000, the commission on the agreed sale price between Carson and Wonka. B) Wonka will have to pay Carson damages (probably $8,000) for breach of contract. C) Because the contract between Carson and Wonka was frustrated by the destruction of the Spruce Ghost, Carson has no claim against anyone. D) The Frustrated Contracts Act will require Carson to share in the expense of reconditioning the Spruce Ghost that Wonka had undertaken in preparation for sale. E) Waxman will have to pay Carson $6,000 as the commission he would have made on the purchase of the second plane.

26) ______

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25) Where one party refuses to perform his contractual obligations, what is the risk that the second party runs if he continues to press the first party to perform? A) The first party may continue to refuse to perform, and there is nothing the second party can do about that. B) The contract may be discharged by frustration. C) The first party might expressly repudiate the contract and therefore not be liable for breach. D) The second party might receive more damages for which he can't recover compensation. E) The first party might breach a condition subsequent.

27) Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action? A) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow" from the breach. B) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of the breach. C) This clause conclusively determines the amount of damages that the court can award. D) This clause requires the injured party to take all reasonable steps to mitigate (lessen) his losses. E) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves.

27) ______

28) Adams signed a contract in which he promised to sell his house to Jefferson for $225,000. The "deposit" to be paid was set at $4,000, and the liquidated damages clause provided that the deposit would be forfeited in the event that the buyer breached the contract. The buyer did breach the contract. Because the cost of housing was falling, it was difficult, even after a reasonable time had passed, to find a new buyer. The highest offer was $218,000. Adams

acceof the pte followi d. ng is Whitrue ch with

regard to 28) Adams's remedies? A) He would be entitled to the $4,000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages. B) He could sue for an injunction to stop him from buying another house. C) He could ask the court to order an accounting. D) He would be entitled to damages for money lost$7,000 plus selling costs. E) Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions.

___ ___

29) ______

30) Which of the following is false with regard to remedies for breach of contract? A) A person who disobeys a court order, e.g., an order for specific performance, can be cited for contempt of court. B) If the court holds that the liquidated damages clause in the contract is an honest attempt to estimate damages, the amount stated will be forfeited to the victim of the breach, even if he suffered no loss in fact. C) As a general rule, a person who breaches a contract is liable for all of the foreseeable loss that directly and naturally flows from the breach. D) Damages are awarded by the court to a person who has suffered loss because of a breach of a condition of the contract, but are not awarded for a breach of a warranty. E) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss.

30) ______

31) Which of the following would most likely result in the court's finding that the contract had been discharged by frustration? A) Lowe contracted to purchase a business from Lerner, but the interest rates jumped so quickly that, even before closing, he realized he would lose money, so he told Lerner he couldn't go ahead with it. B) Thornburn agreed to buy Patterson's tulip crop, but unknown to both of them, at the time of the contract the crop had been destroyed by the frost. C) N. Yung contracts to give a performance at B.C. Place stadium, but the performance was cancelled because he was poisoned by contaminated food at a local restaurant. D) Mellowcream Ltd. contracted to deliver 40 dozen donuts to Pat's Place, but called Pat and told her it couldn't deliver because another customer needed another 40 dozen for an unexpected event. E) Lee Ltd. agrees to haul lumber for Len Lumberjack, but a few days before the delivery date

31) ______

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29) Tufts and McDougal were having an argument about the law regarding performance of a contract. Which one of the following statements of theirs is correct? A) If Jed has to pay $500 to his mechanic, he can pay the whole debt in dimes and the mechanic has to take them. B) If Joan owes a $500 debt due on a specific date, she doesn't have to pay until the creditor seeks her out for payment. C) If Jed owes the mechanic $500, a cheque is as good as cash in law even if the mechanic said he wouldn't take a cheque. D) If Jed shows up with cash for the mechanic on the day and at the place designated in the contract, and the mechanic refuses to take it for some reason, Jed doesn't ever have to pay him. E) If Roscoe tries to deliver lumber to Jed in accordance with their contract and Jed doesn't take delivery of it, Roscoe can sue Jed for breach of contract without ever trying to deliver it again.

the company's best truck, the one they wanted to use, broke down. 32) When Mr. George sold his house, he rented an apartment and was forced to store some furniture 32) ______ until he bought another house. He attended the downtown office of Security Warehousing Ltd. and entered into a bailment contract that promised to safeguard the furniture. Four months later, his things were stolen from the warehouse, and when he asked for compensation for his loss, the company admitted it was in breach of contract, but said it was exempt from liability because of an exemption clause posted on the wall of the storage area where George had taken the furniture. The sign read "Not liable for loss due to fire or water." On these facts, which of the following would be his least successful argument to nullify the exemption clause? A) He failed to receive reasonable notice of the clause at the time of contract. B) The Sale of Goods Act voids such an exemption clause. C) There has been a fundamental breach of the contract. D) Such terms cannot be unilaterally imposed. E) On the strict construction of the clause, it doesn't cover the cause of the loss. 33) ______

34) Which one of the following statements accurately describes the operation of a condition subsequent? A) This occurs when some event that the parties have not anticipated makes performance radically different from what they agree to. B) There is no such thing recognized in the common law. C) This occurs when one party shows up at the right time and place ready, able, and willing to carry out his obligations under the contract. D) This is a term in a contract that must be met before the contract becomes fully operational. E) This is a term in the contract that provides for the premature cessation (ending) of the parties' obligations upon the occurrence of some particular event.

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34) ______

35) Sam agreed to purchase and Joe agreed to sell a brand new Chrysler 300M that was displayed in "Joe's Fine Cars" showroom. But instead of delivering it to Sam, Joe sold it to another customer who offered him more money. Which of the following is the appropriate remedy in these circumstances? A) Damages B) Rescission C) No remedy D) Specific performance E) Injunction

35) ______

36) Harry agreed to make a new violin for Ted at a particularly attractive price. Before he finished crafting it, however, an opportunity arose to work as a salesman for "Joe's Fine Cars." Since it was clear that he could never make a living as a violin maker, he took the job and refused to finish the violin for Ted. Which of the following is the appropriate remedy in these

circ 36) um stan ces?

33) Which one of the following statements accurately describes the operation of a condition precedent? A) This is a term in a contract that must be met before the contract becomes fully operational. B) This occurs when one party shows up at the right time and place ready, willing, and able to carry out his obligations under the contract. C) This is a term in the contract that provides for the cessation (ending) of the parties' obligations upon the occurrence of some particular event. D) There is no such thing recognized in the common law. E) This occurs when some event that the parties have not anticipated makes performance radically different from what they agreed to.

______ A) No remedy B) Injunction C) Rescission D) Specific performance E) Damages 37) Rick was a talented computer programmer and had agreed to work for Bill in his successful computer software business, signing a one-year contract to that effect. On the day he was to start work, and after a week of training where he learned a considerable amount of confidential information about Bill's operation, he phoned Bill and announced that he was going to work for Bill's competitor instead. Which of the following is the appropriate remedy in these circumstances? A) Specific performance B) Accounting C) Injunction D) Rescission E) No remedy

37) ______

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38) Alan entered into a written contract for the purchase of a house owned by Joe . But as the time to 38) ______ move approached, Alan discovered that Joe was refusing to move out and refusing to transfer the property. Apparently a dissatisfied customer had driven through the showroom window of Joe's new car dealership causing him considerable expense. Joe could no longer afford to purchase the new luxury home in Langley to which he had intended to move. Which of the following is the appropriate remedy in these circumstances for Alan, who really wants the house? A) No remedy B) Damages C) Injunction D) Specific performance E) Rescission 39) ______

40) Sam entered into a contract for the purchase of a used dump truck from "Joe's Heavy Duty Trucks." The written contract clearly specified, among other things, that "it shall be a warranty for this contract that the truck has the capacity of carrying and properly dumping loads of up to 4,000 kg of gravel." In fact, when Sam loaded the truck with 4,000 kg of gravel, he discovered that the hoist on the truck was not capable of dumping it. Only if the load was reduced to 3,000 kg could the gravel be dumped. Sam obtained an estimate stating that it would cost $8,000 to reinforce the hoist mechanism of the truck so that it could handle the dumping of 4,000 kg of

gra roache vel. d Joe Wh deman en ding Sa satisfac m tion, app Sam

39) Jones entered into a contract to purchase a 1957 Edsel automobile from Smith for $2,000. Unknown to Smith, Jones had an opportunity to resell that car for $5,000 to Brown, who wanted to use it as a prop in a movie being shot in town. Before the car was delivered and payment made, it was destroyed by fire, when one of Smith's employees carelessly spilled a can of gasoline in the garage where the car was kept. If the court found that the normal market value for such a vehicle was only $3,000, which of the following statements is correct with respect to the appropriate remedy that should be awarded by the court for such a breach of contract? A) In these circumstances, the court should award $5,000, representing the lost profits. B) The court could award $3,000. C) In these circumstances, there should be no remedy since the contract has been frustrated. D) The court should award only $1,000, the difference between the market price and the purchase price. E) Because of the uniqueness of the vehicle, the court should award specific performance.

___ ___

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pointed 40) out another term of the agreeme nt that stated that in the event of a breach of contract the "maximu m damages payable to the purchase r are limited to $5,000." Sam sued. Which of the followin g statemen ts is correct with respect to the legal position of the parties? A) Sam can treat his obligation as over, return the truck, and demand the return of his purchase price. B) Sam must keep the truck but can obtain the $8,000 in damages or what it takes to repair the hoist mechanism. C) Sam can get an order of specific performance, which will force the seller, Joe, to fix the truck even if it does cost $8,000. D) There is nothing Sam can do as this was a breach of warranty. E) Sam must keep the truck and sue for damages, but those damages are limited to $5,000. 41) In a jurisdiction other than B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with the contract. Mr. Seller argued that he was not in breach, that the contract had been frustrated. The computer was destroyed by

wat en a er careless wh driver

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knocked 41) over a fire hydrant outside the warehou se holding the compute r. No deposit had been paid. The court held that the contract was frustrate d. Based on this ruling, how does the court handle the situation? A) The court will treat the contract as if there were a common mistake about the existence of the subject matter. B) Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract. C) The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system. D) Buyer will succeed against Seller for damages because the court will treat it as if were an anticipatory breach. E) The court will look at the costs incurred and any payments made, and will apportion the losses between the parties. 42) In B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with the contract. Mr. Seller argued that he was not in breach; that the contract had been frustrated. The computer was destroyed by water when a careless driver knocked over a fire hydrant outside the warehouse holding the computer. No deposit had been paid. The court held that the contract was frustrated. Based on this ruling, how does the court handle the situation? A) Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract. B) The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system. C) The court will treat the contract as if there were a common mistake about the existence of

42) ______

the subject

matter. D) The court will look at the costs incurred and any payments made, and will apportion the losses between the parties. E) Buyer will succeed against Seller for damages because the court will treat it as if were an anticipatory breach.

43) Rahilly entered into a contract with Khan, whereby Rahilly agreed to paint a portrait of Khan's wife to be completed by her 30th birthday, six months from the time of this agreement. Three months before the portrait was to be completed, Rahilly told Khan that he would not be doing the portrait because he accepted a job in Boston and was leaving immediately. Which of the following is false with regard to the rights of the parties in this situation? A) If Khan presses Rahilly to perform according to the contract, it is possible that the contract could be ended by performance. B) Khan must wait to see if Rahilly really fails to perform the contract before Khan can sue. C) The contract has not been frustrated because there was no unforeseen event beyond the control of either party making it impossible or meaningless to perform the contract. D) If Khan presses Rahilly to perform according to the contract, it is possible that the contract could be ended by frustration. E) The contract has been repudiated, and Khan can elect to acknowledge the breach and sue Rahilly right away.

43) ______

44) ______

45) If a contract states that the contract is "subject to the purchaser obtaining financing for $10,000 at 8% by 5:00 p.m. Friday, March 11," it means that A) if the purchaser does not obtain the financing, he is in breach of contract. B) if the purchaser does not obtain the financing, the contract is frustrated. C) the obtaining of financing is a condition subsequent and ends the contract. D) if the purchaser does obtain the financing and properly notifies the seller, the contract is then in full force and effect. E) there is a contract whether the purchaser gets the financing or not, because the statement is just a statement of intention and doesn't affect the contract.

45) ______

46) Which one of the following is false with regard to exemption (exclusion) clauses? A) Such clauses are prohibited in any sale of goods contract. B) To be part of the contract, such clauses must be brought to the attention of the parties before or at the time of contract. C) Where there is an exemption clause in a contract, the court will strictly construe that clause; i.e., the wording of the clause must cover the situation that occurred. D) Even if there is an exemption clause in the contract, the court can hold that the exemption clause is of no effect if the breach is a "fundamental breach." E) An effective exemption clause is a barrier blocking the party wronged from his or her remedy, e.g., from damages.

46) ______

47) Which one of the following statements accurately describes the effect of a liquidated damages clause on a plaintiff's claim in a breach of contract action?

47) ______

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44) A term in a contract that says that, on the occurrence of an event, the parties' obligations will end is an example of A) tender of performance. B) discharge by frustration. C) condition subsequent. D) discharge by agreement. E) condition precedent.

A) Liquidated damages only apply to losses caused by excess water, such as floods or tidal waves. B) The court will award the amount specified only if it accurately reflects the losses that actually took place. C) This clause requires the injured party to take all reasonable steps to lessen (mitigate) his losses. D) The court will likely award the amount set out in the clause if it considers that to be a genuine estimate by the parties of the likely consequences of a breach. E) The plaintiff will likely be awarded a judgment for all the damages that "naturally and directly flow from the breach." 48) ______

49) Suppliers of goods and services try to eliminate their liability, and the courts have discouraged this by applying the principle that some failures are so significant that there is no performance of the contract. This concept is known as A) fundamental breach. B) frustration. C) repudiation. D) anticipatory breach. E) exculpatory clause.

49) ______

50) In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause when the buyer suffers a loss? A) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost a briefcase in a fire that swept through the dressing rooms. B) Ralph bought a used lawnmower under a written and signed contract that contained an "as is" clause. C) The buyer of an expensive computer software program received, a month after the sale, an invoice on which was printed an exemption clause that he hadn't been shown before. D) There has been a breach of the fundamental obligation of the contract, and the court holds that on its true construction the parties did not mean it to cover a serious breach. E) A consumer transaction is involved and provincial legislation prohibits such exemption clauses in consumer transactions.

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50) ______

51) Perfect Programs Ltd. hired Gill, who had training not only in programming but also in pharmacy management, to create a computer program for use in a pharmacy to take care of all its needs with regard to inventory, billings, prescriptions, etc. The employment contract provided for a three-year term with no provision for early termination and the following covenant: "The employee, upon his leaving the employ of the employer, shall not compete, directly or indirectly, in any capacity whatsoever, within five miles of this place of employment." After Gill had been there for two years and the project was only months away from completion, he was approached by a representative of Big Big Co. (with offices in the same building), who offered Gill a job with, among other things, a higher salary and more staff to help him complete a program for use by drugstores. Gill accepted. To replace Gill, Perfect Programs Ltd. hired a man from New York with the same training as Gill and sued Gill for breach of contract. Which of

the 51) foll owi ng is true?

48) The principle of substantial performance can best be described as A) a major term of the contract is mostly fulfilled. B) minor terms of the contract are disregarded. C) minor terms of the contract are yet to be fulfilled. D) only exact compliance with the contract will qualify as performance. E) all or most of contractual obligations are fulfilled.

______ A) Gill is not in breach of contract because the restrictive covenant is illegal, so the whole contract is void. B) If Gill knew that there would be a delay before the new employee could reach the level Gill had attained before his departure, the costs of the delay would be factored into the damages. C) Gill will have to pay damages for all the loss that directly flows from the breach no matter how improbable. D) Perfect Programs Ltd. could have abandoned the project and just sued Gill for the entire anticipated lost profit. E) Perfect Programs Ltd. could get an injunction against Gill, because the restrictive covenant is reasonable in this form. 52) The claim of frustration is not available in which of the following circumstances? A) The law changes, making performance illegal. B) A change in circumstances makes it difficult or more costly for one of the parties to perform. C) The subject matter of the agreement is destroyed. D) An event that forms the basis of the contract does not take place. E) A government policy prevents performance.

52) ______

53) ______

54) Which of the following is false with regard to remedies for breach of contract? A) Damages are awarded for a breach of a condition (essential term), but not for a breach of a warranty (non-essential term). B) An injunction is the proper remedy to stop a person from doing something that he had promised in the contract not to do, e.g., not to compete, not to disclose secrets, etc. C) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss. D) The quantum (amount) of damages to be given to the victim of the breach depends on the knowledge of the party who breached the contract. Knowledge includes imputed and actual knowledge. E) Specific performance is an equitable remedy forcing a person to comply with the terms of the contract.

54) ______

55) A student bought an I-Pod Nano for the stated purpose of listening to his taped notes while he took his daily run. The contract he signed with the seller, Tape Talk Ltd., included a clause excusing the seller from liability for the breach of "any term of the contract, whether a breach of condition or warranty whether express, implied, statutory or otherwise." After only 30 days, the I-Pod failed to function at all. It was totally useless for the student's purpose, so he took it back to the seller. The seller refused to take it back and pointed out the exemption clause in the signed contract. On these facts, which of the following could be true? A) The student could get around the exemption clause by the court's strict interpretation (construction) of the clause. B) The student could get around the exemption clause by arguing insufficient notice.

55) ______

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53) If neighbours have a contract agreeing not to erect a building that blocks the other's view, which remedy might the court impose if that agreement is breached? A) Punitive damages B) Laches C) Mandatory injunction D) Quantum meruit E) Accounting

C) The student is out of luck because the contract with the exemption clause was in writing. D) The student could be awarded damages if the exemption clause were found invalid by the court on the grounds that the clause could not be interpreted to mean it would forgive such a fundamental breach. E) All exemption clauses are illegal, and therefore the student would not be bound by this one. 56) ______

57) Which one of the following does not terminate a contract? A) Minnie and Mickey agree that Minnie will take less than the amount Mickey owes, as full payment of the debt, and Mickey will pay her two days early. B) The buyer and seller agree orally to cancel their contract when neither one has performed his obligations under it. C) Fred no longer wants to honour his contract to sell Mitra his printer but tells Mitra he'd substitute a $500 boat. Mitra agrees. D) Twain had contracted to build a model of a proposed building for architects who were to meet with their clients today, March 10. The model was destroyed last night when a car left the road and crashed into the workshop and destroyed the model. E) When Ben's new car is delivered, the seats are vinyl rather than cloth as ordered.

57) ______

58) In all but one of the following situations, the contract is frustrated. Identify the exception. A) Ed, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down. B) Dubocovich had contracted to supply a health-food store jars of Melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery the government banned the sale of Melatonin so that it could be properly tested under government auspices. C) On December 1, Pak contracted to buy Scott's horse. Delivery day was set for December 10. On December 8, the horse contracted rabies and had to be destroyed. D) Issacs contracted to sing at the your club on March 10, but that morning the club was destroyed by lightning. E) You agree to paint Joe's house on the following Tuesday, and on the Monday before, through no fault of either party, it is destroyed by fire.

58) ______

59) Mr. Jones rented an apartment to Ms. Smith under a one-year tenancy agreement. Ms. Smith abandoned the apartment after three months. Jones located Smith and sued her for breach of contract. Which of the following is the best statement with regard to the quantum of damages Jones can recover? A) Damages equivalent to nine months rent less whatever rent was received from a subsequent tenant of that apartment. B) He will get nothing. When dealing with land the appropriate remedy is specific performance. C) Nothing, even if it takes six months to rent the apartment again.

59) ______

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56) In which of the following situations would the contract not be discharged by agreement? A) A condition subsequent that calls for termination of the contract has not been met. B) Both parties agree to let a new person be substituted into the contract in place of one of the old parties. C) The two parties have reached "accord and satisfaction" with regard to terminating the contract. D) Both parties agree to call off the contract under which one paid the other $5,000 for work that has not yet been performed, but the other now promises to return the $5,000. E) Both parties to the contract agree to call it off before either one has performed.

D) All the damages that directly and naturally flow from the breach no matter how unforeseeable. E) Damages equivalent to nine months rent even if the apartment is rented again. 60) ______

61) In which of the following is the contract not ended by agreement? A) After party A of the contract paid, party B said he couldn't perform. Party A agreed to waive B's obligation if B would return the money paid to him. B agreed. B) Goode contracted to sell his pony to Reston. Goode then changed his mind and told Reston he didn't want to sell the pony but would give him two lambs instead. Reston agreed to the substitutes. C) Randy visited Terry two weeks after the contract but one month before performance date to say he wouldn't do it. Terry had already paid Randy for the work. After hearing Randy's story, Terry said, "Just forget it, good bye and good luck." D) The event contained in the condition subsequent provision of the contract has happened. E) Sean hired two students to do a market survey for him for $3,000. Before the students had begun the work, they both had received offers for full time jobs. They told Sean they wanted out of the contract. Sean said, "O.K., I'm short of cash anyway."

61) ______

62) Which of the following is false with regard to ending a contract by performance, agreement, or breach? A) If a person properly tenders performance of a service that is rejected by the other party, he is not required to try again. B) A contract can be ended by breach only if there was a breach of condition, not a breach of warranty. C) A person has not legally tendered performance if he pays a $500 debt in 25-cent coins. D) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off. E) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place.

62) ______

63) Which of the following is false with regard to ending contracts and remedies? A) The term "condition precedent" refers to a clause in a contract that brings the contractual obligations of the parties to an end upon the happening of some specific event. B) If a person ignores a court order, e.g., an injunction, he could be cited for contempt of court. C) If Sid incurred costs in preparing to perform a contract that is ended by frustration, the court can allow Sid to keep some of the deposit paid by the other party to help cover those costs.

63) ______

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60) Monroe sold computers. On the purchase of a new IBM computer the buyer signed the written contract that contained the following clause: "The seller is not liable for any breach of condition or warranty express or implied in this contract." The buyer was a businessman who intended to use the machine in his business for a while and then resell it. The machine was used properly but didn't operate well, and within one week it would not work at all. Monroe refused to take back the machine or to refund any money by relying on the exemption clause. Which of the following would be the buyer's best argument for avoiding the effect of the exemption clause in this case? A) Such clauses are prohibited under contract law and are therefore void. B) There is a fundamental breach of contract. C) There is a breach of a non-essential term of the contract. D) On a narrow interpretation of the words used in the exemption clause, they do not cover his complaint. E) The buyer had no notice of the clause; therefore, it is not a term of the contract.

D) A breach of condition allows the party who suffers the breach to terminate the contract. E) The equitable remedy of specific performance is available in those situations where monetary compensation would not be adequate. 64) ______

65) If a supplier failed to honour a contract to supply parts to Mr. Matheson and the court finds the supplier in breach of contract, which of the following would be incorrect with respect to how the court determines the amount of money to award to Matheson? A) The victim of the breach must take all reasonable steps to keep those damages as low as possible. B) If a deposit is involved, the damages will be restricted to that deposit. C) Liquidated damages must be an honest attempt by the parties to pre-estimate damages. D) The supplier is responsible for all damages suffered by Matheson. E) The supplier would not be responsible for any unusual losses lost by Mr. Matheson because of some special use not told to the supplier.

65) ______

66) Jones ordered a new car and was required to pay a $500 deposit. Which of the following is correct with respect to that deposit? A) If the court feels that the damages exceed the deposit, they will order the breaching party to pay any difference. B) The deposit must be a fair reflection of the loss actually suffered. C) If no deposit had been paid, there could be no contract. D) A down-payment is an amount of money to be forfeited if either party is in breach of contract. E) The deposit must be an honest attempt by the parties to pre-estimate damages in the event of a breach.

66) ______

67) The case of Sail Labrador Ltd. v. Challenger One (The) involved an option to purchase and a breach of a contract that was inconsequential and immediately corrected. What did the Supreme Court of Canada hold? A) The contract had not been perfectly performed, so the contract was void. B) The contract had been substantially performed and the option was still available. C) The breach, although minor, rendered the contract unenforceable. D) No breach can be considered inconsequential at law. E) The breach, although minor, rendered the contract voidable at the option of the

67) ______

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64) Dubocovich had contracted to supply a health-food store with jars of Melatonin, a hormone reported in the media as a miracle potion. After they contracted, but before delivery, the government banned the sale of Melatonin so that it could be properly tested under government auspices. Dubocovich told the owner of the store, Mr. Wei, that he wouldn't be delivering the Melatonin because of the government ban. The demand for the Melatonin was high. Mr. Wei was very upset with Dubocovich for failing to honour his contractual obligations. Furthermore, he had given Dubocovich $5,000 in advance, which Dubocovich needed and used to pay the freight costs in bringing the drug to his warehouse. Wei sued Dubocovich for breach of contract. Which of the following is correct with respect to the legal position of the parties? A) When a contract is frustrated in this way, the frustrating party is responsible for any losses incurred by the other party. B) This is an example of a frustrated contract and Wei will lose, since the loss will remain where it has fallen. C) The contract is illegal and void. D) Wei will be able to get back his $5,000 minus a portion of any costs Dubocovich incurred in preparing to perform the contract. E) Wei will be successful in his breach of contract action.

non-breaching party. 68) ______

69) Mikael recently started a home-based business selling custom fishing lures. He decided that he could make a lot more money selling his homemade lures on the Internet. Mikael is not the least bit technologically-inclined, but he knows that his next-door neighbour, Perm, does web design on the side. He decides to hire her to create a website for his new venture. Perm has him sign an agreement that includes an exemption clause that limits her liability in cases of negligence. In the course of designing the website, Perm becomes annoyed at Mikael because his dog keeps digging up her rose bushes. Rather than confront Mikael directly, Perm deliberately puts the wrong pricing information on Mikael's website to get him back. If Mikael suffered damages as a result and wanted to sue Perm, what would the likely result be? A) The exemption clause would protect Perm because of the principle of "freedom to contract". B) Perm's actions were outside the scope of the contract, so Mikael would have no claim in law. C) The exemption clause would be severed as being an illegal restraint of trade. D) Perm only did freelance web design; as a non-professional she would not face liability. E) Perm's acts were deliberate, not negligent, so Perm would not be protected by the exemption clause.

69) ______

70) In the case of an anticipatory breach A) you have the right to demand the other side to perform, but you will not be required to perform yourself. B) you have the right to demand performance or to sue for breach. C) you must wait until the actual breach occurs before you can take any steps. D) the contract is unenforceable by either party. E) the contract is declared void ab initio.

70) ______

71) Dagney was an author of a popular series of children's books. She signed an agreement with her publisher, in which she agreed to have a new book in the series written by October 15th. As noted in the contract, the timing was critical to ensuring the books would be on the shelves before Christmas and in order to coincide with a massive promotion the publisher had been planning. Faran had a terrible case of writer's block. By October 3rd, she realized that there was no way that she would have the book finished by the deadline. She e-mailed her publisher, admitting that she would not have the book finished in time. What are the publisher's options? A) The date set out in the contract is not an enforceable term; if Dagney gets the manuscript to the publisher in a reasonable time, she will not be in breach. B) The contract is voidable at the option of the publisher. C) The publisher has the right to demand performance or sue. D) The publisher has no recourse, because Dagney's case of writer's block has made

71) ______

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68) In Meditek Laboratory Services Ltd. v. Purolator Courier Ltd., a Purolator employee delivered equipment to the wrong address and then falsified documents. In a subsequent lawsuit, Purolator relied on an exemption clause that limited its liability "whether or not from negligence or gross negligence". What properly describes the outcome in this case? A) The exemption clause was not applied, because it was not evidenced in writing. B) The falsification of documents was wilful, not negligent, so Purolator was not protected by this clause. C) The exemption clause protected Purolator because of the principle of "freedom to contract". D) The exemption clause was severed as being an illegal restraint of trade. E) The falsification of documents was done by the employee, not the company itself, so Purolator could not be liable.

performance

impossible. E) The publisher cannot take any steps until October 15th, assuming Dagney does not deliver. 72) ______

73) Ibolya entered into an employment contract with a Toronto advertising firm, VertaNet Ltd. The agreement included a non-competition clause that prevented her from participating in the advertising field in Toronto for five years after termination of her employment. In the event of abreach, the contract provided that Ibolya would have to pay VertaNet the sum of $500,000 as liquidated damages. Ibolya worked for VertaNet for a period of time, then took another job in Vancouver where she worked for four and half years. Six months before the expiry of the five-year period in her VertaNet contract, Ibolya returned to Toronto to take a part-time position as a small advertising firm. Although VertaNet did not suffer any damage, VertaNet sued Ibolya claiming $500,000. What is the likely outcome? A) Liquidated damages clauses are illegal and therefore void. B) Non-competition clauses generally are void as not being in the public interest. C) Although the amount claimed is unconscionable, the clause will be enforced as it is writing. D) The non-competition clause is likely a penalty and therefore unenforceable. E) Unless the $500,000 had been prepaid, Ibolya has no good defence.

73) ______

74) In awarding damages for breach of contract A) the plaintiff should be, to the extent possible, placed in the same position as he was prior to the agreement being made. B) the defendant should be, to the extent possible, punished for the breach in order to deter him from repeating this course of behaviour. C) the defendant should only be required to pay what he can reasonably afford. D) the plaintiff should be, to the extent possible, placed in the same position as he would have been if the contract had been performed. E) the plaintiff should only be entitled to compensation for specific and calculable costs and expenses.

74) ______

75) When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a A) force majeure clause. B) "subject to" clause. C) frustration clause. D) condition precedent. E) condition subsequent.

75) ______

76) Connie enters into an agreement with Razmin, a local artist, to showcase a particular one of her sculptures at a prestigious art show. The day before the show, the gallery where the sculpture was being stored burns to the ground. Which of the following represents the most likely outcome? A) Connie will still need to pay Razmin the same price agreed to in the contract, because the

76) ______

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72) Which of the following statements regarding novation is false? A) Novation requires that the new debtor assume complete liability. B) Novation requires the inclusion of a force majeure clause in order to be enforceable. C) Novation requires the creditor to accept the new contract in full satisfaction and substitution for the old contract. D) Novation refers to the creation of a new contract through the substitution of a third party for one of the original parties to a contract, with everyone's consent. E) Novation requires the creditor to accept the new debtor as principal debtor, not merely as a guarantor.

fire was not

Razmin's fault. B) The contract is void. C) The contract has been discharged through frustration. D) Razmin can simply provide a different sculpture to satisfy the contract. E) Razmin has breached the contract by failing to deliver the sculpture. 77) ______

78) The case of Romfo v. 1216393 involved an order of specific performance and liquidated damages. What did the Court of Appeal hold? A) The contract had been substantially performed and the damages were limited to the liquidated damages. B) The contract had not been perfectly performed, so the contract was void. C) The deposit clauses were upheld. The vendors were required to transfer the lots to the initial purchasers at the new, higher price. D) The breach was considered inconsequential at law. E) The deposit clauses were severed and the contracts enforced. The vendors were required to transfer the lots to the initial purchasers at the original price.

78) ______

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77) The case of Shelanu Inc. v. Print Three Franchising Corporation involved a case whether a franchisor had a duty of good faith to the franchisee. What did the Court of Appeal hold? A) The plaintiff was not entitled to terminate the franchise agreement since the franchisor had not breached their duty of good faith. B) The breach was considered inconsequential at law. C) The plaintiff was entitled to terminate the franchise agreement since there was a breach of the duty of good faith. D) The plaintiff was entitled to terminate the franchise agreement since the franchisor had breached their duty of good faith. E) The plaintiff was entitled to terminate the franchise agreement since there was no breach of the duty of good faith.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 79) Courts enforce exemption clauses because it is assumed that they reflect the will of the parties to the contract.

T or F

81) All rules of contract formation apply when parties agree to discharge a contract.

T or F

82) When an outside, unforeseen event interferes with the performance of a contract, and there is some other way to fulfill the contract, performance is required.

T or F

83) When one party is responsible for an act that frustrates a contract, it is treated as a breach.

T or F

84) A breach of warranty will bring the contract to an end.

T or F

85) A condition precedent is an example of a contract being ended by agreement.

T or F

86) A condition subsequent is an example of a contract being ended by agreement.

T or F

87) For a contract to be frustrated, performance must be impossible.

T or F

88) Damages are an example of an equitable remedy.

T or F

80) Repudiation occurs when one party indicates that they do not intend to follow through with their end of the deal.

T or F

90) The courts prefer to grant an equitable remedy where a breach of contract has taken place.

T or F

91) The courts will grant an order of specific performance to compel performance of a contract for personal services.

T or F

92) The purpose of damages in contract law is to put the victim in the position he would have been in had the contract been properly performed.

T or F

93) When a condition is breached, the victim can only sue for damages but must continue to perform their obligations under the contract.

T or F

94) The Frustrated Contracts Act today requires that when a deposit is paid, the costs incurred can be split out of the deposit.

T or F

95) A condition precedent is a term of a contract that will bring that contract to an end when the specified condition is met.

T or F

96) "Clean hands" refers to the absence of wrongdoing on the part of a person seeking an equitable remedy.

T or F

97) Failure to make an instalment payment will often trigger an acceleration clause, which makes the entire outstanding debt due and payable immediately.

T or F

98) A breaching party is responsible for all lost profits flowing from a breach of contract.

T or F

99) Victims of breach have a duty to mitigate damages, meaning they must do what the can to keep those damages as low as possible.

T or F

100) Lack of financial ability, if proven, will establish frustration.

T or F

101) A person who breaches a contract is responsible for all of the loss that flows from the breach, no matter how unforeseeable.

T or F

102) Legal tender in Canada consists of government-produced coins and bills of any amount or quantity.

T or F

103) A breach of warranty allows a victim to sue for damages, but they must go through with their obligations under the contract.

T or F

104) For a contract to be ended by agreement, there must be consideration as well as agreement on both sides.

T or F

105) The victim of a breach cannot recover damages that he could have avoided if he had made a reasonable effort.

T or F

106) When a person informs you before performance is due that he is not going to perform the contract, you don't have to wait to see if he does perform; you can make other arrangements and sue right away.

T or F

107) A deposit must be returned if no damage has taken place.

T or F

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89) Injunction is an example of an equitable remedy.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 108) Indicate the various ways that the contractual relationship can come to an end. 108) ____________ 109) ____________

110) Joe owed Harry $500, but Harry was confused when Joe came to pay it back and refused to take the money for the payment. Explain Joe's legal position.

110) ____________

111) Explain under what circumstances the tender of performance and its refusal will be treated as performance of the contractual obligation.

111) ____________

112) Explain under what circumstances a creditor would be entitled to refuse to accept payment proffered to him, on or before the payment due date.

112) ____________

113) Joe paid Sam a debt owed of $50,000 by giving him 10,000 $5 bills. Sam refused to accept the payment. Explain this legal position.

113) ____________

114) What is the importance of the distinction between a breach of warranty and a breach of condition?

114) ____________

115) "In contract law, warranty is a promise by the manufacturer of a product to be responsible to make repairs on that product, if it's defective." Discuss the accuracy of that statement.

115) ____________

116) Indicate any limitations on the availability of specific performance and injunctions.

116) ____________

117) Explain what restrictions are put on the effect of exemption clauses (sometimes referred to as exclusion or exculpatory clauses) in a contract.

117) ____________

118) Explain how a fundamental breach affects the application of an exemption clause.

118) ____________

119) Explain what is meant by an anticipatory breach.

119) ____________

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109) Will anything short of the complete performance of the contractual terms amount to performance of the contract and discharge the agreement?

120) What is the legal position of the victim of an anticipatory breach?

120) ____________

121) Joe was a student at the local college and agreed to paint Harry's house during the Easter Break. A month before that time, he informed Harry that he had an opportunity to go to Hawaii and that he wouldn't be painting the house. What can Harry do in these circumstances?

121) ____________

122) If a victim of an anticipatory breach continues to insist on performance, what danger does he face?

122) ____________

123) Explain what is meant by quantum meruit.

123) ____________

124) Where a contract is discharged or modified by what amounts to a unilateral discharge, explain the problem that arises and its solution.

124) ____________

125) Joe owed Sam $5,000. After the money was due, he approached Sam and told him that he couldn't pay the money, but if Sam was willing to take $3,000 that day in full

satis on of the debt, facti he could come

____ ____ ____

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up with 125) that money. Sam agreed to take the money and, in fact, took the money. Once he had it in his possessio n, he then turned around and sued for the other $2,000. Explain the likely outcome.

126) Distinguish between a condition precedent and a condition subsequent.

126) ____________

127) Indicate three conditions under which a contract may come to an end on the basis of frustration.

127) ____________

128) "For a contract to be frustrated, performance of the contractual obligation must be impossible." Discuss the accuracy of that statement.

128) ____________

129) Joe agreed to sell Sam his model T-Ford automobile, and the day before delivery, he took it out for one last drive. Through his own fault, got into an accident in which the car was destroyed. Because it was impossible to go through with the terms of the contract, he claimed that it was frustrated. Discuss the legal position of the parties.

129) ____________

130) Mable grew a field of corn and agreed to provide 300 ears of corn to Jan's Produce in the months of August and September. Unfortunately, her crop was destroyed by hail and she was unable to make the delivery. Jan sued for breach of contract. Discuss the likely outcome.

130) ____________

131) Sam agreed to manufacture and supply 25 specially adapted computers for Joe to use for simulated horse racing in his string of hotels throughout the province. Unfortunately, after Sam almost completed the computers, the province passed a law prohibiting the manufacture and sale of these kinds of machines. Joe had paid a deposit of $5,000, but Sam had incurred $30,000 of expenses in manufacturing these machines. The total purchase price agree upon between these parties was $50,000. Joe sued Sam for the return of his $5,000 deposit. Sam, in turn, sued Joe for a contribution towards his loss.

Disc the parties. uss the legal posi tion of

131)

____________ 132) Joe agreed to buy a car from Sam at Sam's Used Car Lot for $10,000 with a $100 deposit. The next day, before he took delivery, he changed his mind and refused to go through with the deal. Sam kept the deposit and sued Joe for breach of contract. Indicate what kind of remedy he would be entitled to.

132) ____________

133) Distinguish between a down payment and a deposit.

133) ____________

134) When a court determines that a breach of contract has taken place and awards damages, what is the purpose of such an award?

134) ____________

135) "When the court determines that a breach of contract has taken place, they will award monetary compensation in the form of damages to put the person in the position he would have been in had the contract been properly performed." Discuss the accuracy of this statement.

135) ____________

136) The purpose of damages in the form of monetary compensation under a breach of contract action is to compensate the injured party for the losses suffered. Indicate two limitations on this principle.

136) ____________

137) ____________

138) Explain the principle of mitigation in contract law.

138) ____________

139) Indicate three different types of equitable remedies and distinguish among them.

139) ____________

140) Explain what is meant by specific performance in contract law.

140) ____________

141) Explain the injunction as it is available in contract law.

141) ____________

142) Explain what is meant by an accounting as a remedy in contract law.

142) ____________

143) What does it mean when a party has "tendered performance"?

143) ____________

144) When a contract has been performed in all but a minor aspect of it, this is known as ________.

144) ____________

145) What is the usual impact of an exemption clause in the event of fundamental breach?

145) ____________

146) To what does the "construction approach" refer?

146) ____________

147) When faced with an anticipatory breach, what is the risk if the innocent party insists on performance?

147) ____________

148) What is the result of a breach of a minor contractual term?

148) ____________

149) What is the result of a repudiation?

149) ____________

150) What is the result of a breach of a significant term of a contract resulting in a major failure to perform?

150) ____________

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137) Explain how the principle of remoteness affects the availability of damages in a breach of contract action.

151) What is the result of a breach of a significant term of a contract where there is a minor failure to perform?

151) ____________

152) What is the three-part test for determining if novation has occurred?

152) ____________

153) The creation of a new contract through the substitution of a third party for one of the original parties to a contract, with consent by all, is known as ________.

153) ____________

154) An agreement to end a contract, with extra consideration to be supplied by the party benefiting from the discharge, is known as ________.

154) ____________

155) An agreement by both sides to terminate the contract or to disregard a term of the contract is known as ________.

155) ____________

156) What is a "force majeure clause"?

156) ____________

157) Frustration arising when one of the parties to a contract causes or fails to prevent a frustrating event is referred to as ________.

157) ____________

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 158) Explain how a contract can be discharged by agreement. 159) Discuss exculpatory (exemption) clauses and how the courts treat them.

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160) Discuss frustration in contract law and indicate when it is available and how and why it has been modified by statute. 161) Discuss how and why promissory estoppel might come into play when a contract is being discharged or changed by agreement. 162) Discuss the equitable remedies that were developed in contract law and why they were necessary.

163) Explain how the remedy of damages is applied in contract law and any limitation on the availability of damages. 164) Explain the limitations on the ability to request and receive equitable remedies in breach of contract cases.

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1) E 2) A 3) E 4) E 5) C 6) D 7) D 8) D 9) A 10) C 11) A 12) C 13) C 14) A 15) D 16) B 17) C 18) C 19) B 20) B 21) C 22) D 23) B 24) B 25) B 26) B 27) B 28) A 29) E 30) D 31) C 32) B 33) A 34) E 35) A 36) E 37) C 38) D 39) D 40) E 41) C 42) D 43) B 44) C 45) D 46) A 47) D 48) E 49) A 50) B 51) B

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52) B 53) C 54) A 55) D 56) A 57) E 58) A 59) A 60) B 61) C 62) D 63) A 64) D 65) D 66) E 67) B 68) B 69) E 70) B 71) C 72) B 73) D 74) D 75) A 76) C 77) C 78) E 79) TRUE 80) TRUE 81) TRUE 82) TRUE 83) TRUE 84) FALSE 85) FALSE 86) TRUE 87) FALSE 88) FALSE 89) TRUE 90) FALSE 91) FALSE 92) TRUE 93) FALSE 94) TRUE 95) FALSE 96) TRUE 97) TRUE 98) FALSE 99) TRUE 100) FALSE 101) FALSE 102) FALSE 103) TRUE

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104) TRUE 105) TRUE 106) TRUE 107) FALSE 108) By performing the contractual obligations either as required or substantially as required, by breach of contract, by agreement between the parties, and by frustration. 109) Yes. Substantial performance, where an important term is substantially performed, and where breach of warranty or a minor term has taken place. The contract is considered discharged by performance, subject to an action by the other party for compensation for the inadequacies in performance. 110) Joe must pay, although payment was tendered at the appropriate time and place and refused. Money under such circumstances is still owed, although the creditor must bear the costs of collection in these circumstances. 111) When goods or services are involved, the tendering of performance is treated as fulfilling of the contractual obligation to perform, even where such tendering is refused. The person then is free to sue for breach of contract even though he hasn't actually performed the service required. Where money is involved, however, the money is considered to be still owed, although the creditor must bear the costs of collection. 112) For example, away from the workplace, out of working hours, or if the payment is not made in legal tender. Cheques are only acceptable where there is a history of such use, or where the parties have agreed; otherwise legal tender is appropriate. 113) Coin is not involved here and any amount of bills constitute legal tender; therefore, he should have taken the money. 114) When one of parties breaches a condition of the contract, the other one is entitled to treat the contract as discharged and not perform his side of the agreement and is also entitled to sue for damages or another remedy. When a breach of warranty takes place, however, the contract is considered to be performed, and there is an obligation on the victim of the breach of warranty to go through with his side of the agreement, although he can still bring an action for compensation for the imperfect performance. 115) The statement is inaccurate. A warranty is a minor term of the contract, the breach of which does not entitle the victim to treat their contractual obligations as ended. They are, however, entitled to seek compensation for the imperfect performance. 116) These are equitable remedies, and therefore they will not be available where monetary compensation would have proved an adequate remedy. They will also not be available if they cause difficulty to a third party, or where the person seeking the remedy is also guilty of some wrongdoing. 117) Such clauses are strictly interpreted against the position of the person who is favoured by them. For the other party of the contract to be bound by them, they must be brought to his attention and clearly included as part of the contractual agreement. 118) A fundamental breach is a breach that's so basic as to override the operation of an exemption clause. The courts will look at the wording of the exemption clause to see if it was clearly within the intention of the parties to have it cover such a fundamental breach of contractual obligation. Although it may technically be possible to word the exemption clause broadly enough to cover it, the courts will usually find that they have not. 119) This is where one of the parties, some time before their performance is due, states clearly to the other that they will not go through with the contract as agreed to. 120) The victim of such a breach has a choice. He can either insist that performance take place and wait until the date of performance is due to find out if the contract is breached or not, or he can treat the contract as breached at the time that the anticipatory breach was made and seek a remedy immediately, making other arrangements for the performance of the job he has to do. 121) Either he can demand performance and wait for the performance date, and then sue for breach of contract if Joe fails to paint the house, or he can treat the contract as ended by breach, make other arrangements to have the house painted, and sue Joe for what he has lost. 122) That some outside, unforeseen event will make it impossible to perform the contract, and the contract will be frustrated, or else, for some reason, circumstances will change and he won't want go through with his side of the deal, and he will be in breach of the contract. 123) When a person requests a service such as lawyer's services, doctor's services, mechanic's services, plumber's services, etc., and no price is agreed on or stated before the service is rendered, that person is obligated to pay a

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reaso nable amount for the service rendered. 124) A unilateral discharge involves one person allowing the other out of his contractual obligation without receiving anything in return. The problem is with consideration, and the solution is to provide some added consideration in the form of accord and satisfaction to satisfy the requirement that both sides receive some kind of consideration for the discharge. 125) The outcome depends on the jurisdiction. At common law, the reduction of debt would be a gratuitous promise and not binding (for want of consideration). However, many jurisdictions have passed legislation providing that when a creditor has agreed to take less in full satisfaction of a debt (and has actually received the money) the creditor cannot later sue for the difference (e.g., B.C. Law and Equity Act). 126) A condition subsequent involves the term of the contract that requires some event to take place that will bring the ongoing contractual relationship to an end, i.e., "until the project is ended." A condition precedent involves the term of the contract that requires some event or condition to be met before the contractual obligation between the parties arises. This is the famous "subject to" clause. 127) 1. Where the contract is rendered impossible by performance because of some outside, unforeseen event out of control of either party. 2. Where the event that forms the basis of the contract fails to take place. 3. Where some act of government affects the performance of the contract. 128) It's inaccurate. It still may be possible to perform a contractual obligation, and the contract may be frustrated where the event that forms the basis of the contract fails to take place. 129) This is not frustration. This is self-induced frustrationsimple breach of contract. 130) Jan would win. Mable should have obtained her corn from some other source. This is not an example of frustration. 131) The effect will vary to some extent with nature of the legislation in place in the province. At least the deposit of $5,000 will be made available to pay Sam's costs, but in some provinces, such as British Columbia, Sam will be able to keep the deposit plus seek contribution from Joe for at least some of the expense he has incurred. 132) He's entitled to keep the $100 deposit, assuming that it's a true deposit, in that there was a forfeiture clause in the contract. This is an example of liquidated damages, where the parties agree to the amount of damages that are payable in the event of a breach ahead of time. 133) A down payment is merely the first payment of many, but a deposit is an example of liquidated damages. If a true deposit is involved, the deposit will be forfeited as the agreed upon amount of damages owed in the event of a breach. 134) To provide compensation to the victim for the loss suffered. 135) The statement is accurate. When determining what the person has lost, the court will look at the position they would have been in had the contract been properly performed. 136) Remoteness, where the contracting party is responsible only for those damages that could be reasonably foreseeable at the time they entered into the contract, and mitigation. The victim of the breach has an obligation to keep his damages as low as reasonably possible. 137) The victim of a breach can only recover such damages as were reasonably foreseeable by the breaching party at the time they entered into the contract. 138) The victim of a breach of contract has an obligation to take reasonable steps to keep the damages he suffers as low as possible. He will only recover damages that would have taken place had he properly mitigated. 139) 1. Specific performance. Here the court orders the person to perform his contractual obligation. 2. Injunction. Here the court orders the breaching party to stop acting in a way that is inconsistent with the terms of the contract. 3. An accounting. Here the court orders the breaching party to account for any profits that have been made through that breach and pay them over to the victim. 140) This is an order by the courts to the breaching party to a contract to perform the duty or obligation set out in the contract. 141) The breaching party is ordered by the court not to do something that is inconsistent with the terms set out in the contract. 142) The accounting is a remedy whereby the court orders the breaching party to not only indicate what profits he has made because of his breach, but also to pay over those profits to the victim of the breach of contract. 143) A tender of performance is an unsuccessful (because it is rejected or prevented by the other party) attempt by one of

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the parties to a contract to perform its obligations under the contract. 144) Substantial performance 145) It is usually ineffective in the case of a fundamental breach, unless it is absolutely clear that the parties understood the exemption clause to cover such a basic failure to perform. 146) In situations of fundamental breach, a way to ascertain the meaning of a written contract. 147) That party is bound by the choice. If that party cannot perform, then he or she would also be in breach. 148) The other party must perform but can seek damages. 149) If the victim chooses to perform in light of a major refusal, the contract is binding on both. If the victim chooses to discharge, the contract ends but the victim can seek damages. 150) The other party can be discharged. 151) The other party must perform, but can seek damages. 152) (1) The new debtor must assume the complete liability. (2) The creditor must accept the new debtor as principal and not merely guarantor. (3) The creditor must accept the new contract in full satisfaction and substitution for the old contract. 153) Novation 154) Accord and satisfaction 155) Bilateral discharge 156) A contract term anticipating some catastrophic event usually exempting liability when such an event interferes with performance of the contract. 157) Self-induced frustration 158) Students should begin by explaining that discharge by agreement refers to one of a variety of different ways in which a contract can be brought to an end. Discharge by agreement simply refers to the situation when parties agree that a contract will be brought to an end. This requires the presence of all ingredients necessary to form a contract, including consensus and consideration. A bilateral discharge occurs when both parties have something left to do under the original contract and the agreement to discharge relieves them of their respective obligations. The problem arises when such a discharge is one-sided: There must be consideration or the agreement to discharge will be invalid. This problem can be avoided by putting the agreement under seal. (Promissory estoppel arises in the context of such one-sided discharges.) Good students will go on to discuss the concept of accord and satisfaction, in which extra consideration is supplied by a party who is benefiting from the discharge. The critical element, however, is that when a contract is being discharged, there must be complete agreement among all the parties before the new agreement (to end the original contract) will become binding. 159) Here students should explain what an exculpatory clause is, how they favour one of the parties, and the court's reluctance to enforce them, especially in consumer transactions. They should explain how the court takes a very narrow interpretation of such clauses, interpreting them strictly against the party that is benefited by them. The discussion should include an examination of the concept of fundamental breach. At first the courts took the approach that there were some basic obligations in a contract that you could not contract out of. But later, the Supreme Court of Canada changed this, saying that the whole idea of freedom of contract is that the parties can agree to whatever they want. But it must be very clear that when such an exculpatory clause referring to some basic obligation is used that the parties clearly intended the exemption clause to cover even that basic event. This is called the construction approach, and the result is in fact quite similar, since it would be rare indeed that a party would agree to a clause that clearly eliminates liability for a breach of these most basic obligations in a contract. 160) There are many situations where it simply would not be fair to force one party to live up to a contract where the circumstances have changed to make that essentially impossible through no fault of their own. Frustration discharges a contract where some outside unforeseen uncontrollable event (by either party) makes performance of the contract impossible as something essentially different in its very nature than what was agreed. Students should show an understanding of this principle, likely giving several examples in the process. The more difficult part is to explain what happens in the event of a contract being discharged by frustration. At common law, it was "Let the loss lie where it falls." Good students might also note that any money due and payable before the frustrating event still has to be paid. This was found to be unworkable in some situations, and with the Fibrosa case, the court modified this approach by ordering the return of a deposit. Here the party that paid the deposit has received no benefit at all. This is the common law position, and students should show an understanding of why this had to be changed by statute. Statutes were passed (the Frustrated Contracts Act) that provided that, where one party received

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a would pay for that benefit received, and where a deposit was paid, some of that deposit could be retained to pay bene for the costs incurred in preparation for performance of the contract. Students should also indicate that these fit, provisions might vary from jurisdiction to jurisdiction. For example, the B.C. statute allows the courts to order they compensation for cost incurred even where no deposit is involved. 161) Promissory estoppel is one of the most difficult principles to explain and for students to grasp. Students must show that they understand that promissory estoppel only applies where there is a lack of consideration to support the contract. Where one party has made a one-sided promise that would normally be unenforceable against them, this lack of consideration may still have an effect on the relationship because of promissory estoppel. Where one party has promised to do something in the future and the other party relies on it to their detriment, the promising party can be held to that promise in a very limited way. The promise can be used only as a defence, not as a cause of action (as a shield but not as a sword). In almost all situations you can think of, the victim of the breach of promise would be suing to enforce that promise. This they cannot do because of the lack of consideration, and promissory estoppel will not help. It is only used where the victim of the breach of promise is for some reason defending himself against an action by the person who made the promise. The only situation in which this happens is where there is already some legal relationship between the parties (usually a pre-existing contract) that is being modified by the promise that has been breached. The promise maker then would be ignoring his promise and trying to enforce the original legal obligations that were modified by the promise. Here the victim of the breached promise raises that promise as a defence, and it is in these circumstances that promissory estoppel would be effective. Good students might go on to explain that, in the U.S., they have developed the principle of injurious reliance, where the victim of the breached promise can sue the promise maker for damages suffered even where there was no consideration. 162) This is an easier essay topic. Students must show an understanding of the law of equity from Chapter 1, as well as examine the various equitable remedies discussed in this chapter. Of course, there are many situations where monetary compensation will not provide an adequate remedy. I would expect students to give examples. Equitable remedies were developed to overcome these problems that arise where damages are not adequate. After explaining this, I would expect students to examine the various equitable remedies that are applicable to contract law and explain what they are and what they accomplish. Some examples are specific performance, injunction, accounting, and quantum meruit. 163) The idea here is that students should understand that damages are monetary payment designed to compensate the victim of the breach for the losses suffered. Punitive damages are not generally available for breach of contract. Students should also point out that the objective of awarding damages in contract law is to put the victims in the position they would have been in had the contract been properly performed (looking forward), as opposed to the position they would have been in had the contract never been entered into (looking backward, as is done in tort law). It is also appropriate for students to indicate the difference between general damages and special damages. Most important here is the discussion of the limitation on the availability of damages in contract law. First, if a specified amount of damages has been agreed to in the contract, the victim is limited to that amount (liquidated damages or a deposit). Second, the victim is only entitled to those damages that flow directly from the breach and were reasonably foreseeable at the time they entered the contract. Finally, students should show an understanding of the obligation of the victim of the breach to mitigate those damages. Students should explain these principles in their essay. 164) Students should begin by noting that equitable remedies are discretionary and will be granted only when the judge thinks it fair and right to do so. Accordingly, a person seeking equity must come to the court with "clean hands". This means that a remedy will be denied when the person seeking the equitable remedy is also guilty of some wrongdoing. In the event that a plaintiff has engaged in some misconduct, the equitable remedies of specific performance, injunction, accounting, and quantum meruit may be unavailable. In such a case, the plaintiff will be limited to ordinary remedies, such as damages, for the breach. In addition, students should also identify that the courts can refuse to grant an equitable remedy when there has been an undue delay on the part of the party seeking equity. This delay is known as laches. Subject to any limitation period, the plaintiff can still seek common law remedies (such as damages). Limitation periods also limit the availability of equitable remedies.

Chapter 10

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Why is the distinction between employment and an independent contract important? 1) _______ A) An employee has the right to wages. B) An employer may be held responsible for torts committed by the employee. C) Employees can withdraw their services. D) An independent contractor cannot be sure that he will be paid. E) An employee can bind the employer in a contract he enters into on behalf of the employer. 2) _______

3) Which one of the following is just cause for dismissal? A) Refusal to work in an unsafe work environment B) Absenteeism twice in the last year C) Habitual negligence or incompetence D) Tardiness once in the last two years E) No work to do

3) _______

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2) In which of the following situations will Smith be responsible for the tortious conduct of Jones? A) Jones is a secretary working in Smith's office. B) Jones is a independent contractor installing drywall for Smith's grocery store. C) Jones is a computer programmer working for Ace Computer Ltd. and installing new software for Smith's department store. D) Jones is a self-employed vacuum cleaner salesman and Smith manufactures one of the lines he carries. E) Jones is a salesperson Watson's Warehouse visiting Smith's Grocery Store Ltd.

4) _______

5) Which of the following is an unfair labour practice? A) An employer threatens to have an employee fired if he joins a union. B) An employer starts another unrelated business that is non-union, as a union tries to organize his employees at the present location.

5) _______

4) John Li has worked as manager of a video store for six years. Since the 7-Eleven store next door began renting movies for 97 cents, his business has fallen off drastically. Accordingly, the owner of the business told Li that, because the business had fallen on such hard times, he would take over managing and Li would have to take over the counter duties. The present counter clerk would be laid off. The owner also told Li that his wages would be reduced by 15%. When Li came to work the next day, he told the owner that he wouldn't accept the job working at the counter. The owner became angry and said, "If you don't like it, then you can leave! I don't have to put up with your insubordination one minute!" Li left and then sued the owner for unlawful dismissal. The owner argued that he had "just cause": economic slowdown and disobedience. Based on the above facts, identify the true statement. A) The owner was justified in firing Li without notice or pay in lieu of notice because of economic slowdown. B) Li would win the unlawful dismissal action because the owner "dismissed" him by unilaterally changing Li's job without Li's consent and insisting that Li do it. C) The owner could fire Li without notice or pay in lieu of notice because Li refused his order to take over the counter. D) If Li were wrongfully dismissed, he does not have to mitigate his losses by looking for a new job, until the case has been resolved. E) The owner cannot dismiss without cause even if he gives proper notice or pay in lieu thereof.

C) An employer pays higher wages as part of his annual wage increase, as a union is trying to organize his employees. D) An employee is required to join a union as a condition of employment. E) A union representative has a conversation with an employee about joining the union. 6) _______

7) Which of the following is true with regard to employment law? A) The traditional test for determining whether or not a person is an employee is to assess the degree of control; an employee could be told not only what to do but how to do it. B) Employees are allowed to strike only when the employer refuses to honour the collective agreement (a rights dispute). C) A "lockout" is action taken by the employees to prevent employer from operating as normal. D) If a worker is injured on the job, he can sue the employer for any injuries he may have suffered. E) "Constructive dismissal" refers to a breach of the employment contract by the employer in which the employer has discovered the employee had committed theft.

7) _______

8) On Friday afternoon, Frieda was told not to return to work because her job was gone. If her employer is in a non-unionized business, and had no "just cause" to dismiss her, which of the following is true? A) Additional notice must be given even if the employer pays her an amount of money equivalent to the amount of money she would have earned during the notice period. B) The amount of notice to be given her is limited to the employment contract. C) The amount of notice could be set out in the employment contract, and that amount would override the amount set by the common law, unless it was less than the minimum amount set out in the Employment Standards Act. D) If the employee sues for wrongful dismissal and the court has to determine the appropriate notice period, it would consider, among other things, her sex and religion. E) She can elect to have a notice period or to take money in lieu of notice.

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8) _______

9) Which of the following statements describes picketing? A) Strikers gathered at a place of business can prevent people from doing business with employer. B) Permissible only when contract negotiations are taking place, and there is no lawful strike mandate. C) Must be peaceful and merely communicate information D) Permissible where workers cease working because of a dispute over the interpretation of a term of the collective agreement E) Courts or labour relations boards cannot restrict picketing even when regulations are violated.

9) _______

10) Why is the distinction between employment and an independent contract important?

10) ______

6) Which of the following is a true statement about the employer-employee relationship? A) The critical factor in this relationship is control; the employer tells the employee not only what to do but also how to do it. B) If an employer contracts to paint Mr. Shore's barn and sends the employee out to do the painting, if the employee is not paid he can sue his employer or Mr. Shore for his wage. C) An employee does not owe a fiduciary duty to his or her employer. D) One responsibility of an employer is to provide the employee with lifetime work availability. E) An employee for a company could not also be an agent at the same time for the company.

A) An employer may be held responsible for torts committed by the employee. B) An employee can bind the employer in a contract he enters into on behalf of the employer. C) An employee has the right to wages. D) Employees can withdraw their services. E) An independent contractor cannot be sure that he will be paid. 11) ______

12) Mr. Koff, a former policeman, was hired to do investigations for the stock exchange. All those hired in this capacity were required to take and pass a course. When it was determined that Koff had cheated on the course's examination, he was fired. Koff, who was not covered by a collective agreement, sued for wrongful dismissal. If the court holds that the employer had cause for dismissal, Koff will be entitled to damages equivalent to which of the following? A) The amount that would have been paid during a reasonable notice period less any amount received from other employment, E.I., etc. B) Reasonably unmitigable losses C) The amount of pay that would have been received in one pay period, e.g., one month if paid monthly D) Two weeks' pay, the statutory minimum E) Nothing

12) ______

13) The certification process was introduced to solve which of the following kinds of disputes? A) Jurisdictional dispute B) Rights dispute C) Interest dispute D) Recognition dispute E) Commercial disputes

13) ______

14) The employee's right to strike is limited to which of the following types of disputes? A) Jurisdictional dispute B) Rights dispute C) Interest dispute D) Recognition dispute E) Commercial disputes

14) ______

15) Collective agreements must have provisions in them providing for the arbitration of which of the following kinds of disputes? A) Jurisdictional dispute B) Rights dispute C) Interest dispute D) Recognition dispute E) Commercial disputes

15) ______

16) Drew got a non-union, senior management level job. After the first day, Drew came to his dad to discuss his obligations to his boss and his boss's obligations to him. Which of the following is false? A) The employer owes Drew not only pay, but also some direction.

16) ______

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11) Which of the following is not one of the obligations that an employee has to the employer? A) Competence B) Follow all orders no matter how unreasonable C) Loyalty D) Be honest and courteous E) Skill

B) Drew must be punctual and obedient. C) Drew owes the employer a fiduciary duty, i.e., a duty to serve the employer's interests above his own. D) The employer cannot terminate Drew's employment unless Drew does something wrong. E) If Drew wants to quit, he must give the employer proper notice unless the employer has done some wrong, e.g., given an unreasonable or dangerous order. 17) ______

18) Which of the following statements is correct with respect to the employer's liability for the conduct of the employee? A) Any employee can bind an employer in contract. B) The employer is always liable for the wrongful conduct of his employee. C) If a person is injured by an employee acting in the course of the job, that person must sue the employer, not the employee. D) All employees are agents of the employer. E) An employer is only liable for the wrongful conduct of his employee that takes place during the course of the employment.

18) ______

19) Which of the following would end the employment relationship by breach, thus possibly giving rise to a claim for damages for wrongful dismissal? A) The employee is told he will no longer be needed at the completion of the specific job he was hired to do, e.g. paint a bridge. B) The employee is asked to leave because a downturn in the economy has resulted in no work for him to do. C) The employee is asked to leave after he refuses to do a reasonable but unpleasant task that is part of his employment, when another more junior employee could have been asked to do it. D) The employee is told he will no longer be needed at the end of the period of employment specified in the contract, e.g., one year. E) The employee is asked to leave because he consistently comes to work late as a result of frequent morning traffic jams.

19) ______

20) Which one of the following is not just cause for dismissal? A) Habitual negligence or incompetence B) Consistent tardiness C) Open disobedience D) Serious absenteeism E) No work to do

20) ______

21) Which of the following statements is false with respect to the employee's obligation to give the employer notice upon quitting?

21) ______

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17) Which of the following is correct with respect to restrictive covenants included in employment contracts? A) The imposition of such a restriction is at the option of the employer and the employee has no say in the matter. B) Such restrictive covenants are enforceable in court if reasonable and not against the public interest. C) For such a clause to be valid, it is only necessary to show that it was needed to protect the employer's interest. D) A void restrictive covenant destroys the whole contractual relationship and neither party has any obligations under the agreement. E) Such restrictive covenants are always void and have no place in employment contracts.

A) An employee is not obligated to give the employer notice where the employer gives the employee unreasonable or dangerous orders. B) The employee can refuse to give notice and leave immediately if the employer involves the employee in immoral or illegal activities. C) The employee can leave immediately without notice if he has a better job to go to. D) The employee is not obligated to give notice to the employer and can leave the job immediately if working conditions are unreasonably dangerous and the employer refuses to take reasonable steps to correct them. E) The employee is obligated to give reasonable notice unless there is just cause for leaving. 22) Which of the following statements is correct with respect to remedies for wrongful dismissal? A) If the employee gets another job within the period of notice he should have received, that will affect the amount of damages he will receive. B) The court will issue an injunction to prevent the employer from hiring someone else to take the employee's place. C) It is up to the employee to determine the amount of notice he should have been given. D) The damages that are payable to the employee are calculated on the basis of what the employee would have received had he been given reasonable notice whether he gets another job or not. E) The court will usually order the employer to take the employee back.

22) ______

23) ______

24) If the place of employment is not unionized and there are no provisions in the employment contract concerning termination of employment, which of the following would not be within the rights of the employer and therefore actionable by the employee? A) An employee is dismissed because his employer doesn't like his disposition, and he is given reasonable pay in lieu of notice. B) An employee is dismissed because he refused to do a job to which he had just been demoted, and he was given reasonable pay in lieu of notice. C) An employee is dismissed because there is no more work to do and is given neither notice nor pay in lieu of notice. D) An employee is dismissed because he was found stealing goods from his employer, and he was given neither notice nor pay in lieu of notice. E) An employee is dismissed for incompetence and is given neither notice nor pay in lieu of notice.

24) ______

25) Which one of the following statements is true with respect to workers' compensation? A) All of the funds used to pay for injuries suffered on the job come from a fund paid into by

25) ______

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23) Vanessa had been a waitress at Joe's Good Eats for seven years. There had always been differences between Vanessa and Joe because they had radically different views on politics, religion, and sports, but he had always overlooked these differences because he liked her and she was a good waitress. However, one busy day with the restaurant full of customers, he began ranting about city politics. Vanessa whispered, "Please, Joe, you know I don't agree." It ended with Joe yelling, "I've had it with your radical ideas. Get out!" So Vanessa left. The employees at Joe's were not unionized. If Vanessa sues for unlawful dismissal, she will be entitled to damages equivalent to which of the following? A) Nothing B) Her regular pay until she finds another job C) One week's pay (the statutory minimum) D) The amount that would have been paid during a reasonable notice period less any amounts received from other employment E) The amount of pay received in one pay period, e.g., one month if paid monthly

the

government and employees. B) All employers pay similar premiums no mater how dangerous the job. C) While job-related injuries are covered under the Workers' Compensation Act, illness that results from work is strictly the employee's own problem. D) A worker who is injured on a job that is covered by the Workers' Compensation Act cannot sue his employer over the injury regardless of whether he makes a claim under the Act or not. E) A worker who is injured on a job that is covered by the Workers' Compensation Act has the choice of either suing his employer or claiming under the Act with regard to that injury. 26) Which one of the following statements about the compensation insurance scheme under the Workers' Compensation Act is false? A) If the injury is caused by the worker's own careless conduct, he will still receive compensation under the Act. B) When a worker is injured on the job through the fault of someone other than his employer, he cannot claim under the Workers' Compensation provisions. C) Businesses covered by the Act are required to contribute to a no-fault fund that is used to pay for job-related accidents and diseases. D) Employers pay different premiums depending on the nature and danger of the industry. E) Legislation sets rates of compensation to be paid for different types of injuries.

26) ______

27) ______

28) Eastside Nurseries Ltd., which had long been a family business, was faced with a demand by its workers that it recognize their new organization, a union, for the purposes of collective bargaining. The union was certified by the appropriate governmental board as the bargaining agent for this bargaining unit, but the parties could not reach an agreement as to what should be included in the new collective agreement. Eventually the Eastside Nurseries locked out the employees. This sort of dispute is called A) jurisdictional dispute. B) rights dispute. C) interest dispute. D) arbitration dispute. E) recognition dispute.

28) ______

29) The process by which a third party imposes a solution to a dispute on the employer and union is called A) binding arbitration. B) job action. C) conciliation. D) certification. E) mediation.

29) ______

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27) Which of the following statements is correct with respect to workers' compensation? A) When an employee is injured on the job, the workers' compensation system gives that employee the choice of claiming workers' compensation or suing the employer or fellow employee who caused the injury. B) Workers' compensation in each province is a compulsory program whereby employers participate in an insurance program covering accidents and disease arising from the job. C) If an employee is hurt on the job and it is his own fault, he will not be covered by workers' compensation. D) The workers' compensation system is totally financed through government grants. E) Workers' compensation is a voluntary system in place whereby employers, should they so desire, participate in an insurance program covering accidents that take place on the job.

30) ______

31) Smith is an employee of ABC Company and wants to persuade the other employees to join a union and become certified, because the wages paid by ABC are less than those that would be paid in a union plant. ABC Company does not want a union. Which of the following is ABC permitted to do? A) ABC can form his own company organization for workers and have it certified. B) ABC can tell the employees that it cannot afford to pay union wages and, if forced to, will go out of business, as long as that statement is true and not threatening or intimidating. C) ABC can fire Smith. D) ABC can increase the wages paid to the employees, thus eliminating the major reason for having the union. E) ABC can transfer Smith to another plant.

31) ______

32) Which of the following statements is correct with respect to the process by which a union organizes the work force of an employer? A) An employer can refuse to recognize a trade union or have any dealings with it. B) A union can call the employees it has organized out on strike to force the employer to recognize and deal with that trade union. C) Once the union has been certified, the employer must consent to what the union demands in the new contract. D) The employer can refuse to have anything to do with the union even after it has successfully completed the certification process. E) In most provinces, a trade union must receive government certification through an employee voting process before it has the right to represent the employees in dealings with the employer.

32) ______

33) Which of the following is not an unfair labour practice? A) A union representative threatens to have an employee beaten if he fails to join the union. B) An employer threatens to have an employee fired if he joins a union. C) An employer threatens to start another business that is non-union and transfer all the work to that business. D) An employer pays higher wages when he learns that a union is trying to organize his employees, with the intention of persuading the employees they don't need a union.

33) ______

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30) Bruce was a union representative working for Ace Manufacturing Co. The union and management had just concluded a collective agreement that set out terms under which certain functions of the plant would be computerized. A few months after the agreement was signed, the management started installing the computers, and in the process laid off three people who were no longer required. This in fact was exactly what Bruce had taken great care to prevent by the provisions that were included in the collective agreement. The management was in clear violation of these terms. Bruce called the members of the union out on strike and set up a picket line that effectively shut down the plant. Which of the following is true with regard to the legal position of the parties? A) The management was in the wrong and would be unsuccessful in getting an injunction to stop the strike and picketing. B) If the workers disagreed with the layoffs, management could lock them out. C) In this type of dispute, the workers can slow down and disrupt production, but they can't walk off the job. D) The union was right in objecting to the layoffs, but it should have followed the grievance procedures in the collective agreement. Their strike is illegal. E) The picket line has the legal right to physically block people from the plant if they are not persuaded to turn back.

E) An employee is required to join a union as a condition of employment. 34) Which of the following statements is correct with respect to the bargaining process in collective bargaining? A) Employers are required to bargain in good faith, which means that they must be prepared to compromise when their initial offer is refused. B) Once a union has been certified as the legal bargaining agent of the employees, they are the ones in control of when bargaining takes place. They are the only ones who can give notice to commence bargaining. C) Once the employer and the union representatives have completed a collective agreement and signed it, it is binding on all parties. No further steps have to be taken. D) Once notice has been given by either side, bargaining must commence within the time specified in statute, unless they agree otherwise. E) Once a union has been certified, the employer must agree to whatever they represent as the contents of the first contract.

34) ______

35) Which of the following statements is correct with respect to the process of conciliation/mediation? 35) ______ A) Conciliation/mediation is a process by which a third party is chosen by the parties to impose a settlement on the parties. B) This refers to the requirement that the parties bargain in good faith to reach a contract. C) Conciliation/mediation is a process by which a third party is chosen by the government to impose a settlement on the parties. D) The conciliator or mediator's recommendations cannot be ignored by the parties. E) Conciliation/mediation is a process by which a person is chosen by either the government or the parties, who then tries to bring the parties to an agreement. 36) ______

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36) Which of the following statements is correct with respect to the operation of the collective agreement? A) It is unlawful to include in a collective agreement a provision whereby a new employee must become a member of the union. B) Arbitration is a process whereby the mediator/conciliator will hear both sides of the dispute and try to persuade the parties to come to an agreement. C) All disputes arising out of the enforcement of the collective agreement that cannot be settled by negotiation must be handled by conciliation/mediation. D) All disputes arising out of the enforcement of the collective agreement that cannot be settled by negotiation must be handled by arbitration or another agreed upon method. E) Mediation is a process whereby the mediator/conciliator will hear both sides of the dispute and make a decision binding on the parties.

37) In which of the following situations would it be legal for the employees to strike? 37) ______ A) Ace Manufacturing made armaments and some were sold to South Africa. When the employees found this out, they went out on strike, demanding that the practice stop. B) A collective agreement was in place between Ace Manufacturing and its employees, and that contract was blatantly breached by the employer, resulting in the employees going out on strike. C) The A.F.I.O., the properly certified bargaining agent for the employees of Ace Manufacturing Ltd., were demanding an unreasonably high wage settlement from the employer, which would bankrupt the firm if accepted. The employer refused to agree to this and the employees went out on strike. D) The A.F.I.O. was approached by a group of employees working for Ace Manufacturing Ltd. to see if they would organize the work force and unionize it. When the employer discovered this, he fired that group of workers and the rest went out on strike.

E) The employer introduced some new policies into the plant that, while they did not violate the terms of the collective agreement in place, were very much resented by the workforce. The employees then participated in a deliberate process of sabotage and slowdown to show their displeasure. 38) ______

39) For the past seven years, Hudson has worked as vice-president in charge of personnel (a non-union position) for Mountain Enterprises Ltd. As part of a corporate reorganization, the directors of the company decided to downgrade Hudson's position to manager of personnel. Hudson is very upset at this change and consequently refuses to go along with it. The company dismisses him immediately without any notice or pay in lieu thereof, because of his refusal. If Hudson sues for wrongful dismissal, which one of the following statements indicates the most likely outcome of the case? A) The company will win because non-union employees are always subject to dismissal without notice, because there is no collective agreement. B) Hudson will win because an employer owes its employees a job, unless the employee is convicted of a theft. C) The company will win because they dismissed him, rather than saying he was "fired." D) The company will win because Hudson's refusal constituted "cause." E) Hudson will win because the company breached the employment contract and he does not have to accept that breach.

39) ______

40) Which of the following is a false statement about the employer-employee relationship? A) An employee for a company could also be an agent for the company. B) The critical factor in this relationship is control; the employer tells the employee not only what to do but also how to do it. C) An employee sometimes owes a fiduciary duty to his or her employer. D) One responsibility of an employer is to provide the employee with a safe working place. E) If an employer contracts to paint Mr. Shore's barn and sends the employee out to do the painting, if the employee is not paid he can sue his employer or Mr. Shore for his wage.

40) ______

41) With regard to employment law, which of the following is false? A) The common law provides that an employee who wants to quit his job because he wants to take another owes his employer reasonable notice. B) The most common remedy awarded by the courts in wrongful dismissal cases is "reinstatement," i.e., the employer responsible for the wrongful dismissal must take the employee back. C) An employee must be punctual and obedient. D) An employee badly injured on the job can make a claim against a fund of money provided by employers who are obligated by law to contribute. E) A unionized employee does not negotiate personally with the employer for his or her employment contract.

41) ______

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38) Which of the following statements is correct with respect to picketing? A) Lawful picketing is the process whereby striking employees attempt to persuade people not to do business with their employer. B) Lawful picketing is the process whereby striking employees forcefully prohibit others from doing business with their employer. C) Lawful picketing cannot take place during a lockout, only during a lawful strike. D) Lawful picketing is an accepted form of protest by workers whether or not a lawful strike is in process. E) Lawful picketing can take place during a rights dispute or a recognition dispute.

42) ______

43) A difference of opinion between an employer and a union in the interpretation of terms in their existing contract is called A) rights dispute. B) conciliation procedure. C) certification. D) jurisdictional dispute. E) interest dispute.

43) ______

44) The only kind of disagreement between union and employer that can lead to a lawful strike is called A) interest dispute. B) rights dispute. C) jurisdictional dispute. D) conciliation procedure. E) certification.

44) ______

45) The process by which a particular union achieves the status of bargaining agent for a group of employees is called A) binding arbitration. B) job action. C) arbitration. D) conciliation. E) certification.

45) ______

46) Which of the following statements more accurately describes an employee rather than an independent contractor? A) The person is free to represent others in the same business B) The person is an essential part of an employer's organization C) The person determines his/her own work schedule D) The person has a high level of financial risk E) The person provides his/her own tools

46) ______

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42) Mr. Lopez, the owner of the firm, had a large family. His six children were all in their late teens or early twenties and were in school or had jobs. However, in the summer of 2011, two of the six got laid off and the other four were having trouble finding work. Lopez spent ten days reorganizing his firm to find jobs for his family. He decided that the foreman at the plant, Mr. Wedman, who had been with the firm for twelve years, seven as foreman, could go back to being a carpenter and make room for his oldest son, who had management experience. There was no written employment contract with Wedman. On Friday afternoon, Lopez called Wedman into the office and told him that on Monday he would return as a carpenter and that he would be under the direction of his son. Wedman said he didn't want to be a carpenter or under the direction of his son and wouldn't do it. Lopez dismissed him immediately and with no severance pay. Which of the following is true? A) Lopez can fire Wedman for any reason and owes him nothing, because Wedman is not protected by a union. B) Wedman could sue for wrongful dismissal because he was fired from his job when he refused to return as a carpenter, not as a foreman. C) Lopez can fire Wedman for any reason and owes him nothing, because Wedman is not protected by a written contract. D) Lopez had just cause for dismissing Wedman, namely, for disobedience. E) Lopez can't fire Wedman at all if the real purpose of firing him is to make room for his son.

47) ______

48) Federal and provincial human rights legislation cover all of the following issues except A) harassment. B) disabled workers. C) minimum wage. D) affirmative action. E) pay equity.

48) ______

49) Keeping in mind both the common law rules governing employment and the legislation passed to improve the position of employees, indicate which of the following statements is false with regard to employment law. A) An employer owes an employee reasonable notice and an employee also owes the employer notice if he or she wants to leave. B) When a worker is injured on the job and would have a claim under the Workers' Compensation Act, he has the option of claiming under the Act or directly suing the employer. C) The case law provides that an employee is entitled to reasonable notice, and what is reasonable is based on the character of the work, how long the employee has worked there, the worker's age, and the job market. D) Employment standards legislation in each province sets out some minimum standards with regard to such matters as wages, hours of work, termination, etc. E) Statute law allows workers to unionize without interference by the employer.

49) ______

50) The explosive confrontations between management and workers attempting to organize themselves to offset the power of the employer led most governments to pass laws that would create and maintain labour peace. Which of the following is false with regard to collective bargaining legislation? A) Employers can block their workers from organizing themselves as a union as long as they do not use violence or the threat of violence. B) Once a union is certified, the union worker will not bargain for his contract; the union will have a bargaining agent who has the authority to negotiate for a contract that will bind all the union workers in that bargaining unit. C) A contract approved by both the employer and the union is called a collective agreement, and it must set out the method for the settlement of disputes that might arise under the agreement. D) It is an unfair labour practice for an employer to threaten to fire a worker for joining the union. E) A lockout is an action taken by the employer to prevent workers from working and earning a wage.

50) ______

51) Which of the following is correct with respect to human rights in the field of employment? A) While an employer cannot discriminate against a prospective employee on the basis of colour, religion, or sex, they can refuse to hire a disabled person. B) If provincial human rights legislation does not extend human rights protection to same-sex couples, the employer can be sure that discriminatory practices in that area will not be

51) ______

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47) (Modify this question for your province.) To which legislation would a person turn when they have been discriminated against when seeking employment? A) Employment Standards Act B) Human Rights Code C) Charter of Rights and Freedoms D) Labour Relations Code E) Bill of Rights

actionable. C) If an employee becomes disabled, the employer has no further obligation to that employee and can fire him. D) While an employer must ensure that managers do not discriminate or harass, they have no control over or obligations for the actions of other employees. E) Employers have an obligation to accommodate, within reason, the religious beliefs of their employees by, for example, rescheduling shifts to allow for religious holidays. 52) ______

53) Which of the following is correct with respect to the law of collective bargaining? A) Employees can strike only where the employer has clearly breached the terms of the collective agreement. B) All employees have the right to individually choose whether they will become members of a union when they are hired. C) A union shop requires that employees become members of the union when they are hired. D) The public has a legal obligation to honour a properly constituted picket line during a lawful strike or lockout. E) Under the Charter of Rights and Freedoms, all employees have the right to belong to trade unions and to strike.

53) ______

54) In the case of Herff Jones Canada Inc. v. Todd, the Court considered a clause in a sales representative contract that prohibited the representative from working for a competitor for four years. What did the Court hold? A) The covenant was unenforceable because it was not under seal. B) The covenant was enforced because it was reasonable between the parties and reasonable with regard to the public interest. C) The covenant was void because such provisions are in restraint of trade and therefore automatically illegal. D) The covenant was enforced despite been overly excessive, on the basis of the principle of the freedom to contract. E) The covenant was unenforceable because such covenants demand independent legal advice prior to execution and none was obtained.

54) ______

55) Lyons v. Multari was a case in which an oral surgeon and his new associate signed a short, handwritten contract containing a non-competition clause, in which the associate agreed not to compete for three years within a five-mile area. He breached the agreement and was sued. What did the Court determine? A) It is only appropriate to enforce a non-competition clause if the parties have had independent legal advice. B) It is only appropriate to enforce a non-competition clause if the agreement is in standard form. C) It is always appropriate to enforce a non-competition clause, as long as the parties have

55) ______

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52) Which one of the following is correct with respect to employee rights? A) Mandatory retirement at 65 has been abolished by the Supreme Court of Canada. B) There is a duty imposed on the employer to take reasonable steps to accommodate disabled employees. C) Where an employer violates the human rights of an employee, that employee must be prepared to sue to enforce those rights. D) Interactions between employees and their employers outside the workplace cannot constitute employment-related harassment. E) All employers in public or private sectors now have an obligation to balance their workforce so that an equal number of men and women will be employed.

clearly agreed to the provision. D) It is not appropriate to enforce a non-competition clause if a non-solicitation clause would do. E) It is not appropriate to enforce a non-competition clause under any circumstances. 56) In Dowling v. Ontario (Workplace Safety and Insurance Board), the Court had to determine whether 56) ______ the employee's dishonest conduct constituted just cause for termination. What did the Court find? A) Summary dismissal can be appropriate, but only in circumstances where the employee has demonstrated incompetence. B) Summary dismissal is always appropriate for even minor acts of dishonesty, regardless of the circumstances. C) Summary dismissal was unreasonable: Only the most egregious acts of dishonesty can ever amount to just cause. D) Summary dismissal is never justified; reasonable notice is always required for reasons of public policy. E) Summary dismissal was a proportionate response given the acts of misconduct and the context of the employee's position, which required honesty and impartiality. 57) ______

58) Jeff had worked for Sweetums Candy Shoppe for the last 12 years. His boss comes in one morning and tells him that although he has always been a great employee, he is being let go for financial reasons. He gives Jeff only 2 weeks' notice. Jeff checks his employment contract and verifies that the agreement provides that only 2 weeks' notice is required. Under the terms of the employment standards legislation, Jeff is entitled to a minimum of 8 weeks' notice. If Jeff sued for wrongful dismissal, what is the Court likely to find? A) The contractual term does not comply with the legislation, so the Court would substitute the minimum notice period set out in the statute. Jeff would be entitled to 8 weeks. B) The contractual term does not comply with the legislation, so it is void. The Court would award damages calculated on the basis of a reasonable amount of notice. C) Jeff is not entitled to any notice. When a business runs into financial difficulty, that it considered just cause to terminate an employee. D) Jeff is entitled to the amount set out in the legislation, plus any amount specified in the contract. Jeff should have been given 10 weeks' notice. E) The contractual term overrides the common law and statutory provisions by virtue of the freedom to contract. Jeff would lose his lawsuit.

58) ______

59) To avoid a complaint of gender discrimination, an employer should do all of the following except

59) ______

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57) In Tree Savers International Ltd. v. Savoy, two senior key employees left, giving only two weeks' notice, and incorporated a company to compete with their former employer. When they left, they took documents with them, including lists of contacts. When they were sued by their former employer, what did the Court determine? A) The employees were in violation of their fiduciary duty, but employees are not bound to give notice of termination of employment. B) The employees had behaved unethically, but no remedy was available to compensate the company for this type of conduct. C) The employees had given the minimum statutory notice, so the company had no recourse against them. D) The employees were in violation of their fiduciary duty and, as senior key employees, that they should have given considerably more notice. E) The employees should have given more notice, but fiduciary duties cannot arise in the context of a mere employment relationship.

A) reward men and women equally when doing equivalent jobs. B) refrain from asking women in job interviews whether they are pregnant or plan to have children. C) permit an employee to breastfeed in the workplace. D) accommodate a pregnant woman with respect to her pregnancy. E) ensure that there are an equal number of female and male employees employed by the business. 60) In Robichaud v. Canada (Treasury Board), the Supreme Court of Canada had to determine whether the employer was responsible for the sexual harassment committed by another employee. What did the Court find? A) Such behaviour does not constitute discrimination, so the employee's only recourse is a tort law action. B) Such behaviour constitutes discrimination on the basis of gender but, unless the employer actively encouraged this conduct, the employer cannot be liable. C) Such behaviour is juvenile, but the employee is contributorily liable, as she must have encouraged the attention in some way. D) Such behaviour constitutes discrimination on the basis of gender and, under the Canadian Human Rights Act, the employer was liable for such acts. E) Such behaviour is regrettable, but not actionable under the Canadian Human Rights Act.

60) ______

61) ______

62) When new employees are required to join a union within a specified period of time, this is referred to as A) an agency shop. B) rand formula. C) a closed shop. D) a union shop. E) check-off provision.

62) ______

63) Elad starts a brand new job. Lena, his new co-worker, is showing him around. Lena informs Elad that she is a union member, required to pay dues and to maintain her membership. Elad is certain that he was told he did not need to join the union. What arrangement is in place? A) Check-off provision B) Maintenance of membership C) Closed shop D) Agency shop E) Rand formula

63) ______

64) In Samuda v. Recipco Corp., the plaintiff was dismissed from her position, and brought an action for wrongful termination and breach of an employment contract. What did the Court determine?

64) ______

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61) Benoit goes to pick up a shipment from a supplier, but when he arrives, he finds the unionized employees who work there are on strike. Benoit is unsure about whether he can, or should, cross the picket line. Which of the following statements is true? A) Benoit must cross the picket line, otherwise the supplier can sue him under the Canada Labour Code. B) Benoit is free to continue doing business with the employer, but the employer will face serious fines for continuing to operate during a strike. C) Benoit has the legal right to cross the picket line, but if he is injured by those on strike, he will have no recourse against them. D) Benoit has no legal obligation to honour the picket line. E) Benoit is prohibited from doing business with an employer involved in a strike.

A) Samuda was not an employee since she was not subject to the control and direction of Recipco. B) The level of control and direction was minimal, indicating Samuda to be solely an agent of Recipco. C) Samuda was an employee since she was subject to the control and direction of Recipco. D) Samuda was in violation of her fiduciary duty, and was not bound to give notice of termination. E) Fiduciary duties cannot arise in the context of a mere employment relationship. 65) In RBC Dominion Securities Inc. v. Merrill Lynch, Virtually all of the investment advisors at the RBC branch left without notice, and went to work for a competitor , Merrill Lynch. What did the Court determine? A) RBC investment advisors were not in violation of their fiduciary duty to RBC, and were not required to provide notice of termination. B) Merrill Lynch and its manager were found jointly and severally liable, as the manager had induced the breach of the duty not to compete unfairly. C) Fiduciary duties cannot arise in the context of a mere employment relationship. D) Merrill Lynch and its manager were not liable, since no notice of termination was required. E) RBC was found liable for inducement of breach of contract.

65) ______

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 66) Dismissal without reasonable notice must be based on employee wrongdoing or a failure to perform the job.

T or F

68) Mediation is third-party intervention in the negotiation process to force an agreement. 69) Certification is notice to a labour relations board that the union intends to go on strike.

T or F

70) Trade unions activities are controlled by the courts.

T or F

71) An employer is responsible for all torts committed by his employee.

T or F

72) An employer is responsible for only those torts committed by an employee that take place while the employee is doing what he was employed to do.

T or F

73) Only employers are responsible for torts committed by their employees during the course of the employment.

T or F

74) An employer is vicariously liable for the torts committed on the job by employees and independent contractors.

T or F

75) A union shop requires that employees become members of the union when they are hired.

T or F

76) Union employees have a legal obligation to honour (that is, not cross) a properly constituted picket line during a lawful strike or lockout.

T or F

77) A lockout involves picketing employees prohibiting both management and other employees form crossing the picket line.

T or F

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67) A majority of the employees in a workplace must always vote in favour of union organization before certification will be granted.

T or F

79) Mediation involves a process whereby some third party tries to help the conflicting parties reach an agreement.

T or F

80) A certified union has exclusive rights to represent the employees, and individual bargaining unit employees are no longer free to enter into separate contractual arrangements with their employer.

T or F

81) The Wagner Act outlawed the practice of collective bargaining and prohibited trade unions from going on strike.

T or F

82) When an employee is dismissed for just cause, the employer need give the employee only two months' notice or the equivalent pay in lieu of that notice.

T or F

83) When an employee leaves the job because of constructive dismissal, his only recourse is to complain to the appropriate human rights tribunal.

T or F

84) When an employee is dismissed for just cause, he is entitled to reasonable notice or pay in lieu of notice.

T or F

85) The Employment Standards Act sets a maximum amount of notice or pay in lieu of notice that an employer has to give an employee upon dismissal.

T or F

86) It is up to the labour relations board to determine how much notice must be given when an employee is dismissed.

T or F

87) When one employee sexually harasses another, the only recourse available to the victim is to sue the harassing employee.

T or F

88) Unionized employees can be dismissed without notice if there is no work to do.

T or F

89) Both employers and employees pay employment insurance premiums.

T or F

90) Workers' compensation benefits are only available where the employee has been injured because of the fault of the employer.

T or F

91) Not only must a non-competition clause be reasonable between the parties, but the party trying to enforce it must show that the clause is necessary to protect some proprietary interest.

T or F

92) Any contractual term that does not comply with the minimum standards set out in the Employment Standards Act is a nullity.

T or F

93) There is a constitutional right to belong to a union, to strike, and to bargain collectively.

T or F

94) Trade unions are exempt from human rights legislation, because labour statutes are designated as primacy legislation.

T or F

95) Trade unions were once considered illegal organizations with no status separate from their membership.

T or F

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78) While a lockout can only take place during the collective bargaining process when there is no contract in force, the employees can also legally strike when the employer breaches a term of a collective agreement that is in force.

SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 96) Distinguish between an employee and an independent contractor. 96) _____________ 97) What is the significance of determining that an employment relationship exists, aside from the statutory significance, employment insurance benefits, workers' compensation benefits, etc.?

97) _____________

98) "When one person does work for another, they can be either an agent, an independent contractor, or an employee." Discuss the accuracy of that statement.

98) _____________

99) Indicate three responsibilities of an employer in an employment relationship.

99) _____________

100) Indicate three obligations of an employee in an employment relationship.

100) ____________

101) Indicate under what circumstances an employer can dismiss an employee.

101) ____________

102) Indicate what kinds of restrictions there are on an employer's right to dismiss an employee.

102) ____________

103) Indicate how much notice an employee is entitled to when being dismissed.

103) ____________

104) "If the Employment Standards Act (or its equivalent in your jurisdiction) states that an employee who has worked for a specific length of time is entitled to up to eight weeks' notice, and the employee you wish to dismiss has worked for that long, you can be sure that's all the notice or pay in lieu of notice that you have to give that employee." Discuss the accuracy of that statement.

104) ____________

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105) ____________

106) Under what circumstances can an employee be terminated without notice?

106) ____________

107) What constitutes "just cause"?

107) ____________

108) Joe had worked for Sam's Manufacturing Company for ten years when Sam told him one day that, because Sam had lost a major contract, he had no work for Joe to do, and Joe was fired as of that time. Explain Joe's legal position.

108) ____________

109) Joe worked for Sam in Sam's Manufacturing Plant as supervisor for five years, and for five years prior to that had been foreman. Because of a reorganization, the position of supervisor was eliminated, and Joe was reassigned to his old job as night foreman. He refused to take it and sued for wrongful dismissal. What would be the outcome?

109) ____________

110) If Joe sued Sam for wrongful dismissal and it was established that Joe was not given the proper notice that he was entitled to, what factors would the courts take into consideration in assessing the damages he's awarded?

110) ____________

105) Joe had been working for Sam in a supervisory position for 14 years when Sam called him into the office, told him that he didn't have any more work for him to do, and told him that he would be expected to be off the job and the relationship terminated by the end of the month (1-1/2 weeks away). During those 14 years, Joe had worked in a number of positions, but when he assumed his most recent supervisory position one year prior, he had signed an agreement stating that he was only entitled to one week's notice. This agreement also provided him with a substantial raise. Discuss the legal position of the parties.

111) Explain when an employer can be held liable for the wrongful acts of an employee.

111) ____________

112) "Joe was working for Sam, using his own car to deliver manufactured parts for Sam's business to a client. In the process, Joe was involved in an automobile accident, causing injury to George, a stranger. In these circumstances, George's only recourse is against the employer." Discuss the accuracy of that statement.

112) ____________

113) Joe was an employee of Sam's and was using his own car to deliver manufactured goods 113) ____________ to a client. Since the client was in North Vancouver, the same area where his girlfriend lived, he took time out to visit her for lunch. As he approached her house, he was involved in an automobile accident with George. George sued both Joe and his employer. Explain the likely outcome. 114) Joe was an insurance broker and one of his clients, Sam, had a house that he wanted to 114) ____________ insure. As was his normal practice, Joe got into his car and drove past the house to determine if all was as stated by the client. In the process of doing so, he struck a pedestrian crossing the street in a crosswalk, because he was distracted by his examination of the house. The injured pedestrian sued not only Joe, the insurance broker, but the client as well. Explain the likely outcome.

115) Give examples of three areas of employment relations that have been controlled by legislation.

115) ____________

116) Give examples of three areas that are controlled by the employment standards legislation.

116) ____________

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117) Explain how the Workers' Compensation Act modifies the common law position of injured workers.

117) ____________

118) Which level of government has the authority to pass collective bargaining type legislation?

118) ____________

119) What is the significance of a union becoming certified?

119) ____________

120) How is certification obtained?

120) ____________

121) Give three example of unfair labour practices on the part of the employer.

121) ____________

122) Joe was an employer, and he heard that the employees were considering joining a union to be certified. He called them together and stated that, if he had to pay union wages, he couldn't keep the business going and would probably have to close it down. The union immediately charged him with having committed an unfair labour practice. Explain the legal position of the parties.

122) ____________

123) Distinguish between arbitration and conciliation or mediation.

123) ____________

124) What is the minimum period of time for which a completed collective agreement can be in force?

124) ____________

125) Indicate what is meant by the following terms: union shop, closed shop, agency shop, check off and maintenance of membership.

125) ____________

126) ____________

127) What conditions must be met first before the employees can go out on strike?

127) ____________

128) Distinguish between a rights dispute and an interest dispute.

128) ____________

129) "Lawful picketing allows employees to block others from entering their employer's place of business." Explain the accuracy of that statement.

129) ____________

130) Explain why picketing can be effective.

130) ____________

131) What is meant by secondary picketing?

131) ____________

132) "Once a picket line is properly set up, no one can cross it." Explain the accuracy of that statement.

132) ____________

133) What significant differences are there between the rights associated with public sector employees and those associated with private sector unionized employees?

133) ____________

134) What obligations does a union have towards its membership?

134) ____________

135) What is the effect if a contractual term does not comply with the minimum standards set out in employment standards legislation?

135) ____________

136) What is the three-part test used to evaluate if an occupational requirement is justified?

136) ____________

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126) Distinguish between a strike and a lockout.

137) Distinguish between the terms bargaining agent and bargaining unit.

137) ____________

138) To what does the term "check-off provision" refer?

138) ____________

139) Explain what it means to bargain "in good faith".

139) ____________

140) To what does the term "grievance process" refer?

140) ____________

141) Picketing by striking employees not just of their own workplace but also of other locations where the employer carries on business is known as ________.

141) ____________

142) An option in a collective agreement enabling employees to retain the right not to join the union, though hey are still required to pay union dues, is known as ________.

142) ____________

143) Why should employers avoid the temptation to make an employee so uncomfortable he will quit?

143) ____________

144) Prejudice or bias exercised against a person or class for the purpose of correcting a pattern of discrimination against another person or class is known as ________.

144) ____________

145) The correction of employment situations where there has been a tradition of racial or gender imbalance is known as ________.

145) ____________

ESSAY. Write your answer in the space provided or on a separate sheet of paper. 146) Discuss why it is significant to find that an employment relationship exists and how such a relationship is

determin ed. 147) Discuss the termination of employees and the notice to which they are entitled. 148) There are significant examples of statutes that interfere with the free contractual nature of the employment relationship or otherwise compensate for the inadequacies of the protections given to employees under the common law. Discuss several examples of these statutes in terms of the objectives to be accomplished and whether these objectives have been met. 149) Discuss the organization process imposed by labour statutes. In your discussion, comment on the objectives of the legislation and whether those objectives have been met. 150) Discuss the role of strikes, lockouts, and picketing, and whether or not they have any place in our present society. 151) Discuss the legality of mandatory retirement in the context of human rights. 152) Discuss the recent developments in human rights law as they relate to the area of employment. In your answer, refer to recent judicial decisions.

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1) B 2) A 3) C 4) B 5) A 6) A 7) A 8) C 9) C 10) A 11) B 12) E 13) D 14) C 15) B 16) D 17) B 18) E 19) B 20) E 21) C 22) A 23) D 24) C 25) D 26) B 27) B 28) C 29) A 30) D 31) B 32) E 33) E 34) D 35) E 36) D 37) C 38) A 39) E 40) E 41) B 42) B 43) A 44) A 45) E 46) B 47) B 48) C 49) B 50) A 51) E

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52) B 53) C 54) B 55) D 56) E 57) D 58) B 59) E 60) D 61) D 62) D 63) B 64) C 65) B 66) TRUE 67) FALSE 68) FALSE 69) FALSE 70) FALSE 71) FALSE 72) TRUE 73) FALSE 74) FALSE 75) TRUE 76) FALSE 77) FALSE 78) FALSE 79) TRUE 80) TRUE 81) FALSE 82) FALSE 83) FALSE 84) FALSE 85) FALSE 86) FALSE 87) FALSE 88) FALSE 89) TRUE 90) FALSE 91) TRUE 92) TRUE 93) FALSE 94) FALSE 95) TRUE 96) There are two tests for employment. One is the control test--can the employer tell the employee not only what to do but how to do it? If yes, then an employment relationship exists. Second, the organizational test--if the employee is an integral part of the organization of the employer, he is an employee, even if he has some degree of independence. 97) In common law, the main significance is that an employer is vicariously liable for the wrongful acts of an employee while doing his job, and the principles of wrongful dismissal, etc., apply. 98) The relationship of an employee and an independent contractor are mutually exclusive, but agency involves a different function, that is, acting on behalf of the person you represent, the principal. That agency relationship can

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found in either an employment relationship or an independent contractor relationship. 99) To pay wages, provide a safe workplace, provide good working conditions, offer benefits where required, reimburse for expenses, provide direction. 100) To follow any reasonable directions, treat the property of the employer carefully, carry out his responsibilities in a reasonable manner and with competence, have the skills claimed, be punctual. 101) The employer is free to dismiss an employee except in certain circumstances, providing he gives proper notice. Those circumstances are where to do so would violate human rights legislation or where there is a contract requiring him to do otherwise, e.g., collective agreement. 102) He must give reasonable notice, or pay in lieu of notice; he is free to make such a dismissal subject to any collective agreement or contract that states otherwise; and he must not do so in violation of human rights legislation. 103) Reasonable notice. This varies under the circumstances, but may be as long as one or two years. 104) The Employment Standards Act sets a minimum, and if the common law of reasonable notice is greater than this, the common law obligation will prevail. 105) Since the employee has agreed to one week's notice, that agreement will usually prevail over the common law requirement of reasonable notice, but the one-week notice provision may be void because of the statutory provision in the Employment Standards Act or its equivalent. In that case, the common law provision of reasonable notice would prevail. 106) For just cause. 107) Chronic absenteeism, consistent tardiness, open disobedience, habitual negligence, incompetence, immoral conduct, dishonesty, or in some cases, disloyalty. 108) It is not "just cause" for an employer to dismiss because he has no work for the employee to do. In these circumstances, the employer must still give proper notice. Joe will be able to sue successfully for wrongful dismissal. 109) This is an example of constructive dismissal, and Joe would have been entitled to reasonable notice. Although there is some debate about this, Joe will likely be successful in his wrongful dismissal action. 110) He must mitigate his losses, and so the court will take into consideration any income that he's earned during that notice period or, in fact, any income that he should have earned had he tried to find work, and deduct that from the total award given. 111) The employer is responsible for torts committed by an employee during the course of the employment. 112) In fact, George must sue both the employee and the employer, not just the employer. Since this action was done in the course of the employment, if he sues both of them, he will be able to collect against the employer as well (who usually has more assets). 113) Joe will be liable as the cause of the accident, assuming he was negligent, but the employer will not be liable. Joe was on a "frolic of his own" and not in the course of employment. 114) Joe is an independent contractor. Under these circumstances, there is no employment relationship between him and his client and so no vicarious liability. The client will not be liable under these circumstances. 115) Wages, hours of work, termination, employment standards, discrimination, child labour, workers' compensation, health and safety, and employment insurance. 116) Hours of work, notice upon termination, minimum wage, overtime, pregnancy leaves, adoption leaves. 117) This is a no-fault insurance scheme where injured workers claim against an insurance fund rather than sue the employer or the employees who may have caused the injury. The worker gives up the right to any compensation from the employer or other employees. 118) Both the federal and the provincial, depending on the type of work that's being done. 119) Once a union obtains certification, they are the official bargaining agent on behalf of the employees, and the employer must bargain with them to the end that a collective agreement is created. 120) The union representatives attempt to get the employees to sign up as members of that union. When a certain percentage have joined, usually 45%, they can apply for certification. In most instances, a certification vote is held, and if over 50% of those voting choose certification, the union is certified. In some provinces, if over a certain amount joins (e.g., 55% in British Columbia), the union can be certified automatically without a vote. 121) Threats or coercion of employees, threats of dismissal for joining trade unions, changing working conditions to discourage people from voting for the union, intimidation, firing people who join unions. 122) Historically, this has been classed as an unfair labour practice because it intimidates the employees and discourages

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them a union. However, today, because of the freedom of expression requirements in the Charter of Rights and Freedoms, votin it's likely that this degree of the employer expressing his opinions, providing they really are his opinions, is g for allowed. 123) Conciliation or mediation involves a third party trying to assist the parties to come to a decision or agreement between them. Arbitration involves a third party making a decision for them, which is binding on them. 124) One year. 125) Union shop: When someone is hired, he is then required to join the union. Closed shop: Someone cannot be hired unless he is already a member of the union. Agency shop: An employee does not have to join the union, but must still paid union dues. Check off: The agreement provides that the dues to be paid to the union will be deducted by the employer from the employee's paycheque before the employee receives it. Maintenance of membership: Union members must pay dues and maintain their memberships, but new employees need not join the union. 126) The strike occurs when the employees withdraw their services. A lockout occurs when the employer refuses to let the employees work. 127) The employees must hold a strike vote. A specific period of notice must be given (e.g., 72 hours in British Columbia). The collective agreement must have expired and the parties must have attempted to bargain in good faith. 128) An interest dispute occurs when the employer and the employees disagree as to what ought to be contained in the contract. In effect, they are negotiating for a new contract, and it's only under these circumstances the parties can strike or lockout. A rights dispute is a dispute that arises over the interpretation or application of the contract, and such disputes must be arbitrated or settled some other way. 129) Picketing only allows for the picketer to try to persuade others from entering those premises. No physical force can be used to block others from entering. 130) There is a strong union tradition (but no legal obligation) where union members will not cross another union's picket lines; thus, a close-down of a business can be very effective. 131) Secondary picketing is the picketing of other locations where the employer carries on business rather than the specific place where the employee who's striking is employed. 132) There is no legal obligation to honour a picket line. If you want to cross it, you have a right to. 133) Quite often, public sector employees by legislation can't strike, or their ability to strike is severely restricted by essential services legislation. 134) They have a duty to represent the interests of their employees in dealings with the employer. They have an obligation to be a democratic organization, not to participate in any kind of discrimination, and are otherwise subject to human rights legislation. 135) Such terms are a nullity, and will be void. 136) Once the complainant shows that a standard is discriminatory, the employer must prove (a) that there is a rational connection between the test and the performance of the job; (2) that the test was adopted under an honest and good-faith belief that the standard was necessary; and (3) that the standard is reasonable necessary to accomplish the employer's legitimate purpose. 137) A bargaining agent is a body certified to act on behalf of a group of employees or employers; a bargaining unit is a group of employees who have been certified. 138) A provision in in collective agreement whereby employees agree to have employer deduct union dues from payroll. 139) This is the characteristic of bargaining in which the parties make every reasonable effort to reach an agreement. 140) This is the procedure used for settling disputes arising under a collective agreement. 141) Secondary picketing 142) Rand formula (or agency shop) 143) The employer could face a lawsuit for constructive dismissal. 144) Reverse discrimination 145) Employment equity 146) Aside from the obvious points that taxes have to be withheld and employment insurance premiums and workers' compensation assessments paid, the main thrust of this question relates to vicarious liability. Students should demonstrate an understanding of how vicarious liability works. That is, they should show that when an employee commits a tort in the course of the employment (while doing what he was employed to do as opposed to simply

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duri compensation from both the employee who committed the tort and also the employer. In most situations, it is not ng difficult to tell if the person committing the tort is an employee, but employers often try to insulate themselves from work this kind of liability by making the employee look like an independent agent (usually paid on commission or by the ing job). hour An important aspect of this question is distinguishing between employees and independent contractors. s), Students should talk about the control test, where the court will look at the degree of control exercised by the then "employer" over the "employee"; if it is sufficient, and the employer can tell the employee not only what to do but the how to do it, then an employment relationship exists. If there is little control, students should then look at the victi organization test. This has been developed quite recently and will hold a person to be an employee where they are m an integral part of the employer's organization and working for no one else at the same time. Note as well that in can determining whether a person is an employee or not for a particular statute such as income tax or employment seek insurance, you have to check with the governing statute itself to see if a definition of employment is included. 147) Discussion: This is the main aspect of master-servant law, and students should demonstrate an understanding of not only when notice is required but also how that notice is calculated. Of course, no notice is required where there is just cause for the termination or just cause for leaving, and students should spend some time on what constitutes just cause. Good students will even examine an area like incompetence and indicate why it is so difficult to terminate a long-serving employee for incompetence. Secondly, if there is no just cause and the employment contract specifies how much notice a person is entitled to upon termination, that contractual provision will apply. Good students will note, however, that if this contractual notice is less than the minimum provided for in statute (Employment Standards Act), that contractual provision will be void. The main thrust of the answer should be aimed at a discussion of the common law requirement of reasonable notice and how this is determined. The courts will look at the length of service, the age of the employee, the level of the job (more senior, more notice), and the difficulty in obtaining other employment. These factors together will determine how much notice is necessary, and this amount of notice can extend to up to two years for long-serving and senior employees. Good students will also note that, where the termination involved malicious conduct or defamation on the part of the employer, the practice is to extend the notice period. Of course, the court will always be awarding damages, and these damages are calculated on the basis of the notice the employee should have been given. Note that in these circumstances the employee has a duty to mitigate his loss by finding another job, and the damages awarded will be reduced by this mitigation. It might also be noted that what the employee will be offered when leaving will usually be considerably less than what the court will be willing to give as compensation. This may still be attractive to the leaving employee because there will be no legal fees attached and no reduction because of mitigation, and the employee will get the money right away. It should also be mentioned that the employee also has an obligation to give notice, but what is reasonable in these circumstances is usually considerably less. Students should also discuss the operation of the Employment Standards Act provisions and how they only set a minimum amount of notice, and that the common law notice (or that set out in a collective agreement) will prevail. 148) This is meant to have students examine the various aspects of employment welfare legislation and especially the provisions of the Employment Standards Act. Students should at least note employment insurance and workers' compensation. I would expect human rights legislation to be examined in a little more detail, but the emphasis should be on the impact and effect of the Employment Standards Act or the equivalent in place in that jurisdiction. Students should go over these provisions, listing a number of areas covered such as hours of work, minimum wage, pregnancy and other leaves, termination notice, etc. For whatever legislation is discussed, students should try to identify the problem that is being remedied by the provision in the statute. For example, with minimum wage, the problem is obviously the tendency of paying some people a wage below the poverty line and taking advantage of desperate people. But students should also look at the downside. It can be argued that such minimum wage legislation actually denies people jobs because marginal employers cannot afford to pay the employees more, and it drives some employers out of business. This is usually the argument that is raised when there is a movement to increase the minimum wage. I would expect the student to do this kind of analysis for the various statutes and provisions they raise as examples of legislation designed to limit the power of employers or to redress problems in the work force. 149) Most of the violence and confrontation that historically took place in labour relations happened when a union was

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tryin These recognition disputes led to considerable conflict, and it was this problem that was successfully addressed by g to the Wagner Act of 1935 in the U.S., which forms the basis for most of the trade union legislation in place in Canada be today. Employers resisted union forces trying to tell them how to run their business, and refused to deal with them reco no matter what percentage of the workforce they represented. Unions, on the other hand, would organize strikes gniz and other forms of confrontation with the employer to force recognition, even when they had only a small ed percentage of the workforce supporting them. by a Modern legislation takes the matter out of the hands of the employers and recognizes the employees' right to parti join a union and be represented by a union in dealing with the employer, if they so choose. The employer has no cular say in the realization of this right. (Today, because of the changes brought about by the Charter of Rights and empl Freedoms, which guarantees freedom of expression, employers are allowed to express their opinion on this but not oyer to interfere.) Where the employees have chosen to join a union, a certification vote is held. To apply for such a vote, as the union must show that they have signed up at least a certain percentage of the work force (45% in B.C; varies the with the jurisdiction). Then a supervised vote is held, and if over 50% of those voting choose to be represented by a barg union, the union is certified as the official bargaining agent for the employees. The employer then has to negotiate ainin with that body to the end of reaching a collective agreement. In some jurisdictions, such as B.C., if the amount g signed up exceeds 55%, a vote need not be taken, and the union is automatically certified as the bargaining agent agen for the employees. These numbers all vary from province to province, and many other provisions of the legislation t for vary as well, but the basic approach to certifying trade unions is the same in most jurisdictions. the Most people feel that the objective of the legislation should be to be as fair as possible to both the employer and empl employees, and it is usually argued that these statutes go too far in taking away the power of the employer. But if oyee the objective was to prevent the violence and confrontation, then this certification process has gone a long way to s. accomplish that goal. 150) Students should first explain the difference between a strike and a lockout and demonstrate under what circumstances strikes, lockouts, and picketing can take place. The only time a strike or lockout is now permitted is at the bargaining stage, where the parties are trying to negotiate the terms of a new collective agreement (this is called an interest dispute). All other types of disputes are dealt with through the certifications process (recognition and jurisdictional disputes) or through the arbitration and grievance procedures embodied in the collective agreement itself (rights disputes). Even then, when a strike or lockout does take place, what the parties can do is severely limited. In many jurisdictions, replacement workers cannot be hired. Other workers usually have the right to respect the party on strike and not cross picket lines, etc. Notice has to be given before the strike can commence, and even then the parties (or government) can usually require that votes be taken on the last offer by the employees or that mediators be called in and the right to strike or lockout be suspended until they finish their work. Picketing can only be done at certain locations and then can only be persuasive. No violence or physical confrontation or intimidation is permitted (although in fact it often happens). All of these things restrict strikes and lockouts and picketing (the use of power) to a very limited area, and the potential or threat of its use forms the basis of the power for each side that leads to a negotiated settlement in most cases. Students should discuss all of these factors before giving an opinion of whether strikes and lockouts should be allowed. They can clearly choose either side in the debate, but it should be clear that they are arguing from a clear understanding of these important factors. 151) There are two sides to the mandatory retirement issue. On the one hand, forced retirement at 65 years is often justified as being good social policy for a number of reasons, including that it opens up jobs for the youth market. On the other hand, retirees may be affected in a profoundly negative way. Students should note that age discrimination is generally prohibited in the protected area of employment. Provincial employment standards and human rights legislation often exempts mandatory retirement by defining "age" as being 18 years or older and less than 65 years. Where legislation permits mandatory retirement policies, the Supreme Court of Canada has held that this not violate the Charter of Rights and Freedoms (as a reasonable exception under s. 1). To have a mandatory retirement policy where the retirement age in question is less than 65 years, however, must be justified (based on the particular circumstances of the employment). Good students will note that while mandatory retirement schemes may be legal, there are often practical and business reasons that make keeping willing employees on past the age of 65 years worthwhile. 152) Students should note that one area of employment law that is growing in significance is that of human rights. While

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the human rights legislation prohibits discrimination in the area of employment on the basis of race, national or ethnic pass origin, colour, religion, gender, sexual orientation, and in some cases, age marital status, family status, physical or age mental disability, and pardoned criminal convictions. Students should note that human rights tribunals have the of power to hear complaints. the Many new implications for human rights law are emerging in the employment context (which includes the Chart pre-employment application and interview process). In terms of developing areas, employers should be er of especially careful to develop policies that avoid unjust discrimination against same-sex couples, that accommodate Right workers with disabilities, and that help to curtail harassment in the workplace. s and Some important decisions in this area include the Supreme Court decision in Robichaud v. Canada (Treasury Freed Board) in which an employer was found liable for discriminatory acts of employees, the BC Court of Appeal oms decision in Health Sciences Assn. of British Columbia v. Campbell River and North Island Transition Society in which does discrimination on the basis of family status was successfully argued, and the Meiorin case in which the Supreme not Court of Canada established a three-part test used to evaluate if an occupational requirement is justified appl y direc tly to most empl oym ent situa tions, it has had an impo rtant indir ect effect on hum an right s statu tes (whi ch must com ply with the Chart er). Prov incial and feder al

Chapter 11 1) If an agent breaches his duty to his principal, his principal can sue the agent successfully for A) breach of the agency agreement. B) breach of warranty of authority. C) breach of agency act. D) wrongful representation. E) the tort of deceit. 2) An agency relationship can be created by: A) Estoppel B) Actual authority C) Apparent authority D) Ratification E) All of the above

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3) Although Jason had participated in the flower auction for the last nine years as an agent for Thos. Holt's Ltd. (Holt), with the authority to buy whatever he felt the store needed, this day he was given express instructions to buy only cut flowers. When flats of young camellia bushes with a rare gold flower were being sold, Jason bought them on behalf of the company. Which of the following is true? A) Holt is not bound since Holt didn't ratify the contract. B) The key to determining whether or not Holt is bound by the contract is this: in the circumstances, should the auctioneer have confirmed with Holt the extent of Jason's authority? C) Holt is not bound by the contract, because Jason is in breach of his agency agreement. D) Holt is estopped from denying Jason's authority. E) Holt is not bound by the contract, because Jason's authority was expressly restricted.

4) With respect to the formation of agency by estoppel, which of the following statements is true? A) The issue of apparent authority arises only if a person acts as an agent when he has express or implied authority. B) When a third party suspects that the agent he deals with has no authority, there is no obligation on him to question the agent's alleged authority. C) If the principal tells an agent specifically not to sell something and the agent, in disobedience of those instructions, sells it anyway, the principal may be bound by the contract because of estoppel. D) When a party represents, by words or conduct, that someone is his agent, that party can later deny liability on a contract made for him by that agent on the basis that no express agency agreement existed. E) When a party terminates an express agency agreement with his agent and notifies third parties with whom that agent normally dealt, that party will be liable on a contract made for him by that "fired" agent. 5) Which of the following statements is true with regard to an agent's duties? A) An agent cannot act for two principals even with the knowledge and consent of those principals. B) A real-estate agent may buy property from a third party if it is at a good price and then sell the property to his principal at a higher price. C) An agent need not disclose all relevant information to the principal. D) An agent must always scrupulously account for moneys coming into his hands on behalf of his principal. E) An agent is not entitled to the agreed-upon commission and reasonable expenses undertaken on behalf of his principal in carrying out his duties. 6) Sam hires Joe to negotiate and sign a contract with Ken on Sam's behalf. Which of the following is true?

A) If Joe acts outside his express authority and negotiates and signs the contract with Ken, Sam may not be a party to that contract. B) If Joe acts outside his express, implied, and apparent authority, he could be sued by Sam, but not by Ken, because he has no contractual relationship with Ken. C) If Joe acts within his apparent authority, but outside his express or implied authority, Sam will be bound by the contract, but may sue Joe for breach of his agency contract. D) If Joe acts outside express, implied, and apparent authority, Sam is not bound by the contract, even if he ratifies the contract. E) If Joe acts outside his implied and express authority, Sam will owe him for his services. 7) If you hire Gnowsky to act as your agent, which of the following is true with regard to the duties which he owes to you? A) Gnowsky need not use reasonable care, skill, and diligence in his service to you. B) Gnowsky need not tell you everything relevant to his task that a reasonable person would consider might affect your decision making. C) Even when Gnowsky is acting as your agent, he need not put your interest above his own. D) An agent may delegate his authority without the authorization of his principal. E) His failure to obey you and to act within the authority given him would allow you to sue him for breach of contract.

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8) Identify the true statement concerning the law of principal and agent. A) An agent who puts himself in a position where his interests conflict with those of his principal is in breach of his duties even though no actual harm comes to his principal. B) An agent can never be liable to the third party himself while the principal will bear no such liability. C) An agent with no express authority can never bind his principal into a contract with a third party. D) The principal and his agent owe each other the same duties. E) Agency is only created by way of a contract.

9) Which of the following is an example of an agent's breach of fiduciary duty to his principal? A) An agent negotiates a higher price than the highest sale price reasonably possible at that time. B) An agent for the vendor makes a profit on the transaction he negotiated for his vendor above his commission and doesn't tell his principal/vendor. C) An agent for the vendor collects a commission from the purchaser but told his principal and obtained his consent. D) The agent takes presents from the third party and passes them on to the principal. E) An agent discloses to his principal/vendor that he is giving some of his commission to the purchaser to induce the purchaser to sign the contract that the principal/vendor wants. 10) Which of the following is true with respect to the agency relationship? A) An agent's apparent authority may be implied from the position that the agent holds in the employer's organization. B) An agent's authority is limited to whatever authority the principal specifically gives the agent. C) When a principal has specifically limited the authority of the agent, that agent can never bind the principal in a contract, even if the agent acts outside his authority. D) An agent acting gratuitously can never bind the principal. E) Actual authority is the authority the principal has implied in conversations with a third party. 11) Which of the following is correct with respect to the ratification of an agent's contracts? A) When a contract entered into by an agent is ratified by a principal, it commences at the time the principal ratifies the contract. B) The agent can set a time limit within which the ratification must take place. C) A principal can only ratify an agreement entered into by an agent if his name has not been used.

D) A contract can only be ratified if the principal was not able to enter into the contract himself at the time of ratification. E) A principal can ratify a contract where the agent has gone beyond both his actual and apparent authority. 12) Which of the following is correct with respect to an agent's performance of his duties? A) When an agent fails to act in the best interest of the principal and is an independent contractor, this is just cause for constructive dismissal. B) The agent may profit at the expense of the principal, if the agent comes into some previously unknown information. C) The agent must never compete with the principal. D) The principal need not reimburse the agent for any reasonable expenses incurred in the process of performing the agency responsibilities. E) The agent must never take advantage of the third party.

13) In the process of assembling land for Ace Construction Ltd. to build a supermarket, Joe entered into a contract with the seller Sam. In which of the following situations would Sam be able to sue the principal Ace? A) Where Joe exceeded his actual authority but where Ace had led Sam to believe Joe had the authority. B) Where Joe was acting outside his authority and did not disclose that he was acting for the Ace. Sam was aware of Joe acting independently at the time he entered into the contract. C) Where Joe disclosed that he was acting for Ace but made the contract "subject to ratification." D) Where Joe revealed that he was acting as an agent, but did not disclose that he was acting for Ace in particular, and exceeded both his apparent and real authority. Ace did not ratify the contract. E) Where Joe exceeded his apparent and actual authority.

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14) Which of the following is an example of an agent as opposed to an employee? A) Joe worked as a mechanic for Smith Used Cars Ltd. B) Joe worked as a delivery driver for Smith Textiles Ltd. C) Joe worked as the purchasing agent for Smith Textiles Ltd. D) Joe worked in the mailroom of Smith Textiles, sorting mail. E) Joe worked as a janitor fo Smith Textiles.

15) Which of the following is a violation of the fiduciary duty of a partner? A) Where one partner learns of an investment opportunity in the field of the partnership and tells the partners. The partners decline on the opportunity, so he takes advantage of it himself B) Where one partner uses information that he has gained from the partnership for the advantage of the partnership. C) Where a partner uses the partnership property for partnership business. D) When one partner starts another business without the consent of the other partners which is the same as or in competition with the partnership business E) Where one partner carries on an business unrelated to the partnership with the permission of the partners 16) Which of the following statements is true with respect to the obligations in a partnership relationship? A) When one of the partners owes a personal debt not associated with the partnership, that creditor has a claim on his portion of the assets of the partnership. B) In the absence of agreement to the contrary, the partnership is dissolved when one of the partners serves the others with notice to the effect that he wishes to continue.. C) A partnership can be dissolved only by court order. D) In the absence of agreement to the contrary, when one of the partners is injured, the partnership is dissolved.

E) When a partnership is dissolved, each partner can only be forced by a creditor to pay a portion of the debt equal to his share of the capital contributed. 17) Which one of the following statements is correct with respect to sole proprietorships? A) The sole proprietor need not adhere to any licensing and government regulations. B) The sole proprietor is responsible for the torts committed by an employee that take place during the course of business. C) The sole proprietor must consult with the other owners before making any major decisions regarding the business. D) The sole proprietor has the same extent of liability as a shareholder. E) The sole proprietor has limited liability. 18) Which one of the following statements is correct with respect to the creation of a partnership agreement? A) A partnership can be created only by contract. B) For a partnership to exist, the relationship giving rise to it must be of an ongoing business nature, not a one-time promotion. C) Where two people agree to enter into a partnership, there is no partnership created unless all of the elements of a contract are present. D) For a person to be a limited partner, there must be at least two general partners. E) A partnership can be created by an intention to share the revenues between the partners.

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19) Which one of the following is correct with respect to the rights of partners unless they have agreed otherwise? A) Only the partners that have contributed the largest capital amount have the right to share in management. B) Partners can sell their share of the partnership to another person without the agreement of the partners. C) No major decision can be taken without a majority vote agreement of all the partners. D) Personal expenses incurred by the partners in the course of business are reimbursed. E) All profits are shared equally between the partners.

20) Alison told her partners in writing that she would be leaving the law partnership at the current partnership year-end, January 31, 2014. At year-end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations. In February 2014, one of the remaining partners absconded with $2,000,000 held for Mr. Smith, a long-time client, taken in trust in September 2013. Mr. Smith sued the partnership, the partners, and Alison. Based on the foregoing facts, which of the following statements is true? A) Even if Alison gave Mr. Smith actual notice of her leaving the partnership, and he agreed that she would no longer be obligated for the partnership's obligations, she will can be held liable to Mr. Smith. B) She has no right to recover any funds she has to pay from her former partners. C) Only the remaining partners, not Alison, have the right to recover anything they have to pay from the absconding partner. D) After the partnership assets are exhausted, Mr. Smith can recover on his judgment from any one of the remaining partners but not Alison. E) Mr. Smith can recover on his judgment out of the partnership assets. 21) With regard to liability of partners, which of the following is true? A) A general partner who retires from the partnership by giving notice of his leaving to the other partners could still be found liable for debt pursuant to a contract made when he was a partner. B) A general partner has limited liability for any loss suffered because of the negligent act (e.g. omission) of one of his partners. C) A general partner could not be liable for losses suffered by a client because of misapplication of funds unless he knew about or took part in the misapplication.

D) The partnership, and thus the partners, are liable for any loss suffered because of a tort committed by its employee outside the course of his employment. E) A limited partner has unlimited liability beyond the amount of his initial investment.

22) Dave and his sister Chris made unusual kites. They both created the designs; Dave made the patterns. Friends had always wanted to buy their kites. After Chris completed a college marketing program, she began to talk to Dave about going into business selling kites. Ed, a friend of Chris's, wanted to be involved. He said he could buy the supplies and do the other odd chores. They decided to try to make a go of it and to share the profits as follows: Dave 35%, Chris 35%, and Ed 30%. Things went well for 7 months. They even hired George to deliver kites to the increased number of stores buying them. Unfortunately for business, Chris and Ed became romantically involved. This was followed by a heated dispute. Ed disappeared with $1,300 collected from customers and $600 worth of supplies, which he had bought on behalf of the business from their regular supplier. At about the same time George negligently broke a customer's $200 lamp when he was delivering a kite. On these facts, which of the following is true? A) Only Chris would be responsible Ed's misapplication of the customers' money. B) If the partnership funds are not sufficient to pay the partnership debts, the creditors can look to the individual partners for payment. C) Since Dave, Chris, and Ed did not sign a partnership agreement, they are not considered a general partnership. D) When Ed buys supplies for the business on credit, he is acting as an agent for the business and he alone is liable for those debts. E) Although George broke the lamp while delivering kites, the partners are not liable, because it was George's own fault.

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23) Joe and Sam were in business school together in college, and after they graduated decided to open an ice-cream store in a mall together. They had skipped the classes where they were taught about different methods and forms of carrying on business and so gave no thought as to how they would structure their relationship. Which of the following is true with respect to the legal positions of Joe and Sam? A) If Sam opens up another ice-cream store in another mall in a nearby city without telling Joe, he must share any profits he makes with Joe. B) Sam and Joe are not in a partnership since they have not specifically agreed to be. C) If Sam were to find a great deal on anchovy ice-cream and purchase 2,000 litres of it, only Sam would be liable for the debt incurred as a result of the purchase. D) If a customer were injured because of poorly kept food and Sam did not have the assets to pay his half, Joe would only have to pay for his half of the damages suffered. E) If Sam opens up another ice-cream store in another mall in a nearby city without telling Joe, Joe would be liable for any losses he suffered along with Sam. 24) Fred and Carole were trying to create a list of the pros and cons of sole proprietorship, partnership, and corporation to determine the best structure for carrying on business. Which of the following is true regard to being a general partner? A) Every general partner faces limited liability for the debts of the partnership. B) A partner is liable for only the amount than he or she invested in the partnership firm. C) Each partner is an agent for every other partner and of the firm itself, so a partner may be liable for the contracts made by an incompetent partner. D) A partner is liable to pay from his personal assets only when the a partner has committed a criminal act. E) Retiring from a partnership by giving notice to his partners frees a partner from liabilities he faced while being a partner of the firm. 25) Which of the following is not an agent in the eyes of the law? A) The paperboy who sells subscriptions for the Globe and Mail

B) The cashier at London Drugs C) A computer programmer hired by a real estate agency to help computerize the office by buying appropriate software and hardware for the company and adapting the programs to fit the agency's needs D) An editor for the Gazette who writes some of the articles and proofreads the final draft of the paper E) A real estate salesman working for A.E. LePage 26) A recent article in the Lawyers Weekly began: "Step aside, wrongful dismissal: the law of fiduciary duties is where you'll find the hottest legal action these days"! Which of the following is false with regard to the meaning of "fiduciary duty"? A) Fiduciary law governs situations in which one party places trust and confidence in another who consents to act in accordance with that trust. B) In some fields, fiduciary duties are imposed both by the common law and by statute. C) The principal owes the agent a fiduciary duty just as the agent owes it to his principal. D) Fiduciary law is based on the principle of acting with utmost good faith. E) An agent must place the interests of his principal above all except the law.

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27) Grant got a job with Ace Computers Co. (Ace) as a salesman. He was given a course in salesmanship by Ace, business cards, and several of the company's order forms and brochures, and he was assigned an area in which to sell computers door-to-door on behalf of Ace. Grant would be paid on a commission basis. At his first house, he was so excited by the interest shown that he forgot the explicit instructions he had received -only cash sales permitted. As agent for Ace, he sold a computer on time to a 70-year-old lady. She was to pay $25 per month for eight years because that was all she could afford. When Brown, sales manager of Ace, heard of the deal, he fired Grant and said he would not go through with the contract. However, the little old lady liked the computer very much and insisted that Ace provide her with one within the week as required by the contract. Which of the following accurately describes the legal position of the parties? A) Ace would not be bound because Grant failed to follow the exact instructions he had received. B) Ace would be bound because the agent Grant acted within his apparent authority. C) Grant had implied authority to sell computers on time; selling computers necessitates selling on time, despite the prohibition. D) Ace is not bound by the contract because no representations of authority were made by it to the little old lady. E) Brown is personally liable to the old lady because he is the employee of the company who decided not to honour the contract. 28) An agent contracted with a third party on behalf of a principal, but went beyond both his actual and apparent authority. The third party was never paid. Which of the following indicates the legal position of the third party? (He = third party) A) Since the agent had no authority, the third party has no remedy against anyone. B) He can sue the agent for the tort of nuisance. C) He can ratify the deal and force the principal to go through with it. D) He can successfully sue the agent for breach of warranty of authority if the principal fails to ratify the contract. E) He can successfully sue the principal because the principal is always liable for the actions of his agent. 29) With respect to ratification, which one of the following statements is true? A) When an agent, without the authority of his principal, has entered a contract for three computers and two printers, and the principal wants the computers but not the printers, he can ratify part of the contract. B) The only limitation on a principal's right to ratify is the power of the third party to set a time limit within which that ratification must take place. C) The ratification by the principal must be in writing to be effective.

D) Irving has been given authority to contract for the purchase of 1,000 jade tiles at up to $18 a piece. Instead, he buys from Cassiar Jade Co. 1,200 jade tiles at $18.25 a piece. When Cassiar Jade finds out that Irving has exceeded his authority, it sells the tiles to Interior Designs Co. After Cassiar has sold the tiles, Irving's principal can no longer ratify the contract. E) Ratification is the act of a principal approving a contract when his agent has exceeded his authority or acted without authority, and such approval gives the agent authority retroactively to the time the agent made the contract. 30) Because of an alarming drop in the earnings of Microminds Ltd., Roger, the principal contract negotiator and president of the software development company, called a meeting to discuss productivity and customer satisfaction. At the meeting were Michael, troubleshooter, who helped customers over the phone who needed guidance in using the company's software; Ralph, receptionist and purchaser of the office supplies for the company; Keith and Jason, salesmen, hired on a commission basis, i.e., not as employees but as independent contractors; Mr. Toman, purchasing agent for the Vancouver School Board, an important customer; and Mr. Rice, purchasing agent for Matol Toys Ltd., also a customer. Which of these is an agent? A) Only Roger B) All of them C) All of them except Michael D) Roger, Toman, and Rice only E) All of them except Keith and Jason

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31) Chris was a systems analyst hired to determine the best system for a retail china shop. After a careful analysis of the shop's needs and the available software, Chris presented a written report, which was approved by the owner of the business. Chris was paid his fee and was asked by the owner if he would act as his agent in purchasing the hardware and software recommended in the report. The purchase was not to exceed $40,000 and the commission was to be $1,000. Chris agreed. Read each of the following separately and indicate which is true. A) Chris is entitled to accept a commission from both the seller and the purchaser, as long as the total price paid by the purchaser is less than $40,000 and the hardware and software is comparable to that recommended in the report. B) Chris will not be in breach of his fiduciary duty if he buys the recommended system from a firm in which he has an interest, even if he does not mention that fact to the owner. C) Chris could be in breach of his duties if he delegated the task to someone else. D) If Chris buys the hardware and software himself for $36,000 and sells it to the owner for $39,000, he is entitled to his commission because the price to the owner is still within the price allowed. E) The agreement to act as agent fails to be a valid agency contract because it is not in writing. 32) An agent with no express, implied, or apparent authority to do so identified himself as an agent for his principal, and on behalf of his principal bought a computer. The principal refused to ratify the contract. On these facts, which of the following is true? A) The principal would have to pay for the computer because the agent was an agent for that principal. B) The seller of the computer could sue the agent for breach of contract for saying he was an agent. C) The agent could be sued by the seller of the computer for breach of his warranty of authority. D) The seller could sue the principal for breach of warranty of authority. E) By exceeding his authority, the agent has become the buyer of the computer himself. 33) In certain cases, a third party can hold a principal to a contract even though the agent acted outside the authorization given him by his principal and even though his principal elected not to ratify the contract made by the agent. The third party can enforce the contract because of A) fiduciary duty B) the reasonable agent theory. C) agency by express agreement.

D) the failure of the principal to register the agency agreement. E) the agent's apparent authority. 34) John Agent entered into a contract with Joe Third Party to buy 50 stoves, payment to be made two weeks after John Agent picked up the stoves from Joe Third Party's warehouse. The stoves were picked up, but eight weeks later Joe still had not been paid. Joe found out that John Agent had been authorized to buy 50 stoves for Gord Principal. For some reason, John had not made it clear to Joe that he was acting as an agent, nor had he indicated that he was buying the goods for himself. Under the circumstances, which of the following is true? A) Third Party can elect to recover from either Principal or Agent but not both. B) Third Party can successfully sue both Principal and Agent. C) Third Party can successfully sue only John Agent. D) Third party can ratify the contract with Gord. E) Third Party can successfully sue only Gord Principal.

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35) In which one of the following situations will the transaction not be binding on the principal? A) An employee of a flower shop is sent to the flower market every week to make purchases. This week he is told to buy only roses, but he can't pass up a tremendous deal on daisies and purchases a large quantity of them for the store. B) A real estate salesperson, after disclosing the fact to his client, purchases the house the client is selling for himself. C) A truck driver who is not an agent (no actual, implied, or apparent authority) enters into a contract on behalf of his employer to sell the cargo of ripe tomatoes after the truck breaks down and he can't get hold of the boss. D) A chauffeur, going against specific instructions, purchases a new car for his employer. The employer has done nothing to lead the seller to believe the chauffeur has such authority, but is persuaded by the chauffeur to go for a drive before returning the car. E) A salesman at a men's clothing store has heard a rumor that the store will be going out of business. The boss is out of the store when a customer who has heard the same thing comes in and offers to purchase all of the stock, display cases, and fixtures. The salesman accepts on behalf of the employer.

36) If a third party relies on the principal's representation that the agent has the authority to act, which of the following is true? A) The agent can sue the principal for breach of contract. B) The agent is solely liable for the conduct if it results in injury to the third party. C) The principal cannot claim the agent had no authority. D) The principal can claim the agent had no authority. E) The principal can claim estoppel. 37) Novada worked as a salesperson for White Water Yachts Inc. Yates, who was looking at a 30-foot sailboat called the "Mostly Toad," approached him. Yates asked Novada if the boat has been surveyed (inspected) recently, and he was told that it had been just last year and it was in great shape. In fact, it had never been surveyed and had serious fiberglass delaminating problems below in the bilge. Yates bought the boat, and in the first month of sailing the boat delaminated and sank. Yates and his family survived, but both he and his wife suffered some serious long-term injuries. Which of the following is correct with respect to the legal position of the parties? A) If Novada didn't know what he was saying was false, having mixed this boat up with another, Yates can cannot sue either Novada or White Water for negligence, even if Novada was an independent agent rather than an employee. Salespeople are expected to be enthusiastic. B) Since this is a used boat, this is a "buyer beware" situation, and Yates should have had the boat inspected himself. He has no action against Novada or White Water in these circumstances. C) Yates can only sue White Water if the contract itself specifically referred to a recent survey and this

information

was inaccurate. D) If Novada knew what he was saying was false, Yates could sue Novada and White Water for fraud even if Novada was an independent agent rather than an employee. E) Yates can sue only the agent in this situation, not the principal.

38) Gordon was hired to add CD-ROM capacity to Hank Lo's computer. Gordon was instructed to buy (1) a sound card, (2) speakers, and (3) a CD-ROM drive at ROMready, a firm with which Hank had credit. Hank visited the company and said Gordon had authority to act as his agent for the purpose of buying "computer components." While working on the computer, Gordon decided that Hank needed a new and better-designed mouse and a better printer. Gordon went to ROMready and purchased the mouse as an agent of Hank. Not satisfied with printers available at ROMready, he went to Printerhaven Ltd. and bought a printer "as agent for Hank Lo." On these facts, which of the following is true? A) When Gordon bought the mouse from ROMready, he exceeded his express authority, but Hank would have to pay for it anyway. B) If Hank refused to pay for the printer, Printerhaven Ltd. could sue Gordon for breach of contract; Gordon has bought himself a printer and has to pay for it. C) When Gordon bought the printer from Printerhaven Ltd., Gordon exceeded his express authority, but Hank would have to pay for it anyway. D) If Gordon exceeds his authority, Hank would sue him for "breach of warranty of authority." E) In determining whether or not Gordon could bind Hank in a contract, the law poses this question: Did the acts and words of Gordon lead the company to think that Gordon was an agent for Hank?

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39) Which of the following is correct with respect to the agency relationship? A) An agency agreement in writing and under seal is called a power of attorney. B) Agents are those who act on behalf of others but are not employees. C) No agency can be created without the consent of the principal. D) For an agency contract to be valid, it must be in writing. E) The agency relationship must be created by contract.

40) In which one of the following situations is the principal not responsible for the conduct of his agent? A) When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an independent agent. B) When selling vacuum cleaners for Ace Vacuums Ltd., Joe lied to the customer about the qualities of the vacuum being sold. He was an employee of Ace. C) In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an employee of Ace. D) When driving the employer's car to sell vacuums to a customer, Joe hit a pedestrian. Joe was an employee. E) In his job selling vacuum cleaners for Ace Vacuums Ltd., Joe drove his car carelessly and hit a pedestrian on his way to deliver a vacuum cleaner to a customer. He was an independent agent. 41) A principal is not bound in contract with the third party with whom the agent dealt if the agent is A) within his implied authority. B) within his apparent authority. C) outside his authority but the principal ratified it. D) outside his actual and apparent authority. E) within his express authority. 42) The Court in Steinman v. Snarey found that Mr. Snarey devised and conducted a fraudulent scheme as an agent of Mutual Life. What was the result? A) The doctrine of caveat emptor was applied. B) The company could only be liable if it were shown Mr. Snarey were an employee acting under the

direction of a superior. C) As an agent with authority to enter into this general type of transaction, the company was vicariously liable for his conduct. D) Neither the agent nor the company could be liable, because Mr. Snarey was only an agent, and the company had no actual knowledge. E) Only the agent was liable, because the action taken was dishonest, and therefore outside the scope of the agency relationship. 43) In LeRuyet v. Stenner, Stenner defrauded LeRuyet, who gave him money to purchase a Great West annuity. LeRuyet claimed that Great West was vicariously liable. What did the Court determine? A) The Court held that the test used to determine the existence of authority is whether the victim actually believed the person in question was a representative of another. B) The Court held Great West vicariously liable because the defrauded victim had no way to recover the money from Stenner directly. C) The Court confirmed that the principle of apparent authority no longer exists; only actual authority will suffice. D) The Court determined that Stenner had apparent authority to act for Great West, despite the fact that Great West had made no representations to that effect. E) The Court dismissed the claim of apparent authority because there were no representations made by Great West that would lead a reasonable person to assume Stenner acted as an agent.

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44) In Ocean City Realty Ltd. v. A & M Holdings Ltd., what did the Court hold was a key element in the duty of a fiduciary? A) To disclose all pertinent information related to a transaction considered important by the principal. B) To disclose the identities of all of the agent's other principals. C) To disclose whenever one profits at the expense of one's principal. D) To disclose whenever one is competing with one's principal. E) To disclose whenever one is putting personal interests ahead of the interests of one's principal.

45) Q.N.S. Paper Co. v. Chartwell Shipping Ltd. involved an undisclosed principal situation. The Supreme Court had to determine whether the agent could be successfully sued. What did the Court find? A) The agent could be successfully sued on the basis that the principal was not disclosed. This is always material information that the agent is duty-bound to share with the other side. B) An agent can never be successfully sued, as long as it can proven that the agent was, in fact, representing another. C) An agent is always liable if a principal defaults in its obligations under a contract. D) Because Chartwell was acting as an agent in a commercial context, there was personal liability for that agent on the contract. E) Because Chartwell had made it clear it was an agent, there was no personal liability for that agent on the contract. 46) When an agent's authority is terminated by mutual agreement, what is the impact on the agent's actual and apparent authority? A) Both the actual authority and the apparent authority continue until the third party is notified of termination. B) Both the actual authority and the apparent authority immediately cease. C) The actual authority continues until the third party is notified of termination, but the apparent authority ceases. D) Both the actual authority and the apparent authority continue, because an agent's authority cannot be terminated by mutual agreement. E) The actual authority ceases, but the apparent authority continues until the third party is notified of termination.

47) Claire has been selling her famous cookies on her own to local bakeries. Her cookies are so popular that she needs to hire someone as an employee to help with the packaging and delivery. Claire has taken no formal steps regarding the form of business organization. Which of the following is true about Claire's situation? A) The employee that Claire hires will be liable for torts Claire commits during the course of the business. B) Claire is unable to legally hire an employee until she takes steps to incorporate. C) Claire's liability is limited to the value of the cookie business. D) Claire will be vicariously liable for the torts of her employee committed during the course of employment. E) The employee that Claire hires will be, in law, a partner in Claire's business.

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48) Ravinder is the sole proprietor of a shoe store. He is also a partner in a restaurant, which has recently been sued for negligence after countless people got sick from the Salmon Alfredo dinner special. Which of the following statements is true? A) Because of the concept of limited liability, Ravinder can lose only what he has invested in the restaurant. B) The successful plaintiffs in the restaurant action can only go after the assets of the shoe store if Ravinder was the actual person who prepared Salmon Alfredo on the night in question. C) The shoe store assets will only be available to the successful plaintiffs in the restaurant action if the shoe store is operated by Ravinder in conjunction with the restaurant. D) Although the successful plaintiffs in the restaurant action can go after Ravinder's personal assets, they cannot go after the assets of the shoe store because the shoe store is a separate legal entity from Ravinder. E) If the plaintiffs win their lawsuit against the restaurant, they can look to the assets of the shoe store to pay off the debt.

49) Reese Publishing Inc. hosts a golf tournament. In attendance are Jennifer Reese, the owner, director, and manager of Reese Publishing Inc.; her husband, Aaryn, a professional race-car driver and voracious reader who reads everything Reese Publishing Inc. publishes; her sales force, Laura, Catherine, and Keighla (each of whom signed deals that day); Gena, the office manager, who is responsible for all of the company's office supply purchases. Which of these are agents? A) Only Laura, Catherine and Keighla B) Only Laura, Catherine, Keighla, and Gena C) All of them are agents, except Aaryn D) All of them are agents E) None of them are agents 50) Which of the following is considered to be a separate legal person in law? A) An agency B) A partnership C) A sole proprietorship D) A corporation E) A professional practice 51) Which of the following is correct with respect to sole proprietorships? A) The sole proprietor has unlimited liability. B) A sole proprietorship must be incorporated. C) The sole proprietorship is a separate legal entity. D) The sole proprietor has limited liability. E) Sole proprietorship exists where two or more people carry on business together with a view towards profits.

52) Which of the following is correct with respect to partnership? A) Partners are not agents for each other. B) General partners have limited liability. C) Partnership is a separate legal entity. D) General partners have unlimited liability. E) A partnership can be made up of only limited partners. 53) Which one of the following situations will result in a partnership existing? Assume no corporation has been created. A) Employees are given bonuses because of increased profits. B) Joe pays back a debt to Harry by giving Harry a percentage of the profits from his business. C) Joe and Mary own a house together and share the income from it. D) A lawyer and a real estate agent split the commission. E) Joe and Mary own a shoe store business together and share the profits.

54) Which of the following statements is correct with respect to unlimited liability? A) This means the partner can lose what he has invested but no more. B) Only the partner's share of the partnership assets can be used to satisfy the debt incurred by another partner. C) Each partner can be held responsible for the debts of the partnership no matter how great they are. D) If there are two partners, each partner can be held responsible for an amount equal to but no more than one half of the debts of the partnership. E) The partner cannot only lose what he has invested but can also be required to pay an additional amount equal to what he has invested.

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55) Which of the following is correct with respect to limited partnerships? A) Limited partnership refers to the fact that some partners have limited liability. B) Limited partnership refers to the fact that the partnership can only issue common shares. C) Limited partnership refers to the fact that no more than five people are allowed to be partners in such partnerships. D) Limited partnership refers to the fact that limited partnerships can only carry on in certain kinds of businesses. E) Limited partnership refers to the fact that some partnerships are only created for a limited period of time. 56) Which one of the following statements is correct with respect to sole proprietorships? A) A sole proprietorship involves unlimited liability for the proprietor. B) A sole proprietorship involves limited liability. C) A sole proprietorship is a separate legal entity with one shareholder. D) The sole proprietor is a society under the Societies Act. E) The sole proprietor is restricted to service type businesses. 57) Which of the following is the proper definition of a partnership as set out in the Partnership Act? A) A partnership exists where any business is carried on with a view towards profits. B) A partnership is only created where the partners actually share the profits from a business. C) A partnership is created where a corporation with shareholders is registered with the federal government. D) A partnership exists only where two or more people enter into a written agreement to be partners. E) Partnership exists where two or more persons carry on business together with a view towards profits. 58) Which of the following statements best describes a partnership?

A) Partnerships are created when two or more persons specifically agree to be in partnership. B) Partnerships involve limited liability. C) Partnerships are like any other form of contract; they can only be created when there is consensus between the parties in the form of offer and acceptance to that effect. D) Partnership involves two or more persons carrying on business with a view towards profits. E) Partnerships are only created when they have been properly registered with the government. 59) Which of the following statements is correct with respect to the Partnership Act? A) The Partnership Act sets out provisions that will govern the relations between the partners unless those partners have agreed otherwise. B) The Partnership Act always overrides any provisions contrary to it set out by the partners in the partnership agreement. C) The Partnership Act states clearly that a partnership is only created by specific agreement between the partners to that effect. D) When in conflict, the terms of the federal Partnership Act overrides the provincial partnership acts. E) The Canadian Partnership Act is enacted by the federal government and creates a uniform and cohesive system of partnership law for all of Canada.

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60) In which one of the following situations will a court find that a partnership exists? A) Joe and Mary promote several dances at school and split the profits. B) Joe, a partner in a law firm, dies and Joe's widow takes over Joe's share of the profits. C) Joe sells his business to Harry for $10,000 for the assets and a further $20,000 for good will, the good will portion to be paid at a rate of 20% of the profits from the business until paid. D) Joe is a partner in a shoe store and sells his share of the business to Harry without the consent of his partner. E) Joe and Mary, while in college, purchase a house and share the profits from the rent after deducting expenses.

61) Which one of the following statements is correct with respect to the law of partnership? A) Partners are responsible for any contracts entered into by their partners related to the partnership business. B) Every partner is responsible for every contract entered into by his partner. C) Partners cannot bind their partners in contract without specific written authority. D) Partners are only responsible for contracts entered into by their partnership if the third party knew that the person they were dealing with was a partner in the partnership. E) A partner is responsible for contracts with third parties entered into by their partners only where it has been clearly stated by the partner to the third party that he is entering the contract on behalf of the partnership. 62) Which one of the following statements is correct with respect to the law of partnership? A) A partner is responsible for all torts committed by their partners. B) If a partner commits a tort in his own personal capacity outside of the scope of the partnership business, the victim has no recourse against any of the partnership assets. C) Where a person is injured by the careless action of an employee of a partnership in the course of his employment, that injured person has recourse against the assets of the partnership, but if those assets are not enough, he cannot go against the personal assets of the partners themselves. D) A partner is only responsible for those torts committed by the partner that are committed during the course of the business. E) Even where the tort is committed outside the scope of the partnership business, the partners will be liable for a tort committed by their partner. 63) Which one of the following statements is correct with respect to the liability of partners?

A) When a partner enters into a partnership arrangement, he can only lose what he has invested in that partnership. B) If a third party is injured because of an activity carried on by the partnership, that third party can only go after the personal assets of a partner if the assets of the partnership are not enough to provide compensation and the damage was actually caused by the conduct of that partner. C) A general partner is responsible, independent of what he has invested, for any losses caused to outsiders through the partnership business if the assets of the partnership are not enough to cover the claim. D) A partner can protect himself from any liability beyond his investment if one of the other partners specifically agrees in the partnership agreement to be responsible for all such liability. E) If there are three equal partners in a partnership, an injured third party can only collect one third of the claim from any one partner.

64) In which one of the following situations has the duty between partners not been breached? A) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z is the major shareholder in a corporation that sets up a restaurant in the same city. B) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z runs a catering business during the evening using the restaurant's facilities. C) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z opens up a restaurant in the same city as a sole proprietorship. D) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z opens a shoe store in Regina as well. E) X, Y, and Z have a partnership in a restaurant business in Winnipeg. Unknown to his partners, Z owns 50% of the shares in the company that supplies the restaurant with its food supplies.

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65) Jones is a partner in a law firm in a small town, and he is also doing legal work out of his home in the evening for himself. Which of the following statements is correct with respect to his responsibility for the money he earns? A) If Jones did not have the consent of his partners, Jones must pay over all the money he makes through his business at home to the partnership. B) Such conduct will automatically dissolve the partnership, but he can keep what he has made. C) Jones has a duty to tell the other partners, but the money is his and he can keep up the extra work regardless of the other partners consent. D) If Jones is a 1/3 partner in the law firm, he need only pay over 1/3 of what he makes. E) Jones has no responsibility; the money he makes by this extra work is his. 66) Which one of the following is incorrect with respect to the rights of partners unless they have agreed otherwise? A) All profits are shared equally between the partners. B) Reasonable expenses incurred by the partners in the course of business are reimbursed. C) Partners can sell their share of the partnership to another person without the agreement of the partners. D) All partners have the right to share in management. E) No major decision can be taken without unanimous agreement of all the partners. 67) Which of the following statements is correct with respect to limited partnerships? A) A limited partnership is created where all of the partners state in the partnership agreement that they will not be responsible for debts arising out of the partnership business and register as such with the government. B) A limited partner can lose his status as a limited partner if he participates in the management of the business. C) There can be no limited partnerships in Canada. If limited liability is desired, a corporation must be created.

D) A limited partner is totally protected and can lose no money. E) There can only be one limited partner in any partnership, no matter how many partners are involved. 68) Alison told her partners in writing that she would be leaving the law partnership at the current partnership year-end, January 31, 2012. At year-end, Alison's partners bought her partnership interest and agreed that she would no longer be liable for any of the prior or subsequent partnership obligations. In February 2012, one of the remaining partners absconded with $2,000,000 held for Mr. Smith, a long-time client, taken in trust in September 2011. Mr. Smith sued the partnership, the partners, and Alison. Based on the foregoing facts, which of the following statements is false? A) If Alison gave Mr. Smith actual notice of her leaving the partnership, and he agreed that she would no longer be obligated for the partnership's obligations, she will not be liable to Mr. Smith. B) After the partnership assets are exhausted, Mr. Smith can recover on his judgment from any one of the remaining partners but not Alison. C) Mr. Smith can recover on his judgment out of the partnership assets. D) She has the right to recover any funds she has to pay from her former partners. E) All of the partners, including Alison, have the right to recover anything they have to pay from the absconding partner.

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69) Chuck, Howard, and Ben decide to go into a business venture, developing and distributing educational software. For tax reasons, they do not incorporate. Each contributes $10,000, and Howard also contributes a truck and his programming expertise. They agree that all three will be actively involved in the day-to-day management of the business. To determine their rights and obligations, they enter into a one-page agreement that provides only that each of Chuck, Howard and Ben is to get 33-1/3% of the profits and also states specifically they are not to be viewed as partners. Based on these facts, which of the following statements is true? A) Chuck, Howard, and Ben will not be considered partners because of their express intention in their agreement. B) Chuck, Howard, and Ben are not partners because to be partners they must be professionals, such as dentists, lawyers, or doctors. C) Chuck, Howard, and Ben will be considered partners in the eyes of the law, because they share profits and are involved in the management of the business. D) Chuck, Howard, and Ben are not partners because they do not share profits in proportion to their capital contributions. E) Chuck, Howard, and Ben will be considered partners, but someone claiming against the partnership will only be able to collect 33-1/3 % from any one partner because of the agreement. 70) Joe Smith owns a book store as the sole proprietor. He is also a partner in a hotel, which borrowed $100,000 from the bank. Which of the following statements is true? A) Because of the concept of limited liability, he can lose only what he has invested in the hotel. B) The bank can only go after the assets of the book store if Smith was the actual person who negotiated the loan with the bank. C) Although the bank can go after Smith's personal assets, they cannot go after the assets of the book store because the book store is a separate legal entity from Smith. D) The book store assets will only be available to the bank if the book store is operated by Smith in conjunction with the hotel. E) The bank can look to the assets of the book store to pay off the debt. 71) Norma and Janet decided to form a partnership for selling gourmet picnic baskets. To raise sufficient capital, they convinced their mothers to invest $5,000 each as limited partners. Norma's mother was an experienced restaurateur and watched the business with great interest. On several occasions, she advised them on the business and contacted old business associates to buy surplus stock. She even filled in taking orders in the office when needed. A customer who was made ill by contaminated food from a tin can supplied in one

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sued. What would be the liability, if any, of the mothers? A) A limited partner has her liability limited to the amount of her initial investment; therefore, neither mother has any further liability. B) Norma's mother would have unlimited liability because she took part in the management of the business and thus becomes a general partner. C) Because one mother lost her limited liability status, they both do. D) Janet's mother would be liable for $10,000, twice the amount invested, because she failed to take part in the management of the business. E) Both mothers would have unlimited liability because they contributed money but not services as required.

72) Adams was approached by a Mr. McCarthy of XYZ Co., who requested that Adams pay $10,000 to extinguish a debt owed by the partnership of Adams and Jefferson. Adams denied the partnership and the liability. In asserting his claim, McCarthy cited the following facts all of which he could prove. Which of these facts is the strongest evidence of the existence of a partnership? A) That Adams and Jefferson co-owned property. B) That Adams and Jefferson worked together for a non-profit charity. C) That Adams received a commission from Jefferson based on the sale price of the goods sold by Adams for Jefferson. D) That Adams and Jefferson shared gross returns from a business. E) That Adams and Jefferson shared the profits from a business.

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73) Joe R. notified his partners in writing that he would be retiring from the business partnership at the end of 2011. It was acknowledged and agreed upon and, at year end, the remaining partners paid him for his interest in the partnership. In February of 2012, one of the remaining partners misapplied some trust funds that a long-time client had placed in the care of the partnership for the purchase of a hotel. The partnership was sued, but the assets of the partnership were not sufficient to satisfy the judgment. The successful plaintiff went against the personal assets of the partners, including those of Joe R. What is the likely outcome? A) Joe R. is only liable for his share of the losses even if the other partners don't have the assets to pay. B) Joe R. is not liable since he was not a partner when the misapplication happened. C) Joe R. is not liable because he had had nothing whatsoever to do with the misapplication of the trust money. D) Joe R. is liable if he failed to give proper notice to outsiders, namely, the long-time client whose funds were misapplied. E) Joe R. is not liable because he had retired from the partnership at year end and had properly notified his partners. 74) Ted Anderson and Arnie Lee began working together to write some computer programs for companies that needed to adapt standard programs to their particular needs. Ted's dad, an employee for B.C. Telephone, would often hear about businesses with such needs, and would solicit clients for Ted and Arnie or advise Ted and Arnie on how to approach potential clients. One job followed another. Ted and Arnie now want to set up business formally and they need money. Ted's dad will give them $9,000 but doesn't want his liability to ever go beyond that amount. On these facts, which of the following is true? A) If Ted's dad does not follow the statutory provisions governing limited partnerships, he could be deemed a general partner. B) Ted's dad can only be a limited partner if Ted and Arnie are also both limited partners. C) Because Ted's dad does not do the programming, the main business of the firm, he can continue to provide services to the partnership, such as finding clients, and still be a limited partner. D) Ted's dad cannot be a limited partner, because it takes three or more general partners before a firm can have a limited partner. E) The only way to limit one's liability is to incorporate.

75) Frank asked Matt to join him in a business venture. Matt has heard that partnership could result in some harsh consequences. Which of the following statements he has heard about the liability of partners is false? A) Matt could be liable for losses suffered by a client whose funds were misappropriated by Frank even if he (Matt) were not aware of the misappropriation and had no part in it. B) A partner is not liable for any partnership debt that was incurred after he left as long as he gave notice in writing to his partner that he was retiring from the partnership. C) A partner has unlimited liability for any loss suffered by the partnership because of a negligent act by one of the partners if the partnership funds are insufficient to cover the loss. D) A partner is liable to the full extent of his personal fortune if an employee of the firm was negligent in the course of his duties and there were insufficient partnership funds to cover the resulting loss. E) A partner is an agent for the firm and the other partner, and thus Matt would be liable for a contract made by Frank on behalf of the partnership if the partnership funds could not cover it.

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76) Paul and Laurie both worked at the mall. They often discussed how frequently they make the decision for the customer as to what should be bought as a gift. They concluded that knowing the merchandise in all the stores as well as they did, they could make a lot of money by doing Christmas shopping for customers. They discussed the idea at length. Laurie's mom, a buyer for a department store in the mall, referred some customers to them. With more and more customers, they wanted to quit their jobs and devote more time to this new business. Laurie's mom would give them $2000, but doesn't want her liability to go beyond that. On these facts, which of the following is true? A) To protect themselves, all of them should be limited partners. B) Laurie's mother cannot be a limited partner, because it takes four or more general partners before a firm can have a limited partner. C) As long as Laurie's mother does not buy on behalf of the customers hiring Paul and Laurie, she can continue to provide services to them, such as by sending them customers, and can advise them on marketing and other management problems, and not lose a limited partnership status. D) The only way to limit one's liability is to incorporate. E) If Laurie's mom does not follow the statutory provisions governing limited partnerships, she could be deemed a general partner and liable for claims beyond her $2000 investment.

77) Max has been sued for $20,000 as a partner with Jim Nogoode. Which of the following is false with regard to determining whether or not a person is a partner? A) Co-ownership of a property does not in itself raise a presumption of partnership. B) Sharing of profits is evidence of the existence of a partnership. C) The legal relationship of partnership requires that two or more persons carry on business in common with a view to profit D) If no profit was made in the business, Max would not be a partner. E) Sharing gross revenues of a business does not in itself raise a presumption of partnership. 78) Three students in a business faculty created a computer program that compared various retirement plans. They decided to go into business together to offer their services directly to the public. After doing a feasibility study, they felt there were profits to be made. For tax reasons, they decided not to incorporate. Each contributed $15,000 and Wayne, one of the three, contributed a computer. In a short written agreement, they agreed that all three would be actively involved in the management of the business, that all three would work to update the program, that they would share the profits equally, and that they should not be viewed as partners. Based on these facts, which of the following statements is true? A) They are not partners unless they realize a profit from their enterprise. B) They are not partners because they do not share profits in proportion to their capital contributions. C) If Wayne were to go bankrupt, the partnership would be dissolved even if they state otherwise in their agreement. D) If one partner dies, the partnership would be dissolved even if they state otherwise in their agreement.

E) They would be considered partners despite their express intention to the contrary in their agreement. 79) Which of the following is true with regard to partnership? A) No partnership can be formed unless the parties intended to create a partnership. B) The terms of the Partnership Act will be implied in a partnership agreement that includes provisions on the same point. C) A general partner is not an agent of the firm and the other partners. D) Sharing gross receipts is sufficient evidence of the existence of a partnership. E) A limited partnership is an arrangement in which a partner may limit liability to his capital contribution. 80) The Partnership Act provides that if the partners do not agree otherwise, certain terms of a partnership agreement will be implied. Which of the following is not such an implied term? A) Every partner may take part in the management of the partnership business. B) No partner is entitled to a wage for acting in the partnership business. C) The partners will share the profits equally. D) No person may be introduced as a new partner without the consent of all of the existing partners. E) Each partner shall be responsible for the losses of the firm only to the limit of that partner's initial cash contribution.

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81) Which of the following will establish the existence of a partnership? A) A debt is repaid by the creditor taking a share of the profits. B) The beneficiary of a deceased partner takes that partner's share of the income from the partnership. C) The good will portion of the sale of a business is repaid by a share of the profits. D) The parties intend to share the expenses of the business. E) An employee receives a profit-sharing bonus.

82) In which one of the following situations would Sam not be liable for the conduct of his partner, Joe? A) They made it clear in their partnership agreement that they would not be liable for each other's actions. B) Joe is in a partnership with Sam in a shoe store, and without telling Sam, Joe opens up a franchise of Kinney's Shoes in an adjoining municipality, which suffers a loss. C) Joe is in a partnership with Sam and injures a customer while doing partnership business. D) Joe, without the knowledge or consent of his partner Sam, purchases a gross of patent leather shoes in the name of the partnership shoe business. E) Joe absconds with trust funds he has accepted from a client in his accounting partnership with Sam. 83) Which of the following is correct with respect to the law of partnership? A) Each partner is vicariously liable for the wrongful acts of their partners committed in the course of the partnership business. B) Partners are only liable for the torts of their partners if they in fact knew that the wrongful conduct was taking place. C) Partners have unlimited liability, meaning that they can lose up to the amount they have invested in the business. D) Joint and several liability means that each partner can be sued several times. E) A partnership cannot be created inadvertently. 84) Which of the following is incorrect with respect to the law governing limited partnerships? A) Limited partners can lose their status as a limited partners by allowing their names to be associated with the name of the partnership. B) Limited partners can lose their status as a limited partner by participating in management. C) Limited partners can lose their status as a limited partners by failing to register as such. D) Limited partners, once registered as such, are assured of limited liability.

E) Limited partners' liability only extends to the amount of money they have invested in the partnership. 85) Which of the following is incorrect with respect the responsibilities of partners to each other? A) Any information that one partner learns because of his position in the partnership must be used for the benefit of the partnership, not for personal use. B) Unless the partners have agreed otherwise, partners' expenses are to be reimbursed. C) Each partner owes the other partners a fiduciary duty. D) Partners are free to compete with the partnership providing they do it on their own time. E) Unless the partners have agreed otherwise, profits and losses are shared equally. 86) Which of the following is incorrect with respect to the creation of a partnership? A) An important indication as to whether a partnership exists is the sharing of the profits of the business activity. B) The duties and obligations of partners to each other can be modified by agreement. C) The common method of creating a partnership is by agreement. D) A partnership can only be created with the consent of the parties. E) The business activity must be continuing in order for it to indicate the existence of a partnership.

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87) Which of the following is correct with respect to the law of partnership? A) All partners have a right to an equal say in the management of the partnership and this cannot be changed by agreement. B) Any major change in the partnership must be made by unanimous agreement, and this cannot be changed by partnership agreement. C) Partnership is generally a less costly method of carrying on business than incorporation. D) The partnership relationship is governed by legislation that states that profits and losses are to be shared equally, and this cannot be modified by agreement. E) All partnerships must be registered.

88) Which of the following is incorrect with respect to the law of partnership? A) A partnership can always be brought to an end by court order, no matter what the partnership agreement says. B) The death or insanity of one of the partners will dissolve the partnership. C) The admission of a new partner requires the consent of all the partners. D) All partners have the right to inspect all partnership records. E) Limited partners are limited in the sense that they cannot take part in the management of the partnership; otherwise, they are like any other partners. 89) Which of the following is true in respect of limited liability partnerships (LLPs)? A) The main advantage to those carrying on business as an LLP is that potential liability is limited for torts, for breach contract and for breach of trust. B) Provincial limited liability partnership legislation has been introduced in various jurisdictions across Canada. C) Unlike limited partners, those operating through LLPs are not burdened with limitations with respect to naming, registration or other requirements. D) Historically, professionals have relied primarily on incorporation for carrying on business. E) Professionals are prohibited from operating under a limited liability partnership. 90) An agent cannot bind the principal in a contract with a third party unless there is an agency contract between the principal and the agent. 91) Apparent authority is determined by the representation of the agent.

92) Where there is no contract of agency between the principal and the agent, the actions of that agent cannot bind the principal. 93) It is possible for a principal to be bound by the acts of an independent agent even where no contract of agency exists between them. 94) Any restrictions in the employment contract between principal and agent on an agent's authority will be binding on a third party. 95) When an agent acts beyond the specific authority given by the principal, that action will not be binding on the principal. 96) Apparent authority is the authority the agent has based on what the principal has led the third party to believe. 97) It is only where a principal consciously ratifies that a contract can be effectively ratified. 98) The ratification of a contract by the principal must be done in writing. 99) A contract entered into by an agent cannot be ratified inadvertently by the principal.

100) Ratification of a contract can take place by the principal knowingly taking a benefit under the contract. 101) In the modern economy, agency-by-necessity situations are becoming more commonplace. 102) An agent owes a fiduciary duty to the third party to act in that third party's best interest.

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103) An agent owes a fiduciary duty to act in the best interests of the principal and the third party. 104) The fiduciary duty of an agent refers to his obligations to act within the limits of his actual or apparent authority. 105) Information that comes to the agent because of his position as agent must be passed on to the principal.

106) Information that comes to the agent because of his position as agent must be passed onto the third party. 107) Where Joe was given authority to do "anything necessarily incidental" to carrying out his agency function of selling vacuum cleaners for the principal, that gave Joe the authority to borrow money to purchase a car to be used in the business. 108) A third party is bound to the principal only when he knows that agent is acting for that principal. 109) An agent need not disclose the fact that he is acting for a principal in dealings with a third party, and that contract may still be binding on that third party. 110) When a principal is undisclosed, the third party is restricted to suing the agent. 111) The only situation where an agent can be sued by a third party is where he has gone beyond his apparent and actual authority. 112) Where an agent has been guilty of fraudulent misrepresentation, the agent must sue the principal.

113) A person owing a fiduciary duty must submerge personal interests in favour of the interests of the principal he or she represents. 114) If an agency agreement lacks consideration, any agreement the agent enters into on the principal's behalf will be void. 115) Full disclosure refers to an obligation to reveal all details of a transaction. 116) Utmost good faith is another term for a business's reputation and ongoing relations with customers. 117) A principal whose identity is concealed from the third parties with whom the agent is dealing is known s an undisclosed principal. 118) When the object of the agency relationship becomes illegal, the agency agreement is frustrated and any authority terminated. 119) The biggest issue for a sole proprietor is unlimited liability. 120) A partnership is primarily a contractual relationship and can be created verbally or implied from conduct.

121) Chan sold a business to Scott and in the process they valued the "good will" at $50,000. In the sale contract, it was agreed that this amount would be paid by Scott giving Chan 15% of the business profits until it was paid. This creates a partnership between them. 122) It is possible through a partnership agreement to create different classes of partners.

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123) Dennis, Sam, George, and Ray were partners in an accounting business, and Ray decided he wanted to retire. He sold his share of the partnership to Leonardo, but Leonardo is not a partner unless the other partners approve the change. 124) The unlimited liability of partners means that not only can they lose their entire investment in the business, but their personal assets are also at risk, such as their home and car. 125) Requirement of unanimous consent protects partners.

126) A partnership is less expensive to set up than a corporation.

127) Unlimited liability means that an investor can lose everything he has invested in a corporation. 128) Societies are separate legal entities, separate and apart from the members who make them up. 129) A sole proprietor is free from regulatory control. 130) The sole proprietor carries on business alone and cannot employ others in the process. 131) A sole proprietor is not only responsible for his own conduct but also for the wrongful conduct of any employee done in the course of employment. 132) The relationship between the partners is governed by contract law. 133) For a partnership to exist, something more than a single joint activity is required.

134) The partners can change the terms of their responsibilities to each other in the partnership agreement, but not in relationship to their obligations to third parties. 135) The Partnership Act allows the partners to change their liabilities and obligations to third parties. 136) A partner's liability for the torts of their partners extends beyond those committed on company business. 137) Partners are vicariously liable for the wrongful acts of employees committed on partnership business. 138) A partnership cannot employ employees but must carry on its business through the partners. 139) Partners can agree among themselves as to what portion of liability they each will bear, and their losses will be limited to that portion when being sued by outsiders. 140) When the partners fail to register their partnership, they can neither sue or be sued. 141) A partnership can always be brought to an end by the service of notice on the other partners, no matter what the partnership agreement says.

142) An "innocent partner" in a limited liability partnership (LLP) is still liable for the ordinary debts of the partnership. 143) Explain under what circumstances a principal can be held liable for torts committed by an agent. 144) Explain under what circumstances a principal who is not an employer will be held responsible for the wrongful acts of his agent.

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145) Distinguish between an agent and an employee. 146) How is an agency relationship created?

147) Distinguish between the actual and the apparent authority of an agent. 148) Describe what is meant by an agent's apparent authority.

149) Explain how the principle of estoppel can be important in an agency relationship. 150) Joe was a salesman, newly hired by Radio Hut. On his first day on the job, he was left in charge of the store while the manager and the other salesmen went to lunch. They specifically told him not to sell anything over $50 but to just tell the customer to come back in an hour when they would have returned. While they were at lunch, a customer came in and decided to purchase a new stereo TV set and several accessories. The total sales price was $1,600, and the customer couldn't wait. Joe sold her the merchandise at a $400 discount. When the customer returned the next day to pick up the goods, the manager refused to go through with the deal. Explain the manager's legal obligations in these circumstances. 151) Joe is a salesman for Harry's Fine Cars Ltd. He had been told specifically that he had no authority to make any sale, take a trade-in, or otherwise deal with the vehicles without the manager's express approval of every deal. Sam, a customer, came in wanting to buy a used Cadillac and agreed to pay the $16,000 asking price. Unfortunately, the manager had left the lot, and so Joe took it upon himself to write up the agreement. When the manager returned, he liked the deal and realized that the customer might change his mind when he realized that the salesman didn't have the authority to bind the seller in contract. Under these circumstances, what could the manager of the car lot do?

152) What restrictions are there on a principal's right to ratify? 153) Joe was a chauffeur, working for Sam. When Joe was taking the car in to have it serviced, he saw a brand new BMW and bought it on behalf of Sam. When he took it home, Sam was upset, explained that he didn't want a new BMW, and told him to take it back. Joe persuaded him to take it for a test drive first. Explain the legal position of the parties. 154) List three duties that an agent has to the principal. 155) Explain what is meant by an agent's fiduciary duty to the principal. 156) Explain what is meant by an undisclosed principal and the significance of such a relationship. 157) When an agent has been dealing with a third party for an undisclosed principal and there is a default, what rights are available to the third party? 158) Explain under what circumstances the third party can be sued by the principal in the event of default.

159) Explain under what circumstances a principal will be responsible for the wrongful acts of an agent who's not an employee. 160) Explain how the authority of an agent may be terminated.

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161) Joe is in the process of assembling land for Ace contractors Ltd. to build a supermarket. He entered into a contract with the seller Sam. He did not disclose that he was acting for someone else when he entered into the contract. Explain Sam's rights when the contract is breached and he learns that Joe was acting for Ace. 162) "An agent is free to withhold information from the principal as long as it doesn't hurt the principal." Discuss the accuracy of that statement. 163) "A principal can ratify an agent's contract that was done without authority as long as the agent makes it clear that they are entering into the contract 'subject the principal's ratification.'" Discuss the accuracy of that statement.

164) A salesman in a men's clothing store has heard rumours that the store is going out of business. The boss is out of the store when a customer who has heard the same thing comes in and offers to purchase the entire stock, the display cases, and the fixtures. The salesman accepts on behalf of the employer. Discuss the legal position of the parties. 165) A real estate salesperson, without disclosing the fact to his client, purchases the house the client is selling for himself. Discuss the legal position of the parties. 166) A chauffeur, going against specific instructions, purchases a new car on behalf of his employer. The employer has done nothing to lead the seller to believe the chauffeur has authority but is persuaded by the chauffeur to go for a drive before returning the vehicle. Explain the legal position of the parties. 167) Explain what is meant by an agent's fiduciary duty. Give three examples of how that fiduciary duty can be breached. 168) Distinguish between a partnership and a corporation.

169) Distinguish between a sole proprietorship and a corporation. 170) What are the advantages and disadvantages of being a sole proprietor? 171) Explain what is meant by limited liability. 172) "For a partnership to exist, the parties must have consented to its creation." Comment on the accuracy of that statement. 173) Joe sold Harry his barber shop for $100,000. He was paid $20,000 in cash, the other $80,000 to be paid by Harry giving Joe 20% of the profits of the business until the amount was paid off. Unfortunately, a customer, Sam, was injured by Harry, who managed to cut off his right ear while shaving. Sam sued both Harry and Joe. Explain his likelihood of success. 174) Joe was a lawyer and agreed to pay Sam, a banker, 25% of any fees that he received as a result of mortgage referral business directed his way by Sam. Because of Joe's carelessness, one of the customers referred to him by Sam lost his property. The customer sued both Joe and Sam. Explain the likelihood of his success.

175) When two people enter into a partnership by agreement but neglect to set out the terms of such agreement, or where the parties becomes partners inadvertently, the terms and arrangements of that partnership are set out where? 176) Explain the liability of a partner for another partner's actions. 177) Explain the limitations of the liability of partners for the acts of other partners.

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178) Joe entered into partnership with two others in the establishment of a real estate sales agency. The other two, Sam and Harry, had considerable experience in the real estate business but no money. Joe, on the other hand, had his own home and several significant assets, and although he didn't have any experience in the real estate business, his monetary contribution made him an equal partner with Sam and Harry. Unfortunately, Harry misused some trust funds that had come into his care as a result of business, investing it in the business of one of his sons rather than an interest-bearing account. The business of the son went sour and the money was lost. The client sued Harry, Sam, and Joe. Explain the legal position of Joe here.

179) Joe, Sam, and Harry set up an accounting partnership in a small town. Harry, to earn money on the side, did some accounting for friends at night, for which he received a fee. When Joe and Sam found out about this, they demanded that the fees received be paid into the partnership business. Explain the legal position of Harry. 180) Joe, Harry, and Sam opened up a partnership supplying accounting services to the general public in a small town. Harry and his wife, unknown to Joe and Sam, also carried on a mail-order business at night that had nothing to do with accounting. He would, however, often come into the partnership office to use the photocopier and computer for correspondence related to his mail-order business. Joe and Sam found out about this activity when Harry forgot to erase one of the files on the computer one night. Explain the legal position of Harry. 181) "As in other forms of business, when decisions are to be taken, the majority of the partners must approve the decision." Discuss the accuracy of that statement. 182) Explain under what circumstances a partnership can come to an end. 183) Joe and Sam set up an import/export business in partnership, but they needed extra money. Harry was

invited limited partner. Unfortunately, the business began to lose money because of the poor business sense of Joe to invest and Sam. Harry has the business expertise to turn the business around, or at least, so he thinks. What would as a your advice be to Harry in these circumstances? 184) Joe and Mary promote several dances at school and split the profits. Will this be enough to establish a partnership? 185) "A partnership can be created by the conduct of the parties." Discuss the accuracy of that statement. 186) When one partner dies, what happens to the partnership? 187) Explain how partnership can be brought to an end. 188) Explain when a group of people would create a society. 189) Jones is a partner in a law firm in a small town, and he is also doing legal work out of his home in the evening for himself. Explain the rights of his partners in this situation. 190) Explain what must be done to create a limited partnership.

191) Explain how a person's status as a limited partner could be lost. 192) Explain what a retiring partner should do to ensure he is no longer liable for the company's obligations. 193) If a person wants to invest in a partnership but avoid the obligations associated with partnership, what can she do?

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194) What is the effect of a partnership agreement with a term making it clear that each partner will only be responsible for 1/3 of the debts and obligations? 195) "Partners must make clear in their partnership agreement any limitations on authority they wish to impose on each other when entering into contracts with outsiders." Discuss the accuracy of this statement.

197) To what does the term "estoppel" refer?

Discuss

196) "Partners in a limited liability partnership (LLP) are not liable for the liability of the partnership." the accuracy of this statement.

198) Explain what is meant by an "enduring power of attorney". 199) What option does a principal have if the agent has acted beyond both actual and apparent authority, but the principal wants to proceed with the agreement? 200) For an agency agreement to be binding, what is required and what is the effect if a required element is not met? 201) A principal whose identity is concealed from the third parties with whom the agent is dealing is known as ________. 202) Discuss the concept of vicarious liability as it relates to employment and agency law. 203) Discuss the extent of an agent's authority to bind a principal in dealings with a third party.

204) Discuss the principle of ratification, and in your discussion, look at any injustice caused by its operation and limitations on its availability. 205) Discuss the extent of the obligations of the agent to the principal based on his fiduciary duty. 206) Explain under what circumstances an agent can be liable for his conduct rather than the principal. 207) Discuss the advantages and disadvantages of partnership as a method of carrying on business compared to incorporation. 208) Discuss the problem of liability with respect to partnership and how this difficulty can be overcome, if partnership is chosen as the method of carrying on business. 209) Explain why the law of partnership poses a danger to people carrying on joint business activities. 210) Explain how the principle of fiduciary duty works in a partnership relationship. 211) Discuss the role of the Partnership Act as it relates to people carrying on joint business activities.

212) Discuss how an agent's authority may be terminated, as well as the effect of such termination. 213) Discuss how a partnership arrangement may be brought to an end, and the effect of dissolution.

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1) A 2) E 3) D 4) C 5) D 6) C 7) E 8) A 9) B 10) A 11) E 12) C 13) A 14) C 15) D 16) A 17) B 18) B 19) E 20) E 21) A 22) B 23) A 24) C 25) D 26) C 27) B 28) D 29) E 30) C 31) C 32) C 33) E 34) A 35) E 36) C 37) D 38) A 39) A 40) E 41) D 42) C 43) E 44) A 45) E 46) E 47) D 48) E 49) C 50) D 51) A

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52) D 53) E 54) C 55) A 56) A 57) E 58) D 59) A 60) A 61) A 62) D 63) C 64) D 65) A 66) C 67) B 68) B 69) C 70) E 71) B 72) E 73) D 74) A 75) B 76) E 77) D 78) E 79) E 80) E 81) D 82) B 83) A 84) D 85) D 86) D 87) C 88) E 89) B 90) FALSE 91) FALSE 92) FALSE 93) TRUE 94) FALSE 95) FALSE 96) TRUE 97) FALSE 98) FALSE 99) FALSE 100) TRUE 101) FALSE 102) FALSE 103) FALSE

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104) FALSE 105) TRUE 106) FALSE 107) FALSE 108) FALSE 109) TRUE 110) FALSE 111) FALSE 112) FALSE 113) TRUE 114) FALSE 115) TRUE 116) FALSE 117) TRUE 118) TRUE 119) TRUE 120) TRUE 121) FALSE 122) TRUE 123) TRUE 124) TRUE 125) TRUE 126) TRUE 127) FALSE 128) TRUE 129) FALSE 130) FALSE 131) TRUE 132) TRUE 133) TRUE 134) TRUE 135) FALSE 136) FALSE 137) TRUE 138) FALSE 139) FALSE 140) FALSE 141) FALSE 142) TRUE 143) Where there is an employment relationship as well, or where the agent has been involved in fraudulent misrepresentation. 144) Where the agent has committed a fraudulent misrepresentation. 145) An employee performs work under the control or direction of another person. An agent, on the other hand, enters into legal relationships on behalf of the principal, usually contracts. An agent may be an employee but doesn't necessarily have to be one. 146) Usually by contract, but it is possible for an agent to act on behalf of a principal gratuitously through actions. 147) The actual authority of an agent is determined by the specific authority he has been given, either expressed or implied. The apparent authority of the agent is the authority that the principal has led others to believe that the agent has. Apparent authority is an application of the principle of estoppel. 148) When a principal has led someone to believe that an agent has particular authority to act on his behalf, then the agent does have that authority, even where the authority actually given to the agent is considerably less. The principal, once he leads someone to believe that the agent has authority, cannot deny it. This is an application of the

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princ iple of estoppel. 149) The authority of the agent to bind the principal is found not only in the actual authority that the agent has been given, but also in the apparent authority, that is, the authority that the principal has led others to believe that the agent possesses. 150) Joe had apparent authority and was able to bind the store to the purchase; therefore, the customer had the right to insist that the manager go through with the deal. 151) He can ratify the contract, which in effect gives the agent authority after the fact. The effect is retroactive and the contract's binding. 152) The principal can only ratify if, at the time of the ratification or at the time the agent purported to act on his behalf, the principal was capable of entering into the contract in his own right. 153) When the principal took the car for a test drive, he inadvertently ratified the contract by taking a benefit out of that contract and, therefore, the purchase is binding upon him. 154) To act in a reasonable manner with competence in fulfilling his duties, to follow the instructions of the principal, to act in the best interest of the principal at all times, to account for any profits that have been made or expenses incurred. 155) An agent has an obligation to act in the best interests of the principal, to put the principal's interests ahead of his own. 156) An undisclosed principal is involved when the agent deals with a third party in such way that the third party is not aware that he is acting on behalf of somebody else, the principal. In such circumstances, in the event of a default, the third party can sue either the agent or the principal but is bound by his choice. 157) He can sue either the principal or the agent but is bound by his choice. 158) When the agent has acted within his actual or apparent authority in his dealings with the third party. 159) When the agent has committed a fraudulent misrepresentation in the course of his agent's responsibilities. 160) Such authority is usually terminated by notice, unless otherwise stated in the agreement creating the agency relationship. The authority of the agent will also be terminated in the event of the bankruptcy, insanity, or death of the principal. 161) This is an example of an undisclosed principal. When Sam learns that Joe was acting as an agent, he has a choice to continue to sue Joe or to sue the principal. Once that choice is made, he cannot change his mind later. 162) Any information that comes to an agent in relation to that agency is the property of the principal. It is up to the principal to decide whether it is of any value to him or not. Failure to disclose such information is a breach of the agent's fiduciary duty. 163) This is a contract to enter into a contract and is not binding on the parties. 164) Unless the boss has given specific authorization for this act, which is unlikely, the agent has clearly gone beyond any apparent authority he may have and the contract is not biding on the employer. But the agent, in acting beyond his authority, has exposed himself to an action by the customer. This is one of the few situations where the third party customer can sue the agent for not having the authority claimed. 165) This is clearly a breach of the agent's fiduciary duty to the principal, and the agent will lose his commission and will have to account for any profits he makes to the principal. 166) Ratification is a two-edged sword, and a principal can ratify a contract inadvertently by taking a benefit under it. That is what has likely happened here, and the principal has just bought himself a new vehicle. 167) Some examples from the text: must disclose information, not take hidden commissions or kickbacks, always act in the principal's best interests. Not take advantage of opportunities that come through the agency position, must disclose any conflicts, can't act for two principals, can't purchase client's property being sold or sell property to principal without prior disclosure of personal interest, can't operate in competition with the principal. 168) A partnership involves two or more people carrying on business together but no separate legal entity is created. With a corporation, people own shares in a separate legal personality called the corporation. 169) The sole proprietorship is simply a person going into business for themselves. A corporation is a separate legal personality that has been created to carry on the business. 170) Disadvantages--unlimited liability and only one person involved. Advantages--little outside interference and they are not accountable to others. 171) In a corporation, the corporation itself, not the shareholder, is responsible for the debts and obligations of that corporation. The shareholder can only lose what he has invested.

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172) It's inaccurate. A partnership is defined as two or more people carrying on business together with a view towards profit. Such a relationship can be created inadvertently. 173) There is no partnership here between Joe and Harry. Although Joe is receiving a share of the profits, this is done to pay off the purchase price of the business and is one of the exceptions listed in the Partnership Act. 174) No partnership has been created between Sam and Joe, because this is a splitting of gross proceeds, rather than a sharing of profits (aside from the fact of such fee-splitting being unethical). 175) Partnership Act 176) Each partner is vicariously liable in tort law for any torts committed by a partner in the course of the partnership. Also, each partner is considered an agent of the other partners for the purposes of contracts entered into by them. 177) Each partner has unlimited liability for the actions of the other partners done during the course of the partnership, unless one of those partners qualifies as a limited partner. The liability of such a limited partner is limited to the amount invested. 178) Because Joe was a partner with the other two, he is responsible for the wrongful acts of Harry, including this breach of trust. Because Sam and Harry have no money, the client will go after Joe. Joe has unlimited liability and can lose his house and other assets to pay for the debt. 179) Harry owes a fiduciary duty to the other two partners, and when he is carrying on business as an accountant, he is acting in the partnership capacity. Therefore, he must pay over these fees to the partnership. 180) Harry has violated his fiduciary duty to the partnership in using partnership facilities for his own purposes and must make amends for that (e.g. an accounting of profits). 181) It's inaccurate. All of the partners must agree to such changes, absent an agreement to the contrary. 182) Usually by notice, but it may be by the expiration of a specified time or because the activity becomes illegal, or where one of the partners dies or becomes bankrupt or insane, or by court order. 183) Not to get involved in the management of the firm. If he did so, he would become a general partner and lose his limited liability status. 184) Yes. The definition of a partnership is two or more people carrying on business with a view to profits. This is an ongoing activity, so it is a business, and they are sharing the profits, so a partnership exists. 185) This is accurate. A partnership is defined as two or more people carrying on business with a view to profits. It doesn't need an agreement and can be implied from conduct. 186) This depends on the jurisdiction and the number of partners. If there are only two, the partnership dissolves. If there are more than two, it may dissolve with respect to that one partner, or it may dissolve entirely (depending on the jurisdiction). This can be modified by agreement. 187) Automatically with the death, bankruptcy, or insanity of a partner (at least with respect to that one partner). Otherwise, with notice, unless there are other provisions in the partnership agreement. It can always be ended by court order. 188) When the objective of their activity is non-profit. 189) He is in the business of practising law and that is what he is doing in the evening, so unless he has the consent of his partners, he is in violation of his fiduciary duty. In that case, he would have to pay over the profits he makes to the partnership. 190) Limited partners invest in the partnership but do not participate in the management or the business with the general partners. They can't let their surname be associated with the partnership, and they have to register their limited partnership with the appropriate government official. 191) If the limited partner fails to register, participates in the business or the management of the business, or allows his surname to be associated with the partnership, he can lose his status as limited partner. 192) To avoid being liable for any future indebtedness, the retiring partner should take steps to ensure that any customers are told of his retirement and that his name is no longer associated with the partnership. As far as old obligations and liabilities that occurred before he retired, the only thing he can do is to have the old partners (or a new one if someone is taking his place) assume liability for those obligations. Even then, if they don't have the money, he may be called on to pay. To avoid this, the customer with the potential claim must also consent to the new partner taking over the liability of the retiring partner. 193) She can invest as a limited partner. To do this, she must not participate in the management or business of the partnership, she must not allow her name to be associated with the partnership, and she must register with the appropriate government official.

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194) A partnership agreement cannot change the obligations the partners have to outsiders. Each partner will still be liable to pay the entire obligation if the other partners cannot pay their share. The effect of this term, however, does give the party who had to pay more the right to seek contribution from the other partners later. 195) Partners cannot limit their liability to outsiders by so stating in their partnership agreement. Such provisions can only affect the rights and obligations between the parties. Since the partner is acting as an agent, the principle of apparent authority applies, and no matter what the partners wrote in their agreement, the partners would have authority by estoppel unless the customer was given notice of the limited authority. 196) This statement is not accurate. Professionals carrying on business through an LLP do have limited liability, but this shield does not extend to liability caused by the partner's own negligence, or by the negligence of someone under his or her control. Further, the limited liability applies only to negligence, and this protection does not extend to cover liability for other torts, breach of contract or breach of trust. (See the applicable legislation in your province for further details.) 197) To an equitable remedy that stops a party from trying to establish a position or deny something that, if allowed, would create an injustice. 198) The power to act as the donor's trustee or representative following the donor's lack of capacity. 199) The principal can ratify the contract, subject to certain qualifications. 200) All of the elements of a contract, such as consensus, consideration, legality, intention, and capacity must be present. The lack of any one of these elements may void the agency contract, but it will not affect the binding nature of any agreement the agent enters into on the principal's behalf. 201) Undisclosed principal 202) Vicarious liability is where one person is held responsible for the wrongful acts of another. In employment law, the employer is held responsible for the torts committed by an employee. There are, however, some restrictions on its availability. The employer is only responsible for harmful acts of an employee done in the course of the employment, and if the agent does something that is other than what he was hired to do, the employer will not be liable. Employers sometimes try to limit their liability by giving strict instruction to their employees so that they can later say they were not acting within their employment. The question, however, is whether they were doing what they were employed to do even if they were doing it improperly or even in direct contravention to instruction. Applying this to agency, agents can clearly bring responsibility on their principals where they are in an employment relationship and those principals are also their employer, and the same principle applies. That is, vicarious liability will follow where the agent was acting within the scope of that employment, doing what they were employed to do even if they were doing it badly. But what of the situation where the agent is independent? Will their conduct ever impose liability on the principal? Clearly, when we are talking contract law, an agent's conduct will bind the employer wherever they are acting within their authority. But what of tort law? Will a principal be responsible for the torts committed by an independent agent? It is clear that where the agent commits a fraudulent misrepresentation while carrying out his agency responsibility, the principal will be liable. This in fact may be direct liability, since when the agent speaks, it is as if the principal is speaking. In any case, the principal can be responsible. There also may be other situations where a principal is vicariously liable for the torts committed by an independent agent, but they would have to be committed in the very act of carrying out what they had been authorized to do as agent. Students should show a sound understanding of all of these principles in their answers. 203) This question simply requires students to display an understanding of the various aspects of an agent's authority to act. They should show that they understand that the actual authority of an agent may be expressed or implied from the job he has been given. In addition to that, the agent might also have apparent authority that is based on the principle of estoppel. Here the principal does something to hold up the agent as having authority, such as placing him in a job where people would expect the agent to have that kind of authority or specifically telling the third party that the agent has authority without informing that third party of the limitations that have actually been placed upon the agent. Good students should be able to explain the difference between apparent authority and implied authority. The implied authority comes about where the agent has been placed in a position where people would understand that the agent would have this kind of authority and where there has been no instruction to the contrary, that is, what authority the agent has been given. But with apparent authority, even where the principal has specifically instructed the agent that he doesn't have that specific authority, he can still bind the principal because of estoppel. You can't imply authority where there has been direct instruction to the contrary, but there still can be apparent authority where the principal can't deny the agent has the authority that the principal has led

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other ve that agent has. Students may also go on to discuss the power of the principal to ratify. This is not needed and not s to in response to the question but does complete the discussion of the circumstances under which the conduct of the belie agent will bind the principal. 204) This is a more technical discussion and some of the points that students should note are as follows. Ratification of a contract takes place where the agent has no actual or apparent authority to bind the principal to the contract entered into with a third party, and the principal decides that he wants to be bound by the contract in any case. In these circumstances, it is open for the principal to ratify the contract (choose to be bound by it), and the effect is that it will be binding, as if the agent always had the authority to contract on behalf of the principal. The ratification thus acts retroactively. The problem is that, for a period of time, the principal is not bound and free to choose to ratify or not, and during that time, the third party is liable for the principal to exercise this power and create a binding contract or choose not to. There are some limitations placed on this right to ratify, in order to make the operation of the principle more balanced. The third party, when he realizes that the principal needs to ratify, can require that ratification take place within a reasonable period of time and set a time limit. Also the principal cannot ratify if, at the time of the ratification, he could not have entered into the contract. Similarly, the principal cannot ratify, if at the time that the agent acted on his behalf, the principal could not have entered into the agreement. This creates a problem with pre-incorporation contracts, where the promoter of a company enters into a contract on behalf of a company that has to yet been incorporated, and then after incorporation the company wants to ratify. Some provinces have passed legislation to permit ratification of such pre-incorporation contracts. 205) It is very important that students understand the nature of a fiduciary duty, and this question requires them to demonstrate that understanding with respect to the agency relationship. Some of the things they can mention are as follows. The agent must disclose information he is aware of that may be of relevance, whether or not the agent thinks it will benefit the principal. There is a duty not to take kick-backs or to work as agent for both sides unless it is disclosed and there is permission. There is a duty not to act in conflict of interest and so to put the interest of the principal before your own. The agent can't sell things that the agent owns or has an interest in to the principal without disclosing that fact. The agent can't purchase things for himself from the principal without disclosing that fact. The agent can't take advantage of opportunities that come to him because of his position that should be disclosed to the principal. The agent must account for profits that he makes because of a violation of this duty. In short, this is an utmost good faith relationship, and the agent must act in the best interest of the principal, putting his own interests second to those of the principal. Students may supply other examples of the obligations of a fiduciary. 206) This is a reasonably straightforward question, but some students may not appreciate how broad an answer is required. Agents are liable personally in agency law when they exceed their authority (actual [expressed or implied] or apparent) or where they act as an undisclosed principal. Students should explain what actual authority is and what apparent authority is. They should also explain what an undisclosed principal is. This is where the agent does not disclose the fact that he is acting on behalf of a principal. Where the agent could be acting either way and his conduct is ambiguous, when the third party realizes he is acting as an agent, the third party must make a choice to sue the principal or the agent but not both. Good students will realize that the agent can also get sued personally when his conduct involves the commission of a tort. When the agent is also an employee, both the agent and the principal are responsible for the agent's torts (vicarious liability), but where the agent is independent, the agent alone is responsible for his torts, unless the tort is committed in the very process of performing what he was authorized to do. Then if the agent commits fraudulent misrepresentation, the principal can be sued as well. The question requires students to respond in terms of both contract law and tort law. 207) The main advantages of partnership are its ease of creation and the fact that each partner has a veto over important decisions. Also, each partner participates in the management process. The main disadvantage is unlimited liability, and of course each advantage can be viewed as a disadvantage. It is a simple matter in this question for students to simply list the features of incorporation and partnership as listed in the chapter and state that those features are advantages and disadvantages depending on your point of view. But students showing a good understanding will indicate that many of the advantages of incorporation, like limited liability, are illusory (having to sign a personal guarantee), and many of the disadvantages of partnerships can be overcome either by a partnership agreement between the partners and by acquiring adequate insurance. 208) Partners have unlimited liability for their own torts and the torts committed by other partners or employees of the partnership. Students should show that they understand that unlimited liability means that each partner is

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resp partner doesn't have the funds to pay their part, the other partners will have to bear the whole burden, and they can onsib lose everything they have. Students should also point out that, in contract law, each partner is an agent for every le for other partner, so they are responsible for any contractual liability entered into by their partners or by employees the exercising an agency function. Again, this is unlimited liability. Partners are also responsible for the breach of trust whol of their partners. e An important aspect of this question is for students to point out that these problems of unlimited liability can clai largely be overcome by having adequate insurance coverage. They should also point out that more practical means m, so of good management and careful selection of partners are important. Students should also deal with the possibility if of creating limited partnerships in some situations. Good students might also mention the movement to create one limited liability partnerships in applicable cases in some jurisdictions. 209) Here students must show that they understand that a partnership can be created inadvertently. "People carrying on business together, trying to make a profit" is the definition of a partnership. The danger is that the designation of "partnership" brings with it unlimited liability. Students then would likely explain in what circumstances carrying on business together would create a partnership. The courts will look to see if the activity is a business and if it is an on-going activity, not just a one-time combined effort. Then the courts will look to see if the parties are carrying it on together. The test here is whether the parties are sharing gross returns from the business or the profits (the net return). If they are splitting fees or commissions, before profits, that is not enough to create a partnership; however, if they are sharing the returns after costs have been taken out, that is evidence of a partnership. Students should also point out that the Partnership Act lists a number of activities (such as sharing income from the joint ownership of real property or getting a profit-sharing bonus from work) that will not by themselves be evidence of the existence of a partnership. This is most important when dealing with outsiders who are trying to establish a partnership to impose liability on some other party other than the one with whom they have been dealing. 210) It is very important that students understand the nature of a fiduciary duty, and this question requires them to demonstrate that understanding with respect to the agency relationship as well as partnership. Since each partner is an agent of every other partner, they also have a fiduciary duty to their partners. A similar question to this was asked in the last chapter, where the fiduciary duties of agents were discussed. A number of obligations were listed as examples showing the nature of this duty. They are as follows: The partner must disclose information he is aware of that may be of relevance, whether or not he thinks it may benefit the other partners. When one partner represents the partnership in dealing with outsiders, there is a duty not to take kickbacks or to take commissions from the other side without disclosure and approval from the other partners. There is a duty not to act in conflict of interest and so to put the interest of the partnership before one's own. A partner can't sell to the partnership things that he owns or has an interest in without disclosing that fact. The partner can't purchase things for himself from the partnership without disclosing that fact, even where he does so through a corporation. The partner can't use partnership assets or property for his own purposes without the permission of the other partners. The partner can't take advantage of opportunities that come to him because of his position that should be disclosed to the other partners The partner must account for profits that he makes because of a violation of this duty. In short, this is an utmost good faith relationship, and the partners must act in the best interest of each other, putting their own interests second to those of the partnership. Students may supply other examples of the obligations of a fiduciary. 211) This question requires students to demonstrate an understanding of the Partnership Act. They should indicate that it is one of those statutes that summarizes the case law and is in effect in most jurisdictions. More importantly, they should indicate that it contains provisions that govern the activities of partners with each other and the activities of those partners with outsiders. Limited liability is imposed on partners dealing with outsiders for the commission of torts, for contracts entered into on the partnership's behalf, and for breach of trust. It is important for students to show that such liability to outsiders cannot be changed by the terms of a partnership agreement. As far as the relationship between the partners, the Act sets out a number of responsibilities and obligations between the partners. Examples are the duty owed from partner to partner, the fact that majority decisions must be unanimous, and the requirement that profits are to be shared equally. Students should explain others listed in the text. The important point that must be explained is that these rights and obligations between partners listed in the Partnership Act can be changed by the terms of a partnership agreement made by those partners. Thus, there can be different classes of partners (senior and junior) who receive a different share of the profits and who have different powers when important decisions are made. They may also be given different roles with respect to participation in the management of the partnership.

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212) An agent's authority ends as soon as the agent is notified of the withdrawal of the principal's consent. An agency agreement may also set out when the agent's authority will end: An agency relationship established for a specified time will end at the expiry of that period, or if established for a specific purpose or project, when that purpose has been achieved or project has been completed. In addition, frustration may terminate agency, as will as request to perform an illegal task. Finally, death, insanity, or bankruptcy will terminate agency. Students should be sure to discuss the effect of termination. If the principal dies, becomes bankrupt, or (in the case of a corporation) is dissolved, the agent's actual authority will cease, as will the agent's apparent authority. In the case of insanity of the principal, the agent's actual authority will cease, but it is unclear what the impact will be on the agent's apparent authority. When an agent's authority is terminated by mutual agreement, the agent's actual authority ceases, but the agent's apparent authority continues until the third party is notified of the termination. Because apparent authority can continue beyond apparent authority, it is important to take steps to notify third parties of the termination. 213) Students should note that a partnership is relatively easy to dissolve, simply requiring notice to that effect be given by one of the partners. This can cause challenges, as it typically requires the sale of the partnership assets and distribution of the proceeds to the partners. Ideally, in partnerships of more than two, the partnership agreement should provide a mechanism to allow one partner to leave, without causing the remainder of the partnership to dissolve. Subject to the partnership agreement, dissolution can also occur as a result of the death, bankruptcy, or insolvency of any partner. (BC has special rules governing this case.) A partnership established for a specified time will end at the expiry of that period (or if established for a specific purpose, when that purpose has been achieved). Further, a partnership is automatically dissolved if the venture becomes illegal. Finally, a partner can apply to the court to dissolve the partnership in certain cases. Dissolution ends the partnership, requires the partners to wind up the business, sell the assets to pay off any obligations to creditors, and then distribute any remaining assets and funds to the former partners.

Chapter 12 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Because a director of a closely-held corporation breached his duties to the corporation, the corporation lost $15,000. Despite the urging of the shareholders, the board of directors refused to begin an action on behalf of the corporation. Which one of the following provisions would aid the shareholders? A) Derivative-action provisions B) Dissent procedure C) Preemptive right provisions D) Indoor-management rule E) Relief-from-oppression provisions

2) John and two friends incorporated a closely-held corporation. Each bought an equal number of common shares in the corporation. Each became a director, an officer and an authorized agent of the corporation. Which of the following is true? A) As director, each owes a fiduciary duty to the creditors of the corporation. B) The corporation is more highly regulated and less free of government regulations and control than a broadly held corporation would be. C) Since the corporation is a legal fiction, all of its activities must be carried out through principals. D) If the affairs of the corporation are being conducted in a manner that is unfairly prejudicial to any one shareholder, that shareholder could seek relief from such oppression from the courts. E) Each of them, as directors, owe a fiduciary duty to each of the others, as shareholders.

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3) After Bill Roles graduated from university, he incorporated Roles Enterprises Ltd. He put $10,000 into the corporation by way of a shareholder's loan and the corporation granted him a chattel mortgage of one of its two delivery trucks as security. You knew Bill at school; therefore, when Roles Enterprises Ltd. needed computer supplies, Bill, on behalf of the corporation, contracted with you, the owner of a business selling computer supplies. As it turned out, Bill placed such orders with you almost every three weeks. Read each of the following separately and indicate which of the following is true. A) If an employee of Roles Enterprises Ltd. came to your store to pick up supplies and caused $900 damage by his negligent driving, you could sue the employee, Roles Enterprises Ltd., and Bill personally because the employee worked for Bill's corporation. B) If Roles Enterprises Ltd. owed you $1 500 for supplies when it was placed into bankruptcy by its creditors, Bill would be more likely to lose money he lent to the corporation than you would be. C) If the corporation owed you money and Bill, the only shareholder in the corporation, was killed, you would look to Bill's estate for payment. D) If Bill had inadvertently contracted with you before the corporation was in existence, the corporation would lose the ability to ratify that contract, and the contract would be considered void. E) If Bill neglects to file annual returns for the corporation, Roles Enterprises Ltd. could cease to exist. 4) Kent incorporated Dynamite Data Ltd., which worked with small businesses in developing graphs and charts from their data for presentations to bankers, shareholders, etc. Kent lent the company $25,000 by way of a shareholder's loan and took as security computers, plotters, and printers under a chattel mortgage document. An employee of the corporation, Jack, delivering some graphs to a customer, Roth, got into an argument with Roth, who was complaining that the graph was in red and not in pink as requested. It ended with Jack punching Roth, who fell onto a microscopic camera. The damage to the nose and camera: $35,000. Which of the following is true? A) If the corporation went bankrupt but owed creditors (other than Roth), Kent would be in a worse position than unsecured creditors to collect proceeds realized from the sale of the corporation's assets. B) The corporation is not liable for the damage caused by the action of its employee, Jack. C) Kent is liable for the damage to Roth and the camera if neither Jack nor the employer/corporation has sufficient funds.

D) Even if Kent, the only shareholder, died, the corporation would not die and would still owe its outstanding debts. E) Roth's action against Jack is for the tort of assault. 5) Which of the following is a fiduciary relationship? A) Directors of the corporation and the corporation B) Agent and the third party C) Director of the corporation and the shareholders of the corporation D) Officer of the corporation and the shareholders E) Shareholders and the corporation 6) Which of the following is true with regard to the characteristics of corporations? A) A shareholder's liability is limited to the amount he or she paid for the shares. B) Directors are responsible for the shareholders of the corporation. C) Shareholders, are liable for the debts and other obligations of the corporation. D) The corporation is a separate legal person, but neither can sue nor be sued. E) The shareholders would be vicariously liable for any damage caused by a employee of the corporation carrying out his or her duties.

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7) You have been asked by two fellow graduates to join them in incorporating a closely held corporation that would commence a consulting business. One was in your class, so you know him quite well, but the other is graduating from a different school. You have been discussing the law to review the protection it gives you. Read each of the following statements separately and indicate which is true. A) As a shareholder, you will have the right to vote for the officers of the corporation. B) If you have preemptive rights and the directors decide to issue a new allotment of shares, the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation. C) If you each take one-third of the first allotment of the shares, you will necessarily be a minority shareholder, and have no voting rights in electing the directors of the corporation. D) If you were voted out as a director by the others, who could show that it was in the best interests of the corporation, you could always sell your shares to any interested buyer without interference from the other directors. E) A shareholder's agreement allows shareholders and not officers to manage the corporation.

8) Which of the following is an advantage of incorporation? A) Shareholders can veto decisions of directors. B) Shareholders owe a duty to the corporation. C) Shares are easily transferred. D) There are no tax advantages as compared to a sole proprietorship. E) Shareholders are liable for debts of the corporation. 9) ABC Ltd. is a closely-held corporation. Two of the shareholders serve as directors. As directors, they voted to issue themselves more shares to increase their voting control of the corporation. Which of the following provisions would aid the other shareholders? A) Dissent procedure B) Indoor-management rule C) Preemptive right provisions D) Relief-from-oppression provisions E) Derivative-action provisions 10) Smith, Jones, and Brown incorporated XYZ Ltd. The three were sole shareholders, directors, officers, and employees. Jones and Brown disliked working with Smith. They knew he was good for the business, but

they personality and politics. After a year, Jones and Brown, as directors, removed Smith as an officer and disliked employee and raised their own salaries as employees. They then voted Smith out as a director at the next his shareholders' meeting. Which one of the following provisions would aid Smith? A) Relief-from-oppression provisions B) Derivative-action provisions C) Preemptive right provisions D) Indoor-management rule E) Dissent procedures 11) In jurisdictions in which the registration system of incorporation is used, the rules governing the internal regulations of a company are called A) the memorandum or memorandum of association. B) the articles or articles of association. C) the letters patent. D) the notice of offices. E) the certificate of incorporation.

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12) Smith, director of ABC Ltd., intercepted a corporate opportunity for his own benefit and thereby caused the corporation to miss a $45,000 profit. A shareholder urged the board of directors to take action against him. The other directors, all close friends of Smith from school days, did not take any action against him, although they did voice their dissatisfaction with his move. Which of the following provisions would aid the shareholder? A) Indoor-management rule B) Preemptive right provision C) Relief-from-oppression provision D) Dissent procedure E) Derivative-action provision

13) Three classmates incorporated about a week after graduation. The authorized capital was 500,000 common no-par-value shares. Each took one share; each was a director. If the directors decide to issue more shares from the treasury to raise more capital, which of the following provisions ensures that they keep their proportionate holdings? A) Dissent procedure B) Indoor-management rule C) Relief-from-oppression provision D) Preemptive right provision E) Derivative-action provision 14) A real estate agent, by virtue of his fiduciary duty to his principal, is not allowed to buy the property being sold by his principal without full disclosure to and consent from his principal. The real estate agent does not want to disclose that he is the buyer of the property, so he forms a corporation and takes an offer to his principal from the corporation. Based on these facts, which of the following is true if the principal finds out the corporation/buyer is owned by the real estate agent and objects to the contract? A) The court would enforce the contract because this is not a direct breach of the agent's fiduciary duty. B) The court would enforce the contract because the corporation is a separate legal entity in the eyes of the law. C) The court would enforce the contract, but the principal would be able to claim any profits from the agent when he took them out of the corporation. D) The court would not enforce the contract and would "lift the corporate veil." E) The court would dissolve the corporation. 15) Four years ago, Ben Ratzi incorporated a corporation and became the sole shareholder, director and officer.

He lent and took a debenture from the corporation as security for repayment of the loan. The corporation prospered. the Last year, your brother began supplying the corporation with office supplies. He was paid at the end of each corporati month for supplies delivered during that month. For the last six months, however, he has not been paid. He on learned that other suppliers had not been paid either because sales dropped drastically, apparently due to $10,000 Ratzi's harsh management style, which has upset the entire staff. Which of the following is true? A) Your brother has no claim against the corporation because it has limited liability. B) If your brother decided to sue for the debt, he could sue Ratzi because he was the sole shareholder and his management style caused all the trouble. C) Your brother could take an action under statutory "relief from oppression" provisions. D) If Ratzi dies, his corporation would automatically die too, and there wouldn't be any person to sue. E) If this corporation were placed into bankruptcy, Ratzi would be in a better position than your brother for receiving proceeds realized from the sale of the assets of the corporation.

16) Which of the following statements about pre-incorporation contracts is false? A) If a corporation does not ratify a pre-incorporation contract, or if a pre-incorporation contract is signed in a jurisdiction which does not permit ratification, the promoter remains solely liable for any losses. B) Promoters cannot be held liable for losses, due to the doctrine of corporate myth. C) Ratification of pre-incorporation contracts is invalid at common law, since the corporation did not exist at the time the contract was made. D) Many jurisdictions have made legislative changes permitting later-incorporated corporations to ratify pre-incorporation contracts. E) Promoters will often purchase property on behalf of a corporation prior to incorporation and then have the corporation ratify after incorporation has taken place.

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17) Which one of the following is an example of breach of fiduciary duty? A) The directors refused to declare a dividend, contrary to the request by its preferred shareholders. B) A shareholder owning 2% of the outstanding shares started a business in direct competition with the corporation in which he held shares. C) An officer of the corporation learned of a business opportunity intended for the corporation and intercepted it for his own benefit. D) A director profited $120,000 from a contract between the corporation and a firm in which he had an interest after he made full disclosure of his interest to the board of directors and abstained from the vote on the contract. E) The directors of the corporation refuse to give a pay raise to the employees although they had not received a pay raise for five years. 18) Which of the following attracts the dissent procedure, which can result in the corporation being forced to buy the shares of a shareholder at market value? A) When the directors have hidden behind the corporate structure to do a wrong sufficiently serious that the courts would have "lifted the corporate veil." B) When the directors conduct the affairs of the corporation in a manner oppressive to one or more of the members. C) If the directors of a non-reporting corporation fail to allot new shares proportionately to the members. D) When the directors of the corporation fail to enforce a right, duty, or obligation owed to the corporation that could be enforced by the corporation. E) When major changes are made, in the best interests of the corporation, that will adversely affect one group of shareholders. 19) Which of the following situations would allow a shareholder of a closely-held corporation, with permission of the court, to sue on behalf of the corporation? A) If the corporation had been wronged by the negligent and fraudulent acts of one of its directors, but the corporation refused to take any action against the wrongdoer.

B) If the directors refused to declare a dividend. C) If the shareholders refused to enter into a shareholder's agreement. D) If four of the five directors, in the best interests of the corporation, voted against the fifth director, voted to end the employment contract of the fifth director, and voted not to buy his shares. E) If the directors solicited proxies from all of the shareholders. 20) With regard to corporate law, which of the following is true? A) The charter document of a B.C. company is called the "Articles of Incorporation," and it contains an objects clause, i.e., a clause setting out the limits of the company's business. B) Shareholders shall manage the affairs of the corporation and they must exercise care, diligence, and skill in doing so. C) Federal corporations are created only by special acts of Parliament. D) A shareholder in a closely-held corporation is always entitled to sell his shares to whomever he wishes. E) Par value shares may be misleading because the share, after being issued, will be valued by market forces and that value may not be the value on the face of the share.

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21) The directors held their last meeting on December 31 at 4:30 p.m., and it was conducted more like a party than a usual meeting. A director was negligent in signing a promissory note, which cost the corporation $15,000; furthermore, the director was in breach of his fiduciary duty because the note was paid to a corporation in which he had an interest. Which of the following is true? A) The shareholders could force the director to pay the $15,000 to the corporation by insisting on their "pre-emptive rights." B) A shareholder could commence an action on behalf of the corporation against the director if he gets the court's permission to do so. C) The proper plaintiffs in the action are the shareholders, under the relief from oppression provision. D) The shareholders could dissent to this act and force the corporation to buy them out at fair market value. E) If the corporation failed to start an action through its authorized agents (e.g., its directors), no action could be taken because a corporation is merely a legal concept and must act through its authorized agents.

22) The promoter of a corporation, called Seymour Holdings Ltd., contracted for $4,000 worth of office furniture "on behalf of Seymour Holdings Ltd.," prior to incorporation. After incorporation, the new directors want to ensure that the corporation is bound. They will be able to do so if A) the corporation is closely-held and the promoter is a director. B) the promoter made it clear that he was signing on behalf of the corporation. C) the promoter was acting in the best interests of the corporation to be formed. D) the promoter intended that the corporation, and not himself, would be bound by the contract. E) the corporation ratifies the contract and ratification is permitted in the jurisdiction. 23) Which of the following is an example of a breach of a fiduciary duty? A) The directors of the corporation, contrary to the request by the shareholders, refused to declare dividends. B) A promoter of a corporation sold property to the corporation for four times what he paid for it after he made full disclosure of his interest to an independent board of directors, which voted for the purchase. C) A partner in a firm learned of a business forced to sell some heavy equipment. Although the partnership could have used the equipment, he bought and sold it at a substantial profit before the partnership was given a chance to buy it. D) A shareholder of ABC Ltd., a trucking corporation whose shares are listed on the Vancouver Stock Exchange, is working as an employee for ABC Ltd.'s competitor, Jonstone Trucking. E) A shareholder of a corporation voted in favour of an acquisition by the corporation at the annual general meeting because he secretly had an interest in the corporation being purchased.

24) With regard to the law of corporations, which of the following is true? A) A director of a corporation could not be personally liable on a promissory note even if he just signed his own name as long as at the time he intended to sign on behalf of the corporation. B) "Relief from oppression" provisions allow a party who has contracted with the corporation to force the corporation to honour a contract it has signed in an irregular manner. C) A creditor of a corporation could sue for some remedy if the directors of the corporation voted for a resolution to pay a dividend when the corporation was insolvent. D) In many jurisdictions, pre-emptive rights entitle a shareholder to pass on their right to vote to someone else. E) If a minority shareholder is treated unfairly, the appropriate relief to request is that the court "lift the corporate veil."

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25) Jed Wimsey, in auditing the books of various businesses around town, was talking to you, his best friend, about certain practices that he thought improper. Which of the following practices he found would be a breach of fiduciary duty? A) A director of a corporation profited $25,000 from a contract between the corporation and sellers of some property in which the director had an interest, after the director made full disclosure of his interest to the board of directors and abstained from the vote. B) An officer of a corporation took advantage of an opportunity he learned about as an officer of the corporation, but took steps to determine that the corporation was not interested in it and received permission to do so from the board of directors. C) The directors failed to declare a dividend for the fourth year in a row. D) A partner of a firm that sold hospital supplies had, without the knowledge or consent of his partners, started a competing business that he ran from his own home. E) A shareholder belongs to a group that directly opposes the policy of the corporation with regard to its logging and mining operations.

26) In 2011, Rambolin incorporated Rambolin Industries Ltd. and became its sole shareholder. He lent the corporation $10,000 and took a chattel mortgage from the corporation as security for repayment of the loan. He became director, president, and secretary of the corporation. The corporation prospered. Last year, you began supplying the corporation with office supplies. You were paid at the end of each month for supplies delivered during that month. For the last six months, however, you have not been paid. You learn that other suppliers have not been paid either because sales had dropped drastically, apparently due to Rambolin's nasty temper caused by ill health. Which of the following is true? A) If you decided to sue for the debt, you could sue Rambolin because he is the sole shareholder and his nasty temper caused all the trouble. B) You could take an action under the pre-emptive right provisions under the relevant legislation. C) If Rambolin dies, his corporation would automatically die too, and there wouldn't be any person to sue. D) Shareholders have a statutory obligation to manage the corporation, so Rambolin, as shareholder, must exercise care in that task. E) If this corporation were placed into bankruptcy, Rambolin would be in a better position than you for receiving proceeds realized from the sale of the assets of the corporation. 27) Jack Kihn incorporated and put $20,000 into the corporation by way of a shareholder's loan and took back a chattel mortgage on the corporation's equipment. The corporation created decorative boxes. An employee of the company delivered some boxes to a customer who complained about the colour used. The employee became so angry that he shoved the customer, who fell into a glass display case, causing $30,000 damage to the customer and the case. On these facts, which of the following is false? A) The employee is liable for the tort of battery. B) Kihn himself is vicariously liable for the damage caused by the employee. C) Although Kihn is the sole shareholder of the corporation, he is not responsible for company debts.

D) The employee is liable for his tort and his employer is also liable. E) If the corporation went bankrupt, Kihn himself would be a secured creditor. 28) Mr. Ace of Oink Inc., a closely-held corporation, is one of three shareholders. After several years of considerable success, the corporation hit hard times. The other shareholders, Mr. Bane and Mr. Curr, in the best interests of the corporation, voted Mr. Ace out as a director and voted not to renew his employment contract. Upset by these events, Mr. Ace just wanted to sell his interest and leave the corporation. The other two shareholders, however, refused to buy his shares. Furthermore, when he attempted to sell his shares to his brother, who was interested in the corporation, they refused to register the brother as a member. Which of the following is true? A) Because of statutory preemptive right provisions, if Ace wants out, the other shareholders must buy him out. B) Mr. Ace could have avoided such a dilemma through provisions of a shareholders' agreement. C) Mr. Ace could sue the corporation for breach of its fiduciary duty. D) Mr. Ace could sell his shares to whomever he chose and the remaining shareholders must register the new owner. E) The court would "lift the corporate veil" because Mr. Bane and Mr. Curr were hiding behind the corporation to commit a fraud.

29) In which of the following relationships is a fiduciary duty owed? A) The director of a corporation to the shareholders B) An employer to his employees C) The officers of a corporation to the shareholders D) A principal to his agent E) The director of a corporation to the corporation

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30) Which two of the following are examples of breaches of fiduciary duty? A) A shareholder started a business that competed directly with the business. B) The directors of the corporation, contrary to the request of the shareholder, refused to declare dividends. C) A director of a corporation, as director, learned of a good deal and took advantage of it for himself before the corporation had the opportunity to do so. D) A promoter of a corporation sold property to the corporation for three times what he paid for it after he made full disclosure of his interest to an independent board of directors, which voted for the purchase. E) An employer charged his employees for parking after supplying it free for years. 31) Mr. A is the sole shareholder of X Ltd., and is also a director of Y Ltd. Y Ltd. is negotiating to buy property from X Ltd. Which of the following is false? A) Mr. A. has a duty to act in the best interests of Y Ltd., and to avoid any conflict of interest. B) So long as Mr. A discloses his position to the board of directors of Y Ltd., he can vote in favour of the contract at the directors' meeting. C) Failure to disclose his interest will make Mr. A liable to Y Ltd. for any profits he makes on the transaction and for any losses suffered by Y Ltd. D) Mr. A. does not owe a fiduciary duty to X Ltd. or to his fellow X Ltd. shareholders. E) To protect himself, Mr. A must disclose his interest to the other directors and refrain from voting or influencing the decision. 32) Which of the following situations would allow a shareholder to sue on behalf of the corporation? A) If four of the five directors, in the best interests of the corporation, voted against the fifth as director, voted to end the employment contract of the fifth, and voted not to buy his shares. B) If the shareholders refused to enter into a shareholder's agreement. C) If the directors took an action that unfairly prejudiced a shareholder.

D) If the directors issued shares without offering any of the new issue to the present shareholders. E) If the corporation had been wronged (lost $30,000) by the negligent and fraudulent acts of one of its directors, but the corporation refused to make any action against the wrongdoer.

33) Art Raskle was an officer, director, and employee of a broadly held corporation. At a directors' meeting, he was surprised but pleased to learn that the corporation was discussing a resolution to contract with the firm of Fielding's Office Supply for $200 worth of office equipment. He and a businesswoman recently bought that business; Raskle has a 45% interest. Raskle voted for the contract and the resolution passed without discussion by a vote of 6-0. Several months after completion of the purchase, the other directors learned of Raskle's interest in Fielding's Office Supply and called on him to account to the corporation for any profit made. Which of the following is true? A) Raskle has breached his fiduciary duty but if the sale was "fair" and if the shareholders approve the sale by a special resolution after full disclosure, he need not account to the corporation for any profit made. B) Raskle is not in breach of any fiduciary duty because the dollar value of the contract falls below the minimum statutory threshold. C) Raskle is not in breach of his fiduciary duty because directors of corporations vote on contracts in which they have an interest all the time. D) Raskle must account for any profit made because he failed to disclose his interest and voted on the question. E) Raskle has not breached his fiduciary duty because his vote did not determine the matter. Had he not voted, the result would have been the same.

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34) You have been asked by two fellow graduates to join them in incorporating a closely held corporation that would commence a consulting business. One was in your class, so you know him quite well, but the other is graduating from a different school. You have been discussing the law to review the protection it gives you. Read each of the following statements separately and indicate which is false. A) As a shareholder, you will have the right to vote for the directors, who in turn will choose the officers. B) If you have preemptive rights and the directors decide to issue a new allotment of shares, the corporation must offer you a portion of the new issue to allow you to keep your proportional share of the corporation. C) If you each take one-third of the first allotment of the shares, you will necessarily be a minority shareholder. D) A shareholder's agreement would lessen any misunderstandings about rights and obligations. E) If you were voted out as a director by the others, who could show that it was in the best interests of the corporation, you could always sell your shares to any interested buyer without interference from the other directors. 35) An agent owes a fiduciary duty to his principal; a director owes a fiduciary duty to the corporation; partners owe a fiduciary duty to the firm and to the other parties. Which of the following is not true with regard to one's fiduciary duty? A) An agent would be in breach of his fiduciary duty if he let his interest conflict with his duty. B) An agent failing to disclose to his principal all information relating to the principal's business transaction would be a breach of his fiduciary duty. C) A partner secretly competing with his own firm would be in breach of his fiduciary duty. D) A fiduciary is in a position of trust and owes true loyalty to the person depending on him. E) A shareholder owning a business that secretly competes with the corporation is in breach of fiduciary duty. 36) In jurisdictions where the registration system of incorporation is used, registration is accomplished by filing which of the following combinations of documents? A) Letters patent and application for incorporation B) Company constitution and business plan

C) Articles of incorporation and certificate of incorporation D) Articles of association and memorandum of association E) A certificate of incorporation 37) Another term commonly used where a bond is involved is A) a debenture. B) a negotiable instrument. C) a share D) a loan. E) a personal property security.

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38) Your friend Harry became wealthy through the tremendous success of a gadget he designed that allowed micro-chips to be produced without being touched by humans. He has been invited to sit on the board of directors of different corporations. He is aware of the increasing number of cases finding directors personally liable. He does not want to be connected with a corporation involved with any wrong-doing. He has hired you to prepare in-depth reports on five corporations. Your reports reveal the following. In which of these is there no legal wrong? A) 123456 Canada Ltd.: In a closely held corporation with four members, each owning 25% of the outstanding shares, the two members who served as directors voted to issue more shares, which they sold directly to themselves to give them voting control of the corporation, despite a provision providing for preemptive rights in a shareholders agreement. B) 12376252 Canada Ltd.: In this broadly held computer software corporation, a director, without the knowledge or consent of the board of directors, started a competing business that he ran from his home. C) 3721956 Canada Ltd.: The majority of the directors voted on a measure that was not in the best interest of the corporation, but that would financially weaken the position of a shareholder whom they personally disliked. D) 167354 Canada Ltd.: A director who learned of a business opportunity while serving on the board of directors intercepted the opportunity for himself before the company could act on it. E) 1999872 Canada Ltd.: A minority shareholder joined with a group that protested the corporation's involvement in a logging operation and tried to prevent the planned logging.

39) If a corporation had been wronged by negligent and fraudulent acts of one of its directors and consequently suffered a $45,000 loss, and the board of directors would not take any action on behalf of the corporation against the wrongdoer, which of the following is true? A) The shareholders could sue the corporation for oppression. B) If the company failed to commence an action through its authorized agents (e.g., its directors), no action could be taken, because a corporation is merely a legal concept and must act through its authorized agents. C) The shareholder could proceed under the "dissent" procedure and force the corporation to pay them a fair market value for their shares. D) A derivative action allows a shareholder to commence an action on behalf of the corporation. E) The shareholders could force the directors to start the action on the basis of their "pre-emptive right." 40) John Hollin was an officer, director, and employee of a large broadly held corporation. At a directors' meeting, he learned that the corporation was voting on a resolution to buy a piece of property from Sam Keanu for $100,000. It happened that Hollin was one of three co-owners of that property. Hollin voted for the purchase and the resolution passed without discussion by a vote of 5-0. Several months after completion of the purchase, the other directors learned of Hollin's ownership and called on him to account to the corporation for any profit made. Which of the following is false? A) Hollin owed a fiduciary duty to the corporation and breached that duty by his actions. B) Hollin should have disclosed his interest and refrained from voting or otherwise influencing the

decision. C) Hollin must account for any profit made because he failed to disclose his interest and voted on the question. D) The shareholders could proceed under the dissent procedure and force the corporation to buy them out. E) If the directors failed to take action, the shareholders could have brought an action on behalf of the corporation against Hollin. 41) Which of the following is not an advantage of incorporation? A) Shareholders are not liable for debts of the corporation. B) Shares are easily transferred. C) There may be tax advantages. D) Shareholders can veto decisions of directors. E) Shareholders owe no duty to the corporation.

42) Mark wants to incorporate. Which one of the following statements is correct with regard to incorporating in Nova Scotia? A) These are "letters patent" jurisdictions. B) The "objects" of the company must be set out in the charter document so that the shareholders understand the limits on the capacity of the corporation. C) The documents to be sent to the registrar of companies are called the "memorandum" and the "articles." D) You can't incorporate a closely held company in these jurisdictions. E) Articles of incorporation is the document used to incorporate the company.

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43) Kent incorporated provincially. The corporation worked with small businesses in developing graphs and charts from their data for presentation to bankers, partners, shareholders, etc. If Kent, as promoter and agent of the company, had bought the necessary equipment from Ace Computers Ltd. prior to incorporation, which of the following would be true? A) A corporation is legally bound to ratify all contracts made prior to incorporation, but only if those contracts were made with the intention that the corporation be bound. B) Kent may have been able to protect himself by including a provision in the contract with Ace exempting him from personal liability. C) Kent's liability on the contract would be limited to his investment in the corporation. D) Many jurisdictions have recently enacted statutory provisions preventing a corporation from ratifying pre-incorporation contracts. E) At common law, pre-incorporation contracts are binding on the corporation, but only from the moment the corporation comes into existence. 44) Aunt Juliet wants to incorporate a small closely held corporation. Which of the following bits of advice, given to her by friends, is false? A) She can enter into a contract on behalf of the corporation even before incorporation and the company will automatically be bound when it is incorporated. B) The incorporation documents to be submitted in B.C. are called the "Memorandum" and the "Articles." C) She has the option of incorporating federally if she wants. D) The incorporation document to be submitted in Ontario is the "Articles of Incorporation." E) In some jurisdictions in Canada, she could be personally responsible for a pre-incorporation contract. 45) Andrea agreed to form a corporation with two friends, but lay awake last night rethinking her decision. They agreed that they all wanted to be directors and officers and that they all would have signing authority with the bank from whom the corporation is borrowing the money. Nevertheless, she began to review her assumptions. Which of the following is true? A) She would be able to bring an action on behalf of the company if one of the directors breached his

fiduciary duty to the corporation and the other directors refused to do anything about it. B) As a major shareholder, she would be elected as a director every year even without such a provision in the shareholders' agreement. C) She would be able to ask the court for "relief from oppression" if she disliked a decision passed by the majority of the directors. D) As a shareholder, she is free to compete with the company even if she is a director as well. E) When she signs the promissory note at the bank on behalf of the corporation, she can just sign her own name; she will not be personally liable as long as she intended to sign on behalf of the corporation.

46) Read each of the following separately. In which one of the following cases would the corporation not be bound by the contract made? A) A salesperson working for a corporation operating a car dealership sold a car and took a trade-in without first getting approval of the manager as required in his employment contract. B) Kim, an agent for a small closely held corporation which sold Canadian art, had authority to purchase some photographs of Clayoquot Sound, but instead she bought several oil paintings of the sea. When they were sent to the store, they were sold immediately. C) Jones, without the knowledge or authorization of Corporation A, approached one of their suppliers claiming to be an employee of Corporation A. He selected several valuable watches and took them with him, putting the bill on Corporation A's account. No one in Corporation A had ever heard of Jones before. D) Brian, a purchasing agent for the corporation for ten years, was fired for just cause. The next day, he visited suppliers as usual and contracted for the corporation as usual. They had not been told that he had been fired. E) Contrary to company policy, Gore, the purchasing agent for the corporation, contracted for supplies by using the green form instead of using the blue form.

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47) Mr. Malik, an investment counsellor by training, sat on the board of directors of Talbot Enterprises Ltd., a broadly held corporation. During a meeting of the board, he advised the corporation to buy some condominiums given the present soft real estate market. Malik did not disclose that he owned shares in the corporation that owned the property, nor did he disclose that he would be entitled to a commission for every unit he helped sell. When the question was put to the board, he voted for it. Read each of the following statements separately, and indicate which is true. A) Malik has breached his fiduciary duty, but if the sale was fair, he need not give up his profits. B) A shareholder, learning of his actions, could proceed under the dissent procedure, which would cause the corporation to buy his shares at fair market value. C) Malik must account for any profit made because he failed to disclose his interest and voted on the question. D) Malik doesn't have to disclose his interest in the contract if he has signed an agreement with the other directors relieving them of their fiduciary duties. E) A director must disclose his interest in a contract before the board, but is not required to refrain from voting for it. 48) In Salomon v. Salomon & Co., Mr. Salomon incorporated a business to which he loaned money, secured by a mortgage on the business assets. When the business failed, the creditors turned to Mr. Salomon, arguing that he should not be able to claim ahead as a secured creditor and, in fact, should be responsible for the company's debts. What did the Court find? A) The company was a legal entity separate from Mr. Salomon, so Mr. Salomon could have priority as a secured creditor and bore no responsibility for the company's debts. B) Mr. Salomon could not claim priority as a secured creditor, because this would amount to a conflict of interest. C) The company was a legal entity separate from Mr. Salomon, but it would not be fair to allow him to claim his money ahead of arms' length parties.

D) Mr. Salomon, by creating a fictionalized legal entity, had committed a fraud on the business's creditors, and so should bear total responsibility for the creditors' claims. E) Mr. Salomon, as the incorporator, should be responsible for paying the creditors of his business, on the grounds of unjust enrichment. 49) In Peoples Department Stores Inc. et al. v. Wise et al., the Supreme Court of Canada had to clarify to whom a director owes its duties. What did the Court hold? A) A fiduciary duty is owed to the company and to other stakeholders. B) A duty of care is owed only to the company, while a fiduciary duty can also be owed to other stakeholders. C) A fiduciary duty is owed only to the company, while a duty of care can also be owed to other stakeholders. D) A fiduciary duty is owed only to creditors, while a duty of care can also be owed to other stakeholders. E) A duty of care is owed only to creditors, while a fiduciary duty can also be owed to other stakeholders.

50) Consider the decision in Agrium Inc. v. Hamilton. What did the Court find? A) Hamilton, as a director and majority shareholder of Flagstaff, was not in a fiduciary relationship with Agrium, a minority shareholder. B) Hamilton was liable for fraudulent misrepresentation. C) Hamilton's action did not constitute oppressive conduct. D) Hamilton, as a director and majority shareholder of Flagstaff, was in a fiduciary relationship with Agrium, a minority shareholder. E) Hamilton was liable for insider trading.

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51) Lee, a former head of a venture capital firm, sat on the board of directors of Angel Enterprises Ltd., a broadly held corporation. During a board meeting, she recommended that the corporation invest in a new technology startup. Lee failed to mention that she owned shares in this new tech company. When the prospect of investing was put to the board, Lee voted in favour it. Read each of the following statements separately, and choose the true statement. A) Lee does not owe a fiduciary obligation to the company, only to individual shareholders. B) Lee must account for any profit made because she failed to disclose her interest and voted on the matter. C) Lee has breached her fiduciary duty, but she does not need to give up any profits, as long as the investment turns out to have been sound. D) Lee does not have to disclose her interest in the contract, as long as her director's agreement relieves her of her fiduciary duties. E) Lee must disclose her interest in a contract before the board, but she is entitled to vote for it. 52) When lending money to a closely held corporation, what will a bank usually insist on from the major shareholders or other principals? A) a fiduciary obligation B) a negotiable instrument C) a preemptive right D) a personal guarantee E) a debenture 53) Punam was the director of a broadly held corporation that made educational software. Without the knowledge or consent of the board of directors, Punam started a competing business that she ran from home. Which of the following is true? A) Punam owes the shareholders of the corporation a fiduciary duty, so they could sue her if they suffer a loss. B) Punam can compete with the business, as long as she does use confidential documents belonging to the

corporation. C) Whether or not Punam can compete with the business, depends on whether her written contract prohibits it. D) Punam is only a director, so she owes no special duty to the corporation. E) Punam has breached a fiduciary duty owed to the corporation. 54) Ethan got together with a number of friends who all sat on the Board of Directors of a corporation. They personally disliked Stephen, a minority shareholder with a bad attitude. A new proposal was being put to the Board. While they knew that this was not a measure that was in the best interests of the corporation, they also knew it would seriously weaken Stephen's financial position. Accordingly, they voted in favour of it. Which of the following is true? A) The directors have breached their fiduciary duty to act in the best interests of the corporation. B) The directors have acted inappropriately, but because Stephen is a minority shareholder, their conduct is not actionable. C) The directors have breached their fiduciary duty to act in the best interests of the shareholders. D) The directors have discretion to act how they see fit, even if it is not generally viewed as professional. E) The directors have breached the Canadian Code of Professional Conduct.

55) A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering is known in law as A) a shareholder. B) a founder. C) a preferred shareholder. D) an initiator. E) a promoter.

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56) A securities commission is A) a fee or percentage allowed to a shareholder in a share transaction. B) a permission to transfer shares in a closely held company. C) an authorization to exchange confidential information. D) a collateral right to debt. E) a provincial agency that serves as watchdog on the stock market.

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 57) A corporation is a fiction that does not exist in reality. 58) There is one common method of creating corporations used across Canada. 59) A corporation does not die but may be dissolved. 60) A corporation is considered to be a separate legal entity from the shareholders who make it up. 61) Where a corporation borrows money, only the corporation is responsible for that debt, not the shareholders. 62) Where a corporation is not able to pay the debts it owes, the creditors can turn to the shareholders for payment. 63) When a personal guarantee has been signed by a shareholder, the creditor can demand payment from that shareholder despite the separate legal entity nature of the corporation. 64) A broadly held corporation has fewer restrictions on it than a closely held corporation.

65) Directors owe a fiduciary duty to the shareholders. 66) Directors owe a fiduciary duty to the public. 67) Directors owe a fiduciary duty to the corporation. 68) Shareholders do not owe a duty to the corporation. 69) A shareholder has an obligation not to compete with the corporation. 70) Shareholders have a right to bring an action against the directors on behalf of the company when the directors fail in their duty to the corporation. 71) A par value share reflects the actual value on the market. 72) Preferred shareholders usually get preference when dividends are declared but no vote. 73) If dividends are not paid, preferred shares usually convert to voting shares. 74) A debenture creates a creditor/debtor relationship.

75) In Ontario, articles of incorporation are filed in order to incorporate. 76) Shareholders in a closely held corporation are entitled to sell their shares to whomever they want without restriction.

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77) Shareholders in a closely held corporation can control the rights and responsibilities they have to each other by a shareholders' agreement. 78) A director can be held responsible for unpaid taxes, wages, and environmental harm. 79) Where preemptive rights exist, existing shareholders must be offered their proportionate share of any new allotment of shares before the shares are offered to anyone else.

80) A securities commission is a provincial agency that serves as watchdog on the stock market. 81) A prospectus is an internal document detailing the expected performance of a corporation. 82) A share refers to a share interest in the indebtedness of a corporation, often used synonymously with debenture. 83) One of the most common ways for small, closely held corporations to come to an end is for the principals to simply neglect to file the annual return. 84) A person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering is known as promoter. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 85) What is the significance of a corporation being classed as a separate legal entity? 86) What are three distinct methods that are used for the creation of small corporations in Canada?

87) How is incorporation effected in a registration jurisdiction? 88) Explain why a corporation is referred to as a legal fiction. 89) "In modern business practice, the shareholders of a corporation own that corporation." Explain the accuracy of that statement. 90) Indicate three significant results of a corporation being classed as a separate legal personality. 91) Explain why agents are more important when dealing with corporations than they are with partnerships or sole proprietorships. 92) Distinguish between a par value share and a non-par value share. 93) Explain what is meant by a preferred share. 94) Distinguish between a bond and a share. 95) Explain the significance of the determination that a corporation is a broadly held corporation as opposed to a closely held corporation.

96) To whom does the director owe the duty to be careful? 97) Explain the nature of the director's duties to the corporation.

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98) If a director fails in his duty to the corporation, what rights does a minority shareholder have to hold him accountable? 99) Explain the standard of care that a director must live up to in carrying out his duty towards the corporation.

100) Joe was the director of XYZ Corporation, and the corporation was experiencing some financial difficulties. The shareholders had received dividends over the years, and this year insisted that they be paid a similar dividend, despite the fact that the corporation did not have enough reserved funds to pay off its debts. Joe, along with the other directors, complied with this request, and a few months later, the corporation was unable to pay a required payment on a bank loan. What can the bank do in these circumstances? 101) Indicate two examples where a director can be personally liable for the debts of the corporation. 102) Joe, along with two friends, bought a peat bog with the idea of incorporating a corporation and reselling it to promote the development of the peat bog. Joe bought the bog for $40,000 and, when the corporation was incorporated, had himself and his two friends named as directors. They then held a meeting and on the first order of business, they bought the bog from themselves for $500,000. Then they voted to sell all of the shares of the business to five interested businessmen for $500,000, based on the value of the sole asset of the corporation, the peat bog. When the businessmen found out what had happened, they sued Joe and his friends. Explain the nature of the complaint and the likely outcome. 103) Joe is an environmental activist and he acquired shares in MacMillan Bloedel (a forestry corporation), only for the purpose of undermining MacMillan Bloedel, speaking against their practices at annual shareholders' meetings, and getting access to confidential information. Joe spoke against MacMillan Bloedel at every opportunity. Explain his legal obligations to the corporation under these circumstances. 104) Explain the power of a minority shareholder in decision-making situations.

105) Explain what is meant by pre-emptive rights. 106) Explain under what circumstances a shareholder will not be permitted to sell his shares. 107) Explain under what circumstances a shareholder's right to dissent arises. 108) Explain under what circumstances a shareholder's right to sue against oppression arises. 109) Joe is a shareholder of XYZ Corporation, an extremely profitable corporation in the software business, and was upset when the directors of the corporation refused to declare a dividend again, ploughing the money back into research and development. Joe sued, along with several other shareholders, claiming that there was no excuse for withholding dividends under these circumstances. Explain the likely outcome. 110) Indicate three advantages to incorporation. 111) Indicate the main disadvantages to incorporation. 112) How can a corporation be brought to an end?

113) Explain "lifting the corporate veil."

114) Distinguish between selling the assets of a corporation and selling its shares. 115) Explain the concept of a promoter.

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116) What is meant by the term "prospectus"?

117) The provincial agency that serves as watchdog on the stock market is known as ________. 118) In jurisdictions in which the registration system of incorporation is used, what are the rules governing the internal regulations of a company called? 119) What happens if annual returns are not filed for a corporation?

121) Explain the significance of a personal guarantee.

120) To what does "franchising" refer?

122) To what does the term "due diligence" refer? 123) The method of incorporating used in some jurisdictions in Canada whereby the government grants recognition to the company as a separate legal entity is known as ________. 124) Explain the nature of the "corporate myth". 125) What is a "share"? 126) What are "preferred shares"? 127) A share interest in the indebtedness of a corporation that is normally secured against specific assets is known as ________.

128) What is the purpose of a shareholder agreement? 129) What does it mean to be a closely held corporation? 130) What does it mean to be a broadly held corporation? 131) Explain the nature of an annual general meeting. 132) What duty to directors owe to creditors? 133) Who is the party responsible for for ensuring that financial statements for an organization are properly done? 134) What is typically the most expensive form of business organization to create and maintain? ESSAY. Write your answer in the space provided or on a separate sheet of paper. 135) The separate existence of a corporation is said to be a legal myth. Discuss the development of this myth and its value in our society today.

136) Discuss and contrast the various methods of financing a corporation. Deal with the advantages and disadvantages of each. 137) Contrast the obligations and duties of directors and shareholders of a corporation. 138) Discuss the principle of limited liability, why it arises in the law governing corporations, and its significance.

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139) Discuss the advantages and disadvantages of incorporation as a method of carrying on business as compared to sole proprietorship and partnership. 140) Discuss the process of incorporation in your jurisdiction, including practical tips for maximizing the advantages offered by this form of business organization. 141) Discuss the concept of promoters, their duties, and their role in the corporate form.

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1) A 2) D 3) E 4) D 5) A 6) A 7) B 8) C 9) C 10) A 11) B 12) E 13) D 14) D 15) E 16) B 17) C 18) E 19) A 20) E 21) B 22) E 23) C 24) C 25) D 26) E 27) B 28) B 29) E 30) C 31) B 32) E 33) D 34) E 35) E 36) D 37) A 38) E 39) D 40) D 41) D 42) C 43) B 44) A 45) A 46) C 47) C 48) A 49) C 50) A 51) B

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52) D 53) E 54) A 55) E 56) E 57) TRUE 58) FALSE 59) TRUE 60) TRUE 61) TRUE 62) FALSE 63) TRUE 64) FALSE 65) FALSE 66) FALSE 67) TRUE 68) TRUE 69) FALSE 70) TRUE 71) FALSE 72) TRUE 73) TRUE 74) TRUE 75) TRUE 76) FALSE 77) TRUE 78) TRUE 79) TRUE 80) TRUE 81) FALSE 82) FALSE 83) TRUE 84) TRUE 85) As a separate legal person, it is responsible for its own debts, thus, limited liability. It does not die. Management and ownership are separated. 86) Letters patent, registration, and articles of incorporation. 87) Memorandum of association and articles of association are registered with the registrar of companies and a fee paid. 88) When a corporation is created as a separate legal personality, it doesn't really exist but is just a convention; therefore, it is referred to as a legal fiction. 89) A corporation is a separate legal person. It can't be owned; rather, shareholders have certain rights in relationship to the corporation to control it and have a claim against the assets upon dissolution. In a practical sense, however, this usage is correct. 90) 1. Limited liability 2. It doesn't die 3. Separate management and ownership 91) Because the corporation is a myth, it must do everything it does through agents. 92) Par value is simply a value that is placed on the share when it is originally issued and will likely have little relationship to what it is trading for or being sold for at the current time. Non-par value shares have no such initial valuation placed on them. 93) A preferred share is one where special rights and/or restrictions have been placed on the share. Usually holders of preferred shares have a claim to a set dividend and no right to vote unless that dividend is not paid.

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94) A share involves a shareholder who has a share in the business, like a partner in the sense that he's participating in the carrying on of the business. An outstanding share is not considered to be a debt or liability to the corporation. A bond, on the other hand, represents a claim against the corporation or a liability; thus, it's a debt that must be repaid. 95) There are more significant reporting and accounting obligations on a broadly held corporation. These are usually traded on the stock exchange or involve a great number of shareholders. A closely held corporation is more like an incorporated partnership with fewer obligations of reporting and accounting. 96) To the corporation itself. 97) A fiduciary duty is owed, in that the director must act in the best interests of the corporation, not taking any advantage of corporate opportunities for himself, and must not act negligently in the carrying out of his direct responsibilities. 98) The minority shareholder can bring a derivative (representative) action on behalf of the corporation to hold the director accountable for his breach of duty. 99) He must exercise the care, diligence, and skill of a reasonably prudent person in carrying out his director responsibilities. Note that this will vary with the jurisdiction. 100) The bank can sue Joe directly because he allowed the dividend to be paid out when the corporation was insolvent. This violated a duty imposed by statute. 101) When the director allows dividends to be paid out when the corporation is insolvent; when the corporation is unable to pay a certain amount of wages for their employees (depending on the jurisdiction); when the corporation is unable to pay taxes; and finally, for environmental pollution. 102) This is a violation of Joe's duty as a promoter and these business people will be successful in getting an accounting from Joe and his friends of the profits they made from the sale. 103) He has none. As a shareholder, he is free to speak against the corporation if he so wants. 104) The majority prevails, and an out-voted minority shareholder has no say in the operation of the business. This is an example of the tyranny of the majority. 105) Depending on the legislation and the jurisdiction, a shareholder has the right to maintain his percentage of the shares outstanding from a corporation. This means that if new shares are issued, he has to be offered an amount whereby he will maintain his share of the overall shares outstanding, if he purchases them. 106) Closely held corporations usually have a prohibition against a shareholder selling his shares to other parties without permission of the other shareholders. 107) Where a corporation, usually in the form of the directors, makes a decision that will have the effect of benefitting the corporation as a whole, but won't particularly help the position of a minority shareholder. In some jurisdictions, that minority shareholder has the right to dissent, and have his or her shares purchased at a fair price. 108) Where the directors of the corporation make a decision with the objective of hurting the position of the minority shareholder as opposed to benefitting the rest of the corporation. This is an abuse of their position, and the minority shareholder can sue for relief from oppression. The power of the courts in these circumstances extends to putting the corporation into receivership or having it dissolved. 109) A shareholder has no right to a dividend and Joe will lose his action. 110) Limited liability; reduced taxes under some circumstances; ease of transferability; the corporation does not end with the death or bankruptcy of a shareholder; the shareholders are free to carry on their activities without obligation to the corporation; management is separated from ownership; majority vote of the shareholders prevails. 111) Relatively weak position of minority shareholder and the expense. 112) In most jurisdictions, if you simply fail to file annual returns the corporation will be taken off the rolls. Also, the corporation can be wound up in accordance with relevant legislation, or as the end event of a bankruptcy procedure. 113) This is where the courts will look to impose responsibility on the shareholders of a corporation as opposed to the normal situation where liability is limited to the corporation itself. 114) If its shares are sold, the corporation continues as before (existing contracts stay in place, etc.), but with new shareholders. When the corporation's assets are sold, the purchaser is not affected by the contractual or other obligations of the corporation (unless those assets are encumbered). 115) A promoter is a person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering.

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116) A prospectus is a public document disclosing relevant information about a corporation. 117) The securities commission 118) The articles or articles of association. 119) A certificate of dissolution may be issued for it. 120) Arrangements based on contracts of service and the supply of products between larger and smaller units of one organization. 121) It is a guarantee of payment for another's obligation. When given by a shareholder with respect to loan to the corporation, it effectively eliminates any advantage of limited liability. 122) Doing everything reasonable to avoid a problem leading to legal liability. 123) Letters patent 124) This refers to the idea that a corporation is a legal fiction. 125) An interest in a corporation held by an investor. 126) Shares giving the shareholder preference over other classes of shares. The preference often pertains to payment of dividends. 127) Bond 128) To protect the rights of shareholders in relations with the corporation. 129) In general, it is a corporation with relatively few shareholders, which is subject to less government regulation and control than a broadly held corporation. 130) In general, it is a corporation that is publicly traded on the stock market, which is subject more government regulation and control than a closely held corporation. 131) An annual general meeting refers to the meeting where shareholders elect directors and vote on other important resolutions. 132) A director owes a duty of care to creditors. While this is less onerous than a fiduciary duty, it still imposes on directors exposure to liability for negligence. 133) An auditor. 134) A corporation. 135) The development of corporations can be traced back to royal charters and the creation of towns, universities, and the like. This was extended to business enterprises in the form of joint stock companies, and eventually led to the practice of incorporating private companies that we know today. An essential element of this process was the recognition of the thing created as a separate legal personality able to hire people and enter into contracts in its own right. As the practice of incorporating grew, this principle was applied, and the corporation became something separate from the shareholders that made it up. This has lead to unlimited liability, the fact that the corporation does not die, and all of the other factors discussed in the text that result directly from the corporation being treated as a separate legal personality from the shareholders that make it up. Of course, the corporation doesn't really exist; it is a convenient legal fiction and hence the legal myth. Still, it is very valuable myth and plays an important role in our modern economy. Students should be able to explain what is meant by the corporation being a separate legal entity, how that is a myth, and what has developed from that in our treatment of corporations today. 136) There are two main methods of financing for a corporation and then various alternatives within these options. Equity financing involves the sale of shares to investors. These can take various forms, including preferred shares or other shares with special rights and restrictions attached to them, or simply the normal issuing of common shares. These people have invested in the business, and the corporation does not owe them any funds. This is true even of preferred shares where the corporation has committed to pay specific dividends. That is not owed in the normal sense. The other method of finance is through borrowing. Again, this can be done directly with a simple loan from a bank or other finance source that would likely be secured, but the corporation can also be financed through bonds or debentures. These are like shares and are sold on the bond market, but each represents a share of debt owed by the corporation. Of course, if the corporation fails to honour its legal obligation to repay this debt, the creditors can enforce their claim against the assets of the corporation by obtaining judgment and executing that judgment. Usually there are contractual provisions that allow the creditors to take over the company in the event of default (receivership) without first seeking judgment. There are many different variations and combinations of these methods, and students should at least demonstrate an understanding of the primary distinctions and the implications for the corporation.

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137) Basically, the shareholders of a corporation owe no duty to the corporation or to other shareholders. This is one of the major advantages of a corporation. The shareholder is free to compete with and even try to destroy the corporation and there can be no complaint from the corporation or the shareholders. The only duty that may arise is where the shareholder owns enough shares to be classed as an insider, and then there is an obligation under the securities regulations not to use insider knowledge in trading the shares of the business. Other duties may be created by a shareholders' agreement between the shareholders when a small or private corporation is created. As far as the directors are concerned, they have a significant duty to the corporation to act in its best interest and to act competently as a reasonably prudent businessperson. This is a fiduciary duty, and it is owed to the corporation, not to the other shareholders, although the shareholders (even a minority shareholder) have the right to bring a representative (derivative) action on behalf of the corporation against a director who breaches that duty, when the other directors fail to do so. The directors have other duties as well. These are imposed by statute and relate to obligations with respect to the environment, to withholding taxes and other payments to government bodies, to paying wages to employees, as well as obligations with respect to consumer protection legislation, human rights, and other statutes that put penalties on the directors for violations of the corporation in these areas. Students should take this well beyond the recognition that the shareholders have little duty and the director significant duties. 138) This is a relatively straightforward question but important, since the principle is at the heart of corporate law. Limited liability refers of course to the principle that shareholders in corporations and limited partners in partnerships are not liable generally for the debts of the corporation. Their liability is limited because they can lose only what they have invested in the business; their whole personal fortune is not at stake. In partnership, the limited partner is a creature of statute. Limited liability comes from the fact that the corporation is a separate legal person from the shareholders who make it up. The debts and obligations incurred are the debts and obligations of the corporation, not the shareholders. This was finally established in the case of Solomon v. Solomon in 1897. Unlimited liability of course exposes the investor to claims for all who have a claim against the business, whether that is because of problems in the operation of the business or because of debts owed. Much of this problem can be solved with appropriate insurance, and often the advantage of limited liability is lost when shareholders are required to sign personal guarantees when the corporation borrows money. It is important that students get the advantages and disadvantages of limited liability into perspective and show that they understand that the advantages are often illusory. 139) The main problem with partnership and sole proprietorship is of course unlimited liability. The corporation protects the shareholders, in that they can lose only what they have invested, no matter what the obligations and liability that face the corporation. That protection can be lost when the shareholder is required to sign a personal guarantee, and the unlimited liability aspect of partnerships can be somewhat alleviated by acquiring appropriate insurance. There are other advantages of the sole proprietorship, such as freedom from interference by others in making decisions and carrying on the business. With partnership, the fact that each partner has veto over important decisions can be both an advantage and a disadvantage, depending on your point of view. That can also be lost in a partnership agreement between the partners. The corporation is generally the accepted method of carrying on business because of several important advantages associated with its nature as a separate legal entity. In addition to limited liability, some of the advantages are that the shareholders are separate from management, they owe no duty to the corporation, there are some tax advantages, and the corporation doesn't die. Of course, the other side is that the corporation is closely regulated and there are serious reporting and legal obligations that have to be complied with. This can be a very involved question requiring some real insight by students, depending on the level at which they choose to approach the question. 140) Students should begin by outlining the process of incorporation used in the relevant jurisdiction. A summary of the different alternatives appears in the text at pages 472 to 476. In addition to outlining the process of incorporation, good students will note that there are two general approaches to incorporating. Because the process has been simplified, people can incorporate themselves, or purchase a simple "off-the-shelf" corporation. The alternative, however, is to pay a lawyer to custom-design a corporation for their particular needs. This latter approach may be worth the expense. It can allow one to take advantage of the flexibility of the corporate form, through creation of certain share classes, shareholders' agreements, etc. (to cater to different relationships and needs).

141) A promoter is a person who participates in the initial setting up of a corporation or who assists the corporation in making a public share offering. Provincial securities statutes control the sales of shares to the public and impose duties on the corporation and the promoters. Whether promoters are officers of the corporation or not, they owe a fiduciary duty to the corporation. Students should expand on the concept of a fiduciary duty, noting that it requires promoters to act in the best interests of the corporation, must disclose any conflicts of interest, etc. Students may also note that that promoters may purchase property on behalf of a corporation before it has been incorporated and then have the corporation ratify the agreement after incorporation. Such ratification is invalid at common law, but many jurisdictions have enacted statutory provisions permitting later-incorporated corporations to ratify. If the contract cannot be, or is not, ratified, the promoter will remain liable for losses.

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Chapter 13 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If a person habitually crosses property over a number of years with permission of the owner, he can, in some provinces, acquire a right to cross that property even though there has been no actual documented grant of such a right. Acquiring such a right is this manner is called A) adverse possession. B) profit a prendre. C) an estate in land. D) a dominant tenement. E) an easement by prescription. 2) Which of the following is one of the implied rights of a lessee of a commercial tenancy? A) That the lessor will repair unfurnished premises. B) That the lessee will deliver vacant possession to the new tenant at the time they agreed the lease period would start. C) That the lessor is assured against the interference by a third party. D) That the lessee can use and enjoy the premises for all usual purposes without physical interference from the lessor. E) That the lessee will give the lessor possession.

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3) Marian met with the owner of a warehouse and contracted for factory space for a two-year term. The amount to be paid ($2,400 yearly) and the premises were made clear, but nothing else was discussed. The law, however, implies some terms. Which of the following is a term of the contract? A) The landlord need not provide quiet enjoyment of the premises. B) The premises will be reasonably fit for her purpose. C) The landlord has no general obligation to deliver premises that are clean or in good repair. D) The tenant is responsible for normal wear and tear. E) The landowner has no obligation to provide vacant possession at the time the lease period is to start.

4) Zack, Virgil, and Craig, friends for several years and all worried about the alarming rise in land prices, want to go in together and buy a four-acre parcel in the country. There is a small cabin on it. They hope that the land value will appreciate, and they want to sell it in a few years to help finance a house of their own. Read each of the following separately and indicate which is true with regard to their ownership of this property. A) If they do not indicate on the transfer documents the nature of the co-ownership, the law presumes they will take as joint tenants. B) Ownership of the fee simple does not guarantee their right to everything below the surface of their property. C) If they buy the land and do not take possession, in some provinces they could lose their right to claim possession, and their rights become a fee simple estate. D) Ownership of the property entitles them not only to the surface of the earth between the boundaries, but also to the infinite airspace above and everything below the surface of their property. E) In Canada, in strict legal terms, the only owner of land is the Crown, and if they buy land free and clear, they are only getting a life estate. 5) Jack and Joan got married. It was the second marriage for both of them, and each brought one teenaged child into the marriage. They bought a house in Langley as joint tenants. They worked very hard to create a loving home, but when the children had disputes, it always affected the relationship between Jack and Joan because of the loyalty to their own child. Joan now thinks that it was a mistake to buy the house as joint tenants and wants her share in the house to go to her child in the event of her death. Which of the following will bring about such a change? A) Joan could sell her interest in her house to her uncle and have him sell it back to her.

B) Joan could purchase an option agreement to lease her interest in the house to herself. C) Joan could have a will drawn up by which her share in the house would be left to her child. D) Jack and Joan cannot sever the joint tenancy. E) Joan could lease her interest in the house. 6) Which of the following is true with regard to real property law? A) A profit a prendre is a type of restrictive covenant attaching to all the properties within a particular development plan. B) A true interest less than estate, whether properly registered or not, runs with the land and therefore is an exception to the privity of contract rule. C) The essential characteristic of an estate in land is that the owner of the estate, whether it is a fee simple, life estate, or leasehold, has exclusive possession. D) An easement acquired by prescription must be restrictive in nature to be binding on subsequent purchasers of land. E) A contract for land in which a person sells the property with a restriction that the new owner not sell to any person of a certain race cannot be challenged by the courts because it is a restrictive covenant that runs with the land.

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7) With regard to interests in land, which one of the following statements is true? A) A joint tenant can sever the joint tenancy by bequeathing his interest in a will the property to a third person. B) An easement in land is characterized by giving the owner of the estate exclusive possession of that property for some time. C) If the fee simple is conveyed to "Mr. Bill and Mr. Phaster" without indicating the nature of their co-ownership, they take the land as joint tenants. D) The interest in land referred to as the "life estate" is not outright ownership but is the greatest "bundle" of rights in relation to that land that the owner can have. E) If a joint tenant severs the joint tenancy, he can then will his interest in the land to whomever he chooses, and on his death the person named will take his interest.

8) Which one the following is true with regard to real-property law? A) Property includes only the land and not the buildings attached to it. B) The "leashold estate" interest in land is the greatest interest that can be granted and bestows the rights to use or sell the property. C) A person who owns an interest less than an estate (e.g., a right of way) has a right to exclusive possession of that property. D) A legal, registered restrictive covenant "runs with the land"; i.e., it can bind subsequent owners who were not parties to the original contract under which it arose. E) If two people own land as tenants in common, the surviving joint owner takes the interest of the deceased co-owner. 9) If Sam buys the fee simple, which of the following is true with regard to his rights? A) In law, he is entitled only to the surface of his property within the boundaries, and not to things attached to the land, such as fences and barns. B) He would have the right to all below the surface except those things retained by the Crown in the original Crown grant. C) If someone intrudes onto his property, the proper cause of action is to sue for the tort of public nuisance. D) The maxim "to whomsoever the soil belongs, he owns also to the sky" remains unchanged and is as valid today as ever. E) If fumes from the neighbouring processing plant kill his bushes and vegetables, he may be able to sue the neighbour for the tort of trespass.

10) Brenna owns two adjacent lakeside lots. She sells one lot to Burt and Ernie, with the provisions that they agree not to develop any commercial facilities on the land and to plant a row of rose bushes between the properties. The covenants are registered in the appropriate Land Title Office. Which of the following is true? A) If Burt and Ernie sell their lot to Holly, Holly would not be bound by the covenant to refrain from developing commercial facilities. B) If Burt and Ernie sell the property, the new owner would not have to plant the row of rose bushes as provided in the original contract. C) If Burt and Ernie do not plant the bushes as agreed, Brenna could sue them for private nuisance. D) The registration of a covenant guarantees that it is valid interest that runs with the land. E) If the title documents are silent on the point, Burt and Ernie take possession as joint tenants.

11) Old Uncle Isaac has a cold and has become very morbid, talking continuously about funerals, death, and wills. Now he asks about life-estates and wills; should he give wife Juliet a life estate? Which of the following is a true statement about wills and life-estates? A) The holder of a life estate must pay for normal upkeep, pay fees and taxes, and not harm the value of the reversionary interest. B) The owner of the fee simple can grant a life estate only while he is alive. C) If Isaac doesn't make out a will, his property will revert back to the Crown. D) The life tenant is entitled to exclusive possession of the property for an indefinite period of time. E) A life estate can only be created by contract.

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12) If Niles and Frasier buy a "fee simple" interest, which of the following is true with regard to their rights? A) The maxim "to whomsoever the soil belongs, he owns also to the sky" remains unchanged and is as valid today as ever. B) Today a person's right to the area above his land is restricted to that part of it he can make use of. C) In law, they are entitled only to the surface of the earth within the boundaries. D) They have rights to the area under their land, including the mineral rights. E) You can sue an airplane for trespass for flying at 30,000 feet over your property.

13) In 2011, Jonah sold a building to his two married sons: Bert, and Charles. In 2012, Charles was thinking of severing the joint tenancy, but before anything was said or done, Charles and Bert both drowned in a boating accident. Charles died immediately, but Bert died two months later, never having regained consciousness. Charles had willed his interest in the property to his wife and Bert had willed his to his son. On these facts, which of the following is true? A) As soon as they made the wills, the parties became joint tenants. B) Bert's son is entitled to the whole property. C) Charles's wife and Bert's son have now acquired possession through adverse possession. D) Charles's wife and Bert's son now have a leasehold interest in the building. E) Charles's wife is entitled to the whole property. 14) If I grant my grandma a life estate and she asks about her rights and duties as a life tenant, which of the following is true? A) If I make no indication of who the property is to go to when she dies, the property reverts back to my estate. B) The life tenant cannot rent out the property during the life tenancy. C) The life tenant is not responsible to make repairs to keep the property in good condition, only the fee simple owner has that responsibility. D) The life tenant can transfer the fee simple to someone in her will. E) The life tenant after 20 years, can establish a easement interest in the property. 15) Mario bought a small house in Nelson and was puzzled when he saw the conveyancing documents, which

referred transfer of a "fee simple." The following statements were made to him to explain the term. Which is correct? to a A) The owner of the fee simple also owns what is below the land including mineral rights. B) The owner of the fee simple has rights to the surface of the earth and also unlimited use of the airspace above his property. C) Technically, only the Crown owns the land, but the fee simple interest is the greatest bundle of rights, other than the Crown's, a person can own. D) The owner of the fee simple has the right to exclusive possession of the land until his death. E) If the owner of the fee simple dies without a will, his estate reverts back to the Crown.

16) Jane had two teenaged sons. Her husband died when the boys were 14 and 16. She met Jack, who had a son and daughter by his first marriage. He was divorced from both a first and second wife. Jane and Jack decided to marry. After the marriage, they bought a house as co-owners. Which of the following is true with regard to co-ownership? A) If the type of co-ownership is not stated on the conveyancing documents, they will take possession as joint tenants. B) If they took the property as tenancy in joint tenants and she decides that she does not want the "right of survivorship," she cannot change that type of ownership without his permission. C) If they co-own the property as joint tenants, Jane could control what happened to her share upon her death by a well-crafted will. D) A joint-tenancy cannot be severed by one party selling their interest. E) If it is a joint tenancy and no changes are made, if she dies first her husband gets the whole property.

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17) Which of the following is considered real property in legal terms? A) Intellectual property (ideas and creative work) B) Land C) Chattels D) A claim against someone that has value E) Intangible property or chose in action

18) Which of the following is true with regard to our Canadian Copyright Act? A) The statute provides for copyright protection only where the copyright is registered and the owner of copyright uses the following form of notice: (c) year of creation, name of creator. B) The statute is a provincial statute with each province having its own unique statutes. C) The statute expressly provides that computer programs are not copyrightable. D) Copyright is protected both by statute and in common law. E) The statute provides that the employer owns copyright in a work created by the employee in the course of his employment, in the absence of any agreement to the contrary. 19) Which of the following is essential for a work to have copyright protection? A) The expression of the idea must be an original product of the author's own skill. B) The idea on which the work is based must be original. C) The creator of the work must register his/her work in Canada. D) The subject matter of the work must only fall into either musical or artistic categories. E) The expression of the idea will generally be sufficient. 20) Tom, a classmate of yours at Red River College, was employed as a programmer by Mohawk Oil Company about three months after graduation. Because you could understand the program he was working on and because you write well, he called to ask if you wanted to take on the task of writing the manual to accompany the program. Read each of the following separately and indicate which is true. A) If you contract as an independent contractor (independent consultant) with the company, and the contract does not specify otherwise, the company owns the copyright.

B) If two persons wrote the manual together, only one person can have ownership of the copyright. C) The issue of who owns copyright in the manual depends solely on who writes it. D) If the company hires you as an employee to write the manual, the company would own copyright unless your employment contract provided otherwise. E) The owner of the copyright will be whoever first gets his claim of ownership in the copyright office. 21) Which of the following is true with regard to the law governing patents? A) Computer programs, as a general rule, can be patented as well as copyrighted, because they are a set of instructions to the computer. B) An amendment to the Patent Act allows patent protection automatically. C) A patent will only be granted if the invention has been the subject of a publication of over one year prior to the application. D) In exchange for the monopoly given under the Patent Act, the owner of the patent must disclose the invention in its entirety. E) If a patent is developed by an employee, the employee has the right to obtain the patent.

22) Which of the following is true with regard to trademark? A) Registration of a trademark gives the owner of the trademark the exclusive right to use it throughout Canada. B) If a person registers a trademark but later fails to use it, protection of the mark will not be lost; it is still his and is protected for the remainder of the period of protection granted. C) Registration of a trademark grants the owner protection for life plus 50 years with the right to renew. D) Registration under the Trademark Act provides protection for only registered trademarks, unregistered marks and names are protected under the common law tort of copyright. E) The distinctive design of a product container cannot be the subject of trademark protection.

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23) Which of the following is true with regard to the copyright law in Canada? A) Registration of copyright is restricted to published works. B) Everyone can receive copyright protection in Canada for his or her work created elsewhere. C) Copyright law is governed by the Copyright Act, but an author need not register under the statute to acquire copyright. D) A Canadian author must register upon the creation of her book, in order to acquire copyright protection. E) Generally, the term of copyright is fifty years. 24) Chad was the best private detective in the west. His system for tracking persons who have caused themselves to disappear was markedly superior to that of others. Sally, his only assistant, was considered so valuable that he always had her sign five-year contracts with non-disclosure clauses. Sally took notes at a private meeting between Chad and a representative of the RCMP who was negotiating a contract with Chad for tracking down two criminals. Sally and Chad took care that the discussions were understood to be confidential -- regarding both the information from the RCMP and from Chad about his methods. Sally was approached by a competitor of Chad, Mr. Adolph, who offered her three times her salary if she would break her contract with Chad, sign with him, and bring him information about Chad's tracking system. After some months, she did just that. Furthermore, she told Adolph the details of the information given to Chad by the RCMP, which caused the RCMP embarrassment, time, and money. Which of the following is true? A) The RCMP could not sue Chad for breach of confidence because the information disclosed by Sally was not novel know-how that was giving the RCMP the cutting edge in business competition. B) Chad could sue Sally for disclosing the information only if he had signed a non-disclosure clause. C) Chad could sue Sally for breach of her employment contract, not only on the clause relating to the term of her employment, but also on the non-disclosure clause. D) Sally owes no fiduciary duty to Chad even though she had a trusted position as an employee. E) Chad could sue Adolph for the tort of passing-off.

25) Which of the following is true with regard to obtaining a patent? A) If a patent application is denied, the inventor can apply for trademark protection instead. B) The Patent Act allows a patent to someone for an existing process or machine that is in use but has not been patented. C) The inventor's expression of the idea is automatically protected under the provincial Patent Act. D) The inventor does not have to send specifications or a model when he sends his application. E) To obtain a patent, besides satisfying the provisions of the Patent Act, the inventor must show that the invention was not known or used by any other person before he or she invented it. 26) Aunt Juliet wants to know whether or not to register her trademark. Which of the following is true with regard to registration of trademarks? A) A registered trademark is required for a passing-off action. B) Registration of the trademark would give her exclusive use of that mark nationwide even though she was not marketing her wares nationwide. C) If she does not register her trademark under the Trademark Act, she will have no legal protection of her mark. D) Trademarks can only consist of socially acceptable symbols or logos. Words and expressions must seek copyright protection. E) Registration gives her the right to use her mark for her life plus fifty years.

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27) Which of the following is true with respect to the duty owed when a person is in possession of confidential information? A) A duty is only owed when the information is copyrighted or patented. B) The duty is owed only between partners within a partnership. C) There must be a fiduciary duty, in order to have a legal obligation not to disclose confidential information. . D) The nature of the duty is not to disclose confidential information about a business that would cause harm to the business or bring personal benefit. E) There is an obligation of duty, only if stems from contract law.

28) Lodown Ltd., a company created by Mr. Day, became very successful over its ten-year history. The company was run by Day, as president, and three vice-presidents (Martin, Mull, and Rand) who made up the executive board. At their last meeting, Mr. Day announced that he had confidential information to share with them, namely, that his wife was terminally ill, that he was withdrawing from active management for an indefinite period of time, and that he would transfer his responsibilities to Martin. Rand repeated this information to others, and by doing, so he caused the company to lose a lucrative contract being negotiated and caused Day personal embarrassment and monetary loss in his personal affairs. On these facts, which of the following is true? A) A non-disclosure provision is required, Day simply putting the members of the executive on notice that they were expected to keep the information confidential is not sufficient to bring action. B) Rand cannot be sued since the information disclosed was personal and did not deal directly with the business. C) In law, there can be an no action against Rand because the information he repeated was not a trade secret. D) The company would have an action against Rand because it is a commercial enterprise that suffered a loss because he breached his fiduciary duty to the company. E) Rand owes no fiduciary duty to the company as an officer of the company. 29) Which of the following is correct with respect to trade secrets? A) The employee need not be informed that the information is confidential. B) The information must be fully disclosed under the provincial Trade Secrets Act.

C) Trade secrets include such things as formulas, patterns, recipes. D) There is no duty not to disclose trade secrets, unless specified in contract. E) Personal information cannot be a trade secret, even if it affects the business. 30) An option agreement is A) a contract by which the offeror of property promises to hold his offer open for a period of time during which the offeree can accept the offer and the property can't be sold to another. B) a contract transferring the fee simple to a new owner. C) a contract that provides that a debtor will transfer title in property to a creditor as security for repayment of the debt. D) a contract by which an offeree promises to buy the property offered at a later date set in the contract. E) a contract that provides that a seller will retain the title in the property until the buyer has made all of the required payments.

31) Which of the following is false with regard to condominiums and cooperatives? A) The owner of a condominium can mortgage his interest. B) The owner of a condominium owns a share in the common areas. C) The owner of a condominium has a fee simple interest in his unit within the condominium structure. D) An owner of a cooperative, like the owner of a condominium, has a real property interest in the suite. E) The owner of a condominium can be forced to pay a fee levied by the condominium association governing the condominium.

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32) For advertising purposes, Mr. Storage, the owner of a restaurant in the middle of the city, attached an enormous balloon to the roof of the building. The wind caused the balloon to rest most of the time right above a small adjacent grocery store. The balloon caused no damage, but its presence annoyed the owner of the grocery store, Mr. Greens, who was thinking of putting his own sign above his store. What action, if any, does Mr. Greens have against Mr. Storage? A) Trespass B) Public nuisance C) Breach of the Aeronautics Act D) Negligence E) None

33) The will read, "To my beloved wife, I leave our matrimonial home for life, remainder to our son, Ivan." Ivan, the adult son, no longer lived in B.C. Upon her husband's death, his wife remarried and moved out of the matrimonial home, but she allowed her friend Tilly to live there. Upon learning that his mother had moved out, Ivan considered moving back to the home. Which one of the following is true? A) If the wife sold her interest to Tilly, Tilly could stay in the home until she (Tilly) dies regardless of when the wife dies. B) If the wife willed the home to her new husband, upon her death the new husband would inherit the home. C) Ivan has the legal right to return to the home because, as the remainderman, he has a better right to live there than Tilly does. D) Ivan's legal right to return to the home does not arise until the death of his mother. E) Ivan has the legal right to return to the home because, as a blood relative, he has a better right to live there than Tilly does. 34) With respect to the land titles system of registering interests in land, which one of the following is true? A) The system is to safeguard the documents; the government is not guaranteeing title. B) This registration system is the same throughout Canada because the procedure has been set by the federal government to ensure a uniform method of registration. C) When documents concerning an interest in land are filed in the land title office, each document is

examined, and if it is in order, the state of title certificate is amended to show the change. D) All the documents concerning an interest in land must be kept in the land title office, and to ensure the state of the title, a potential purchaser is advised to examine the various documents that have accumulated over the years. E) Mortgages, restrictive covenants, building schemes, easements, and even entries under the Builders' Lien Act need not be registered to protect those interests against third-party claims. Registration of such interests is voluntary and won't affect one's interest. 35) About ten years after their marriage, Eric and Bev had saved enough money to buy an investment property. First they bought a duplex, which they held as joint tenants, and later they bought a building lot in Surrey, which they held as tenants-in-common. Eric's will provided that his interest in the duplex would go to their daughter, Lisa, and that his interest in the Surrey lot would go to their son, Max. Indicate the statement that accurately describes who will take what upon Eric's death. A) Max will get Eric's interest in both properties as the oldest son. B) Lisa will get his interest in the duplex and Max will get the interest in the Surrey lot just as the will said. C) Bev will get Eric's interest in the Surrey lot but Lisa will get his interest in the duplex. D) Bev will get Eric's interest in the duplex but Max will take Eric's interest in the Surrey lot. E) Bev will get both properties because she and Eric co-owned them both.

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36) Mr. Bucks owned a 10-hectare property in Langley. He subdivided the land into two 5-hectare lots. He decided to keep lot A for himself and to sell lot B. His friend and neighbour, Ms. Goode, wanted lot B, so they made the following deal: for lot B, Ms. Goode would give Bucks $100,000, her car, a right-of-way of 3 metres along the east side of lot B to provide access to the highway, her promise not to remove any of the cedar trees (a row of which benefits lot A by blocking the view of a factory) and her promise to plant a 5-metre-long laurel hedge to block his view of her driveway. All promises were registered. Which one of the following is true? A) This kind of deal for land is not possible because it is too complicated. B) With regard to the right of way, lot B is the dominant tenement and lot A is the servient tenement. C) If Ms. Goode sells lot B to Mr. Ho, Mr. Ho could cut down the cedar trees because the promise was part of the contract between Mr. Bucks and Ms. Goode to which Mr. Ho was not privy, and which therefore does not affect him. D) Ms. Goode would have to comply with all the terms of this contract except for the part about the laurel hedge, because that is a positive covenant. E) If the right-of-way is properly registered in the land title office, it would bind subsequent purchasers of either lot A or lot B even though they were not privy to the original contract. 37) With regard to real property law, which one of the following is true? A) If the fee simple is conveyed to Mr. and Mrs. So and there is no indication of the nature of their co-ownership, they take the land as joint tenants. B) An interest in land less than an estate (e.g., an easement) gives its owner exclusive possession of that property for some period of time. C) A life estate is an interest in land that necessarily ends when the life of the grantor ends. D) If one co-owner wants to sell but the other won't consent to the sale, the first one may be able to get a court order to sell the property. E) If a father cuts his family out of his will and leaves the property to someone else, there is no legal recourse for the family; i.e., the property is his to dispose of entirely as he wishes. 38) A husband and wife own Lot A as joint tenants and Lot B as tenants-in-common. The husband's will reads: "I leave Lot A to my son John and Lot B to my daughter Mary." Who takes what when the husband dies? A) The son, John, gets Lot A and daughter Mary gets Lot B, just as their father wished and designated in his will. B) Mary will get her father's interest in Lot B, but John will get no interest in Lot A.

C) John will get Lot A but Mary will not get Lot B because it was co-owned with the mother as tenants-in-common, so the mother takes Lot B as the other tenant-in-common. D) Mary will get her father's interest in Lot B, but John will only get a life tenancy in Lot A. E) Mary will get all of Lot B but John will not get Lot A because it was co-owned with the mother in joint-tenancy, so the mother takes Lot A as the surviving joint tenant. 39) If a person wanted to build a log cabin in a new subdivision what might prevent him from doing it? A) Federal statute B) Prescription C) Strata regulations D) Restrictive covenant E) Easement

40) In 2005, Jonah sold a building to his two married sons: Bert, and Charles. In 2015, Charles was thinking of severing the joint tenancy, but before anything was said or done, Charles and Bert both drowned in a boating accident. Charles died immediately, but Bert died two months later, never having regained consciousness. Charles had willed his interest in the property to his wife and Bert had willed his to his son. On these facts, which of the following is false? A) Bert's son is entitled to the whole property. B) Charles's wife and Bert's son are now joint tenants. C) As soon as they made the wills, the parties became tenants in common. D) Charles's wife and Bert's son are now tenants in common. E) Charles's wife is entitled to the whole property.

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41) After saving his money for years, Taylor was finally able to buy property with a small house and a lake. Which of the following is false? A) Taylor owns all of the area above his land and all of the land below. B) He can sell part of his interest and create a joint tenancy. C) His ownership extends to include "fixtures." D) Taylor's interest is referred to as a fee simple. E) Despite the extent of his interest, the Crown can grant the mineral rights to someone else.

42) Mario bought a small house in Nelson and was puzzled when he saw the conveyancing documents, which referred to a transfer of a "fee simple." The following statements were made to him to explain the term. Which is incorrect? A) If the owner of the fee simple dies without a will, his estate reverts back to the Crown. B) The owner of the fee simple has the right to exclusive possession of the land and can sell it in his lifetime or dispose of it by his will. C) The owner of the fee simple has rights to the surface of the earth and also to anything attached to it, e.g., crops, houses, fences. D) Technically, only the Crown owns the land, but the fee simple interest is the greatest bundle of rights, other than the Crown's, a person can own. E) The owner of the fee simple also owns what is below the land subject to the reservations in favour of the Crown. 43) When a house is built on a lot the house is an example of A) a chattel. B) real property. C) an easement. D) a house is not considered property. E) a profit a prendre.

44) Which of the following statements is incorrect with respect to personal property that becomes attached to real property? A) When such tangible personal property becomes attached, it becomes part of the real property. B) The owner of real property has the right to detach a fixture if he so desires. C) When a tenant attaches tangible personal property to the real property he has rented in order to use it in his trade or profession, those trade fixtures can be removed when he leaves. D) When such tangible personal property becomes attached to the real property, it is unlawful to remove it under any circumstances. E) When a person renting a home attaches a mirror to the wall to better use it, he can take that mirror with him when he leaves, providing no damage is done by removing it.

45) A periodic tenancy means A) a lease in which the parties agree to no set termination date but to the rental period being automatically renewed. B) a lease granting the lessee exclusive possession for one year. C) a tenancy created when an owner of property allows a purchaser to take possession before title transfers to him. D) a term lease. E) a lease created when a tenant is over-holding after the termination date of his lease without the landlord's permission.

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46) In which of the following does a person have a true lease? A) When a person's one-year lease has expired and he has paid no further rent, but remains on the premises contrary to the wishes of the lessor. B) When he spends the night in an inn. C) When he has been given permission to sleep on a cot in the dark room used at the photography shop where he works. D) When he has contracted for a warehouse for a two-week period commencing June 1, 2001. E) When a person contracts for a room in a boarding house for one month.

47) When Joan entered into a contract with Mr. Shultz to rent an apartment in a converted house, she noticed that the back stairs and hand railing looked as if they were in disrepair. On the day when she took possession, she found she couldn't use the back stairs because the last two steps were rotten and the handrail was not bolted down at one end. Which of the following is true? A) The common law places no duty on the landlord to repair, and this has not been overridden by any statute. B) Because Joan has taken possession, she would have the obligation to replace the steps and bolt down the handrailing. C) The landlord has an obligation to provide premises in a good state of repair only if any defect was brought to his attention at the time of the contract. D) Unless the contract states that the landlord has an obligation to repair, the landlord has no obligation to repair. E) The landlord has a statutory duty to provide premises in a state of repair that complies with safety standards irrespective of the state of the premises at the time of contract. 48) Consider the following statements regarding the nature of the landlord-tenant relationship. Indicate the true one. A) An oral lease is never enforceable. B) The term of a lease must be for a definite period of time. C) Leases are only available in residential tenancies. D) A leasehold is one kind of interest less than an estate.

E) A characteristic shared by leaseholds and life estates is that they both grant to the holder the right of exclusive possession. 49) Which of the following is false with regard to the law of landlord and tenant, lessor and lessee? A) If a commercial lessee defaults on his rent, the lessor has the power to seize the lessee's property left on the premises. B) A lease agreement is a contract that grants an estate in land; i.e., it gives the lessee exclusive possession for a period of time. C) Residential properties are governed by provincial statute and vary from jurisdiction to jurisdiction. D) The law of frustration applies to residential leases. E) A tenancy is primarily contractual and therefore does not "run with the land"; it does not bind a purchaser of the building.

50) In which of the following does a person have a true lease? A) When he pays by the hour to use a woodworking shop along with other users. B) When a person rents a hotel room. C) When he has been given permission to sleep on a cot in the dark room used at the photography shop where he works. D) When a person's one-year commercial lease has expired and he has paid no further rent but remains on the premises without the agreement or consent of the lessor. E) When he has contracted for the use of a warehouse for a two-month period commencing June 10, 2011.

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51) Which of the following is the correct definition of a chattel? A) Chattel refers to intellectual property such as patents and copyrights. B) The term chattel is the broad term used to describe any kind of property interest. C) Chattel is the term used to describe tangible personal property or movables. D) A chattel is a name used to describe the land registration system in place in the Western provinces. E) Chattel is an intangible form of personal property, such as a debt or claim.

52) When one person leaves tangible personal property with another to look after, the resulting relationship is called A) a chattel. B) a choose in action. C) a fixture. D) a bailment. E) a fiduciary relationship. 53) Which of the following statements is correct with respect to the person who is entitled to found property? A) When a person finds valuable property, he must turn it over to the police, and if the rightful owner is not found, the property goes to the government. B) When a person finds a valuable watch in a public place, he is entitled to that property over everyone else including the rightful owner. C) When a person finds a valuable watch in a public place, he is entitled to that property over everyone else except the rightful owner. D) You only have a claim to personal property you find if it is a chose in action. E) When an employee finds an item of lost property on the premises of his employer, he is entitled to that lost property if the rightful owner cannot be found. 54) Which of the following statements is correct with respect to the creation of a bailment? A) A bailment is not created when the transfer of the property is only done incidentally, such as leaving a watch with a watchmaker for repair. B) Bailments can only be created through contracts.

C) For a bailment to be created, it is necessary for the parties to have anticipated that the property would be returned at the end of the bailment period. D) A bailment is the process provided for releasing people from jail before trial. E) For a bailment to be created, the property must be given with the understanding that payment would be given for the service. 55) Mable was employed as a waitress at a respectable restaurant in Vancouver. After cleaning up at one of the tables, she noticed a valuable broach on the floor beneath the table. Which of the following is correct with respect to her legal claim to the broach? A) As the finder of the broach, she is entitled to it. She has a prior claim against all but the rightful owner of the broach. B) Because of the principle of "finders keepers," she gets to keep the broach even against the original owners who lost it. C) Although she found the broach in a public part of the restaurant, she must give the broach to her employer, who has the right to keep it if the rightful owner is not found. D) She must hand it to the police, and if the rightful owner does not come forward, the broach becomes the property of the government. E) She has no claim to the broach no matter where she found it.

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56) Jane asked her friend Harry to look after her very valuable Stradivarius violin while she was away on vacation. Which one of the following statements is correct with respect to the legal relationship created? A) Because the violin is a Stradivarius, this is an example of a bailment for value. B) This is an example of a gratuitous bailment for the benefit of the bailee. C) This is an example of a gratuitous bailment for the benefit of the bailor only. D) Because he is doing his friend a favour, Harry has no legal duty to be careful of the violin. E) This is an example of an involuntary bailment.

57) Harry's lawn mower ceased to work, and in order to get the lawn mowed, he borrowed his neighbour's lawnmower. Which one of the following is correct with respect to Harry's responsibility in relation to that lawn mower? A) If, when Harry asked his neighbour, the neighbour was reluctant to loan it to Harry but did so anyway, this is an example of an involuntary bailment. B) Because Harry has borrowed the lawnmower, he is obligated to return it in the condition it was given and is liable for any damage or loss no matter what the reason. C) This is a gratuitous bailment for Harry's benefit, and as such, Harry has a duty to be reasonably careful that no harm or accident come to that lawnmower. D) Because the lawnmower is valuable, this is an example of a bailment for value. E) This is a gratuitous bailment, and as such, Harry has no legal obligation to look after the lawnmower. 58) Which of the following is not considered personal property in legal terms? A) A good affixed to real property B) Intangible property or chose in action C) Intellectual property (ideas and creative work) D) A claim against someone that has value E) Chattels 59) When a person acquires temporary possession of a chattel by arrangement with the owner, it is known as which of the following? A) Bailment B) Consignment C) Holder in due course D) Chose in action

E) Fixture 60) Which of the following describes involuntary bailment? A) The bailee refuses to claim the stored goods. B) Someone is forced to provide bail. C) Goods have been left without permission. D) The borrower refuses to return goods. E) The bailor sells the goods to compensate for storage costs. 61) In Spycher Estate v. J.L. Coulter Ltd., a mobile home was damaged while being transported by a hired trucking company. What did the Court of Appeal find? A) The defendant was a bailee for hire and therefore liable for any damage, unless he could show he was not negligent or had contracted out of his negligence. B) The defendant was a bailee, but not liable for any damage to goods occurring while in his possession, because this was not clearly specified in a written agreement. C) The defendant was a gratuitous bailee, and therefore not liable for any damage. D) The defendant was a bailee, but was exempt from liability on the basis of relief against forfeiture. E) The defendant was an involuntary bailee, and therefore automatically liable for any damage caused.

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62) In Durham Condominium Corporation No. 123 v. Amberwood Investments Limited, an agreement was registered that required a fee payment and provided that this obligation was to run with the land. The Court found that this was a positive obligation requiring Durham to make payments. Such an obligation A) would not run with the land and would not bind a subsequent owner who purchased the land. B) would run with the land, but would not bind a subsequent owner who purchased the land. C) is void as an illegal restraint on property and not in the interest of the public. D) would run with the land and would, therefore, bind a subsequent owner who purchased the land. E) would not run with the land, but would still bind a subsequent owner who purchased the land.

63) Jurg was hosting a luncheon when his punchbowl broke. He went next door and asked his neighbour, Ethan, if he could borrow his. Ethan reluctantly agreed, commenting that the punchbowl was a family heirloom. This made Jurg a little nervous. On his way back home, he was wondering what his responsibility would be in relation to the bowl. Which one of the following statements is true? A) Because this is a gratuitous bailment, Jurg has no legal obligation in relation to the punchbowl. B) Because this is a gratuitous bailment for Jurg's benefit, Jurg must be reasonably careful that no harm or damage comes to the punchbowl. C) Because the punchbowl is valuable, the rules of a bailment for value will be enforced. D) Because Jurg borrowed the punchbowl, he must return it in the same condition and is liable for any damage howsoever caused. E) Because Ethan lent the punchbowl to him reluctantly, the rules of an involuntary bailment apply. 64) Mr. and Mrs. Dunn were divorced and Mr. Dunn applied for a division of the matrimonial home in which they were joint tenants. Mr. Dunn died before the matter was settled. In Dunn Estate v. Dunn, the issue was whether the home was part of Mr. Dunn's estate, or whether it passed by survivorship to Mrs. Dunn. What did the Court find? A) The home passed to the wife. A joint tenancy, if properly created, cannot be severed. B) The home passed to the wife. Neither divorce nor commencement of a matrimonial property action was enough to sever the tenancy. C) The home was part of the estate. The commencement of a matrimonial property action was enough to sever the tenancy. D) The home was part of the estate. The divorce was enough to sever the tenancy. E) The home was part of the estate. A joint tenancy is instantly severed by the death of either joint tenant.

65) In Shun Cheong Holdings B.C. Ltd. v. Gold Ocean City Supermarket Ltd., premises were leased for use as a grocery store. Seepage of a "smelly greasy fluid" interfered with the operation of the store. When the lease was abandoned, the issue was whether the landlord could bring an action against the tenant for breach of the lease. What did the Court find? A) There had been a breach of the tenant's fundamental right of quiet enjoyment and the abandonment was justified. B) The tenant's obligation to pay supercedes any obligation on the part of the landlord, so the tenant was liable. C) Because the premises were leased for a commercial purpose, not a residential one, the landlord had no obligations. D) Because of the frustration endured by the tenant, a tenancy at sufferance was established. E) The presence of the fluid breached the tenant's right of vacant possession, so damages were payable.

66) The case of Applewood Lane West Ltd. v. Scott involved two tenants who, to get out of their lease, had a series of "lease-breaking parties". As expected, they were evicted. The landlord had trouble renting the premises and sued the tenants. What was the result? A) The conduct of the tenants constituted abandonment of the lease, and so the tenants were liable. B) The lease was void for illegality, so no damages were payable. C) The conduct of the landlord resulted in a forfeiture of the lease, so no damages were payable. D) The tenants had been evicted without cause, and so the landlord was required to pay damages on the counterclaim. E) The landlord chose to evict the tenants and, in doing so, the landlord abandoned all claims against them.

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67) There is an equitable principle that when a landlord retakes a property for failure to pay rent prior to the end of the lease term, the tenant can pay the arrears and apply in the court to have the lease reinstated. This is known as A) tenancy at sufferance. B) distress. C) an order absolute. D) an order nisi. E) relief against forfeiture.

68) When a landlord seizes property left by the tenant and holds it until the rent is paid, or sells it to pay rent owing, this is referred to as A) an order absolute. B) relief against forfeiture. C) distress. D) an order nisi. E) tenancy at sufferance. 69) The case of Horn Ventures International Inc. v. Horn Plastics Inc. involved ta lease that required the tenant to leave the premises clean and in good repair. Instead, the defendant removed equipment not included in the agreement and damaged the premises in the process. What was the result? A) The conduct of the landlord resulted in a forfeiture of the lease, so no damages were payable. B) The Court determined that the premises had to be left in the same condition they were when the tenant took possession, except for normal wear and tear, and there was an award for damages and lost income. C) The Court determined that the premises had been left in better condition than they were when the tenant took possession, and hence there was no award of damages. D) The Court determined that the premises had to be left in the same condition they were when the tenant took possession, except for normal wear and tear and there was an award for only damages.

E) The tenants had been evicted without cause, and so the landlord was required to pay damages on the counterclaim. 70) As part of his preparation for a debate on whether the Criminal Code should be amended to include a crime for the unauthorized use of computer programs, Joe photocopied a short essay on the topic to study at home. The essay proved to be an excellent argument for his side -- namely, that such a crime should be created. Although some of the other articles advanced different arguments he could use, Joe was short of time and just turned in the essay as his own and later used its ideas in the debate. Which of the following is true? A) There would be an infringement of copyright when Joe used the essay as his own work. B) The first time Joe copied the essay was clearly an infringement of copyright; there is no defence available to him. C) There can be no infringement of copyright by a student. D) Joe cannot use the essay in any way without infringing copyright. E) Using the essay's arguments in the debate is an infringement of copyright even though they would be expressed in Joe's own words.

71) If a copyright owner has grounds for believing that a person is infringing his copyright, but fears that the infringer may destroy the evidence, the owner could get a court order to allow him to search and seize the evidence. Which of the following is such an order? A) Anton Piller order B) Order for an accounting C) Execution order D) Interlocutory injunction E) Order for specific performance

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72) Pete is an accountant and Judy works in a bank, but every evening of last year they worked to create a clever computer game. When they approached a publisher, they had no difficulty in gaining the interest of the publisher. Pete and Judy hired a lawyer to draft a licence agreement in which they would give the publisher exclusive rights to sell the game in North America for royalties based on gross sales. When the game was published, the advertising was rather vulgar but acceptable to Pete and Judy. They learned, however, that there was a further change -- the villain had been changed and clearly represented a world leader of an Asian country. Pete and Judy were embarrassed and outraged. On these facts, which of the following is true? A) They have no cause of action because once there has been an assignment of rights, the creators would not have their name on the product and thus no right to sue. B) They would have a cause of action only if the contract provided that there should be no alterations without their consent. Such a change would then be a breach of contract. C) They have a cause of action even though there has been a partial assignment, if the modification is prejudicial to their honour or reputation. D) They have no protection here since they failed to register their copyright in the game. E) There is not protection here; a game is not something that can be copyrighted. 73) Maureen, who frequently developed gadgets, had an idea for a machine that could feed her animals (cats, dogs, rabbits, and fish) while she was away on vacation for a week. She was very sure of the idea and began discussions with a manufacturer. Unfortunately, after it was concluded that he could make the machine, they could not agree on his proper compensation and they broke off negotiations. Shortly afterwards, this manufacturer, Easylife Ltd., began to manufacturer "the animal feeder" based on her idea. On these facts, which of the following is true? A) The manufacturer could not be sued for misuse of a trade secret because he had not signed any document in which he acknowledged he understood it was confidential information and in which he promised not to use it to her detriment. B) Maureen could not sue the manufacturer for infringement of copyright but could sue for misuse of a trade secret if she can show that it was apparent in the circumstances that he was being trusted with

confidential

information. C) The manufacturer could not be sued for misuse of a trade secret because he was not Maureen's employee and thus was not in a position of trust and could use the information for his own benefit. D) Maureen has no action against the manufacturer because she had not patented her invention. E) The manufacturer could not be sued for misuse of a trade secret because Maureen only told her idea and ideas cannot be protected by trade secret law.

74) Which of the following is true with regard to the law of trade secret/breach of confidence? A) An Anton Piller order is an order of the court requiring a person who stole and used a trade secret to make an accounting of all the profit realized from its use. B) An injunction could be granted by the court only against a person who stole a trade secret, not against a third person using the stolen secret. C) A person could seek protection under the law of trade secret and the law of copyright at the same time. D) The protection afforded by this area of the law applies only to personal information, not commercial matters the disclosure of which would increase competition. E) The subject matter protected by the law of trade secret is set out in the provincial Trade Secrets Act.

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75) Which of the following is true with regard to the law of trade secrets/breach of confidence? A) The court cannot award punitive damages, just compensatory damages, for breach of confidence. B) Trade secret law is governed by a provincial statute. C) While an employee is prohibited from disclosing confidential information he has learned on the job, he can use the general skills he has acquired on that job when he changes employment. D) The protection afforded by this area of the law is limited to breaches of confidence only in a commercial setting, e.g., stealing a company's customer list, plans, etc. E) Computer software is not a proper subject matter for trade secret/breach of confidential protection because it can be protected by copyright law.

76) Computer students who watched their teachers go out on strike were amazed when they heard about the difficult logistics required in such an operation. Two students spent two nights and two days developing a program for organizing a strike and picket line. It included such variables as legal requirements, number of sites, number of picketers, communications network, shifts, media contacts, etc. The students called their program "Picket Program." The students took their package -- program and manual -- to a computer developer/publisher, Mr. Lacs, to discuss the feasibility of marketing the program. Lacs said it was feasible. However, negotiations, which had lasted over a two week period, broke down when Lacs rejected the students' terms in their licensing agreement. Three months later, the students learned that Lacs developed and published a program called "Picketers' Path" based on their ideas, with a manual that they recognized as theirs. On these facts, which of the following is true? A) With regard to the computer program, Lacs could not be sued for misuse of a trade secret because the students only told him their idea and ideas cannot be protected by trade secret law. B) The students cannot protect the computer program under the law of trade secrets because all the information it contained could be obtained by others, e.g., the law from the library, the necessities of picketers from observation or unions, etc. C) Because there was no non-disclosure agreement signed by Lacs, he cannot be sued for misuse of a trade secret. D) The students' manual was not protected by copyright, because they had not yet applied for protection under the Copyright Act. E) The students could sue for breach of trade secret law if they can show it was apparent in the circumstances that Lacs was being trusted with confidential information. 77) Paul and Robert designed a new disk holder that they wanted to introduce to a large market. They decided that the quickest way to have their product recognized would be a symbol that would alert the buyer that it can be used with any computer. After playing with some symbols, they decided to use a slight variation of

Apple r Ltd.'s symbol of an apple because it was pleasing to the eye and well-known. Which of the following is Compute true? A) There could be no infringement of Apple Computer Ltd.'s registered trademark unless the apple symbol used by Paul and Robert were exactly like its symbol. B) If Apple Computer Ltd. did sue Paul and Robert for infringement of trademark, it could ask the court for an injunction as well as for damages. C) There could be no infringement of Apple Computer Ltd.'s registered trademark unless Apple Computer Ltd. suffered a loss because of this unauthorized use of its symbol. D) Even if Paul and Robert knowingly forged the trademark, they would only be liable in a civil action and could never be charged with a criminal offence. E) It is one of the jobs of the trademark office to alert owners of trademarks when their symbols are being used by others.

78) Which of the following is true with regard to trademark infringement and the remedies of the trademark owner? A) Before a trademark owner can sue successfully for an infringement, he must prove that the mark used by the defendant actually did confuse members of the public. B) Once a trademark is registered, the owner of the trademark cannot lose the right to use that mark. C) If a person forges a trademark, that person can be sued by the owner of the trademark for infringement in a civil action, but there cannot be any criminal charges laid against him. D) Before a trademark owner can sue successfully for an infringement, he must prove that the mark used by the defendant was the same as his mark. E) The owner of a trademark can sue someone who forges his trademark, and can ask the court for an injunction, an accounting of profits, and custody of the offending wares.

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79) Which of the following is false with regard to trademark? A) The distinctive design of a product container may be the subject of trademark protection. B) Registration of a trademark gives the owner of the trademark the exclusive right to use it throughout Canada. C) Registration of a trademark grants the owner protection for 15 years with the right to renew. D) If a person registers a trademark but later fails to use it, protection of the mark will not be lost; it is still his and is protected for the remainder of the period of protection granted. E) Registration under the Trademark Act establishes a presumption that the person registered is the owner of the trademark. 80) Which of the following is false with regard to the copyright law in Canada? A) A Canadian author automatically acquires copyright upon the creation of her book, if she wasn't employed to write it. B) Copyright law is governed by the Copyright Act, but an author need not register under the statute to acquire copyright. C) Registration of copyright is restricted to published works. D) Generally, the term of copyright is the life of the author plus fifty years. E) Not everyone can receive copyright protection in Canada for his or her work created elsewhere. 81) Three students chose to work on a directed study project for Planned Parenthood Association. The project included the creation of a computer program for inventory control. The students went to the library to get a book on the topic. The book was in the reserve section, so the students made three copies of the four relevant pages so that they could study them. They used the ideas from the book and created an original program and a manual. Later, when the students were preparing a report for their presentation, they decided that the pages in the book exactly expressed the theoretical background they needed for the introduction. They copied those four pages and used them as their own for the beginning of their twenty page report. At the presentation, seven copies of the report were made (with the program and manual as appendices). On these

facts,

which of the following is true? A) Using the ideas from the book was an infringement of copyright. B) Copying the pages from the book for their report was fair dealing because it was exactly what they wanted to say about the theoretical basis of the report. C) When the students made three copies of the few pages of the book for study purposes, that in itself was an infringement of copyright; they have no defence. D) Because the copied pages were a very small part of the whole report, there was no infringement of copyright. E) Although the students have created a program and a manual as a project, they would own the copyright on the program and the manual unless they had agreed otherwise.

82) If Weird Al wants to take "Blue Bayou," a song composed by Roy Orbison, and replace only Orbison's lyrics and publish it under "Blue by You," a song about domestic violence, which of the following is true? Assume that all are Canadian citizens governed by Canadian law. Read each separately. A) If, before his death, Orbison has signed a license agreement with Weird Al, allowing him to use the music, there could be no lawsuit against Weird Al no matter how offensive the lyrics turned out to be. B) Weird Al could get no protection for his original lyrics unless he sent a copy of his lyrics to the Copyright Office along with his application for copyright. C) Weird Al could get protection for his original lyrics even if his lyrics were unpublished. D) Orbison's legal representative could not sue because Roy Orbison died and thus so did his copyright. E) Orbison's legal representative could not sue if Weird Al's lyrics were different, because the song takes on a whole new meaning.

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83) In an article about the patents held by the Research Services Office at the University of British Columbia, it was written that none of the patents were there because someone set out to invent something new. "If we knew what it was that creates innovation, we would all be millionaires... it's chance, brilliance, an offhand remark...." We know that to obtain a patent we need to have created an "invention." Which of the following best defines a patentable invention? A) A unique mark identifying a business or product B) A significant scientific principle C) An original artistic work D) A new and useful machine E) Novel information used in a person's business which gives him or her a competitive edge

84) Which of the following is false with regard to trademark? A) Registration of a trademark gives the owner of the trademark the exclusive right to use it throughout Canada. B) If a person registers a trademark but later fails to use it, protection of the mark will not be lost; it is still his and protected for the remainder of the period of protection granted. C) Registration of a trademark grants the owner protection for 15 years with the right to renew. D) Registration under the Trademark Act establishes a presumption that the person registered is the owner of the trademark. E) The distinctive design of a product container may be the subject of trademark protection. 85) A computer programmer created a program and put a hard copy of it in his desk. If that program were copied, etched on a chip, embedded in the ROM of a computer, and sold to a mass market, the programmer A) could claim copyright because there is a provision in the Copyright Act to that effect. B) could claim copyright based on common law principles. C) would be better off to seek patent protection. D) could not claim copyright because the program would be part of a machine, which bars it from copyright protection. E) could not claim copyright because there is no provision in the Copyright Act nor case law that would

give him

protection.

86) When is it appropriate for a copyright owner, as plaintiff, to ask the court to cite the defendant for contempt of court? Read each separately. A) When the defendant first infringes the copyright. B) When the defendant refused to stop infringing the plaintiff's copyright even after the court ordered an injunction. C) When the defendant can't pay the $10,000 awarded by the court for copyright infringement. D) When the plaintiff wants to seize the plates used by the defendant to make copies of the plaintiff's work. E) When the plaintiff has learned of the infringement and wants the court to order the defendant to show how much the defendant made by selling the plaintiff's work. 87) Which of the following is not a remedy for a copyright infringement? A) Interlocutory injunction B) Permanent injunction C) Certiorari D) Anton Piller order E) Damages

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88) The effect of an Anton Piller Order is to A) compensate holder of copyright. B) stop infringement before trial. C) seize material from the suspected wrongdoer. D) require the infringer to pay over any profits. E) prohibit offender from dealing with product.

89) Yung created a machine that was not exactly new and novel in that it was an improvement on an existing patented machine. Which of the following is true? A) Yung could get a patent for his improvement, and would thereby get an independent right to make, sell, or use his machine with the original machine incorporated into it. B) The patent holder of the original machine has the right to make, sell, or use the improvement because his machine is the basis of the improvement. C) Yung could get a patent for his improvement, but has no right to make, sell, or use the original machine. D) Yung cannot get a patent for his improvement because it is not entirely new or novel. E) Both Yung's improvement and the original machine lose their patent protection. 90) In order to obtain a remedy for the disclosure of confidential information or a trade secret, what must the plaintiff show? A) That the employee profited from the disclosure B) That the employee intended to harm the employer C) That the disclosure of information has caused harm D) That there was a non-disclosure agreement E) That the information was not personal 91) Homer Ford invented a unique pollution-free engine that runs on gas created by chicken "droppings" and old leaves. This fuel also caused no wear on the engine of the car. Homer built a prototype in a workshop in his backyard. Before he seeks publicity, he would like to protect his invention and any business that emerges from the development and sale of his cars. In this regard, which of the following is false? A) If anyone steals his ideas, Ford could also sue in tort for injurious falsehood. B) Surnames cannot be registered as trademarks unless the name has acquired a secondary meaning at the

time of

application. C) If he can succeed in getting a patent on his novel engine, he would have a government-granted monopoly to produce, sell, or otherwise profit from his invention. D) If he obtains a patent, the protection will be for a period of 20 years. E) If he is granted a patent, he will be giving up any trade secret protection he might have had to protect his ideas.

92) Which of the following is true with respect to the application of intellectual property law to the Internet? A) In Canada, the design of an integrated circuit embodied in a computer chip is protected by a specific statute created for that purpose. B) Because of the "wild west" nature of the Internet, web sites have typically been exempt from traditional trademark and copyright laws. C) If a user accesses a web site on which a trademark appears, an actionable infringement has taken place. D) The Napster trial and other high-profile cases have shown the courts remain powerless to stop abuse of intellectual property rights on the Internet. E) Copyright law provides the owner of electronic material with the legal right to prevent unauthorized copying, but does not give the owner any exclusive rights to rent it or otherwise control its use.

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93) In Boudreau v. Lin, a professor published a student's paper without giving the student credit. What did the Court find? A) Plagiarism is a form of academic dishonesty that should not be tolerated. The student's copyright was infringed, as were his moral rights. B) While a student owns the copyright in works he or she has created, a professor still retains control over publication of such works. C) A professor automatically owns copyright in works created by a student for his or her class. D) While a student owns the copyright in works he or she has created, a professor has moral rights in such works. E) Plagiarism is a form of academic dishonesty, but there is no legal recourse in such cases.

94) In Baker Petrolite Corp. v. Canwell Enviro-Industries Ltd., Canwell developed a chemical formula that it began selling. Just over a year later, it applied for a patent. What was the result? A) Canwell was not entitled to a patent. A corporation cannot seek patent protection, only an individual can. B) Canwell was entitled to a patent, as all of the necessary elements had been satisfied. C) Canwell was not entitled to a patent. Patent protection can only be extended to mechanical, not chemical, inventions. D) Canwell was not entitled to a patent. A formula cannot qualify as an invention capable of being protected by patent. E) Canwell was not entitled to a patent. To qualify as "new", the invention must not have been disclosed more than a year prior to application. 95) In Harvard College v. Canada (Commissioner of Patents), Harvard College sought protection for a genetically altered mouse. What was the result given the decision of the Supreme Court of Canada? A) The oncomouse was granted patent protection, on the basis that it was a non-naturally occurring composition of matter. B) The oncomouse was granted patent protection, on the basis that it was not the product of the laws of nature. C) The oncomouse was granted patent protection, on the basis that it was the product of inventiveness. D) Unless the Patent Act is amended, higher life forms can only be patented under the doctrine of "sound prediction". E) Unless the Patent Act is amended, higher life forms cannot be patented in Canada.

96) Monsanto Canada Inc. developed a strain of canola seed that was resistant to a herbicide that Monsanto produced. Monsanto patented this strain of genetically-engineered seed. Schmeiser, a farmer, noticed that some of his crop was resistant to this herbicide. He collected these seeds and replanted them. When it turned out his plants contained the genetically-modified genes, Monsanto sued for patent infringement. In the case of Monsanto Canada Inc. v. Schmeiser, what did the Supreme Court of Canada hold? A) While genetically altered plant forms can be patented for medical purposes, they cannot be patented for commercial gain. B) One can patent genetically altered plant forms. Monsanto lost the action, however, as the farmer's infringement was not deliberate. C) Possession of genetically-modified plants is illegal in Canada. Accordingly, the civil action was dismissed. D) One can patent genetically altered plant forms. By collecting, saving, and planting the seeds, the farmer infringed the Patent Act. E) One cannot patent genetically altered plant forms. Life forms cannot properly be the subject of a patent application.

97) Walt Disney Productions v. Triple Five Corp. involved a passing-off action related to use of the word "Fantasyland". According to this case, which of the following is true about the law of passing-off? A) In a passing-off action, the onus is on the defendant to prove that no damage was caused. B) The law of passing-off is founded in contract law. C) The law of passing-off does not require proof of any intent to deceive or misrepresent. D) The law of passing-off requires some proof of actual confusion. E) In a passing-off action, proof of trade-mark registration must be established.

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98) Cadbury Schweppes Inc. v. FBI Foods Ltd. involved an action for breach of confidential information, where the information in question was a drink recipe. Which of the following statements is false? A) Where information is given in a manner that indicates it is to remain confidential, an obligation to keep that information confidential arises. B) To find breach, it is necessary that the party to whom the information had been communicated had misused it. C) In establishing breach, it is relevant whether or not the information in question was communicated in confidence. D) The duty not to misuse confidential information is limited to fiduciary relationships. E) A recipe can be considered confidential information. 99) Which of the following correctly matches the term to its definition? A) Punitive damages - court order to refrain from future infringements B) Permanent injunction - court order prohibiting offending conduct C) Statutory damages - damages in excess of the plaintiff's actual losses intended to punish D) Damages - court order that profits made from wrongdoing be paid over to the victim E) Enhanced injunction - monetary compensation to the the victim 100) When a Court orders that any profits made from wrongdoing be paid over to the victim, this is known as A) an accounting. B) an injunction. C) statutory damages. D) compensatory damages. E) punitive damages. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 101) Real property refers to land only.

102) An estate in the land describes a person's right to the exclusive possession and use of that land. 103) Life estate means that the land leased to a tenant for the period of his/her life. 104) A right of way can be acquired by prescription when a person's habitual use of land is not interfered with by the owner. 105) When people have a tenancy in common and one of them dies, his or her share in the property goes to the survivor. 106) An agreement for sale includes the right to retake possession if the person buying land fails to pay installments. 107) A right of way is an example of an estate in land since it gives the holder of it the right to go across the land. 108) A distinction between real property and personal property is that one cannot be moved while the other can. 109) A joint tenancy can be changed to a tenancy in common in a will. 110) The separation or division of joint ownership is referred to as severance.

111) Because a tenancy is primarily contractual and so does not "run with the land", it will not bind a purchaser of a building. 112) A periodic tenancy refers to a lease in which the parties agree to no set termination date but to the rental period being automatically renewed.

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113) A remainderman is a third party with the right to the remainder of the fee simple after the death of life tenant. 114) Leasehold estates are another way of describing landlord and tenant relationships. 115) Term lease describes a period-to-period rental.

116) In a three-year commercial lease, the tenant must give the landlord two months notice upon leaving. 117) One of the important features of residential tenancies is that the parties are free to override the provisions of the various residential tenancies acts by clearly doing so in a written lease agreement. 118) The only person who has a better claim to goods that are found is the original owner. 119) A finder has no obligation to return found goods to the proper owner. 120) The bailee is not liable for damage done to goods while in his/her possession. 121) If someone stores goods on your property without permission, and you exercise no control over those goods, there is no duty to take care of them. 122) A gratuitous bailment can occur when someone borrows an item from a neighbour. 123) Provincial legislation gives the right to copy or reproduce a created work to author or owner and controls infringements.

124) Ownership of a copyright can be sold. 125) Moral rights means that the creator has the right not to have the work changed in such a way as to diminish or degrade it. 126) A patent gives the exclusive right to produce, market, and sell a new invention. 127) Trademarks are to prevent the deception of people who think they are dealing with the company usually associated with the symbol. 128) The Patent Office will conduct a search of patent records for you to determine that the invention is original and unique. 129) It is possible for a trademark name to lose its status through common use. 130) When a trademark is registered, it gives protection for a period of 50 years. 131) A "passing off action" prevents a person from misleading the public into thinking it is dealing with some other business and applies whether or not a registered trademark is involved.

132) The Industrial Design Act requires registration, within three years of its publication, of a unique shape, pattern, or ornament. 133) The Industrial Design Act is designed to protect distinctive patterns or shapes as opposed to useful ones.

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134) If a copyright owner has grounds for believing that a person is infringing his copyright, but fears that the infringer may destroy the evidence, the owner could go to court to get an Anton Piller order, which would allow him to search and seize the evidence. 135) A person can obtain copyright protection only when the idea upon which the work is based is original. 136) A person who develops a new computer program can obtain copyright protection even though that program is only loaded onto the computer as software.

137) A person can only bring a passing off action where there is no registered trademark involved. 138) An employee could not be sued for disclosing a company's customer list because no trade secret or unique manufacturing process is involved. 139) In Canada, there is no right to patent methods of carrying on business as yet, but business method patents are available in the United States. 140) In Canada, software is protected primarily under copyright law, although there are situations in which patent law will apply to software embedded in a particular invention. 141) The mere possibility of confusion is sufficient to block a trade-mark application. 142) The Copyright Act now provides new remedies in the form of statutory damages, enhanced injunction, and summary procedures. SHORT ANSWER.

Write the word or phrase that best completes each statement or answers the question.

143) Distinguish between real property and other forms of property. 144) Indicate the extent of ownership above and below that land. 145) Explain what is meant by a fee simple interest. 146) Explain what is held in a life estate. 147) What is meant by a reversionary interest in a life estate? 148) Explain the rights of a remainderman in a life estate. 149) Distinguish between a leasehold estate and a freehold estate. 150) Explain what right is conveyed by an easement. 151) Distinguish between an easement and a right of way. 152) When a person has the right to go across land to get to another location, this is referred to as what?

153) Explain what is meant by a person obtaining a right of way by prescription. 154) When a person buys property but under the title is prevented from building certain types of structures or carrying on certain types of activities at that location, this is called what? 155) Distinguish between real and personal property.

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156) Indicate what is meant by real property.

157) What's the significance of an item being identified as a trade fixture? 158) What's the main difference in the effect of a registration of a certificate under a "certificate of title" jurisdiction such as British Columbia as compared to a normal registration system in other parts of Canada?

159) Distinguish between a tenancy in common and a joint tenancy.

160) Explain when the notice must be given to vary or terminate a periodic tenancy agreement. 161) Explain what is meant by a landlord's obligation to provide quiet enjoyment. 162) Who is responsible for the repair of the premises in a normal rental agreement? 163) Does the principle of frustration apply in landlord and tenant relationships? 164) When a landlord seizes the tenant's property for failure to pay rent, this is called what? 165) "When a tenant has signed a two-year lease and then for some reason finds himself in the position where he has to leave, the landlord has an obligation to try to rent out the premises to someone else." Explain the accuracy of that statement. 166) Indicate what residential rent control regulations are in place in your jurisdiction.

167) Indicate three ways that the laws related to residential tenancies have been modified by statute in your jurisdiction. 168) Joe verbally agreed with his landlord to a two-year lease for an apartment, and then only five months later, the property was sold to somebody else. The new owners immediately gave him three months to vacate the premises. Explain his legal rights under these circumstances. 169) Explain what is meant by chose in action. 170) What is meant by a chattel? 171) Joe was walking in a park and found a watch. He took it to the City's Lost and Found, but it was not claimed. Three years later, Joe went to this Lost and Found and asked for the watch and was told that the watch was a property of the City. Explain Joe's legal position in these circumstances. 172) Joe borrowed his neighbour Sam's lawnmower, and at the same time, Sam asked Joe to look after a valuable camera for him while he was on vacation. Explain in relation to which of these items Joe has a higher duty to be careful. 173) Distinguish between a bailment for value and a gratuitous bailment.

174) Indicate how the obligation on innkeepers has been modified by statute. 175) A subsidiary contract creating an obligation to hold an offer open for acceptance until the expiration of a specified time is known as ________.

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176) Explain what is meant by a tenancy at sufferance. 177) What is meant by "relief against forfeiture"?

178) Candice tells you she has "sublet" her property. What does this mean? 179) What is meant by the term "distress" in the context of landlord-tenant relations?

181) Distinguish between copyright and patent.

180) What is the lessor's obligation to ensure "quiet enjoyment"?

182) Give three examples of matters covered by copyright legislation. 183) Joe wrote a short story that he was extremely proud of, brought it to you, and asked you about how to go about having it copyrighted. What would be your answer? 184) "In Canada, copyright always resides with the author of the material." Discuss the accuracy of that statement. 185) When the author assigns his copyright to a purchaser, what rights does he still have in relation to the work? 186) Explain what is meant by moral rights under copyright law. 187) Explain what rights a copyright holder has in relationship to the work. 188) Explain under what circumstances copyrighted material can be reproduced without permission of the

copyrigh t holder. 189) The courts have had difficulty deciding whether computer programs are covered by copyright legislation or not. Discuss how this has been resolved. 190) What is an interlocutory injunction? 191) What is an Anton Piller order? 192) Explain how the remedy of an accounting works when there has been a violation of copyright. 193) Indicate four remedies that may be available to the victim of the breach of copyright. 194) Explain what is meant by an ex parte procedure and give an example. 195) Indicate three things that cannot be patented. 196) What rights are conveyed by the granting of a patent? 197) What qualifications must be met in order for something to be patentable?

198) Explain how a patent is obtained.

199) What is the main purpose of patent law?

200) What rights are obtained by the granting of a patent?

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201) Distinguish between what is protected under patent law compared to copyright law. 202) Indicate the kinds of things that are covered by trademark legislation. 203) Explain how trademark protection is obtained.

204) Indicate three things that cannot be used as a trademark.

205) What protection is given under trademark legislation?

206) In order to successfully sue someone for violation of trademark, what must be established? 207) Distinguish between a trademark action and a passing off action. 208) Joe wanted to start up a restaurant business, did some research, and found out McDonald's had not properly registered its trademark, the golden arches, in his particular area. Joe used a similar pair of arches over his restaurant and started business. Explain any danger he might face. 209) What kinds of things are protected as industrial designs? 210) How long is the protection given under the Copyright Act? 211) What is the period of protection associated with patent law? 212) What period of protection is granted under industrial design legislation?

213) Joe worked for Harry's Fine Toys for a period of six years. In September, he left Harry's Fine Toys and went to Sam's Toy Shop, a competitor, disclosing Harry's Christmas line. What could Harry do under these circumstances? 214) "One of the most effective statutes in Canada protecting confidential information is the Trade Secrets Act." Discuss the accuracy of this statement. 215) Explain under what circumstances a tort action of inducing a breach of contract can be brought. 216) In order to obtain an interlocutory injunction, what must the plaintiff establish? 217) What three new remedies does the Copyright Act now provide to copyright owners? 218) What is meant by a permanent injunction? 219) Explain the concept of "delivery up". 220) An arrangement allowing a court to make a decision based on affidavit evidence is known as ________.

221) Explain the concept of an "enhanced injunction". 222) What does it mean to say that works are in the "public domain"? 223) Explain the nature of "fair dealing".

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224) Under the Copyright Act, what does the new remedy of statutory damages entail? ESSAY. Write your answer in the space provided or on a separate sheet of paper. 225) Discuss how the normal rules in relationship to residential tenancies have been modified in your jurisdiction by statute, and discuss the effectiveness of such changes in terms of the objectives of the statutes. 226) Discuss how the process of an item becoming a fixture can interfere with the priority of creditors in secured transactions.

227) Discuss the various obligations of bailees when looking after the property of others. 228) Discuss, in the context of commercial tenancies, what a business person ought to do to reduce his or her risk. 229) Discuss the various remedies that are available and their effectiveness when intellectual property such as copyright and patent are interfered with. 230) Contrast patent and copyright protection. In your discussion, consider the differences in the nature of the protection, the kind of things protected, the effectiveness of the protection granted, and the objectives of the legislation. 231) Discuss how the common law protects intellectual property. In your discussion, indicate why it was necessary to introduce statutes in some areas. 232) Discuss the idea of the duty of confidentiality that an employee owes to the employer. Give examples of the circumstances under which such a duty is imposed and what an employer should do to ensure that such confidences are kept.

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1) E 2) D 3) C 4) B 5) A 6) C 7) E 8) D 9) B 10) B 11) A 12) B 13) E 14) A 15) C 16) E 17) B 18) E 19) A 20) D 21) D 22) A 23) C 24) C 25) E 26) B 27) D 28) D 29) C 30) A 31) D 32) A 33) D 34) C 35) D 36) E 37) D 38) B 39) D 40) A 41) A 42) A 43) B 44) D 45) A 46) D 47) E 48) E 49) E 50) E 51) C

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52) D 53) C 54) C 55) C 56) C 57) C 58) A 59) A 60) C 61) A 62) A 63) B 64) B 65) A 66) A 67) E 68) C 69) B 70) A 71) A 72) C 73) B 74) C 75) C 76) E 77) B 78) E 79) D 80) C 81) E 82) C 83) D 84) B 85) A 86) B 87) C 88) C 89) C 90) C 91) A 92) A 93) A 94) E 95) E 96) D 97) C 98) D 99) B 100) A 101) FALSE 102) TRUE 103) FALSE

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104) TRUE 105) FALSE 106) TRUE 107) FALSE 108) TRUE 109) FALSE 110) TRUE 111) FALSE 112) TRUE 113) TRUE 114) TRUE 115) FALSE 116) FALSE 117) FALSE 118) TRUE 119) FALSE 120) FALSE 121) TRUE 122) TRUE 123) FALSE 124) TRUE 125) TRUE 126) TRUE 127) TRUE 128) FALSE 129) TRUE 130) FALSE 131) TRUE 132) FALSE 133) TRUE 134) TRUE 135) FALSE 136) TRUE 137) FALSE 138) FALSE 139) TRUE 140) TRUE 141) FALSE 142) TRUE 143) Real property includes land and anything affixed to it. 144) You own above and below as much as can be used, excluding mining rights and mineral rights below, and you have the right to exclude any permanent incursion into the space above. 145) This is the highest interest in land that we have and is akin to ownership, but in actual fact just gives the holder of the fee simple a right to use the land as he pleases (subject to regulations and by-laws) and to buy and sell it. 146) The person who holds the life estate in the land will have the right to use and occupy that land during the life of the person to whom the life estate is attached, usually the person who holds the life estate. This includes the right to sell the interest in the land, but that interest is limited by the life in question. 147) When the original grantor of the life estate does not designate where the estate is to go after the life estate is exhausted, then that original grantor is said to retain a reversionary interest or right to have the property revert to him or his estate. 148) When a life estate is granted to one person, and on the expiration of that life estate, the property is to go to another, that other person is referred to as a remainderman.

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149) A leasehold estate involves a transfer of a right to possess the land to someone else for a specific period of time. A freehold estate such as a fee simple or life estate does not last for any specific period of time. 150) This gives the right to a person to use a portion of another's land, usually for a specific purpose (for example, driveway, utility maintenance). 151) A right of way is a particular type of easement giving the holder of it the right to cross the land to get to another location but not to stay on that land. 152) Either a right of way or easement. 153) If a person is allowed to go across land without interference for a period of time (for example, 20 years), it will then be too late to stop that person from using the land. He acquires the right of way by prescription. Note: This may not be possible in land titles jurisdictions. 154) A restrictive covenant. 155) Real property is land and things fixed to it. Personal property includes movables called chattels and intangible personal property in the form of chose in action. 156) Real property includes lands and items or things permanently affixed to that land. 157) A trade fixture is fixed to the land for the purpose of making that fixture useable, such as machinery and the like. The tenant can take such trade fixtures with them when they go, even though they are fixed to the land. 158) In the normal registration system, the registry contains the documents that can affect title, but it's up to the person searching that title to determine the effect of those documents. In a land title system, however, a certificate of title is granted and the title is, thereby, guaranteed by the registry to be as stated on the certificate of title. 159) A tenancy in common is where two or more people share an estate on the same property, each owning an undivided interest. In a joint tenancy, on the other hand, each of the parties owning the property owns the whole property, and when one of them dies, the other retains the entire title by survivorship. 160) One clear rental period notice must be given. In a month-to-month tenancy, that's one full month. The notice must be given before the expiration of the prior period, e.g., April 30 to be effective at the end of the next rental period, May 31. (May vary with jurisdiction.) 161) It's the landlord's obligation to insure that nothing happens to interfere with the tenant's use of the property. 162) Without legislation to the contrary, the tenant is responsible for any major damage he causes; otherwise, repairs are the landlord's responsibility, although the landlord may only be required to make such repairs when not to do so would seriously interfere with the tenant's ability to use those premises. 163) This would vary with the jurisdiction and whether a commercial or residential tenancy is involved. Check the local statute, such as the Landlord and Tenant Act or the Commercial Tenancies Act of your province. 164) Distress or distraint. 165) Except where otherwise created by statute (which is often the case), a landlord has no such obligation. The tenant is obligated for the lease period, and if he chooses to leave earlier, that does not relieve him of his obligation to pay. 166) This will vary with the jurisdiction, but should include not only restrictions on the amount of rent that can be charged but also the control of how often such rent increases can be imposed (per year, or following renovations or a change of tenant). 167) This will vary with the jurisdictions but may include rent controls, a lengthening of the notice periods required for termination or rent increase, a restriction on how often rent increases can be imposed, control of repair of the premises, and the condition of those premises, whether a security deposit can be charged, how much, etc. 168) Because this is a two-year lease, it need not be evidenced in writing. It runs with the land and binds the new owners. Note that this may be subject to the local legislation in your province. 169) A chose in action is a form of personal property; it's intangible and represents a claim one person has against another. 170) A chattel is a tangible, moveable item of personal property. 171) Joe had prior possession and therefore prior title to the City. His title is good against everyone except the person who lost the watch; therefore, Joe is entitled to the watch. (Finders keepers) 172) With the lawnmower. It's gratuitous bailment for the benefit of the bailee, which carries with it a very high duty of care. With the camera, it's a gratuitous bailment for the benefit of the bailor, which carries with it a lower duty of responsibility to avoid gross negligence (although the value of the item will cause the duty to vary). 173) Bailment for value involves some sort of contractual relationship where the goods are being taken by the bailee pursuant to some sort of contractual relationship such as repair, use, etc. In a gratuitous bailment, no such contract

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is involved. 174) Historically, the obligation of an innkeeper was to be an insurer in relationship to the goods of the guest. By statute, in most jurisdictions, that obligation has been reduced so that liability only exists where negligence can be shown. 175) An option agreement 176) This refers to a situation in which the tenant fails to leave after lease has expired and owes compensation to the landlord. 177) This is the equitable principle that when a landlord retakes a property for failure to pay rent prior to the end of the lease term, the tenant can pay the arrears and apply in the court to have the lease reinstated. 178) Candice is a lessee of land or premises and she has executed a lease to a third party for a shorter term than that which she currently holds. 179) This refers to seizure by the landlord of any property left by the tenant and the holding of it until the rent is paid (or sale of it to pay rent owing). 180) This is the obligation that the lessor or anyone claiming through the lessor will not interfere with the tenant's use of the property. 181) Copyright law prevents completed works like books, photographs, artwork, plays, etc., from being copied. A patent prohibits inventions or ideas from being used, rather than the work that is being produced from it. 182) Literary works such as books, computer programs, etc.; dramatic works such as shows, movies, television, theatre, etc.; musical works such as melody, harmony; and finally, artistic works such as paintings, drawings, sculpture, etc. 183) In Canada, the work is automatically copyrighted when it is created. Joe could, however, take steps to register it so that he will be protected in other jurisdictions and will have proof of when it was created for copyright purposes. He could also mail it to himself, not opening it, thus establishing proof of the time it was written. 184) It's inaccurate. If the author was working for someone else in the process of creating the work, that other person might own it, depending on the contractual arrangement between them. Also, the copyright may be assigned from the author to a purchaser. 185) He has moral rights in relationship to the work, that is, the right to have his name continually associated with it and not to have it modified except with his permission. 186) If the author of the work assigns that copyright to someone else, the author still maintains moral rights in relationship to it, that is, the right to have his name associated with it and not to have it modified without his permission in such a way as would denigrate it or damage his reputation. 187) The right to control it and prevent copying or use of that product by others. The exemptions are when the work is reproduced for private study, review, or newspaper summary. 188) Where it is being reproduced for private study, research, review, or for a newspaper summary. 189) The 1988 amendment to the Copyright Act specifically states that computer programs are covered by copyright legislation. 190) This is an interim injunction that is obtained prior to the trial to prevent some sort of offending conduct. 191) This is a court order whereby the offending goods are seized, or stolen information recovered, before they can be sold, distributed, or otherwise disbursed. 192) The offender is required to report any profits that he has made from the sale or use of the offending materials and pay those profits over to the holder of the copyright. 193) An Anton Piller order; damages, both normal and punitive; injunction, both permanent and interim; accounting. 194) The Anton Piller Order or an injunction is often obtained ex parte, which means without the other party to the matter being present and without their knowledge. 195) Theories, obvious improvements, something designed for an illegal purpose, something that can't work, something that is subject to copyright law, computer programs. 196) The patent holder has a monopoly over the use of the invention. 197) It must be new, not already invented by somebody else, and an invention. 198) A patent must be applied for by filing forms with the appropriate government patent office. 199) To provide the disclosure of the information associated with the invention while protecting the inventor from its use by others; also to provide a licensing mechanism. 200) The granting of a patent gives the patent holder exclusive rights to manufacture, sell, and profit from the invention. 201) Copyright protects the specific way an idea is expressed, whereas patent law is intended to protect the idea or principle behind the product.

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202) Terms, symbols, design, or a combination of them that identifies a business or product, such as a logo or a name. 203) An unregistered trademark is entitled to protection at common law, but for a trademark to be protected under the Trade-marks Act, it must be registered at the appropriate government agency. 204) A sound or colour by itself; something obscene or scandalous; anything resembling the insignia of crests or other symbols of royalty, government, or government agencies; names; portraits of individuals without consent. 205) It prevents others from using the same or similar mark that would have the effect of confusing the public and lead them to believe they were dealing with the original. 206) That the complainant is the registered holder of the trademark, and secondly, that the public will or has been confused by the wrongful use of that trademark. 207) Even where there is no registered trademark, when one business does something that will confuse the public into thinking that they are dealing with another business, that other business can sue in common law by way of a passing off action. 208) Even if McDonald's has failed to properly register its trademark under these circumstances, they could still sue Joe under a common law passing off action for trying to confuse the minds of the public into thinking that they were dealing with McDonald's when they were not. 209) A design or pattern that distinguishes one manufactured item from another. 210) The life of the author, plus fifty years. 211) Twenty years from the time of registration of the invention. 212) Ten years. 213) In the process of disclosing this information, Joe has violated his duty to his employer of confidentiality and can be sued for the damages suffered. 214) There is no Trade Secrets Act in Canada. 215) When one business persuades an employee or someone else doing business with another to breach that contract and do business with him instead. 216) A prima facie case (1) that there has been an infringement of copyright, (2) that if the injunction is not granted, irreparable harm will be suffered that could not properly be compensated for by an award of damages at the trial, and (3) that the balance of convenience is also in the plaintiff's favour. 217) Statutory damages, enhanced injunction, summary procedures 218) Court order prohibiting offending conduct 219) This is an order directing the defendant to deliver all copies of the infringing items in his or her possession or control to the copyright owner. 220) Summary procedures 221) This is a new remedy under the Copyright Act that allows a court to order a wrongdoer to refrain from future infringements of copyright in other works owned by the plaintiff copyright owner. 222) This refers to a category of works that are no longer copyrighted and may be used by anyone. 223) This refers to the use of copyrighted material (as permitted under Canadian law) for the purpose of research or private study, criticism or review, or news reporting. 224) It is a remedy enabling a court to award damages that is "considers just" in the circumstances. 225) This will have to conform to the particular legislation in place in your jurisdiction, but some general points are as follows. Usually the landlord's rights and obligations are significantly changed. Sometimes rent controls are in place, restricting the amount a landlord can increase the rent for a tenant each year. At least, the legislation will restrict how often such an increase can be made. The legislation will restrict how much can be taken as a security deposit and what it can be used for, and will also impose an obligation to pay interest. The landlord will usually also have an obligation not to change the services that are given, such as parking, cable, heat, or laundry facilities, as this will be in effect a rent increase. Typically, the landlord will also have to maintain the premises to a reasonable standard of health with respect to the premises, but this obligation will be on the tenant as well. An important area of change is usually the amount of notice that must be given when rent is increased or for termination. Usually the notice has to be given on the last day of the previous month, but that is often changed so that the notice can be given the same day the rent is paid. Also, the amount of time for termination by the landlord is usually increased from one month to three, and with a rent increase, usually at least three months' notice must be given. Landlords must also mitigate their damages when a lease is defaulted. These are some of the things that students can bring up to illustrate how local legislation has modified the traditional landlord and tenant

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relati onship. 226) A fixture is an item of personal property that has become affixed to the building or land, thus becoming part of that real property. Student have to demonstrate not only knowledge of the difference between real and personal property but also what a fixture is. Then they should discuss debt and security. When an item of personal property is used as security for a loan, it is covered by a conditional sales act, bills of sale act, or personal property security act, depending on the jurisdiction. Registration gives the secured creditor fist claim on that chattel. But when it becomes part of the real property, what happens to that creditor's security? If there is a mortgage on the real property or if the real property is sold to an innocent purchaser, what happens to the claim of the secured creditor? In fact, the effect varies with the jurisdiction. This is one of the matters that is solved by the Personal Property Security Act. Students should at least demonstrate an understanding of the various forms of property and of the nature of the problem that arises when a chattel used as security becomes affixed to real property. 227) Bailment takes place when one person has in his possession chattels owned by another. The obligations associated with this relationship will vary with the type of bailment in place. Students should show an understanding of the nature of personal property and what is meant by a bailment. The obligations on the parties to take care of the goods and be responsible when they are damaged, lost, or destroyed depends on whether the possession is pursuant to a commercial relationship or not, and who gets the benefit. A bailment for value takes place when both parties receive a benefit under the bailment. Usually this is a commercial relationship where goods are stored for a fee, where goods are being shipped, or where the goods are left with a repairperson to be fixed for a fee. In these situations, the standard is that of normal negligence (the bailee has an obligation to take the care that a reasonable person in that situation would), or in special industries, the tradition or common practice of the industry. The duty might be modified in the contract, giving rise to the commercial relationship. Exculpatory clauses in such contracts will usually limit the bailee's obligations. Common carriers and innkeepers have a special duty to care for these goods, but this is usually reduced by statute. When the bailment is gratuitous -- that is, one party only is getting a benefit -- then if the bailment is to the benefit of the bailee (borrowing your neighbour's lawnmower), the duty is high. Where it is for the benefit of the bailor (storing your neighbour's furniture in your garage), the duty is minimal, although the courts seem to be moving to impose a duty of normal negligence in such circumstances. The question requires students to demonstrate an understanding of personal and real property as well as what a bailment is, and then to deal with the duties imposed. 228) Businesses generally require a physical location from which to carry on business activities. It is critical that tenants understand the terms of the lease into which they are entering. Students should note that the best way to ensure this is the case, is to obtain appropriate legal advice. Because leases are so common, people are often not are careful as they should be. A lawyer can review a standard form agreement, identify areas of concern, and seek appropriate modifications before it is executed. One common area of risk relates to the possibility of changing business needs. It is important to ensure sufficient flexibility within the terms of the lease that changes to the business over time can be accommodated. Students should also identify the tenant's primary obligations, including the need to pay rent when due. An obvious way a tenant can reduce his or her risk, is simply to abide by these obligations. A tenant should be aware of the remedies available to the landlord in the event rent is not paid, including forfeiture, distress, and the ability to sue for monetary compensation. The tenant's remedies are more limited, and are generally restricted to suing for damages or an injunction. It is also critical that students point out that the tenant also faces risk as an occupier of the property. Reference should be made to the specific occupiers' liability provisions in place in the relevant jurisdiction. 229) This requires students to consider the unique problems associated with intellectual property. They should explain the common remedies such as damages and injunction, and the special problems associated with them, as well as the more unique remedies such as an accounting or an Anton Piller order. Damages are usually very difficult to calculate and often don't provide an adequate remedy, and so injunction and other remedies are often more attractive. Because it is so difficult to determine compensation, often the more appropriate remedy is an accounting, where the infringer has to disclose what profits have been earned as a result of the infringement and hand over those profits to the victim. The injunction can be effective in preventing the competing infringer from taking profits away from the holder of the intellectual property. The interlocutory injunction can be especially effective since it takes effect before the trial. Often this interim order to stop the infringement is enough to solve the problem and

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there a trial, avoiding the delay and extra costs that would result. The Anton Piller order is unique in this area in that it is is no obtained ex parte and is designed to stop the infringer from destroying evidence before it can be seized. Where need copyright, trademark, or patent infringement is involved, the courts will often grant an order to seize the offending to product and surrender it to the plaintiff so that it can be destroyed. Punitive damages are sometimes awarded, and follo since this is primarily federal legislation, often there are criminal penalties including fines and imprisonment when w up a criminal prosecution is pursued. Students should show that they understand the unique problems in this area and with how these remedies provide unique solutions. 230) The main difference between copyright protection and patent protection is that the copyright protects the expression of the idea, not the idea itself, whereas the patent protects the invention, however it is expressed or whatever form it takes. In fact, the type of protection given varies with the type of intellectual property being protected, copyright being more appropriate where written material, dance, music, computer programs, and the like are involved. Patents are more appropriate for inventions and products that are eventually manufactured and incorporated into products that do things, produce things, or otherwise function in some way that is useful. The copyright lasts longer, usually the life of the author plus 50 years, whereas the patent protection normally lasts for only 20 years. Patent protection creates a monopoly with respect to the use and profit from the invention. Copyright gives exclusive right to copy and profit from the work, writing, computer program, or whatever is being protected. It is difficult to say one is more effective than the other, as they are tailored to the unique kind of thing that needs protecting. The objective of the question is for students to show that they understand the difference between copyright and patent protection, the kinds of things protected by each, and the contrasting ways that protection is extended. 231) The main type of common law protection with respect to intellectual property deals with the use of confidential information, including trade secrets and passing off actions. In relationships where one party is vulnerable to the disclosure of such confidences (for example, employers), the other party has a duty not to disclose that information. Of course, the employer should make it clear that the information is confidential and is to remain secret. Disclosure of such business secrets can cause serious harm, and the courts usually take a very serious view of a breach of this duty. Passing off actions occur where one business tries to take advantage of the good will developed by another by getting the customers to think that they are dealing with someone else, usually a more successful business. An example would be where a restaurant uses golden arches to make people think they are associated with McDonald's, when they are not. These common law remedies can be very effective when the type of intellectual property that has been abused falls into one of these categories. But as with all common law action, the plaintiff has to be willing and have the funds to pursue an action against the infringer. The Trade-marks Act, which covers much of the same territory as a passing off action, can be more effective, in that the statutory remedies discussed in the text are available, and in some circumstances criminal prosecution can take place. But there has to be a trademark that has been infringed, and that is not necessary when a passing off action is involved. Thus the common law remedy can be actually broader. But there is no common law remedy where copyright or patent is involved, or in several other areas where specific acts impose obligations and rights on the parties. In those areas, the federal statutes and the protection they provide is vital. One area where you would expect common law protection to have developed is in the protection of privacy, but this has not happened; it is only now, with federal and provincial initiatives in passing statutes in this area, that abuse of a person's privacy is actionable to any extent. Students should understand that this is a situation where the common law remedies can be very valuable and effective, but that only applies to specific areas and the federal statues provide protection in several areas where the common law is silent. 232) There are many situations where the disclosure of confidential information can have a harmful effect on a business. In this question, students are expected to demonstrate knowledge of the nature of an employee's duty to keep confidences, what constitutes confidential information, and the consequences of its disclosure. Trade secrets, customer lists, and information -- even private information about key personnel in the company -- can be important to a competitor, and its disclosure can hurt the business. It is clear that any employee, as part of his duty to the company, has a duty to maintain such confidences. Of course, the more senior the employee, the more likely they will be to be party to such harmful information; however, even the most junior of employees can be party to information the disclosure of which can hurt the company.

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the collective agreement might provide some protection. Where another person, such as a new employer or Whe competitor, has persuaded that employee to disclose the secret, that competitor can also be sued for inducing n the breach of contract. empl But even the best-intentioned employee cannot be expected to keep a confidence that he doesn't know is secret. oyee It is vital for the employers to tell the employee what materials information or trade secrets are confidential. wron Employers must make clear the company policy on keeping such confidences and inform the employees what they gfull can expect if the confidential information is disclosed. Any confidential documents should be clearly marked. y Terms can be included in employment contracts designed to control such information, such as provisions discl prohibiting employees from going to work for competitors for a reasonable period of time upon termination. oses As far as remedies are concerned the normal gamut should be available, including damages, injunction (often to such keep the employee from working for a competitor), accounting, and even punitive damages in the appropriate infor circumstances. mati on, he has viola ted his duty to the com pany and can be disci pline d. This may inclu de firin g and suin g that empl oyee for dam ages. Whe re unio ns are invol ved,

Chapter 14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is true with respect to the application of intellectual property law to the Internet? A) If a user accesses a web site on which a trademark appears, an actionable infringement has taken place. B) Copyright law provides the owner of electronic material with the legal right to prevent unauthorized copying, but does not give the owner any exclusive rights to rent it or otherwise control its use. C) Because of the "wild west" nature of the Internet, web sites have typically been exempt from traditional trademark and copyright laws. D) The Napster trial and other high-profile cases have shown the courts remain powerless to stop abuse of intellectual property rights on the Internet. E) In Canada, the design of an integrated circuit embodied in a computer chip is protected by a specific statute created for that purpose.

2) Which of the following statements with regards to defamation over the internet is true. A) Where the communication is found to be defamatory, the first question to be determined is whether the statement is libel or slander. B) If the author is unknown, intermediaries, such as ISP's or website operators, can always be held liable for defamation. C) If the ISP encourages the offending behaviour, or if they ought to have known of it , the intermediary cannot be held liable for defamation. D) If the author is unknown or uses a false name, bringing an action for defamation presents little difficulty. E) If the author resides in another jurisdiction, an action for defamation in all circumstances, can be brought against the ISP.

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3) Gordon invented a solution that dissolved the residue of tape that remained on walls after the removal of notices, pictures, etc. He kept his formula secret, but wasn't yet interested in marketing it, just in improving it. Gordon's only employee, Thad, who had signed a contract to work until July 1, 2011, was offered a job by Mr. Barr who would pay him twice his salary if Thad would leave Gordon right away (April) and bring Gordon's secret formula with him. Because Thad was upset by Gordon's lack of interest in marketing his product, he did copy the formula, quit, and began working for Barr, who marketed the solution. On these facts, which of the following is false? A) As one remedy, Gordon could ask for the accounting of profits. B) Gordon could sue Barr for inducing breach of contract. C) Gordon could sue Thad for breach of trade secret law. D) Gordon could sue Thad for breach of the employment contract. E) Gordon could not get an injunction to stop Barr from marketing the product because Barr didn't steal the formula. 4) Chad was the best private detective in the west. His system for tracking persons who have caused themselves to disappear was markedly superior to that of others. Sally, his only assistant, was considered so valuable that he always had her sign five-year contracts with non-disclosure clauses. Sally took notes at a private meeting between Chad and a representative of the RCMP who was negotiating a contract with Chad for tracking down two criminals. Sally and Chad took care that the discussions were understood to be confidential -- regarding both the information from the RCMP and from Chad about his methods. Sally was approached by a competitor of Chad, Mr. Adolph, who offered her three times her salary if she would break her contract with Chad, sign with him, and bring him information about Chad's tracking system. After some months, she did just that. Furthermore, she told Adolph the details of the information given to Chad by the RCMP, which caused the RCMP embarrassment, time, and money. Which of the following is false? A) Chad could sue Sally for breach of her employment contract, not only on the clause relating to the term of her employment, but also on the non-disclosure clause.

B) The RCMP could not sue Chad for breach of confidence because the information disclosed by Sally was not novel know-how that was giving the RCMP the cutting edge in business competition. C) Sally owes a fiduciary duty to Chad because of her trusted position as an employee. D) Chad could sue Sally for disclosing the information only if he had made it clear that the information was confidential and should not be disclosed. E) Chad could sue Adolph for the tort of inducing breach of contract. 5) Naxon opened a retail computer shop which he called Computer Haven Ltd. He used colours and signs similar to those used by Computerheaven Ltd., a very successful computer store three miles away. After Naxon was in business for about five months, the directors of Computerheaven Ltd. noticed that their sales had dropped. On these facts, which of the following is true? A) Computerheaven could successfully sue Naxon for the tort of passing off if it can prove that the name, signs, and colours used by Naxon were likely to mislead the public. B) Computerheaven could successfully sue Naxon for the tort of innuendo. C) Computerheaven has no cause of action against Naxon because ours is a free society and competition in all forms is encouraged by our political and legal system. D) Computerheaven could successfully sue Naxon for the tort of injurious falsehood. E) Computerheaven could successfully sue Naxon for breach of contract.

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6) While at work, Neil would spend a considerable amount of time on the Internet. After multiple warnings, Neil was fired from his job as a result. To get back at his boss, Neil anonymously posted several untrue and offensive messages about his boss to an Internet discussion board frequently visited by his employer's customers and suppliers. Which of the following is true? A) Neil's internet service provider, not Neil, is the one facing liability for defamation, because it is the one technically publishing the offensive material. B) If Neil's former boss notifies Neil's internet service provider about the offensive messages, the internet service provider should not remove the messages, because free speech is the cornerstone of the Internet. C) Because the messages were posted anonymously, Neil could not be held liable for such discussion board postings. D) Because the Internet remains largely unregulated, neither Neil nor his internet service provider could be held liable for such discussion board postings. E) Neil's internet service provider could be forced to disclose the source of the discussion board postings.

7) Which of the following is false with respect to the application of tort law to the Internet? A) The principles of misrepresentation and negligent misstatement will apply to the Internet just like any other form of communication, but the problems of jurisdiction and whom to sue will create significant obstacles. B) Companies that sell their products over the Internet will still be held liable under the laws of negligence if that product causes injury. C) Because the Internet provides direct and inexpensive access to a massive audience, torts such as deceit, negligent misstatement, and defamation are primary concerns. D) It is unlikely that courts will be willing to expand existing tort law to encompass new technologies. E) Statutes will need to be passed to expand or modify the common law where current tort law proves inadequate. 8) Which of the following is true with respect to the application of contract law to the Internet? A) Online communications are governed by the "postbox rule". B) Even if the basic requirements of acceptance are met, an offer accepted by e-mail has been deemed legally ineffective. C) Clicking an "I Accept" button is used by some online vendors to make an internet user believe that the terms presented are binding, however "click-wrap" cases have confirmed that this action has no legal effect.

D) Internet contracts are governed by the federal Uniform Electronic Commerce Act, in effect throughout Canada. E) Many jurisdictions have passed legislation making electronic communications the equivalent of written documents for legal purposes.

9) Grant and Shawna developed a new and exciting invention which they called the "Zlackerblogf". They incorporated "Zlackerblogf Industries Ltd." to be responsible for the manufacture and sale of this revolutionary new product. After years of success, they decided to sell their product online. When time came to register "zlackerblogf.com", however, they discovered that the domain name had already been taken by Curlicue Developments Inc., a major competitor. Which of the following is true? A) If Curlicue Developments Inc. obtained the domain name to prevent their competitor from using it, this does not undermine Curlicue's claim to the name; it merely demonstrates that Curlicue is a crafty competitor. B) The dispute over the domain name could be dealt with by dispute resolution mechanisms in place to resolve exactly this kind of domain name conflict. C) Although Curlicue Developments Inc. may have acted improperly, once a domain name has been issued, it cannot later be rescinded. D) Curlicue Developments Inc.'s registered domain name could be used as a defence to any allegation of trademark infringement. E) Zlackerblogf Industries Ltd. does not need to worry; because of the nature of the Internet, the same domain name can be used by more than one entity.

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10) Deceitful practices and fraud are ongoing concerns for those transacting business on the Internet. Pat has recently been the victim of such a scam. He gets into a heated discussion with his friend over the application of current consumer protection laws to online transactions. Which of the following statements is correct? A) Consumer protection law in respect of online transactions is governed by the federal Universal Internet Transactions Act (UITA). B) Although new legislation may be enacted in the future, general consumer protection legislation has yet to be extended to online transactions in any Canadian jurisdictions. C) Provincial securities regulations will also apply to trades on the Internet, but amendments will likely be enacted to apply special provisions to electronic trading. D) In most provinces, consumer protection legislation has been enacted to invalidate internet transactions and render electronic "signatures" ineffective. E) While case law applies to online activities, statute law - such as sale of goods legislation - does not apply to such transactions. 11) Which of the following is not a common internet or computer-related offence? A) Hate literature and other human rights violations B) Computer piracy C) Gambling D) Trespass E) Distribution of pornography 12) Dan, a Canadian resident, has decided to created a web site offering products and services to consumers in certain European markets. Which of the following is true with respect to the jurisdictional issues that arise? A) Dan could not be prosecuted for an activity that is against the law in a European jurisdiction, as long as that activity is acceptable in Canada. B) "Conflict of laws" refers to the established rule that if laws in one jurisdiction conflict with those of another, it is the laws of the jurisdiction of residence that always govern. C) Because the web site was created to do business in other jurisdictions, the laws of those jurisdictions will apply to the transactions unless it is clearly stated otherwise in the contract.

D) Disclaimers posted on Dan's web site will protect him if the content of his web site turns out to constitute an offence in the European markets in which he is operating. E) It is sufficient for Dan to follow the rules of his own jurisdiction. 13) Laura is concerned that her e-mails may be read by third parties and that her Internet "surfing" is being tracked by businesses hoping to use the information to inundate her with unsolicited e-mail advertising. She is also convinced that embedded software devices on her computer give others the ability to access her private information. Her friends think she is just being paranoid. Which of the following is true in respect of privacy on the Internet? A) Although privacy laws are being enacted as precautionary measures, voluntary protection of privacy has proven overwhelmingly successful. B) Unauthorized interception of communications between individuals is now a criminal offence in Canada. C) Now that privacy rights are legally protected, Internet users should feel secure in giving out private information online. D) Every Canadian province is governed by the provisions of the federal Personal Information Protection and Electronic Documents Act. E) While unencrypted data is susceptible to unauthorized access, encryption of information communicated online provides a guarantee of security.

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14) In the context of employment and use of the Internet, which of the following is false? A) E-mail should be encouraged over other forms of communication, because it is inherently private. B) An employer should have a clear and comprehensive policy prohibiting misuse of company resources. C) Employers should notify employees when their use of company resources may be subject to monitoring. D) Employers can be liable when their employees misuse the Internet. E) Monitoring employees' e-mail can be effective, but also raises a privacy concern.

15) Which of the following statements regarding online transactions is false? A) Clicking an "I Accept" button may constitute valid acceptance of the terms of an agreement. B) Reasonableness of terms can affect the enforceability of electronic contracts. C) Legislation has been passed in some jurisdictions to make electronic documents equivalent to written ones. D) Conducting transactions online negates the need to satisfy the normal requirements of a contract. E) It is unlikely that the courts will extend the postbox rule to apply to online transactions. 16) Which of the following statements regarding privacy is true? A) Credit card and debit card fraud is now virtually impossible with the new safeguards in place. B) The incidence of personal identification numbers (PIN) theft has been eliminated. C) Employers are not liable for employees' abuses of privacy. D) Since the development of 128 bit encryption, wireless networks are 100% protected against unauthorized access. E) An organization is responsible for the protection of personal information such as drivers' licence information. 17) Which of the following is true in respect of privacy law in Canada? A) Privacy laws are generally considered unnecessary because voluntary privacy protection has been so successful. B) Organizations in the private sector are subject to the Personal Information Protection and Electronic Documents Act with respect to the personal information they collect. C) Privacy protection is found primarily in the common law. D) The power to enact privacy legislation has been exclusively granted to the federal government.

E) The Personal Information Protection and Electronic Documents Act is designed only to regulate the government in its collection, use and disclosure of personal information. 18) Which of the following is true with respect to the application of tort law to the Internet? A) Because the Internet provides direct and inexpensive access to a massive audience, torts such as deceit, negligent misstatement, and defamation normal civil and criminal remedies do not apply. B) Since common law provides adequate protection, no new statutes need to be passed to provide additional protection. C) The principle of defamation will apply to the Internet just like any other form of communication, but the problems of jurisdiction and whom to sue will create significant obstacles. D) It is unlikely that courts will be willing to expand existing tort law to encompass new technologies. E) Companies that sell their products over the Internet will cannot be held liable under the laws of negligence if that product causes injury.

19) Which of the following is true with respect to the application of contract law to the Internet? A) Online communications are governed by the "postbox rule". B) Internet contracts are governed by the federal Uniform Electronic Commerce Act, in effect throughout Canada. C) No jurisdictions have passed any legislation making electronic communications the equivalent of written documents for legal purposes. D) Clicking an "I Accept" button on a website is considered the equivalent of achieving the consensus element of a binding contract. E) If the basic requirements of acceptance are not met, an offer accepted by e-mail is binding on both parties.

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20) Deceitful practices and fraud are ongoing concerns for those transacting business on the Internet. Pat has recently been the victim of such a scam. He gets into a heated discussion with his friend over the application of current consumer protection laws to online transactions. Which of the following statements is correct? A) Although new legislation may be enacted in the future, general consumer protection legislation has yet to be extended to online transactions in any Canadian jurisdictions. B) While case law applies to online activities, statute law - such as sale of goods legislation - does not apply to such transactions. C) Provinces are adopting federal Uniform Electronic Commerce Act guidelines. D) Consumer protection law in respect of online transactions is governed by the federal Universal Internet Transactions Act (UITA). E) Provincial consumer protection legislation has been ineffective in protecting consumers with respect to internet transactions. 21) Which of the following statements regarding online transactions is true? A) Electronic signatures are not effective in determining the capacity of the parties entering into a contract. B) Clicking an "I Accept" button may constitute valid acceptance of the terms of an agreement. C) Conducting transactions online negates the need to satisfy the normal requirements of a contract. D) The post box rule applies to both non-instantaneous and instantaneous methods of communication. E) Common law has established the equivalency of electronic documents to written ones. 22) In the context of employment and use of the Internet, which of the following is true? A) Employers can be liable when their employees misuse the Internet. B) An employer need not have a clear and comprehensive policy prohibiting misuse of company resources such as the Internet. C) E-mail should be encouraged over other forms of communication, because it is inherently private. D) Employers are not required to notify employees when their use of company resources may be subject to

monitoring. E) Viewing an employees' Facebook account is considered a criminal offence. 23) The objective, in Canada, of the Uniform Electronic Commerce Act (UECA) is primarily: A) To restrict internet pornography. B) To make electronic documents and signatures as binding on parties as written ones. C) To provide a series of remedies for internet commerce retail abuses primarily from "offshore" enterprises D) To restrict internet gambling E) To define what constitutes a violation of privacy 24) Electronic commerce (E-commerce) legislation consists of: A) The laws regulating the internet and internet transactions. B) The laws to restrict internet gambling, pornography, and defamatory material. C) The laws of what jurisdiction should apply to internet transactions. D) The digital communication between government agencies. E) Specifies the time and place of the formation of electronic contracts.

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25) With regards to the internet, which of the following statements is true? A) Regulatory steps have been taken to overcome all problems associated with jurisdictional issues. B) Judicial action is allowed only if the person being sued is a resident of that jurisdiction. C) Existing laws go a long way to establish rights and obligations for the parties doing business online, but the protection and enforcement of those rights can be an insurmountable problem. D) Valid laws apply to the internet, and there have been no difficulties in determining what laws apply to the internet and internet transactions. E) Determining where an action should be brought has not presented any legal problems.

26) With regards to internet jurisdiction, which of the following statements is true? A) Every jurisdiction has a different set of laws, and each internet user should conform to the local laws of each nation, state, or province. B) Judicial action is allowed only if the person being sued is a resident of that jurisdiction and directly involved. C) Valid laws apply to the internet, and there have been no difficulties in determining what laws apply to the internet and internet transactions. D) Many jurisdictions have passed long-arm statutes allowing them to take jurisdiction only if the person being sued is a resident of that jurisdiction. E) Canadian courts are willing to find jurisdiction where there is a degree of interactivity and substantial connection between the act complained of and the province. 27) With regards to internet jurisdiction, the courts have identified eight factors in determining a real or substantial connection. Which of the following statements is false? A) The courts will not consider the standards of jurisdiction, recognition, and enforcement prevailing elsewhere. B) There need be neither an unfairness to the plaintiff nor the defendant in assuming jurisdiction. C) The courts will consider the involvement of the parties to the suit in determining jurisdiction. D) There need be a connection between the forum and the plaintiff's claim. E) The courts will consider the standards of jurisdiction, recognition, and enforcement prevailing elsewhere. 28) Which of the following statements are relevant to determining the appropriate jurisdiction for litigation arising from online defamation? A) Whether the defendant owns the ISP that posted the comments.

B) Whether the plaintiff suffered any harm where the comment was posted C) Whether there is a sufficient connection between the defamation and the jurisdiction for the case to be heard. D) Whether the website that posted the comments has a local server. E) Whether the defendant only intended for a local audience to view the comments. 29) A Canadian company published an article on the internet defaming an Australian resident. The Australian resident brought action against the Canadian company. With regards to internet jurisdiction, which of the following statements is true A) Since the company was Canadian, the most convenient jurisdiction would be the province the Canadian company resides. B) Since the plaintiff lived in Australia, and the harm was done in that country, there is no connection between the defamation and Canada, and appropriately there is no jurisdiction. C) Since the plaintiff lived in Australia, and the defendant was based in Canada, a third neutral country would be the appropriate jurisdiction. D) The Canadian company's appropriate defence would be to point out out that it is impossible to know and comply with the laws of every jurisdiction, and therefore not liable. E) Since the plaintiff lived in Australia, and the harm was done in that country, there is a sufficient connection between the defamation and that country, and case would be heard in an Australian court.

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30) With regards to the Ontario Consumer Protection Act , which of the following statements is true A) The Act specifically provides that the rights set out in it apply only if the seller resides in Ontario at the time of the transaction. B) The Act specifically provides that the rights set out in it apply to all consumer transactions where the consumer or the other party is located in Ontario at the time of the transaction. C) The Act specifically provides that the rights set out in it apply to all consumer transactions where the consumer or the other party are Canadian residents. D) The Act specifically provides that the rights set out in it apply only if the consumer resides in Ontario. E) The Act specifically provides that the rights set out in it apply to all consumer transactions where the consumer or the other party is located anywhere in Canada at the time of the transaction.

31) The Ontario Consumer Protection Act requires that the supplier disclose to the consumer, before the consumer enters into an internet agreement, detailed information including which of the following statements: A) The telephone number of the supplier, and the address of he premises from which the supplier conducts business. B) The name of the supplier and, if different, the name under which the supplier carries on business. C) An itemized list of the prices, including taxes and shipping charges, at which the goods and services are proposed to be supplied to the consumer. D) The consumer need be notified of any cancellation, return, exchange, or refund conditions. E) All of the above statements are included. 32) With regards to the National Do Not Call List registry (National DNCL), which of the following statements is true A) The registry enables consumers to reduce the number of unsolicited pop-up ads they receive by making a single registration. B) The registry enables consumers to reduce the number of unsolicited bulk email they receive by making a single registration. C) The registry requires consumers to register only once to avoid all future unsolicited calls. D) The registry enables consumers to reduce the number of unsolicited calls they receive by making a single registration. E) The registry requires telemarketers to operate and maintain the national DNCL.

33) When a judgment is obtained against a foreign service provider, which of the following statements is true A) If the service provider has assets in the foreign jurisdiction or there are treaties in place to allow for enforcement, enforcement continues to be a substantial threat, no matter if the conduct complained of is actionable in only one jurisdiction. B) If the service provider has no assets in the foreign jurisdiction or if there is no treaty in place to allow for enforcement, enforcement continues to be a substantial threat. C) Since the judgment is obtained in a different jurisdiction, the business or individual may be extradited to face criminal charges. D) Since the service provider resides in a foreign jurisdiction there is no threat of enforcement. E) If the service provider has assets in the foreign jurisdiction or there are treaties in place to allow for enforcement, enforcement continues to be a substantial threat, but generally, only if the conduct complained of is actionable in both jurisdictions.

34) You decide to register a domain name "Delicious_breads_R_us.com", although you neither own a bakery nor any legitimate use for the domain name. Subsequently you receive a complaint alleging that you have registered the name in bad faith. The complainant does not hold a registered trademark in the name nor do they have a domain name registered, but they have used the business name "Breads R Us" for many years. Which of the following statements is true? A) You can claim good faith justification for your the use of your domain name. B) Your domain name dispute must be litigated in court. C) You have a real property right in the name D) The complainant does not have any legitimate claim on the domain name. E) You are a cybersquatter.

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35) Which of the following statements regarding cybersquatting is true A) A business is entitled to its own unique domain name regardless who registered it first. B) Similar domain names are registered just to sell them to others or so that visitors making slight but expected mistakes are intercepted and redirected to a competing business. C) Registration of domain name precludes someone from registering a similar name to confuse visitors of their business website. D) Businesses that did not register their domain name, have no recourse against someone else appropriating their name and registering it first. E) Cybersquatters capture domain names that rightfully belong to no one.

36) Which of the following statements regarding the registration of domain names and trademarks is true A) The Canadian Internet Registration Authority determines whether a domain name constitutes trademark infringement. B) Where trademarks are infringed, it will be no defence to show one registered a domain name. C) The registration of domain names overrules trademark law. D) A business is entitled to its own unique domain name regardless of trademark law. E) Registration of domain name precludes someone from registering a trademark. 37) Which of the following statements correctly illustrate a legal signature for online commercial transactions? A) Opening an online shopping basket, and adding several items to the basket. B) Attaching a signature on your computer screen. C) Attaching an electronic signature to an electronic document. D) Clicking an "I Reject" dialogue box.. E) Signing your name at the bottom of a standard form, and then not mailing it to the business. 38) Joe sends Sanjay an offer via email from his Toronto office. The offer contains a provision indicating the offer expires at 5:00 PM Toronto time. Sanjay, who lives in Vancouver, replies accepting Joe's offer at 4:00 PM Vancouver time. Joe received Sanjay's email acceptance at 9:00 AM the next day. Which of the following

statemen ts is true? (Note the three hour time difference between Toronto and Vancouver) A) Joe's offer had expired. B) The contract became binding once Joe had made the offer. C) Once Sanjay had sent the email,, a binding contract had been formed, regardless of what time Joe had received the email. D) Joe and Sanjay had a binding contract, since Sanjay had accepted by 4:00 Vancouver time. E) A binding contract had been formed, once Joe opened Sanjay's email acceptance the next day. 39) Which of the following statements would be true with regards to the Uniform Electronic Commerce Act (UECA)? A) A password or encryption does not authenticate an electronic document. B) The UECA changes the law with respect to the requirement of written documents and signatures. C) An offer will be accepted and a contract formed only when the offer is sent and accepted by snail mail, and not email. D) A signature equivalent may be a password or some other form of encryption. E) The use of electronic documents is not allowed with regards to online purchase of goods.

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40) When a business or employer provides access to their website for discussion forums, the following statement is correct. A) All email communications are considered private, and therefore exempt from any defamation actions. B) The employer is not liable, if the employee uses email and does not post the offensive comments on the website. C) The business or employer may be held liable for any defamation or otherwise offensive statements made by its employees. D) Businesses or employees can not be held criminally responsible for offending communications made. E) The employee only is held liable for any offensive comments made. 41) Which of the following is used to authenticate the identity of a person of a party to an online contract? A) A court order B) File formatting C) Digital certificate D) Digital waterboarding E) Information encryption security

42) With regards to online contracts, which of the following statements is accurate? A) An electronic document becomes effective only once the consumer is provided with a paper copy. B) Consumers cannot be held liable for terms that they did not actually read. C) The electronic equivalent of small print, is the part of a document that cannot be seen on the screen. D) Exemption clauses in electronic contracts do not have to be brought to the attention of the person accepting. E) Canadian consumers may have to have their claims heard in foreign jurisdictions. 43) With respect to the online contracts, which of the following statements is true? A) The Uniform Electronic Commerce Act (UECA) clearly states that an invitation to treat in all cases qualifies as an offer. B) Online contracts do not require all the essential elements of a contract such as consensus, capacity, and legality. C) The Uniform Electronic Commerce Act (UECA) clearly states that an offer may be made and accepted electronically. D) The legal status of online contracts is determined by common law. E) The Uniform Electronic Commerce Act (UECA) clearly states that a contract is formed when the communication of an acceptance through instantaneous communication is sent.

44) Which of the following statements is true? A) Online dispute resolution services are very costly and time consuming. B) Arbitration has not been proved to be a valuable tool for ecommerce disputes. C) Online disputes are often self-regulated. D) Online dispute resolution services are now available for electronic transactions. E) The legal status of online contracts is determined by common law. 45) Click Enterprises operated a software and internet business in Ontario to facilitate the illegal copying and downloading of movies in both Canada and the United States. Disney Enterprises brought action against Click in New York State.Which of the following statements is true? A) Click's involvement in the United States was not direct, since the firm operated out of Canada, and as a consequence, Disney's action in New York State would not be successful. B) An Ontario court will not enforce a New York judgment regardless of any circumstances. C) Even though Click's involvement in the United States consisted of selling his product directly to residents of the United States, the question of jurisdiction would be solely determined by Click's nationality. D) New York State has no jurisdiction since Click is a Canadian company. E) An Ontario court will enforce a New York judgment since Click's involvement indicated a real and substantial connection between the conduct complained of and New York State.

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46) Because the internet provides direct and inexpensive access to a massive audience, torts involving defamation is a primary concern. Which of the following statements regarding defamation over the internet is false. A) Material placed on the internet, via a website, where it may be accessed by a large audience, has been likened to broadcasting information on television or radio. B) The courts are reluctant to create new categories of torts, and hence have been unwilling to consider defamation over the internet. C) Where several connecting factors exist, Canadian courts appear willing to assume jurisdiction. D) Intermediaries, such as ISPs' will be liable for defamation only if they encouraged the offending behaviour, or if they knew or ought to have known of it and failed to remove it after notification. E) When determining damages, the size of the audience has been regarded as relevant.

47) The internet provides direct and inexpensive access to a massive audience. Which of the following torts are not concerns related to the internet. A) negligent misstatement B) conversion C) defamation D) deceit E) nuisance 48) Burke v. NYP Holdings Inc. involved defamation over the internet. According to this case, which of the following is true? A) Since the plaintiff lived in New York, and his reputation was damaged there, the Court held New York was the appropriate place to sue. B) The key to a court assuming jurisdiction is the connecting factors between where the plaintiff and the defendant reside. C) Burke established a real and substantial connection, and that his reputation was damaged within British Columbia, even though the article was published on an American website, the Court held Burke was able to pursue a defamation action in British Columbia. D) The key to a court assuming jurisdiction is the number and strength of the connecting factors between the cause of the action and the where the defendant resides.

E) Since the article was read, and the damage to Burke's reputation was done in America, the Court held New York was the appropriate place to sue. 49) Ness v. Cunningham Lyon Creek Lodge, involved a case where the plaintiff learned over the internet of the defendant, a residential centre for therapy of eating disorders. What did the Court find? A) The internet information and faxed materials contained insignificant misstatements of fact, but these statements did not induce Ness to enroll in the program, so the tort of deceit could not be established. B) The internet information and faxed materials contained serious misstatements of fact. These statements were either made dishonestly or recklessly, to induce Ness to enroll in the program. The tort of deceit was established. C) The internet information and faxed materials contained serious misstatements of fact. These statements induced Ness to enroll in the program, so the tort of defamation was established. D) The internet information and faxed materials contained innocent misstatements of fact. The tort of deceit could not be established. E) The internet information and faxed materials contained serious misstatements of fact. These statements were either made dishonestly or recklessly, to induce Ness to enroll in the program. The tort of deceit was established, but since the missrepresentation took place in another jurisdiction, Ness had no course of action against the defendant.

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50) An offer accepted on a website or by email will be effective so long as the basic requirements of acceptance are made. Which of the following statements are true? A) A purchaser of a product online will be bound by all the terms of the agreement regardless if has notice. B) When people buy software over the internet, or the licence to use it, clicking the "I Accept" button is the equivalent of removing the shrink-wrap, and the contract is binding as soon as the button is clicked. C) When people buy software over the internet, the contract is binding only when the product has been delivered. D) When people buy software over the internet, or the licence to use it, it is not necessary, that the purchaser indicate that they have read and accepted the seller's terms and conditions. E) When people buy software over the internet, or the licence to use it, the contract is binding immediately since the postbox rule of acceptance applies.

51) In an Alberta case, the accused sent "teaser" email on the internet advertising software that could be used to generate "valid" credit card numbers. What did the Court find? A) The law requires proof of any intent to deceive or misrepresent. B) Knowingly counselling others to commit a crime, is all that is required to show guilty intent. C) Counselling others to commit a crime, is not in of itself enough to commit an indictable offence. D) If someone is knowingly counselling others to commit a crime, damages must be proved in order for a criminal action to be successful. E) Knowingly counselling others to commit a crime, is neither a criminal nor a civil matter. 52) Citron v. Zundel, involved a Canadian human rights complaint involving an internet hate site. What did the Tribunal find? A) Since no one person in particular was mentioned on the internet hate site, there is no case for defamation. B) The tone of the messages on the website were so malevolent in its depiction of Jews, the Tribunal found them to be hate messages within the meaning of the Canadian Human Rights Act, but they were protected under the Charter of Rights and Freedoms. C) The tone of the messages on the website were so malevolent in its depiction of Jews, the Tribunal found them to be hate messages within the meaning of the Canadian Human Rights Act. D) The only recourse would be for the plaintiff to bring a defamation action against the defendant. E) The messages on the website were considered free speech and thusly protected by the Charter of Rights and Freedoms.

53) Jurisdiction with respect to the internet is an important area of concern. Which of the following statements is false. A) Without a degree of interactivity, the courts in a particular province may refuse to hear a case. B) There must be a special link or connection to have a local court take jurisdiction. C) A Canadian may be prosecuted for an activity that is against the law in one jurisdiction, but perfectly acceptable in another. D) It is relatively straightforward to take a judgment obtained in one jurisdiction, and enforce it in another. E) To avoid battles over jurisdiction, the parties should specify in their contract what law is to apply. 54) Employment with respect to the internet is an important area of concern. Which of the following statements is false. A) The employer will be responsible for data transmissions that result in intentional violations of intellectual property rights. B) Monitoring employee email and the their internet use in all cases, is a violation under the Charter of Rights and Freedoms. C) Employers must consider the impact of PIPEDA before monitoring employee email. D) Monitoring an employee's telephone conversation, without obtaining prior consent or authorization, may be recognized by the Courts as an invasion of privacy. E) Businesses may find themselves linked to criminal activities through the actions of their employees.

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55) The case Di Vito v. MacDonald Dettwiler & Associates Ltd., involved an employer dismissing an employee for just cause based on a email message. What did the Court find? A) The Court determined that circulating the derogatory email, was in itself insufficient grounds for a summary dismissal, and the employer was held vicariously liable for defamation. B) The Court determined that circulating the derogatory email, while wrong, was not in itself sufficient grounds .for a summary dismissal. But later lying about how far and to whom the email was forwarded gave the employer just cause. C) The Court determined the only recourse would be for the plaintiff to bring a defamation action against the employer. D) The Court determined that circulating the derogatory email, was in itself sufficient grounds for a summary dismissal. E) The Court determined that lying about how far and to whom the email was forwarded gave the employer insufficient grounds for a summary dismissal. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 56) In order to be effective, employers who monitor their employees' use of computers are well-advised to do so secretly, without informing their employees of this practice. 57) The Personal Information and Protection and Electronic Documents Act, PIPEDA does not allow employers from monitoring email. 58) The Personal Information Protection and Electronic Documents Act (PIPEDA) applies only to federal government institutions. 59) The Personal Information Protection and Electronic Documents Act (PIPEDA) protects personal information, and limits its collection and provides for limited access where appropriate. 60) Health information is not specifically protected by legislation in any province. 61) The federal government's Personal Information and Electronic Documents Act applies in all provinces except where legislation that provides for equivalent protection has been passed by the province.

62) Privacy protection is provided under common law . 63) Attempts at self-regulation of the Internet have been largely successful. 64) Credit cards, debit cards and other forms of electronic money may be used in online transactions. 65) Businesses can find themselves liable for defamatory statements made by an employee. 66) Alternative dispute resolution has been effective in settling certain types of internet disputes. 67) In assessing damages for defamation over the Internet, the size of the audience is irrelevant. 68) Long-arm statutes refer to rules used to resolve questions as to which jurisdiction's laws are to be applied to a particular issue. 69) Ontario's Consumer Protection Act specifically provides rights set out in it that apply to all consumer internet transactions.

70) A major problem concerning the internet is to determine what laws apply to the internet and internet transactions. 71) Cybersquatting captures domain names that rightfully should go to others. 72) Internet defamation is a problem because of the ease of widespread distribution.

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73) Traditional contract rules only apply to written contracts but not internet transactions. 74) Canada's Uniform Electronic Commerce Act creates rights, and obligations with respect to electronic commerce transactions within Canada. 75) A signature equivalent for electronic documents might be a password or some other form of encryption.

76) Whether a contract or another form of internet communication, UECA provisions determine, a message is sent as soon as it is committed to the system, and it is received as soon as it arrives on the recipients's computer, even if it is never read. 77) With regards to internet transactions, an offer will be accepted and a contract formed as soon as message is sent, and it is received as soon as it arrives on the recipient's computer, even if it is never read. 78) Hitting the "I Accept" button on a website is equivalent to an acceptance of the seller's offer. 79) Electronic signatures provides a digital certificate that authenticates the identity of a party to the contract. 80) Determining where the contract was formed is an important factor in determining the laws of what jurisdiction will apply to the transaction. 81) PayPal, and other similar services are foolproof methods to insure the consumer gets what he has paid for. 82) Online dispute resolution services for electronic transactions are less expensive and less time consuming than traditional court processes.

83) The Canadian government was successful in forcing the Canadian components of eBay to disclose their financial records on certain "power sellers" to Revenue Canada. 84) Until a jurisdiction has enacted legislation specifically allowing it, an agreement made over the Internet cannot constitute a legally binding contract. 85) Negotiable instruments cannot be created or transferred online since their essential nature is a unique written document. 86) Credit cards, debit cards and other forms of electronic money replace negotiable instruments in online transactions. 87) Employers can find themselves tied to criminal activities on the Internet through the actions of their employees. 88) Alternative dispute resolution has been effective in settling certain types of internet disputes. 89) In order to be effective, employers who monitor their employees' email are well advised to do so secretly, without informing their employees of this practice.

90) The registration of a domain name and use on the Internet is one way to get around trademark law. 91) To infringe a trade-mark, the violator must somehow use it, not merely display it on a website. 92) In assessing damages for defamation over the Internet, the size of the audience is irrelevant.

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93) Conflict of laws refers to rules used to resolve questions as to which jurisdiction's laws are to be applied to a particular issue. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 94) "Existing laws have proven useless with respect to the Internet." Discuss the accuracy of this statement. 95) Acceptance of an offer by e-mail or web-based communications can create certain difficulties. What can be done to minimize the impact of such problems?

96) Can offences committed via the Internet be the subject of criminal prosecution?

Explain.

97) Discuss the problems associated with business and the internet. 98) Explain the concept of long-arm statutes.

99) Describe the provision with respect to internet transactions, as set out in the Ontario Consumer Protection Act . 100) Describe the concept of cybersquatting. 101) Describe the most common type of tort on the internet. 102) Discuss the elements of a contract required for electronic commerce transactions. 103) Discuss the federal Uniform Electronic Commerce Act (UECA). 104) Describe electronic signatures with respect to capacity.

105) In determining jurisdiction for electronic commerce, what factor is particularly important. 106) Discuss alternative dispute resolution with respect to online transactions. 107) Discuss the scope and purpose of PIPEDA. 108) Unsolicited e-mail sent in bulk is referred to as ________. 109) To what does "conflict of laws" refer? 110) Employers are particularly vulnerable to the misuse of their computer resources by employees.

Discuss.

111) Personal use of computers by a company's employees can expose the employer to a variety of liabilities. Discuss some practical solutions available to the employer which help contain this risk. 112) In Canada as of January 1st, 2004, all organizations involved in the collection, use, and disclosure of personal information in connection with their commercial activities must be in compliance of PIPEDA federal legislation (or, where enacted, equivalent provincial legislation). Discuss the salient points of the legislation with which businesses must be in compliance.

113) Identify the three torts that are often committed online. 114) Describe the factors concerning defamation online. 115) Describe the principle of misrepresentation and negligent misstatement with regards to the internet.

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116) From a business point of view, how does a professional protect himself against liability from online communications? 117) Companies that sell their products over the internet will still be held liable. Explain. 118) Discuss the problems with internet transactions.

119) Is it possible to have committed the tort of nuisanace through the internet? 120) Discuss the application of the postbox rule and online contracts.

121) Discuss the Personal Information Protection and Electronics Documents Act with respect to electronic signatures. 122) Discuss the National Do Not Call List. 123) Identify the forms of electronic money. 124) Identify the common internet and computer offences. 125) Discuss "degree of interactivity". 126) Discuss the following statement "A Canadian may be prosecuted for an activity that is against the law in one jurisdiction but perfectly acceptable in another". 127) Discuss the following statement "It is sufficient for a Canadian to simply follow the rules of one's own

jurisdicti on". 128) In determining jurisdiction, contract law is irrelevant. Explain. 129) In Canada, the legality of monitoring email in the context of employment is determined by ________. 130) The right of privacy in Canada does not exist. Discuss. 131) What rights does an employer have with respect to email and surfing the web? 132) What sanctions are appropriate for computer misuse in the workplace? 133) Identify the impact the internet and other forms of electronic communication have had on intellectual property. 134) The internet is impossible to regulate. Discuss. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 135) Describe the tort of defamation committed online.

136) Canada's Chief Justice Beverly McLachlin remarked that the "new technologies of the computer are far ahead of the law. They are, quite literally, 'outside' the law". Discuss. 137) Discuss the unique challenges the Internet presents with respect to the law and how such challenges are being addressed.

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138) Discuss the validity of online transactions, and the related issues that arise in transacting business over the Internet. 139) Discuss regulatory trends in the age of the Internet. 140) Discuss the Ontario Consumer Protection Act, 2002.

141) Identify the factors which courts look to when dealing to determine jurisdiction.

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1) E 2) A 3) E 4) B 5) A 6) E 7) D 8) E 9) B 10) C 11) D 12) C 13) B 14) A 15) D 16) E 17) B 18) C 19) D 20) C 21) B 22) A 23) B 24) E 25) C 26) E 27) A 28) C 29) E 30) B 31) E 32) D 33) E 34) E 35) B 36) B 37) C 38) A 39) D 40) C 41) C 42) E 43) C 44) D 45) E 46) B 47) B 48) C 49) B 50) B 51) B

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52) C 53) D 54) B 55) B 56) FALSE 57) FALSE 58) FALSE 59) TRUE 60) FALSE 61) TRUE 62) FALSE 63) FALSE 64) TRUE 65) TRUE 66) TRUE 67) FALSE 68) FALSE 69) FALSE 70) TRUE 71) TRUE 72) TRUE 73) FALSE 74) FALSE 75) TRUE 76) TRUE 77) FALSE 78) TRUE 79) TRUE 80) TRUE 81) FALSE 82) TRUE 83) TRUE 84) FALSE 85) TRUE 86) TRUE 87) TRUE 88) TRUE 89) FALSE 90) FALSE 91) TRUE 92) FALSE 93) TRUE 94) It is inaccurate. Existing laws are applied in situations involving the Internet, despite certain challenges (such as jurisdiction). The courts have demonstrated a willingness to expand existing common law to encompass new technologies. Where the common law proves inadequate, however, statutes will need to be passed. 95) Certain problems can be avoided by the businessperson specifying in a web site advertisement or offer that acceptance is not effective until received, and also specifying which jurisdiction's laws will apply. 96) General Criminal Code provisions such as theft and fraud can be used to address certain online offences. Specialized Criminal Code provisions, such as those prohibiting the unauthorized use of computers and mischief relating to computer data, can also be applied. Further, specific provisions in copyright and trademark legislation can also be used to deal with intellectual property offences. However, the nature of the Internet and resulting difficulties with enforcement mean that criminal prosecution cannot always be relied upon to protect individuals

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and businesses from such offences. 97) A major problem is to determine what laws apply to the internet and internet transactions. Also, it is often not clear whom to sue, or where an action should be brought. There is a considerable problem for local jurisdictions with respect to taxation. Lastly, the question of of which jurisdiction's laws apply. 98) Long-arm statutes refer statutes many jurisdictions have passed allowing them to take jurisdiction even when no resident is directly involved. The result that business people providing an internet service from one area where the activity is completely legal, may find themselves sued or criminally prosecuted in other jurisdictions. 99) The Act specifically provides that the rights set out in it apply to all consumer transactions where the consumer or the other party is located in that province at the time of transaction and that the rights set out in the Act apply despite any agreement to the contrary. 100) Each domain name is a unique address, giving rise to considerable conflict. Since, only one business can have that domain address, conflicts arise when less well-intentioned individuals register the domain names first and then, in effect, hold the names for ransom. Sometimes similar names are registered so that visitors making slight mistakes are intercepted and redirected to a competing business. 101) Defamation is the most common type of tort on the internet. Due primarily to the ease of widespread distribution. Online defamation can take many different forms, ranging from a remark in a private email, to chat room conversations, Facebook and blogs, or to an article posted on a business' website. 102) Electronic commerce transactions legal status is determined by contract law. Contract law specifies there must be five elements satisfied in order to form a binding contract. The elements include consensus, consideration, capacity, legality, and intention. Written evidence of a contract, while not generally required, is a sensible thing to have. In some cases, under the Statute of Frauds, writing and signatures are required for the transaction to be legally enforceable. 103) The UECA has no legal standing, but it serves as a model for the design of provincial legislation throughout Canada. The object is to make electronic documents and signatures as binding on parties as are the written ones. In general, the UECA recognize electronic or digitally stored documents and signatures as satisfying those requirements. A signature equivalent may be a password or some other form of encryption, which is controlled by the author of the document. The password or encryption would authenticate the document and give it the same status as one that was written, and signed. 104) Electronic signatures are most effective in identifying people if used in conjunction with trusted third parties who provide a digital certificate that authenticates the identity of a party to the contract. It assists in determining a person's age or mental capacity. 105) Determining where the contract was formed is an important factor in determining the laws of what jurisdiction will apply to the transaction and whether dispute can be brought in a local court. This can determine whether the individuals involved were minors or adults at the time, whether transactions are legal, and what consumer protection statutes apply to the transaction. 106) Alternative dispute resolution methods such as negotiation, mediation, and particularly arbitration are useful in seeking a resolution to a dispute. A professional arbitration service may be the best way to seek for a resolution, since the courts must first deal with the jurisdiction question and will be reluctant to pursue cases outside of their own jurisdiction. Online dispute resolution services are considerably less costly and less time consuming than traditional court processes. 107) This federal act came into force as of January 1st 2004. It applies to all organizations in Canada involved in the collection, use, and disclosure of personal information in connection with all commercial activity. It applies to both health and non-health information, information gathered from websites, as well as subscriptions to magazines and internet services by an individual and any other personal information that a company has in its possession that relates to identifiable individuals. This act requires that businesses and organizations develop a privacy policy that will protect all such private information from being disclosed to others. 108) Spam 109) The rules used to resolve questions as to which jurisdiction's laws are to be applied to a particular issue. 110) Employees can expose their employers to criminal and civil liability. An employer can be held responsible for data transmissions that result in intentional or careless violations of intellectual property rights, privacy rights, and even criminal law in both local and foreign jurisdictions. Circulation of confidential, pornographic, hateful, discriminatory, or defamatory material by an employee also puts

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an employer at risk. Further, disgruntled employees have been known to tamper with company data directly. 111) The employer may have mechanisms in place to digitally monitor the employees use of company equipment. Here it is important to make the employees aware of the various monitoring activities that are employed. The optimum solution is to educate all employees upon their hire - and at periodic intervals during their employment that their phone calls, computer usage, and other employment activities are the subject of monitoring. 112) The organization must be accountable for the information collected. Consent must be obtained from those whose information is used. Reasonable limits must be placed on the collection, use, retention, and disclosure of this information. Provisions must be in place for maintaining the accuracy and safeguarding of said personal information, including safeguarding from abuses by employees of the organization. Individuals must have access to the collected information in order to determine its accuracy and challenge the information collected about them where appropriate. 113) The torts include defamation, deceit, and misrepresentation. 114) The factors include whether the defamation is libel or slander, the size of the audience, jurisdiction, and the identity of the author. 115) The principle of misrepresentation and negligent misstatement will apply to the internet just like any other form of communication, but the problems of jurisdiction and whom to sue may pose obstacles. Professional dispensing information, in order to avoid liability, should include disclaimers, specific instructions for use, and restrictions. 116) Professional dispensing information, in order to avoid liability, should include disclaimers, specific instructions for use, and restrictions. 117) If the purchaser is the injured party, he can sue the seller in contract. If someone else is injured, a negligence action against the manufacturer may be appropriate. Consumer protection legislation may also apply. 118) Jurisdiction, and whose laws or consumer protection laws will apply. 119) Yes, in the case of Motherwell v. Motherwell, the Alberta Court found that a nuisance had been committed even though the interference was perpetrated from a distance over the telephone. It is likely that the same will hold true for the internet. 120) If it is appropriate to answer by mail, an acceptance is effective to when and where posted. This is an exception to the rule that an acceptance has to be received to be effective. The courts have not been willing to extend this exception to instantaneous forms of communication such as telephone, email, web-based communication, and fax. Recent statutes in various jurisdictions provide that such communication will be effective when it reaches he information system of the recipient, even though there may be some time before it is actually read. 121) The federal PIPEDA sets out a definition of an electronic signature and how it may be used in federal government documents; it may well become the model for similar legislation recognizing electronic or digital signatures in the provinces. 122) The National DNCL registry enables consumers to reduce the number of unsolicited calls they receive by making a single registration. A subscriber may register and de-register his telephone numbers with the National DNCL. Registration expires after three years, so it will be the consumer's responsibility to re-register their telephone numbers after that period. 123) Credit cards, debit cards, access and store-value cards, and third party internet services such as PayPal are electronic substitutes for money. 124) Fraudulent use of electronic technologies, piracy of computer programs, computer viruses, hackers stealing confidential information as well as pornography, theft, gambling, criminal defamation and harassment, hate literature, and other human rights violations. 125) There must be a special link or connection or degree of interactivity to have a local court take jurisdiction. 126) True, these cases often involve moral issues, such as gambling and the distribution of pornography, where different community standards contribute to variation in laws. It is no longer sufficient to simply follow the rules of one's own jurisdiction. 127) False, a business must also consider where it is doing business and ascertain the laws that apply in all those jurisdictions.

128) False. To avoid battles over jurisdiction, the parties should make their own rules, specifying in their contract what law is to apply.

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129) Charter of Rights and Freedoms and Personal Information Protection and Electronic Documents Act 130) There has been no common law right of privacy in Canada, but the courts now recognize that the tort of invasion of privacy exists at common law. In addition, there is legislation such as the Charter of Rights and Freedoms and Personal InformationProtection and Electronic Documents Act that protect the right of privacy. 131) An employer may reprimand an employee who wastes inordinate amounts of time on personal email or surfing on the web. 132) "The penalty must fit the crime". For minor infractions, a reprimand may suffice, whereas graver infractions may warrant dismissal. 133) Canadian copyright law protects computer software and original works published on the internet. Trade-mark law applies to domain names and website logos. 134) Although there are several examples of statutes that apply to companies doing business on the internet, many internet transactions and communications remain unregulated. It is difficult to enforce regulations concerning the internet, but governments realize the attraction of collecting fees and taxes on goods and services sold on the internet; gaming and lotteries regulations are applied to both the originator and the ISP. 135) The first question to be determined is whether the defamation is libel or slander. If the communication is "broadcast", then the defamation may be more of a case of libel than slander, as opposed to the communication of an email between individuals, may lean more towards slander than libel. Another problem relates to whom the injured party can sue. If the author is known and lives in the same jurisdiction there is little difficulty, but where the author is unknown, uses a false name, or resides in another jurisdiction with different rules, the question of where does one sue arises. Canadian courts appear willing to assume jurisdiction, where several connecting factors exist, In addition, when determining damages, the size of the audience has been regarded as relevant. 136) Creating laws t regulate the internet presents some unique challenges. One of the problems relates to jurisdiction. Another difficulty with online transactions is that the online identity of the person or business being dealt with is uncertain. Also, the devices to protect consumers from the unscrupulous business dealings are inadequate. Another issue, is the protection of rights to the information found on the internet. Existing laws go a long way to establish rights and obligations for the parties doing business online, but the protection and enforcement of those rights can be an insurmountable problem. 137) Students should highlight the key challenges raised by the Internet in a legal context. One of the greatest challenges obviously relates to jurisdiction. Online activities do not fit neatly within established geographic boundaries, making it difficult to determine which jurisdiction's laws are to be applied. There are also difficulties that arise as a result of the anonymity associated with the persons involved in online activities. Whether such anonymity is real or imagined, dealing with persons of uncertain identity raises additional challenges. Because of the vast amount of information and data easily transmitted over the Internet, intellectual property issues are clearly present. Issues of privacy and security, the threat of computer viruses and related problems, and payment over the Internet are all the subject of much concern for businesses today. In addition, all of the general business law issues - related to contracts, torts, employment, criminal and regulatory offences, consumer protection, etc. - are also present in, and sometimes magnified by, online business transactions. Students should note that laws and regulatory processes are working hard to catch up with an area that has grown at a phenomenal rate. It is important that students recognize that existing laws go a long way in establishing rights and obligations for parties doing business online, and new statutory provisions are being enacted to address particular concerns. Good students will point out that enforcement is not perfect, however, and individual businesses are well-advised to take steps to protect themselves through proper the exercise of appropriate technological and organizational safeguards. 138) Students should point out that online transactions often involve contracts, but that the online environment does not undermine their validity. The elements required for a valid contract remain, although certain additional issues are raised. Offers accepted by e-mail or through a website will be effective as long as the usual requirements are present. Good students will discuss "click-wrap" agreements. In particular, they will note that an Internet ad

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com an offer, and that clicking "I Accept" (or the equivalent) can constitute valid acceptance. Buyers are well-advised to bine ensure that they carefully review license terms (and other provisions) prior to acceptance (as with any contract). d Case law suggests that the form of the assent and the reasonableness of the terms will affect the enforceability of with electronic contracts. It does not appear that the postbox rule will apply to online transactions, although this is not "click yet certain. Students should also point out that capacity issues are heightened in an online environment, as it -wra difficult to know whether the person engaging in an online transaction is sufficiently old enough and possesses the p" mental faculties to enter into the transaction. Further issues arise when there is a requirement of writing. Many may jurisdictions have passed legislation making electronic communication the equivalent to written documents. const Provisions of the Uniform Electronic Commerce Act, for example, contain provisions validating electronic documents itute and signatures. Sale of goods law and consumer protection law remain relevant to this area. 139) The unregulated nature of the Internet has opened the door for a variety of concerns, including the proliferation of spam, significant damage done by computer viruses, privacy issues, and the like. Students will point out that the unregulated nature of the Internet is unlikely to continue. With the ever-growing level of business conducted online, greater controls are expected. Existing tax laws will continue to apply to business conducted over the Internet, as will current federal and provincial regulations in other areas. There will no doubt be further law developed (either in the form of legislation or case law) to address Internet-specific issues. Liability of Internet service providers will hopefully be clarified. Various dispute resolution mechanisms, outside of litigation, are expected to continue to play an important role in settling disputes involving online situations. Self-regulation is expected to continue to play a role (in terms of "netiquette", etc.), although more comprehensive and far-reaching legislation is expected to continue to emerge. This will be an area to watch closely for developments. 140) The Act requires that the supplier disclose to the consumer (before the consumer enters into an internet agreement) detailed information including: 1. The name of the supplier and, if different, the name under which the supplier carries on business. 2. The telephone number of the supplier, and the address of the premises from which the supplier conducts business. 3. A fair and accurate description of the goods and services proposed to be supplied to the consumer. 4. An itemized list of the prices at which the goods and services are proposed to be supplied to the consumer, including taxes and shipping charges. 5. A description of each additional charge that applies, such as customs duties or brokerage fees. 6. Consumers must also be notified of any cancellation, return, exchange, or refund conditions. 141) 1. The connection between the forum and the plaintiff's claim. 2. The connection between the forum and the defendant. 3. Unfairness to the defendant in assuming jurisdiction. 4. Unfairness to the plaintiff in not assuming jurisdiction. 5. Involvement of other parties to the suit. 6. The court's willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis. 7. Whether the case is interprovincial or international in nature. 8. Comity and the standards of jurisdiction, recognition, and enforcement prevailing elsewhere.

Chapter 15 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) To which one of the following contracts would the Sale of Goods Act apply? A) A contract for the purchase of a farm B) A contract with a dentist to have a tooth filled C) A contract for a table where title to the table will not pass to the buyer until some future date D) A contract by which two computer programs were swapped for two others E) A contract for the assignment of a company's accounts receivable 2) To which one of the following would the Sale of Goods Act apply? A) A contract for the sale of intangible property B) A contract for the sale of a ranch C) A haircut at the local hairstylist D) A contract for the purchase of a house E) A contract for future goods when title will pass in the future.

3) Which of the following statements is correct with respect to the Sale of Goods Act? A) Some of the terms of the Sale of Goods Act are implied in the contract of sale. B) The Sale of Goods Act does apply to the assignment of a contractual claim. C) The terms included in the Sale of Goods Act override the terms agreed upon by the parties to such a sale of goods. D) The parties are restricted to contract out of any of the terms of the Sale of Goods Act. E) The Sale of Goods Act does apply to the sale of land.

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4) Which of the following statements accurately state the law with respect to consumer transactions? A) Where a supplier engages in a deceptive or unconscionable act, he is neither subject to fines nor jail. B) A deceptive or unconscionable supplier does not lose his right to carry on business in the province. C) In all consumer transactions, there is a cooling-off period of seven days in which the consumer can call off the deal. D) Where the court decides that a transaction was unconscionable, that transaction is unenforceable by the buyer. E) Where a consumer has been subject to a deceptive or unconscionable act or practice, he may recover damages and an order of rescission. 5) With respect to a sale of goods, which one of the following statements is true? A) The Sale of Goods Act provides terms that are not to be part of a contract for goods even if the parties failed to mention anything about such matters. B) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds) in payment for goods that he still possesses has a choice of rights against the goods themselves and an action for breach of contract against the buyer. C) In a retail sale of new goods, the seller can always exclude liability for breach of all implied terms in the Sale of Goods Act by a carefully drawn exemption clause. D) In private personal transactions, a buyer of goods has the protection of the "fit for purpose" provision. E) The Sale of Goods Act does not allow the use of exemption, exculpatory or limitation clauses. 6) Bob and Barb went into Logan Drugs, a self-service drug store. She bought some packaged cookies and he bought some Tilox, a cleaning solvent for tile that he hoped would remove greasy dirt from a painted kitchen chair. Because Bob wanted to work on the chair, Barb set their son, Keith, at the kitchen table with some cookies so he could watch without being in the way. After he had two cookies, Barb noticed that there were worms in the cookies. She took Keith and the cookies (made in Vancouver) to the doctor. While they were away, Bob learned too late that the Tilox did take off the grease but also the paint. The directions advised

against

using the product on wood or painted surfaces. On these facts, which of the following is true? A) Bob's purpose for buying the cleaning solvent was implied although not express. B) Keith (represented by a parent) would have an action against the makers of the cookies in tort law. C) Bob has a cause of action against Logan Drugs because it is a dealer in cleaning products and this Tilox was not fit for his purpose. D) Barb could not sue Logan drugs for breach of contract for the wormy cookies. E) Logan Drugs has no right to sue the makers of the cookies under the Sale of Goods Act.

7) For the purpose of building a playhouse for his sons, Andy went to Lumberlore Ltd. and bought, with his charge card and without talking to a salesperson, the following things: a drill, lumber, and a six-foot step ladder. While working on the project, Andy noted that the drill worked but it was not powerful enough to drill into the 4x4 inch posts the playhouse needed for support. When he went toward the house to get his car keys, he found his wife unconscious. She had used the ladder to take some leaves out of the gutter, and it buckled under her weight because of its faulty design. Which of the following is true? A) Andy would have no cause action against Lumberlore Ltd. for breach of a condition B) Andy would have an action against the seller for breach of a condition of the contract for the drill because it wasn't fit for his purpose. C) The sale of the items he bought are not covered by the Sale of Goods Act because he used his charge card. D) Title for the goods passed to Andy at the time of contract but that does not preclude him from his remedies. E) Andy's wife would have no cause of action against the manufacturer of the ladder in tort.

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8) If you buy a toaster from a second-hand dealer of small appliances, which of the following is true? A) There is an implied term of the contract that the seller has good title, i.e., the right to sell it. B) Title to the toaster would pass at the time the buyer would pick it up the next day. C) The risk of loss depends on who has possession of the toaster. D) The Sale of Goods Act does not apply. E) The Sale of Goods Act prohibits the seller from exempting himself from liability in the event that the toaster is not fit for purpose.

9) Uncle Isaac has had some difficulty in a sale-of-goods contract and wants to know if there are any mistakes in the information he has received with regard to the remedies for breach of such a contract. Indicate the true statement. A) Once the seller of the goods has given up possession of them to the buyer, he has lost his right to sue. B) A court will award a remedy, only if there was a breach of warranty. C) The Sale of Goods Act excludes the possibility of the equitable remedy of specific performance. D) If there has been a breach of contract, the purchaser is only entitled to tort remedies. E) An unpaid seller who has possession of the goods has a lien on those goods; i.e., he can hold the goods. 10) Four students assigned to examine the operations of Mr. Triffle's restaurant supply company found that the business worked in an inefficient manner. On the students' recommendation, Triffle went to Computerheaven Ltd. and explained to the salesperson the needs of the company. Computerheaven sold the company an Olivetti computer system for $18,000. The system was in operation less than one hour when it malfunctioned and injured one of Triffle's employees. The malfunction was not the fault of the seller or the buyer, but of the manufacturer. Which one of the following actions arise from these facts? A) Triffle's employee vs. Triffle Company for breach of condition. B) Triffle's company vs. Computerheaven for breach of a condition because the system was not fit for purpose C) Triffle's employee vs. Computerheaven for negligence. D) Triffle's company vs. Computerheaven for breach of a warranty because the system was not of merchantable quality E) Triffle's company vs. the manufacturer for frustration.

11) With respect to a sale of goods, which one of the following statements is true? A) Legislation allows a seller to override the requirement that goods supplied be fit and of merchantable quality in consumer transactions. B) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds), in payment for goods that he still possesses, has rights against the goods themselves as well as an action for breach of contract against the buyer. C) If the parties do not agree otherwise, the time of payment is 30 days after the time of delivery. D) If the parties do not agree otherwise, the risk of loss stays with the seller until delivery. E) The Sale of Goods Act also applies to the purchase of real estate and of bonds.

12) Which of the following is true with regard to the implied terms of the Sale of Goods Act? A) The Act does not provide that the goods must be fit for purpose. B) The Act provides that the goods must be of "merchantable quality," and that means that the goods must be without flaw. C) If a buyer places an order for silk after seeing a sample of it, the order delivered must be delivered within 10 days. D) When you buy a car, and the contract speaks only of the car and the price, you are entitled to receive good title, to acquire quiet possession and a car free from any encumbrances (i.e., a claim by a bank). E) If you ordered a lamp from a catalogue but it did not match the description when you got it, the seller is in breach of a warranty of the contract.

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13) To which one of the following would the Sale of Goods Act not apply? A) A contract for future goods when title will pass in the future. B) A contract for the purchase of a car C) A meal in a restaurant D) A contract for the sale of a ranch E) A contract for the sale of tangible personal property

14) Which of the following contracts would be covered by the Sale of Goods Act? A) The trade of a car for a boat involving no money B) The purchase of a house C) A contract for medical services with a doctor D) A contract for the sale of a famous painting E) The sale of corporate shares 15) Which of the following statements is correct with respect to a contract for the purchase of goods? A) The purchaser has a claim against the manufacturer only if the goods purchased are defective. B) The purpose of the inclusion of a warranty in a sale of goods contract is to force the seller of those goods to repair the goods if they are defective. C) Where a breach of a warranty is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement. D) Where a breach of a condition is involved, the obligation of the victim of the breach is ended and that person need not perform her side of the agreement. E) Where a breach of a condition is involved, the contract is still in force and the victim of the breach must still perform her side of the agreement. 16) Slipstream bought a new lawnmower for mowing his own yard at home from Mulcher Mowers Ltd., a lawn and garden tools dealer in Vancouver. Unfortunately, while there were no major defects with the machine, a number of small things kept going wrong: the blade kept going out of adjustment, the starter rope broke twice, a wheel fell off, the handle loosened and wobbled, and the machine stalled in heavy grass. During the summer, Slipstream had it repaired six times. These small annoyances continued and finally, in disgust, he

returned However, Mulcher's manager (a university graduate) pointed out to Slipstream that their contract contained the a very extensive exemption clause excluding "all conditions or warranties, express or implied, statutory or mower otherwise," and refused to accept the mower back or to return Slipstream's money. Slipstream commenced to legal action. Which of the following statements best describes Slipstream's legal situation? Mulcher. A) The Sale of Goods Act prohibits the use of such exclusion clauses generally. B) All such exclusion clauses are void. C) In a sale of new goods by a dealer to a private consumer for his own use, legislation prohibits the seller from excluding these basic warranties with respect to fitness and quality. D) Such clauses are only effective when there is a breach of the fundamental term of the contract, which is likely not the case here because the defects were all minor. E) Such clauses are always effective just as long as the two parties have agreed to their inclusion in the contract.

17) With respect to the breach of a sale-of-goods contract, consider the following statements. Which of these is false? A) Where a buyer has continued to push a breaching seller for performance, he could lose the right to discharge the contract in the event of a breach of a condition. B) Before a court will award a remedy, generally it will decide whether the breach was of a condition or a warranty. C) The Sale of Goods Act excludes the possibility of the various equitable remedies such as specific performance. D) Whether a seller can sue for the price or damages depends upon whether or not title has passed. E) Even after the seller has given possession of the goods to the buyer, he may be able to get them back under the provisions of the Bankruptcy and Insolvency Act.

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18) Which one of the following statements is false with respect to who bears the risk of loss in a sale-of-goods contract? A) When unascertained or future goods are involved, the risk transfers once a reasonable time has passed. B) The parties can contradict the provisions of the Sale of Goods Act on this question. C) The risk of loss may depend on who holds title. D) Where repairs have to be done before delivery, the risk passes when the repairs are made and notice given. E) The risk of specific goods may pass upon formation of the contract. 19) In which of the following will the title to the goods pass to the buyer at the time of contract? A) While at the Bay, Preston decides to buy the style of sofa he sees on display. He pays by cash and the store arranges to have one sent from its warehouse directly to Preston's home. B) Mrs. Jones calls the Bay and asks them to send out the blanket advertised on p. 3 of its flyer. The Bay agrees and takes her credit card number. C) Williams contracts for the desk he selected at Antiques Unlimited, and he arranges to have it delivered to his office tomorrow and to be paid for in one month. D) Mary picks out a leather briefcase and leaves it with the seller so that initials can be engraved on it. She pays by cheque. E) ABC Co. buys all the chemicals contained in a drum marked "A" but the price has to be ascertained by measuring the number of litres in the drum. 20) With respect to a sale of goods, which one of the following statements is false? A) The Sale of Goods Act permits commercial parties to exclude the Act if they mutually want to. B) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds) in payment for goods that he still possesses has a choice of rights against the goods themselves and an action for breach of contract against the buyer.

C) The Sale of Goods Act provides terms that will be taken to be part of a contract for goods even though the parties failed to mention anything about such matters. D) In commercial transactions, a buyer of goods has the protection of the "fit for purpose" provision, but legislation enables the seller to exempt himself from liability. E) In a retail sale of new goods, the seller can always exclude liability for breach of all implied terms in the Sale of Goods Act by a carefully drawn exemption clause.

21) Bob, owner of a pizza business, went with his wife to pick out a new family car. Since they already knew the make and model they wanted, it did not take long before the contract was signed by the wife for a new 2012 Oldsmobile. While the paperwork was being done, Bob had been talking with another salesman about the used cars on the lot, telling him that he needed a mechanically sound car but not a new car for his business. The salesman showed him one that he said was in good shape and would give several years of service. Bob made a very low offer that the salesman accepted, much to Bob's surprise. The contract Bob signed, like his wife's, contained a clause exempting the seller, B & S Motors, from liability for breach of any warranties, including any implied warranties under the Sale of Goods Act. A few weeks after the sale, the wife and daughter were injured in an accident caused by the faulty steering mechanism of the new car. Furthermore, the used car was not in good shape and lasted weeks, not years. On these facts, which of the following is true? A) The daughter could sue B & S Motors for negligence. B) The wife could not succeed in an action against B & S Motors, because there is an exemption clause in the contract of sale. C) The daughter could sue B & S Motors for breach of contract. D) If legislation in the province prohibits a seller from overriding the requirement that goods be fit and of merchantable quality in consumer transactions, the wife may win for breach of contract. E) An exemption clause is always effective in exempting the seller from liability.

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22) John bought a car for $5,000. Shortly afterwards, a bailiff acting for an unpaid chattel mortgagee who had properly registered his claim in time seized the car. In which of the following circumstances will John be least likely to recover what he is owed? A) If neither John nor the seller said anything about whether the car was free and clear of encumbrances B) If John forgot to check the registry for liens or encumbrances C) If the seller told John that the car was free and clear of any encumbrances after John asked D) If the seller told John that the car was free and clear of any encumbrances even though John didn't ask E) If the seller can no longer be located. 23) O'Neil bought a new car from a Chevrolet dealer for family use. The contract he signed contained the following clause: "The parties hereto expressly agree that the dealer is not liable for any breach of condition or warranty, express or implied." He also bought a used car radio from the dealer for his old car, which he was keeping. The contract for the radio was not in writing. The car did not run properly; O'Neil had it back in the shop seven times in three weeks. It was finally determined that the problem was due to a faulty transmission. Unfortunately, the car radio didn't work either. On these facts, which of the following is true? A) The exemption clause does not apply to either because both involve fundamental breaches of contract. B) The contract for the radio is not covered by the Sale of Goods Act because the radio was not new. C) The contract for the radio is not covered by the Sale of Goods Act because the contract was not in writing. D) O'Neil has an action for breach of contract against the dealer, because the exemption clause does not defeat the dealer's obligation to deliver a properly performing car (fit for use) in a consumer transaction. E) The exemption clause in the contract for the car would succeed in defeating an action by O'Neil against the dealer for breach of contract. 24) The following events occurred before the goods or parts of the goods were destroyed by fire. In which case would the buyer suffer the loss?

A) Heinz contracted for all the corn in silo A. The seller still had to weigh the corn to determine the price. B) Jaspers contracted for four standard-sized cupboards for the kitchen. The boards had been cut, but they had not been assembled. C) Justin contracted for a piano that had to be tuned before it was in a deliverable state. It was tuned, but Justin had not been notified that it was ready. D) McGrady ordered a chainsaw advertised in the Sears catalogue. E) Manchesco chose which of the chairs he wanted and contracted for it, but he had agreed to pay and pick it up the next day. 25) In which of the following would the title pass to the buyer only when the goods were "unconditionally appropriated" with assent? A) After some discussion with the owner of Guitars Galore Ltd. as to which of the guitars there were best for a beginner, Bob bought a guitar for his son "on approval" and took it with him. B) Mark chose a guitar advertised in the catalogue of Guitars Galore Ltd., called the store, and after some discussion on its features and price, ordered it. C) Jethro chose the guitar and paid for it, but it had to be strung before it was ready. D) Jenny wanted amplifier A for her guitar, but the store only had amplifier B. She decided to take it because she wanted one right away. E) Homer chose a guitar that was ready and he agreed to buy it. They had agreed that he could pay for it next month and pick it up when he paid.

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26) Colson went to Logon Drugs and bought some light bulbs for the hallways of his new apartment building. A tenant asked for one and Colson gave him one but told him he was responsible for getting his own from now on. The bulb, manufactured by Burnaby Brite, Ltd. and sold to Logon Drugs by Dandy Distributors Ltd., was defective, improperly made. It exploded and set some curtains on fire. The tenant's apartment suffered $6,000 damage; he had to move out. He couldn't live there while repairs were being undertaken and had no choice but to find another place, as it would take three weeks to get the apartment liveable again. On these facts, which of the following is false? A) Logon Drugs cannot sue the manufacturer for breach of contract even though the manufacturer was at fault. B) Logon Drugs could sue Dandy Distributors for breach of contract, although it was not at fault for the damage. C) The manufacturer could be sued in contract by Dandy Distributors, but could be sued by others only for the tort of negligence. D) Logon Drugs had not really caused the damage, but it could still be sued by Colson for breach of contract. E) The tenant could sue Logon Drugs for breach of contract or negligence because his loss was caused by the defective light bulb. 27) For the purpose of building a playhouse for his sons, Andy went to Lumberlore Ltd. and bought, with his charge card and without talking to a salesperson, the following things: a drill, lumber, and a six-foot step ladder. While working on the project, Andy noted that the drill worked but it was not powerful enough to drill into the 4x4 inch posts the playhouse needed for support. When he went toward the house to get his car keys, he found his wife unconscious. She had used the ladder to take some leaves out of the gutter, and it buckled under her weight because of its faulty design. Which of the following is false? A) The sale of the items he bought is covered by the Sale of Goods Act although he used his charge card. B) Title for the goods passed to Andy at the time of contract but that does not preclude him from his remedies. C) Andy would have an action against the seller for breach of a condition of the contract for the drill because it wasn't fit for his purpose. D) Andy would have an action against Lumberlore, Ltd. for breach of a condition of the contract for the ladder because it wasn't of "merchantable quality."

E) Andy's wife would have an action against the manufacturer of the ladder in tort. 28) Tina's Gourmet Catering Ltd. (hereinafter referred to as "Tina's") makes several types of fresh salads, which they package in sealed containers and sell to various retail outlets. Grandma Wright, shopping with her daughter Jane, bought one of Tina's salads at the delicatessen at Superdeal Grocers Ltd. (Superdeal). Jane and her mom drove to Jane's and Jane served the salad to her family for lunch. The salad was contaminated through Tina's carelessness and caused Jane's family to be very sick; father missed work and the kids missed school for a week. Neither Jane nor her mother were sick because neither had sat down with the others for lunch. On these facts, which of the following actions would most likely be successful? A) Father v. Superdeal for breach of contract B) Father v. Superdeal for negligence C) Jane v. Tina's for negligence D) Grandma v. Superdeal for negligence E) Kids v. Tina's for negligence

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29) Gregory went to Collegiate Sports Ltd. with his dad, who asked for some shoes for Gregory suitable for playing squash. Gregory was given a pair of running shoes suitable only for jogging. His dad paid by cash. That evening, wearing the new shoes while playing squash, Gregory broke his ankle. In the ensuing lawsuit, the statement of claim cited the provisions of the Sale of Goods Act. Which of the following is true if it were proven that the shoes were inappropriate and the cause of the injury? A) Gregory could win for breach of contract because he made known the purpose for which he wanted the shoes to a shoe dealer. B) This is not a sale of goods situation because Gregory's father paid by cash. C) Only Gregory can sue since he was the only one hurt. D) Gregory's father would be the proper plaintiff in this action and could win on the claim that the goods were not fit for purpose. E) This is a "buyer beware" situation and there would be no remedy for anyone.

30) Which of the following is a statement of facts to which the Sale of Goods Act would apply? A) "Waiter, there is a dead fly in my spaghetti." B) "I agreed to give you a dozen old campaign buttons for that original signature of the Prime Minister, but received the signature of the Governor General." C) "I ask for a trim! You've cut off 5 inches!!!" D) "I brought in five shirts to be laundered and you are returning only four to me!" E) "Today is the closing date and I am willing to tender the full price in cash, namely $70,000, for the farm, and you are now telling me that you have no intention of closing." 31) To which of the following transactions would the Sale of Goods Act apply? A) A heart transplant operation B) The oral lease of an apartment for less than two years C) The sale of an office building D) The sale of a puppy to be given as a present by the buyer E) The sale of shares in a corporation 32) Which one of the following statements accurately describes the legal relationship between the principle of caveat emptor ("buyer beware") and the effect on a sale-of-goods contract of the Sale of Goods Act? A) The sale of goods provisions with respect to fitness and quality always override a different stated intention in a contract for the sale of goods. B) The buyer must be particularly careful to make it an express term of the contract that he get good title to the goods. C) When there is a conflict between the principle of caveat emptor and the provisions of the Act, the principle prevails over the Act.

D) Because caveat emptor applies to the quality of goods, the buyer's only protection is to examine them carefully and only accept them if he finds them to his liking. E) The Act provides a number of implied contractual terms to supplement those expressed in the contract, and these implied terms override the principle of caveat emptor. 33) To which one of the following contracts would the Sale of Goods Act apply? A) A contract for the assignment of a company's "accounts receivable" B) A contract in which one party gives an antique pin in exchange for the other party giving an antique cigar box C) A contract for the sale and purchase of a farm D) A contract in which the seller sells a computer, and ownership will transfer to the buyer at a specified future time E) A contract with an artist to have a portrait painted

34) With regard to a contract for the sale and purchase of goods, which of the following is false? A) Contracts for the sale of goods valued at more than $2 must be in writing in order to be enforceable. B) Title to the goods may pass to the buyer at the time of contract. C) The buyer of used goods has the protection of the implied terms of the Sale of Goods Act, but the Act does not automatically void an exemption clause in a contract for the sale of used goods. D) To guard against loss, a buyer of costly goods should have his insurance in place by the time that title passes to him, because the person with title generally bears the loss. E) The Act provides a number of implied terms that may be added to the contract if the parties failed to mention those particular matters.

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35) The British Columbia Business Institute (BCBI), because of its vast purchasing power, arranged a special plan through which its students could purchase new computers at a greatly discounted price. BCBI took orders from a number of students, along with a deposit as an indication of good faith, and then bought that number of computers from A. Pwee Ltd., the manufacturer. When the students came to BCBI with the balance of the purchase price, a specific machine was selected and sold to them by a serial number, and it was then theirs to take away. By Friday afternoon of delivery week, all but three students had picked up their machines. Jackson had stopped by and completed the purchase arrangements, and a particular machine was identified by number as his. But because he was going out of town for the weekend, he arranged to pick it up on Monday. The two others, Pollock and Kline, had not yet showed up. Unfortunately, some time on the weekend, despite due care by BCBI, thieves smashed into the storeroom and stole the final three computers. Identify the true statement about liability for this loss (presuming the thieves cannot be caught). A) No one will be liable for the loss because this was a crime and not the fault of any of them. B) BCBI will be liable for the entire loss because none of the three students had taken actual delivery. C) BCBI will be liable to Jackson but not to Pollock and Kline. D) The three students will be liable entirely for the losses. E) Jackson will be liable for the loss but Pollock and Kline will not. 36) Which of the following complaints would lead to a successful action under the Sale of Goods Act? A) "Waiter, there's a spider in my sandwich." B) "I paid $1000 for government bonds, but you have sent me shares in a private company that I never heard of!" C) "I hired you to wait tables, not to stand around doing stand-up comedy routines." D) "You are not going to honour our contract for the land?! I planned to build on that lot in the spring!" E) "I left the car here with orders to adjust the front lights; I did not order a tune-up!" 37) The following events occurred before the goods or parts of the goods were lost or destroyed. In which case would the buyer suffer the loss? A) Heinz contracted for all the corn in Silo A. The seller still had to weight the corn to determine the price.

B) Yates chose which of the desks he wanted and contracted for it, but he had agreed to pay and pick it up the next day. C) George ordered a Pentium computer system with 4 megabytes of RAM and a 105 megabyte hard drive advertised by Kicks Computers. D) Jaspers contracted for four standard-sized cupboards for the kitchen. The boards had been cut, but they had not been assembled. E) Al picked out and contracted for a particular computer, and an additional component had to be installed before it was in deliverable state. It was installed, but Al had not been notified that it was ready. 38) With respect to a sale of goods, which one of the following statements is false? A) The Sale of Goods Act does not apply to the purchase of real estate or of bonds. B) Legislation in most provinces will not allow a seller to override the requirement that goods supplied be fit and of merchantable quality in consumer transactions. C) If the parties do not agree otherwise, the time of payment is the time of delivery. D) If the parties do not agree otherwise, the risk of loss stays with the seller until delivery. E) A seller who has been given a cheque that "bounces" (dishonoured for insufficient funds), in payment for goods that he still possesses, has rights against the goods themselves as well as an action for breach of contract against the buyer.

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39) To which of the following transactions would the Sale of Goods Act apply? A) A contract with a warehouseman to store a Chevrolet car B) A contract for a house C) A contract for a haircut D) A contract for a boat E) A contract to get a dress mended and cleaned

40) Which of the following complaints would lead to a successful action under the Sale of Goods Act? A) "What do you mean that you are not going through with the contract to sell me that lot? I have workers ready to start construction one week after the closing date!" B) "I hired you to tutor me for my chemistry exam, not to tell me your personal problems week after week!" C) "I paid $1000 for government bonds, but you have sent me shares in a private company that I never heard of!" D) "I left the car here with orders to adjust the front lights; I did not order a wheel alignment and I don't want to pay for it!" E) "I paid a lot of money for this car and this is the third time I've had it back in the first week. Something is seriously wrong with it." 41) If the contract doesn't say who bears the loss if an item is lost or stolen, the Sale of Goods Act says risk goes with title. If the contract doesn't say when the title will pass, the Sale of Goods Act implies when it will pass. In which of the following will the statute imply that title will pass to the buyer at the time of the contract? A) While at Sears, Preston decides to buy the style of sofa he sees on display. He pays cash and the store arranges to have one like it, covered in the material he selects, delivered directly to him from the factory. B) Maureen contracts for Ms. Roberts' next year's pumpkin crop. C) Agro Ltd. buys all the chemicals contained in the container marked "A" but the price has to be ascertained by measuring the number of litres in the container. D) Azar goes into a store specializing in old woodworking tools. He chooses a $1000 tooling machine. The contract provides that it would be delivered to his workshop the next morning and he would pay for it in one month. E) George calls a store and asks them to deliver the table advertised in its catalogue. The store agrees,

takes his

credit card number, and promises to deliver it on Friday.

42) Alf bought a car from Mr. Wojchu for $10,000. Shortly afterwards, a bailiff, acting for an unpaid conditional seller, seized the car. The conditional seller had properly registered his claim in time. Alf wants to sue Mr. Wojchu. Which of the following correctly sets out his legal position? A) Alf loses. It was his obligation to search the title and he failed to. B) Wojchu loses. Risk follows title. C) Alf loses. Caveat emptor applies. D) Alf wins. Mr. Wojchu has failed to deliver good title. E) Alf wins. Goods are not of merchantable quality.

43) Which of the following is false with regard to the implied terms of the Sale of Goods Act? A) The Act provides that the goods must be fit for purpose, but to have that protection, the buyer must be dealing with a seller who deals in goods of that kind. B) The Act provides that the goods must be of "merchantable quality," and that means that the goods must be without flaw. C) If a buyer places an order for silk after seeing a sample of it, the order delivered must match the sample. D) If you ordered a lamp from a catalogue but it did not match the description when you got it, the seller is in breach of a condition of the contract. E) When you buy a car, and the contract speaks only of the car and the price, you are entitled to receive good title, to acquire quiet possession and a car free from any encumbrances (i.e., a claim by a bank).

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44) Vanderhoort contacted Prinz to buy a new furnace that burned both wood and oil. Prinz, who bought the furnace directly from the manufacturer, also installed it. The furnace was defective; it malfunctioned and caused a fire that destroyed the house of the buyer and the belongings of a visitor. Which of the following accurately sets out the legal position of the parties? A) The visitor could sue both seller and the manufacturer. B) Vanderhoort could sue only seller. C) The damages to be claimed from the seller are limited to the total charged for the sale and installation. D) If Vanderhoort successfully sued the seller, the seller could then sue the manufacturer. E) If the reason for the fire was a defect caused at the factory, Vanderhoort could only sue the manufacturer for negligence.

45) Which of the following is not controlled by consumer protection legislation? A) False advertising B) Unequal bargaining power that is abusive C) The investigation of complaints D) Business transactions E) Unconscionable transactions 46) Which of the following is not federal legislation? A) Motor Vehicle Safety Act B) Sale of Goods Act C) Competition Act D) Hazardous Products Act E) Food and Drug Act 47) Which of the following is a statement of facts to which the Sale of Goods Act would apply? A) "I brought in five shirts to be laundered and you are returning only four to me!" B) "Today is the closing date and I am willing to tender the full price in cash, namely $50,000, for the house and you are now telling me that you have no intention of closing."

C) "I agreed to give you a dozen old campaign buttons for that original signature of the Prime Minister, but received the signature of the Governor General." D) "Excuse me, there is a mouse in this beer bottle." E) "I ask for a trim! You've cut off 2 inches!!!" 48) Which of the following is a statement of facts to which the Sale of Goods Act would apply? A) "There's a small dead insect in my soup!" B) "Pursuant to the contract, the buyer of the house tendered $50,000 on the closing date, but the seller had changed his mind." C) "We hired you as a bartender, not to join the guests and teach them Texas line dancing!" D) "I paid you to tune the car, but it obviously wasn't done!" E) "The deal was this: Fred was to assign to Paul Fred's accounts receivable, and Paul would pay him $5000 cash, but Fred did not honour his promise."

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49) Rick has just been told that he will have to undergo a second operation because the results of the first operation are not as expected. In the first operation, a small device was inserted near his damaged knee to stimulate bone growth with electrical impulses. The device was not working. The operation was performed by Dr. Jones, who is employed by St. Everybody's hospital. There is evidence that the device itself is faulty. The hospital had purchased the device from Medisci Ltd., which had purchased it directly from the manufacturer, Electrobo Ltd. The operation is not covered by the medical plan, and it will cost Rick $5,000. Rick is very upset and wants to sue for damages. Which of the following is correct with respect to who Rick could sue and why? A) Rick can sue Electrobo for both negligence and breach of contract. B) Rick can't sue anyone. There are no guaranties in surgery. C) Rick can successfully sue the doctor for negligence. D) Rick can sue Medisci Ltd. for breach of contract. E) Rick can sue Electrobo for negligence.

50) Mr. Olde died. Mrs. Olde was treated by a psychiatrist who advised her that part of her difficulty was her trying to make financial decisions that had previously been made by her husband. Upon his advice, she contracted with him to examine her financial situation and to give her a letter advising her, in detail, what steps she should take with regard to twenty or so pressing business decisions. His fee would be $2,000. As agreed, he attended her home one evening and examined all the financial records. She issued a cheque payable to him for $2,000; the cheque was drawn on the Bank of Montreal, Austin Street branch. As promised, his letter of advice was delivered on the following day--a one-paragraph letter in which all he advised was that she transfer the two income-producing properties into his name so that he could "take care of things for you." Mrs. Olde attended her bank immediately to stop payment on the cheque. Before she did, however, the psychiatrist had endorsed it over to his bank, the Royal Bank at Cambie and 16th Avenue. On these facts, which one of the following is true? A) Mrs. Olde is the "drawee" of the cheque. B) If Mrs. Olde can prove undue influence was used by the psychiatrist, she will not have to pay the holder of the cheque. C) The psychiatrist is the "acceptor" of the cheque. D) Because the parties deal with different banks, Mrs. Olde would not have to pay the holder of the cheque because she can successfully argue breach of contract. E) Mrs. Olde will have to pay the holder of the cheque because it is a holder in due course. 51) Which of the following is false with regard to a "holder in due course"? A) A holder in due course cannot be an immediate party. B) A holder in due course is the same as the "drawee" or "acceptor." C) A person cannot be a holder in due course if he acquired the instrument in bad faith; e.g., he tricked the person into giving him the cheque.

D) A person cannot be a holder in due course if he knew the instrument had been obtained by the payee by fraud. E) A holder in due course is in a better position to be paid by the drawer or maker of the instrument than is an immediate holder, because there are fewer defences against his claim for payment. 52) Read the following statements with regard to the parties involved with negotiable instruments and indicate which is false. A) The person who signs a promissory note is the maker of the note, and unlike a cheque, the note will not include a drawee. B) The person who signs and issues the cheque is the drawer. The person who is owed the money and receives the cheque is the drawee. C) A person who signs a draft is a drawer; the party commanded to pay is the drawee. D) The payee of a negotiable instrument can negotiate the instrument to a holder who will be remote in relation to the drawer. E) An acceptor of a draft will become liable to the payee for the amount of the draft.

53) Which of the following is false with respect to the law of negotiable instruments? A) A holder in due course is in a better position than he would be as the receiver of contractual rights through assignment. B) A bill of exchange involves 3 parties. C) The Bills of Exchange Act is federal legislation. D) Negotiable instruments are controlled by provincial legislation. E) The Bills of Exchange Act governs the area of negotiable instruments.

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54) In Hunter Engineering Co. v. Syncrude Canada Ltd., the Supreme Court of Canada had to determine whether an exemption clause overrode the operation of the Sale of Goods Act. What did the Court determine? A) Parties cannot contract out of the Sale of Goods Act. B) An exemption clause is effective in all cases except when dealing with a fundamental breach. C) An exemption clause that is inconsistent with the Sales of Goods Act is illegal and therefore void. D) Even in the face of a fundamental breach, it is possible for parties to exempt themselves from liability. E) Except in cases involving a sale of goods, the presence of an exemption clause will protect a party from any misconduct.

55) In Dansway International Transport Ltd. v. Lesway and Sons Ltd., the relevant contract did not state that time was important nor did it specify a time for performance. What did the Court find? A) Because the parties did not include a provision as to time, the agreement was void for a lack of the essential element of consensus. B) Because the parties did not include a provision as to time, the agreement was voidable at the option of either party, pursuant to the Sale of Goods Act. C) Because the parties did not include a provision as to time, the Court could not invent one for them. D) There was an implied term that performance had to be within a reasonable time, which would always be equal to one calendar month. E) There was an implied term that performance had to be within a reasonable time, which would depend on the circumstances. 56) Tahmineh was very upset to find herself short of cash, after her roommate had moved out without paying her share of the month's expenses. Tahmineh had no choice but to borrow money from QuickMoney Loans. Without getting legal advice, she signed a contract in which she agreed to pay back the money along with interest. The interest clause provided that interest was to be calculated at the rate of 2 percent per month. Tahmineh failed to pay back all of the funds and QuickMoney Loans sued her. What argument might she successfully raise to limit the amount of her obligation? A) It is unlawful to charge interest to a person in a vulnerable state.

B) Because Tahmineh did not receive independent legal advice, the loan agreement is void. C) Because Tahmineh was upset over her roommate moving out, she lacked capacity to agree to the terms of the contract. D) Because the actual interest rate was over 1 percent per month, the interest provision was contrary to the Criminal Code. E) The Interest Act provides that in any contract where interest is payable, interest must be stated as an annual rate. 57) Sarah, who had just celebrated her 21st birthday, was distraught over the fact that her tuition had recently gone up. She did not qualify for any further student funding, so she had no alternative but to borrow money from FastCash Loans. Without getting legal advice, she signed a contract in which she agreed to pay back the money along with interest. Because Sarah was a student, and therefore a high-risk client, the interest clause was to be calculated at the rate of 80 percent per year. Sarah failed to pay back all of the funds and FastCash Loans sued her. What argument might she successfully raise to limit the amount of her obligation? A) The Interest Act provides that in any contract where interest is payable, interest must be stated as an monthly rate. B) Because Sarah did not receive independent legal advice, the loan agreement is void. C) Because Sarah is a student, she lacked capacity to agree to the terms of the contract. D) Because the interest rate was over 60 percent, the interest provision was contrary to the Criminal Code. E) Under the Student Finance Act, it is unlawful to charge interest to a student.

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58) A type of sales practice in which the purchaser supplies a seller with a list of friends or acquaintances and receives a benefit when sales are made to those people is known as A) direct sales. B) preferred selling. C) consumer sales. D) one-off marketing. E) referral selling.

59) Prebushewski v. Dodge City Auto (1984) Ltd. involved an action under the Consumer Protection Act. The issue that went to the Supreme Court of Canada was the award of $25,000 in exemplary damages. What did the Supreme Court of Canada hold? A) The award of exemplary damages was set aside, as it contradicted the overriding principle of caveat emptor. B) The award of exemplary damages was unwarranted, given that no one had been injured. C) As long as Chrysler's conduct was voluntary, intentional, and deliberate, this was sufficient to justify an award of exemplary damages. D) The Consumer Protection Act did not apply, because the issue involved the sale of goods. E) The threshold set by the Consumer Protection Act was unjustifiably low, so the Court severed those provisions from the legislation. 60) The Bankruptcy and Insolvency Act allows a supplier of goods to recover those goods even after they are delivered to the purchaser if A) within 7 days of delivery, the debtor has become bankrupt or a receiver has been appointed, even if the goods have been transferred to a third party. B) within 30 days of delivery, the debtor has become insolvent, provided the debtor or trustee still has them. C) within 6 months of delivery, the debtor has become bankrupt or a receiver has been appointed, provided the debtor or trustee still has them. D) within 6 months of delivery, the debtor has become insolvent, provided the debtor or trustee still has them. E) within 30 days of delivery, the debtor has become bankrupt or a receiver has been appointed, provided

the debtor or

trustee still has them.

61) Which of the following is not a federal statute with a consumer protection aspect? A) Textile Labelling Act B) Trade Secrets Act C) Competition Act D) Precious Metals Marketing Act E) Consumer Package and Labelling Act TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 62) The sale of goods anticipates the transfer of possession but not necessarily property rights from the seller to the purchaser. 63) The Sale of Goods Act applies to both goods and services. 64) The transfer of the title and possession of the goods in exchange for money must be intended or anticipated for the Sale of Goods Act to apply. 65) Risk refers to potential loss due to the destruction or damage of the goods.

66) The principles of freedom of contract and caveat emptor have been completely done away with by the Sale of Goods Act. 67) The protection of consumers is solely a provincial responsibility. 68) Some jurisdictions allow civil suits against abusive debt collectors.

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69) Privity of contract does not apply to consumer transactions.

70) Consumer protection legislation falls exclusively under federal jurisdiction. 71) Unconscionable transactions statutes apply to any transaction where the price paid is not fair or reasonable.

72) There is a cooling off period in all consumer sales transactions where the purchaser of goods has a period of time in which to change his mind. 73) The purpose of the federal Competition Act is to prevent competition among retailers. 74) When goods are traded for other goods, the Sale of Goods Act does not apply. 75) An agreement to sell involves a contract to sell goods where the actual title will transfer sometime in the future. 76) The general rule is that risk follows title. 77) With F.O.B. contracts, title and risk always transfer at the seller's place of business. 78) When a contract of purchase is entered into with regard to specific goods that are to be delivered some time in the future, title always transfers at the point of delivery. 79) A warranty under the Sale of Goods Act is a condition the breach of which will allow the victim of the breach to refuse to go through with their side of the agreement.

80) Quiet possession of the goods means that the goods must be of merchantable quality and free from any inherent defect. 81) When the sale of goods is involved and a specific price has not been agreed upon, a reasonable price must be paid. 82) Under the Sale of Goods Act, the seller has a lien against the goods and can recover those goods from the purchaser in the event of default. 83) A bill of exchange is an order by one person to another to pay money to a third. 84) A certified cheque insures that the instrument will be honoured by the bank. 85) If Jones receives a promissory note from Smith, who passes it on to Green, who qualifies as a holder in due course, Green is the receiver of assigned contractual rights and is in the same position as Jones. 86) A cheque made payable "after the building is completed" can qualify as a negotiable instrument. 87) The common law doctrine of unconscionability in contract law can also be applied to consumer situations.

88) Every province has enacted legislation requiring that the true cost of borrowing be disclosed, thus prohibiting excessive rates of interest and costs in loan transactions. 89) Every Canadian jurisdiction has now enacted an international sale of goods act.

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90) A holder in due course is in the same position as the person from whom a negotiable instrument was received. 91) For an instrument to be negotiable, it must be an unconditional promise to pay a specific amount at some future date or on demand. 92) The key issues involving gift cards relate to expiry dates and fees.

93) Gift Card Regulation stipulates that gift cards are allowed to have expiry dates. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 94) What's the main purpose of the Sale of Goods Act? 95) "The Sale of Goods Act is another example of consumer protection legislation." Discuss the accuracy of that statement. 96) "The Sale of Goods Act is to impose terms into the contract that are even and fair, that don't benefit one side over the other." Discuss the accuracy of that statement. 97) Where the parties fail to state a price in a sale of goods transaction, what effect will the Sale of Goods Act have on that agreement? 98) What types of transactions does the Sale of Goods Act apply to? 99) When goods are used as a security, does the Sale of Goods Act apply to such a transaction?

100) Explain under what circumstances the sale of goods must be evidenced by writing. 101) Distinguish between a sale and an agreement to sell. 102) Distinguish between a C.I.F. contract, an F.O.B. contract, and a C.O.D. contract. 103) When goods are sold, who normally bears the risk? 104) What is a bill of lading? Explain how it can affect the risk in a sale of goods transaction. 105) Jones walked into Sam's TV shop and said, pointing to a particular television, "I'll take that one." They wrote up the deal, and Jones was to return the next day to pay for it and pick it up. Explain who bears the risk in the meantime. 106) Jones walked into a new car lot, pointed to a specific car, and said, "I'll take that one." Sam, the operator of the car lot, explained that there was a certain amount of pre-delivery preparation that had to take place before the car could be delivered, and that it would be ready for the purchaser two days later. It was agreed that the purchase price would be paid at that time. Explain who bears the risk in the meantime.

107) Sam went to Joe's garden shop and agreed to purchase a particular bin of bark mulch. The seller, Joe, agreed and said that he would just weigh it, figure out the price, and deliver it tomorrow. In the meantime, who has title to the bark mulch?

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108) Joe bought a TV set "on approval," took it home, and installed it as part of a built-in stereo wall in his renovated recreation room. He discovered, however, that the TV set was too small, extracted it from the wall, and took it back, saying he was not happy about it. The seller asked about the minor scratches on the finish and Joe explained how it had been built into the wall, and the trouble he went to get it out again. Has title transferred? Explain. 109) Joe left his car at Harry's tire store, asking Harry to put a particular model of tire from his stock onto the vehicle while Joe went into his office in town. During the day, the tires were installed on the car, and Joe returned that evening to pick up the car. At what point did title on those tires transfer? 110) Distinguish between conditions and warranties in a sale of goods contract.

111) Explain the options that are available to the victim of a breach of a condition in the contract. 112) The Sale of Goods Act places certain obligations on the seller with respect to conveying good title. What are those requirements? 113) What are the rights of the purchasers when the goods do not match the description? 114) Explain what obligation the Sale of Goods Act puts on the seller with respect to fitness and quality. 115) Explain what is meant by merchantable quality. 116) When goods are bought by sample, what obligation is implied into the contract on the seller? 117) Explain the rights conveyed in an "unpaid seller's lien." 118) Explain how the Bankruptcy and Insolvency Act protects the position of an unpaid seller.

119) Give examples of three federal acts which have consumer protection aspects to them. 120) What steps have been taken provincially to protect a purchaser with respect to the quality of the goods that are purchased? 121) Explain what common law recourse there is against manufacturers when they manufacture a faulty or dangerous product. 122) Explain what kind of protection is provided by the Trade Practices Act (Unfair Practices Act, Business Practices Act, etc. depending on the jurisdiction). 123) Explain the protection provided by the Unconscionable Transactions Relief Act (or Unconscionable Transactions Act, depending on the jurisdiction). 124) Explain how the abuses usually associated with door-to-door sales are controlled. 125) Give examples of several different types of industries that are specifically controlled by consumer protection legislation. 126) Explain how the money lending business is controlled in your province.

127) Explain three significant contributions of the federal Competition Act. 128) What two important characteristics of negotiable instruments contribute to their value as a method of transferring funds?

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129) Distinguish between a cheque and a bill of exchange.

130) Distinguish between a promissory note and a bill of exchange.

131) Explain the liability of the parties on an "accepted" bill of exchange.

132) Jones bought a car from Smith, giving Smith a certified cheque drawn on the Bank of Commerce in payment. Smith got the car home and discovered that, instead of a new engine, as had been represented to him, a used engine had been installed. He immediately went to the bank to stop payment on the cheque. Explain his legal position. 133) When the holder of a negotiable instrument signs his name in the form of an endorsement before passing it on to a subsequent holder, what risk does he take? 134) When a buyer defaults, the seller has an unpaid ________ against the goods. 135) What is the effect of an unpaid seller's lien? 136) When goods are en route to the buyer, upon the buyer's default, the seller has the right to intercept them and retake possession from the transporter as long as the goods have not yet reached the buyer. What is this right called? 137) In what way does the Interest Act affect contracts under which interest is payable? 138) Distinguish between a vertical merger, horizontal merger, and a conglomerate merger.

139) Explain what is meant by the term "consumer transactions". 140) Explain what is meant by a "cooling-off period". 141) Sales made to consumers at their dwellings or places of business are known as ________. 142) Explain what is meant by "referral selling". 143) In the context of sale of goods, products sold on the Internet, by catalogue, by mail order, or other forms of distance shopping, are being sold in what way? ESSAY. Write your answer in the space provided or on a separate sheet of paper. 144) Explain the relationship between risk and title and how they are dealt with in the Sale of Goods Act. 145) Explain the significance of a "manufacturer's warranty" on products such as a camera and a radio, and discuss why it's necessary with respect to the Sale of Goods Act. 146) Explain the importance of the provisions of the Sale of Goods Act relating to fitness and quality of the goods.

147) Discuss the consumer protection legislation in place in your province in terms of its effectiveness and purpose. 148) Discuss the function of the federal Competition Act and the role it plays in consumer protection. 149) Discuss the different types of negotiable instruments and indicate the significance of them being classified as negotiable.

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150) Discuss, in the context of consumer protection, how legislative and other changes have helped to overcome the obstacle created by the principle of privity. 151) Discuss the common law and legislative enactments in place controlling debt collection agencies.

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1) C 2) E 3) A 4) E 5) B 6) B 7) D 8) A 9) E 10) B 11) B 12) D 13) D 14) D 15) D 16) C 17) C 18) A 19) C 20) E 21) D 22) E 23) D 24) E 25) B 26) E 27) C 28) E 29) A 30) A 31) D 32) E 33) D 34) A 35) E 36) A 37) B 38) D 39) D 40) E 41) D 42) D 43) B 44) D 45) D 46) B 47) D 48) A 49) E 50) E 51) B

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52) B 53) D 54) D 55) E 56) E 57) D 58) E 59) C 60) E 61) B 62) FALSE 63) FALSE 64) TRUE 65) TRUE 66) FALSE 67) FALSE 68) TRUE 69) FALSE 70) FALSE 71) FALSE 72) FALSE 73) FALSE 74) TRUE 75) TRUE 76) TRUE 77) FALSE 78) FALSE 79) FALSE 80) FALSE 81) TRUE 82) FALSE 83) TRUE 84) TRUE 85) FALSE 86) FALSE 87) TRUE 88) TRUE 89) TRUE 90) FALSE 91) TRUE 92) TRUE 93) FALSE 94) To provide missing terms that the parties neglect to include in their sales contracts. These are implied into the agreement. 95) It's incorrect. The Sale of Goods Act is designed to cover all situations where goods are sold, whether it be at the wholesale level or the retail level. Commercial transactions are covered as well. 96) It's inaccurate. If the parties include terms in their agreement that are inconsistent with the Sale of Goods Act, those terms will override the Sale of Goods Act. 97) The Sale of Goods Act contains a provision stating that in such circumstances, a reasonable price will be paid. 98) The contract must anticipate the transfer of goods, either now or sometime in the future, for a monetary consideration. 99) When the goods in question are being sold on time (conditional sale agreement) and eventually the title will

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trans transaction is covered by the Sale of Goods Act. However, where the goods are owned by the debtor and put up as fer, security with the idea that they will be returned when the debt is paid, the Sale of Goods Act does not apply, even this where a bill of sale is used in the transaction. 100) It varies with the provinces. Some provinces require that goods being sold over a value of $30 or $50 must have some sort of writing to be enforceable. Others don't require writing at all. 101) A sale deals with the present transfer of title to the goods and possession. The agreement to sell involves a transfer which will take place sometime in the futurefor example, when the goods have not yet been manufactured and are being ordered. 102) All of these deal with title and risk. A C.I.F. contract places the obligation to pay for the costs, the insurance, and the freight on the seller. An F.O.B. contract requires that the seller will bear the risk of loss or injury to the goods until those goods are placed with some common carrier usually, or some other designated receiver for the goods. C.O.D. contracts are cash on delivery contracts, where the risk stays with the seller until the point of delivery. 103) Risk follows title; that is, whoever has title to the goods at any point in the transaction is the one bearing the risk, unless the parties have specified otherwise in their agreement. 104) A bill of lading is a document given by a transporter or shipper as a form of receipt to the sender. The sender can designate who is entitled to receive those goods, and this will affect who bears the risk. 105) John bears the risk. Rule #1 applies to this situation, and title transfers immediately upon the transaction taking place. 106) The dealer. Rule #2 applies to this situation, and property does not pass on the goods until the buyer has received notice that the work has been done. 107) Joe has title to the bark mulch. Rule #3 applies in this situation, as something has to be done to those goods to put them in a deliverable state, that is, to weigh them to determine the cost. 108) Title transferred as soon as he did something to those goods that was inconsistent with the seller's continued ownership of them. This is Rule #4. 109) This is Rule #5. Title transfers when the goods have been unconditionally appropriated and there is the assent of the other party of such appropriation. In this case, by leaving the car, knowing that Harry would choose the tires and put them on, Joe had assented to the selection; therefore, title transferred when Harry put the tires on Joe's rims and on the vehicle. 110) Conditions are important terms of the contract, whereas warranties are minor terms of the contract. 111) The victim of the breach can treat the contract as ended, but does not have to. He can treat it like a breach of warranty, if he prefers, or ignore it. 112) First, a condition that the seller conveys good title or has the right to sell the goods at the time the contract is to be performed. Second, a warranty of quiet possession, meaning that the purchaser can use them for what they are designed for without interference. Finally, a warranty that the goods be free of any lien or encumbrance. 113) This is a breach of condition, and they are entitled to refuse delivery of the goods and treat their obligation as ended. 114) The Act implies a condition into the contract that the goods will be of merchantable quality when sold by description, and where bought for a particular purpose, the goods must be fit for that purpose. 115) That the goods be free from any defect that would have persuaded the purchaser against buying them had he known of the defect. 116) That the goods be free of any defect that would render them unmerchantable, and that the goods delivered match the sample. 117) The seller, so long as the goods are in his possession, has a lien against those goods, and in the event of default, even though title may have passed, can withhold the goods until payment. Even when goods are in transit, he can stop them and bring them back, so long as they haven't got into the hands of the purchaser. This is referred to as a "stoppage in transitu." 118) Under recent modifications to the Bankruptcy and Insolvency Act, the seller can reclaim the goods from a bankrupt if that happens within 30 days of delivery, and providing that they are still in the possession of the debtor or trustee. 119) Food and Drugs Act, Hazardous Products Act, Competition Act, Weights and Measures Act, Textile Labelling Act, Explosives Act, Pest Control Products Act, Bills of Exchange Act. 120) This will vary with jurisdictions. For example, provisions are included in separate legislation in some provinces, and in the Sale of Goods Act in others, requiring the seller to be responsible for the goods sold with respect to their

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quali ty. 121) If injury or damage results from their use, the consumer can sue the manufacturer for negligence. If the consumer was the purchaser, he can also sue the seller for breach of contract under the Sale of Goods Act. 122) This legislation prohibits and provides remedies for misleading the buyer through deceptive statements, in that they become part of the contract of sale and the purchaser can sue for breach of contract. Note that this answer will vary with jurisdictions. 123) Where someone has been taken advantage of because of their weak intellectual capacity (short of insanity), or because of their desperation or simplicity, the courts can step in and vary the terms of the contract, or relieve the obligation. Note that in most jurisdictions, this applies only to the loan of money and the interest rates charged, although in other provinces this has been expanded to cover other kinds of transactions. 124) This will vary with the jurisdiction. For example, there may be a cooling-off period giving the purchaser an absolute right to get out of the deal within a specific period, e.g., seven days. 125) This will vary from province to province. Depending on the jurisdiction, examples are door-to-door sales, credit card transactions, food plans, mortgage brokers, tax refunders, funeral or education plans businesses. 126) This varies from jurisdiction to jurisdiction, but typically there is a requirement that the interest rates and the amount of money paid for the borrowing of money be clearly stated in the agreement in a specified format, that any bonuses must be clearly specified, and that the interest rates be calculated in such a way as to disclose the true rate of borrowing. 127) 1. To control mergers and other agreements between businesses that have the tendency to restrict or limit competition. 2. To restrict or control certain anti-competitive abusive trade practices, such as predatory pricing. 3. To control or prevent, and provide remedies for, unfair business practices such as misleading advertising, double ticketing, etc. 128) 1. Their free transferability from holder to holder without the requirement of giving notice back to the drawer of the instrument. 2. The holder in due course of the instrument is not generally subject to the problems and disputes arising between the initial parties. 129) Both of these instruments involve three parties. A bill of exchange is used in any situation where one party orders another to pay a third on demand or sometime in the future. A cheque is defined as a bill of exchange drawn on a bank and payable on demand. 130) A bill of exchange involves one person ordering another to pay a third. A promissory note involves only two partiesthe maker who promises to pay (payer) and the receiver of the payment (payee). 131) The act of acceptance is done when the drawee (the person being ordered to pay) accepts that obligation and so states on the instrument. From that point forward, the primary debtor is the drawee/acceptor. 132) Even though a fraud has been committed here, the bank will have to honour the certified cheque. Smith must sue Jones to get his money. 133) If the note is dishonoured, the payment can be collected from anyone who endorsed the instrument. 134) Seller's lien 135) It gives the seller the right to retain the goods until appropriate payment has been made even though title may have transferred. 136) Seller's right of stoppage in transit 137) The Interest Act provides that in any contract where interest is payable, interest must be stated as an annual rate. Otherwise, it is not permissible to collect more than 5 percent interest. 138) A vertical merger is a merger of a supplier and a retailer; a horizontal merger is a merger in which one competitor buys out another; and a conglomerate merger is a merger of companies not in direct competition. 139) These are purchases by individuals of goods or services for personal use and not for resale or for business purposes. 140) A statutorily defined period during which purchasers in door-to-door sales may change their minds and rescind a contract. 141) Direct sales (or door-to-door sales) 142) A type of sales practice in which the purchaser supplies a seller with a list of friends or acquaintances and receives a benefit when sales are made to those people. 143) By description.

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144) This is an easier essay topic and requires students to show an understanding of the concept of risk and how it is dealt with in sale of goods transactions. Whoever is assigned the risk will suffer the loss if the goods are damaged or destroyed. The Act first determines that risk follows title, but it is important that students demonstrate that they know this can be changed by agreement. Standardized approaches like C.I.F. contracts or F.O.B. and C.O.D. contracts, as well as the use of bills of lading and other mechanisms, can modify the normal operation of the Sale of Goods Act with respect to risk and title. Students then should demonstrate an understanding of the five rules that apply with respect to who has title to the goods at the various stages of a sale of goods transaction. These are involved rules, especially rule five, relating to goods that are unascertained at the time of the agreement. See the text for the details of these rules. 145) It is important that students first show an understanding that warranty, as it is used here, does not relate to a minor term of the contract. These are exculpatory terms where the seller or manufacturer tries to limit their liability that would otherwise be quite broad under the Sale of Goods Act. It is also important that students demonstrate an understanding that the Sale of Goods Act can be modified by agreement between the parties, and these manufacturer's warranties are an attempt to do just that. Without these provisions, the sections of the Sale of Goods Act primarily relating to fitness and quality would apply, and the goods would have to be of merchantable quality. Students should show they understand that this requires a product to be clear of any defect that would render it not merchantable -- that is, where if the purchaser had then known about it they would not have purchased the product. They should also make it clear that these provisions apply to all sale of goods transactions in business for large machinery and other such equipment. Good students will also point out that many provinces have introduced legislation imposing conditions relating to the fitness, quality, and durability of consumer goods that cannot be contracted out of by such clauses. If there is legislation in place in the jurisdictions in question, this should be given more emphasis in the answer. 146) One of the most important provisions of the Sale of Goods Act relates to fitness and quality. Students should point out that this implied term might be the only provision in a contract relating to the ability of the product to perform as required or whether it is properly made to do the job. These provisions apply to both new and used goods, and they apply not only to consumer purchases but also to business transactions, including heavy-duty machinery. The Hunter Engineering case is a good example of this provision being applied to the sale of large, expensive, specialized equipment used in mining operations. Students should also point out that in consumer transactions, when dealing with new goods, many jurisdictions impose terms relating to the fitness and quality of the product on the manufacturer and seller. Exemption clauses are an attempt to modify this obligation as set out in the Sale of Goods Act, but in many jurisdictions those exemption clauses are void in consumer transactions. This question is a good opportunity for students to demonstrate an understanding of not only how the Sale of Goods Act implies terms into the agreement that otherwise would not be included, but also the specific nature of these clauses with respect to fitness and quality, and how they have been expanded into a form of consumer protection legislation. 147) This question must be answered in terms of the unique legislation in place in your particular jurisdiction, but there are some general observations that will apply to most situations. All provinces have in place a variant of a consumer protection act, covering not only responsibility for the goods sold, their fitness and quality, but also services as well. Students should discuss the consumer protection aspects of the Sale of Goods Act, including the provisions related to fitness and quality; they should also deal with the power to contract out of these provisions and the various ways the different jurisdictions have restricted this right to include exemption clauses limiting manufacturer or seller liability. But they should also look to the poor business practices that have been controlled by statutes under the various trade practices acts or their equivalents. They should look at the kind of practices prohibited, as well as the remedies that are made available in the statutes and their effectiveness. In particular, misleading and deceptive statements made by salespeople and how they can be remedied should be addressed. Students should also include here an examination of unconscionable transactions as controlled by statute and what qualifications must be met for the legislation to apply. It would also be appropriate to examine particular practices, such as door-to-door sales or referral selling practices, that are subject to abuse. It is important that students discuss how these practices and abuses are controlled and the remedies available, including licensing, fines, and actions by consumer or government officials against the people who engage in such practices. Bright students will also look at the federal legislation, in particular, the federal Competition Act. They would deal with the statute's control of misleading advertising, bait and switch, and other abusive activities. They could also look at conduct that has a more indirect effect on consumers, including anti-competitive practices such as unduly restraining trade and

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merg ers. 148) The federal Competition Act has three main functions, all of which can be viewed as protecting consumers either directly or indirectly. As the name indicates, the primary purpose of the Act is to ensure the maintenance of a free competitive environment for businesses. To do this, the statute restricts three kinds of abuses. It controls mergers of various forms and thus ensures the continuation of competition in the marketplace, thus indirectly protecting consumers from unfair prices that could result from monopolistic practices. Not all mergers are prohibited, only those that would have an unduly restrictive effect on competition. These provisions apply to horizontal mergers, vertical mergers, and conglomerate mergers. There is a competition tribunal that, along with other functions, reviews the appropriateness of such mergers. The Act also seeks to control certain abusive trade practices, where one company tries to use its position to drive another out of business or otherwise control its share of the market. Predatory pricing is an example of such abusive practices. The statute also prohibits agreements between merchants that have the effect of unduly restraining competition, such as price fixing or bid rigging. Perhaps the most common practices that might directly affect consumers and that are controlled by the Act are such practices as misleading advertising, double pricing, bait and switch schemes; another example is the requirement that, in contests, the chances of winning are clearly indicated. The federal Competition Act is very important in the process of protecting consumers from abusive practices by merchants. Students should show an understanding of the breadth of this legislation, as well as indicating some of the methods of implementation and enforcement, including a discussion of the role of the tribunal and the penalties and remedies that can be imposed. 149) These are bills of exchange, cheques, and promissory notes. They are outlined in detail in the section titled Negotiable Instruments. 150) Students should discuss how the principle of privity can pose a significant obstacle to suing in contract, because only parties to the contract are able to sue. While tort law can be used, this has the disadvantage of needing to establish a failure in the duty of care. Some provinces have extended the requirements of fitness and quality to anyone the seller could reasonably foresee might use the product. Some jurisdictions have eliminated privity as a defence altogether where warranties of fitness are implied. Students should make reference to the specific statutes in their jurisdiction, and how this legislation addresses the problem. Good students may also discuss the fact that the courts have also shown a willingness to get around the privity problem (by finding a subsidiary or collateral contract). 151) Students should note that when creditors are unpaid, they often get assistance from debt collection agencies. Often, the debts are assigned to these agencies for a fee. Abusive practices can occur. Common law remedies for abusive debt commection practices include defamation, assault and battery, trespass and false imprisonment. Unfortunately, these tend to be somewhat ineffective. Legislative interventions have included the addition of licensing requirements and a list of specific unacceptable collection practices (e.g. excessive calls, calls at unreasonable hours, collect calls, baseless threats of legal action, deceptive or misleading statements, communicating with (or putting pressure on) people the debtor knows, etc.) Students should refer to the specific provisions in place in their jurisdiction.

Chapter 16 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is false with regard to "property"? A) Personal property includes chattels. B) Real property consists of land but does not include the buildings on that land. C) Both real and personal property can be given as security to a creditor that he will be repaid. D) Personal property includes intangible rights. E) Real property includes "fixtures." 2) Which one of the following actions by a debtor constitutes an act of bankruptcy? A) A fraudulent transfer of money or assets B) Assignment of liabilities to a trustee C) Having more debts than assets D) A fraudulent conveyance of liabilities to one of the creditors E) Generally meeting liabilities as they become due

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3) Which one of the following statements about the Personal Property Security Act is true? A) This legislation applies only to all present transactions where personal property is given as security interest to enforce an obligation. B) Unless a creditor in a secured transaction covered by this Act takes steps to "attach and perfect" his security interest, he could lose that interest to someone outside the contract. C) In a situation where a debtor fraudulently attempts to transfer property that he has given as security, the Act is designed to protect both the debtor and secured creditor. D) If someone suspects that an item of personal property has been given as security by a particular person, he can sue on the breach of a condition. E) If a secured creditor fails to register his security interest in the Personal Property Registry, he loses his rights against the debtor.

4) Which one of the following statements about bankruptcy is true? A) Bankruptcy law is different in every province of Canada. B) Bankruptcy law forces a debtor to pay all his debts, regardless of his financial position. C) All creditors of a bankrupt debtor are treated equally and will receive shares of the assets directly in proportion to how much is owed to each of them. D) A debtor who has been discharged from bankruptcy is released from his previous financial obligations. E) Bankruptcy refers to a situation in which a debtor who cannot pay debts transfers his assets to the creditors directly. 5) Which of the following is a goal of the Bankruptcy and Insolvency Act? A) Provides alternative to criminal charges B) Protects the interests of debtors. C) Allow persons with impossible burdens of debt to discharge all of their debts. D) Determines process by which debtors convey their assets to a trustee in bankruptcy who distributes them to the creditors E) Helps incorporated companies after discharge to carry on without the same burden of debt 6) Which of the following is governed by federal statute and thus has rules common to all of Canada? A) Chattel mortgages B) Bankruptcy C) Assignments of accounts receivable D) Conditional sale contracts E) Builder's liens

7) In which one of the following situations is a chose in action (intangible property) given as security by a debtor to the creditor? A) A programmer pawns his computer. B) Jeff buys a piano under a conditional sale contract. C) Mr. Jason grants a chattel mortgage on the family car to secure repayment of money borrowed for a trip. D) A farmer gives his future crop to the bank as security for the repayment of money borrowed for seed. E) A dentist assigns her accounts receivable to the bank that lent her money for the purchase of a business. 8) Which of the following is the consequence of an unpaid subcontractor failing to file his lien on time? The owner had contracted with the general contractor who in turn had contracted with this subcontractor. A) He loses his right to claim against the building but can sue the owner of the property directly. B) He will lose all of his remedies. C) He will lose his right to place a charge against the owner's property, but he can sue the owner directly for the amount owed him, because his work and materials went into the owner's house. D) He would lose his right to place a charge against the owner's property, but he can sue the contractor on the contract. E) He can submit documents giving his reason and he will be allowed to file the lien late.

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9) Amy Carr looked at a 2011 Ford being sold by a private party who told Carr that the car was free and clear of all encumbrances. Carr had the Ford inspected by Automobile Association, which reported it to be in good condition. Carr bought the Ford for $8,000. Two months later, the car was seized by a chattel mortgagee bank that had properly registered its claim in the registry within the time allowed by the act governing chattel mortgages. On these facts, which of the following is true? A) Carr would be able to keep the Ford because the seller had represented that the Ford was free and clear of encumbrances. B) Carr would be able to keep the Ford because she was an innocent purchaser without notice of any lien or charge. C) The chattel mortgagee would get the Ford because it properly registered its chattel mortgage on time. D) Carr will lose the car and has no recourse against anyone. She should have checked the registry. E) The chattel mortgagee would get the Ford because it had title to it as security, and it could claim its right to title whether it registered the chattel mortgage or not.

10) With regard to guarantees and indemnities, which of the following is false? A) A guarantor can use any defence against the creditor that the debtor could use. B) A guarantee cannot be enforced in court unless it satisfies the writing requirements set out in statute. C) A legally binding promise to be primarily responsible for someone else's obligation is an indemnity. D) A legally enforceable guarantee must satisfy all the elements required to create a binding contract except consideration. E) Subrogation can result in a guarantor's being able to sue successfully the very debtor whose obligation he guaranteed. 11) Bret decided to enlarge the fishpond in his backyard. He contracted with a general contractor, Conan. Conan subcontracted with Darson to do the excavation and with Ericson to do the plumbing. Conan's own workers did the masonry work. Bret made "progress payments" to Conan, since Conan said such payments were necessary to pay his workers and subcontractors. Bret learned that the workers and subcontractors had not been paid; Conan had used the payments to pay debts unrelated to the job on Bret's pond. Which of the following best describes Bret's position? A) If Bret held back the 10% required by statute from his payments to Conan, but then later paid it out despite liens having been filed against his property, Bret would still face no liability as he technically complied with the legislation.

B) Because of the doctrine of privity of contract, Bret will not face any liability whatsoever. C) Bret had no obligation to hold back any amount of the payments made to Conan as the hold back requirement doesn't apply to progress payments. D) If Bret held back the 10% required by statute from his payments to Conan, his obligation would generally be limited to the amount of that holdback. E) Bret will be liable for all unpaid amounts, because the work was on his land and for his benefit. 12) With regard to conditional sales and chattel mortgages, which of the following is false? A) A chattel mortgagee must register the mortgage in the appropriate registration office, not to protect his claim on the chattel against the chattel mortgagor, but to protect his claim against third parties, e.g., a bona fide purchaser for value. B) There is no longer a distinction between a chattel mortgage and a conditional sale. C) If a conditional buyer defaults in his payments, the conditional seller can generally seize the chattel without a court order. D) A conditional seller can assign the conditional sale contract to a finance company without the consent of the conditional buyer. E) These transactions are now governed by the Personal Property Security Act.

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13) Hank sold three properties for Mr. W and had been paid his commission for the first, but not for the last two. Hank had done everything according to the contract and according to the relevant statutes, but Mr. W wouldn't pay. Hank knows that Mr. W has a bank account with the Bank of Montreal and has money owing to him from a Mr. Gregory. With regard to the collecting of the debt owed, which of the following is false? A) After obtaining judgment, Hank could force the bank to pay into court an amount of money from Mr. W's account to satisfy the debt. B) If Mr. W goes into bankruptcy, Hank may not get paid. C) If Hank got judgment against Mr. W, he could get an order commanding seizure of enough of Mr. W's goods to satisfy the judgment debt. D) Hank could sue Mr. W for breach of contract. E) Hank's claim for commission is unenforceable because he failed to secure the debt by retaining title until the amounts were paid.

14) Identify which of the following statements best describes the legal position of a conditional seller. A) The conditional seller loses all legal rights against the conditional buyer if he fails to register. B) The conditional seller is in a better legal position than if instead he had been the chattel mortgagee of the same assets. C) The conditional seller has no legal rights because such contracts are void. D) The conditional seller must comply with the provisions of the Personal Property Security Act to protect his interest. E) He is given first priority over all of the other creditors with respect to all of the conditional buyer's assets. 15) Holtz hires Joe, a builder, to convert his attic into an apartment, so that Holtz's mother can move in. Joe employs two carpenters, an electrician, and a plumber to do the actual work. When making payments to Joe, Holtz holds back the 10% required by statute. After waiting the legislated minimum period, Holtz discovers that several liens have been registered against his property. It turns out that Joe failed to pay the various subcontractors for their work. Which one of the following statements best describes Holtz's position? A) Holtz has no liability to any of those involved with the job except Joe, because he has a contract only with Joe. B) Holtz and Joe are equally liable to the lien claimants, because of recent amendments to the builders' lien legislation. C) Holtz bears the sole liability to the lien claimants for any debts arising out of their work on his

property. D) If Holtz has complied with the statutory requirements, his obligation will be limited to the amount of the holdback, even if the amount owed under the liens far greater. E) Holtz's mother will be liable to both Holtz and the lien claimants, as she will be taking the benefit of the renovations. 16) If you want to buy a car from a private party (other than a dealer), which of the following is false? A) If the seller indicates to you that the title is clear, but after the sale the car is seized by someone with the legal right to do so, you could still sue the seller. B) If the seller tells you that the car is free and clear, and two months later a properly registered chattel mortgagee claims a right to the car, you could lose the car. C) Even if both the seller and the central registry indicate to you that the car's title is clear, you could still lose it to a third party. D) If you request a search, and the central registry states that the car is free and clear of liens and encumbrances, then title is clear. E) If the seller makes no representations whatsoever about the car, and the car is seized by a creditor, you can still sue the seller because he had an obligation to deliver good title.

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17) With regard to bankruptcy and debt collection, which of the following is false? A) Both fraudulent conveyance and fraudulent preferences acts attempt to prohibit the debtor from delaying, hindering, or defrauding the creditor. B) Any assets obtained by a discharged bankrupt can still be claimed by former creditors who placed the former bankrupt into bankruptcy. C) Corporations that go into receivership may not be involved in bankruptcy; the receivership may be based on contract. D) The commission of a bankruptcy offence could prevent a bankrupt debtor from being discharged. E) The Bankruptcy and Insolvency Act provides for a procedure for an insolvent debtor to make a proposal to his creditors that may or may not result in bankruptcy for the debtor.

18) Which one of the following is true with respect to the builder's lien acts? A) If a lien claimant files his lien within the time set, he can be assured that he will collect the full amount of his claim. B) Compliance with the statutory holdback provisions is required, but gives an owner no protection against potential lien claims. C) If a lien claimant loses the right to file a lien, he also loses the right to sue for breach of contract. D) A lien claimant owed money by a general contractor can choose to pursue either the general contractor or the property owner for the full amount of the claim. E) Various provincial statutes give suppliers of work and materials a claim for payment against the land enhanced by their services. 19) Last night at the dinner table, Uncle Isaac started on again about his company buying a truck on time. Which of these statements by his friends is false with regard to conditional sales contracts? A) If the company were in default, the conditional seller could sell the truck, but it must return any of the proceeds from that sale beyond the debt and costs owed. B) If the company is in default and the conditional seller seizes the truck, the relevant statute provides that it still has the right to redeem it within a short period of time. C) If the company is in default, in some provinces the conditional seller can seize the truck, sell it, and sue for any deficiency between the amount received and the amount the company owes. D) If goods are repossessed under a conditional sales contract, the creditor must use commercially reasonable care to protect the goods and keep them in good repair. E) The rights and obligations of the company differ substantially if the company buys the truck under a chattel mortgage rather than a conditional sale contract.

20) Here comes your neighbour Max who wants to ask you more questions about buying an Apple computer for use at home under a conditional sales contract. Which one of the following statements told to him at work is true? A) Max's rights would be much greater and his obligations fewer if he bought it under a chattel mortgage rather than a conditional sales contract. B) If Max is in default and the conditional seller seizes the computer, the relevant statute provides that it can be sold immediately with no further notice to Max. C) In a conditional sales contract, the result of satisfying the condition is that the lien or charge will be removed from the goods used as security. D) If Max were in default, the conditional seller could sell the computer and keep all the proceeds of that sale, even if they were greater than the debt and costs. E) If Max has paid two-thirds of the amount owing under the conditional sale contract, the conditional seller could never seize the computer, even if Max were in default.

21) Your brother wants to borrow $8,000 from the Bank of Britannia and has asked if you would guarantee the loan. You have been told the following with regard to guarantees. Which of the following statements is false? A) A legally enforceable guarantee must satisfy all the elements required to create a binding contract. B) You, as guarantor, may be relieved of your obligation if the bank does anything to weaken your position, e.g., by agreeing with your brother to increase the amount without your consent. C) As guarantor, you can use any defence against the bank that your brother could use. D) If he defaulted on his payments and you had to pay the debt to the bank, you would be subrogated to the rights of the bank; i.e., you would get the bank's right to sue your brother. E) A guarantor, like an indemnitor, becomes primarily liable on the debt as soon as the document is signed.

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22) Which one of the following is false with respect to the Builders' Lien Act? A) If a lien claimant loses the right to file a lien, he still has the right to sue the party who failed to pay him for breach of contract. B) The Builders' Lien Act gives some protection for those in the building trades, and these include contractors, subcontractors, workers, and materialmen. C) The lien claim is required to be filed at the appropriate registry in order to establish a claim against the property. D) A lien claimant has a limited period of time from filing his lien within which to begin his court action. E) If a lien claimant files his lien within the time set, he can be assured that he will collect the full amount of his claim. 23) With regard to debt collection, which of the following is false? A) The Bankruptcy and Insolvency Act provides for a procedure for an insolvent debtor to make a proposal to his creditors that, if accepted by his creditors, will not result in bankruptcy. B) Under the execution procedure, the assets of a judgment debtor can be seized satisfy a judgment debt. C) A debenture can create a "floating charge" that will not attach to anything specifically until the debtor defaults or until the happening of another "crystallizing" event. D) A person who wins in an action and is awarded damages is called a "judgment creditor." E) Any assets obtained by a bankrupt after his being discharged can still be claimed by former creditors who placed him into bankruptcy. 24) John, a salesman for the computer division of B & C Machines Ltd., is meeting with a potential customer at 11:00 tomorrow morning. Because the customer does not have the funds to pay the full price of the system required, he wants to discuss chattel mortgages and conditional sales contracts. Which of the following is false with regard to these contracts? A) If the seller of goods is willing to allow the buyer to pay by installments, he could use either a

conditional

sale contract or a chattel mortgage to obtain security for payment of the debt. B) Both contracts are governed by the Personal Property Security Act. C) In both cases, the debtor is entitled to have the lien removed upon final payment. D) Both contracts provide that the debtor has quiet possession of the goods given as security as long as he is not in default. E) Only a conditional seller needs to register his interest for protection against third-party claims; a chattel mortgagee need not do so.

25) They couldn't remember exactly how it happened, but the Mauri's ended up a three-computer family with the consequent mess of books and papers in three different rooms. Mr. Mauri hired a general contractor, Mr. Wip, to build a "computer room." Wip had several qualified workers but still sub-contracted with an electrician and a carpenter. The work went well. Mauri held back 10%, but paid out 90% in good faith; i.e., when he paid, there were no complaints or liens filed. It turned out, however, that before anyone had completed his work--and no one expected payment until the job was finished-- Wip disappeared with the money. On these facts, which of the following is true? A) The workers and subcontractors have an action against Wip for breach of contract. B) If the carpenter properly files a lien in the appropriate office, he can be assured that he will recover the entire amount owed. C) The subcontractors, but not the workers, are entitled to place a lien on Mauri's property. D) If all those entitled to file a lien do file and prove in court the amounts owed, Mauri is responsible for the sum total of those claims. E) If the electrician failed to file his lien on time, he can file it late if he uses the right form.

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26) Nick has a consulting business with monthly billings of $4,000. He rents his office, hardware, and furniture and owns few assets. Nick rents his apartment, has no car, and spends most of his income on leisure. If he came to you, a bank manager, and asked to borrow $10,000 for the purpose of increasing his working capital, which of the following securities would you most likely request? A) Chattel mortgage B) Assignment of accounts receivable C) Security under sections 426 and 427 of the Bank Act D) Floating charge debenture E) Conditional sale contract

27) With regard to guarantees, which of the following is false? A) Subrogation can result in a guarantor's being able to sue successfully the very debtor whose obligation he guaranteed. B) A legally binding promise to be primarily responsible for someone else's obligation is an indemnity. C) A guarantor can use any defence against the creditor that the debtor could use. D) A verbal guarantee is as enforceable as a written one. E) A legally enforceable guarantee must satisfy all the elements required to create a binding contract. 28) Greg told Rick that he would be willing to pay a high rate of interest for a two-month loan of $2,000. Rick agreed to lend Greg this amount at an annual rate of 20%, repayable March 1, 2011. Greg agreed to these terms. Greg did not pay on March 1. Rick learned that Greg had recently completed some work for Martinson for which Greg was owed $2,000. Now that Greg is in default, which of the following is false? A) Rick could not place Greg into bankruptcy unless Greg had committed an "act of bankruptcy." B) Once he has obtained judgment, Rick can garnishee the money owed to Greg by Martinson. C) Rick could execute against Greg even if Rick had not obtained judgment against him. D) If Rick obtained a judgment against Greg, he could compel him to be examined about his income, property, and debts. E) Rick could sue Greg for breach of contract.

29) Which one of the following is false with regard to creditors' remedies? A) A garnisheeing order is an order to the sheriff to seize assets of a judgment creditor to satisfy a judgment debt. B) A guarantor is a person who agrees to be responsible for a debt if the borrower (the person primarily liable) defaults. C) A person who wins in an action and is awarded damages is called a "judgment creditor." D) A debenture can create a "floating charge" that will not attach to anything specifically until the debtor defaults or until the happening of another "crystallizing" event. E) A guarantor may avoid liability if the creditor does some act or enters into an agreement that weakens the guarantor's position.

30) The owner of the house had contracted with a general contractor, Mr. Hadrian, for a greenhouse addition to the house at a cost of $20,000. In accordance with the legislation, the owner withheld 10% and waited the legislated period of time within which any liens are to be filed. Which of the following correctly describes the owner's liability? A) Unpaid subcontractors can no longer place liens on the owner's property, because of the doctrine of privity of contract. B) Lien holders would have no claim against the property but would be entitled to the 10% holdback, in addition to being able to sue the owner for the amount not satisfied by the holdback. C) The owner is liable to any unpaid subcontractors, whether or not a lien was filed, but can use the holdback money to reduce his liability a certain extent. D) Whether or not there are liens registered, the owner is free to pay out the retained holdback once the legislated time period has expired. E) If the owner checks the registry and there are no liens registered, he is free to pay out the retained holdback.

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31) Consider the following statements about the use of personal property as security for a creditor in a creditor-debtor transaction. Indicate the false statement. A) If the required procedures have taken place, a potential buyer from an unscrupulous debtor who has already given personal property as security will be protected; i.e., the creditor will either have registered his interest in the public registry or will have actual possession of the collateral. B) Before a creditor who has been promised an interest in personal property as security can claim priority rights, two processes must have taken place: the security interest must have attached to the collateral item, and the security must have been perfected. C) Real estate professionals need to be aware of the Personal Property Security Act because items that constitute fixtures under real property law may also constitute chattel security, and thus an unpaid creditor may be able to repossess them. D) Regardless of the type of personal property involved, whether tangible or intangible, as long as it is being used as security then the transaction is governed by the Personal Property Security Act, and thus an unpaid creditor may be able to repossess them. E) If the transaction involves the use of consumer goods as collateral, upon default of payment by the debtor, the creditor can seize the goods and sell them, but also always retains the right to sue the debtor on his personal covenant to pay for any deficiency. 32) Identify which of the following statements is true about secured transactions in provinces having a personal property security act. A) This kind of transaction, which formerly was legal, is now prohibited by law in all provinces. B) All kinds of security arrangements involving personal property as collateral now come under one statute. C) An assignment of an account receivable does not qualify as a security arrangement because no tangible property is involved. D) Various kinds of secured transactions, such as conditional sales, chattel mortgages, etc., are regulated

by their own

distinct statutes. E) Only tangible personal property can be used as security.

33) Identify which of the following statements is true about secured transactions in provinces not having a personal property security act. A) Various kinds of secured transactions, such as conditional sales, chattel mortgages, etc., are regulated by their own distinct statutes. B) This kind of transaction, which formerly was legal, is now prohibited by law in all provinces. C) All kinds of security arrangements involving personal property as collateral now come under one statute. D) An assignment of an account receivable does not qualify as a security arrangement because no tangible property is involved. E) Only tangible personal property can be used as security.

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34) As the fishing season slowed down in the fall, Bob decided that this might be a good time to find a real bargain in used equipment for his boat. He found a navigation instrument for sale for $15,000, a great price. However, he only had $10,000, so he borrowed the other $5,000 from the bank. He also signed a chattel mortgage on the equipment as collateral in favour of the bank, which promptly registered its interest in the Personal Property Registry. Bob made his payments for a while, but things started to go badly for him. He was unable to make any further payments, although he still owed over $3,000. Desperate and not thinking too clearly, Bob sold his boat to his friend Claude for $50,000 and left for Central America with the funds. When the bank realized what Bob had done, it located the boat and demanded that Claude pay off the $3,000+ or lose the navigational equipment. Claude was outraged because he had paid Bob in good faith and argued that he had never borrowed anything from the bank and therefore owed it nothing. Which one of the following statements accurately describes the legal situation here? A) If Claude is unwilling to pay off the $3,000, the bank has the right to remove the equipment from the boat. B) Because Bob transferred the boat and equipment to Claude, that was an assignment of his obligations and he no longer owed the debt. C) If the bank does seize the equipment and sells it for $2000, the bank can still sue Claude for the the $5,000. D) If the bank had failed to register the chattel mortgage, it would still have a better right to the equipment than Claude, because the mortgage was signed before Bob sold the boat to him. E) Claude is right, and the bank's only remedy is to sue Bob. 35) In a secured transaction, the creditor's right to payment of a debt may be secured by his taking title to certain assets. In which one of the following types of transactions do those assets consist entirely of intangible property? A) Assignment of book accounts. B) Chattel mortgage. C) A sale of goods in which the buyer will obtain title when he finishes paying the price in installments. D) A debenture issued by a manufacturing firm with a floating charge over its inventory of products. E) A transaction under section 427 of the Bank Act, whereby a bank takes security over a farmer's growing crops with respect to a loan to purchase the seed and fertilizer necessary to grow those crops. 36) Which one of the following statements about bankruptcy is false? A) Bankruptcy refers to a situation in which a debtor who cannot pay debts transfers his assets to a trustee who acts on behalf of creditors B) Bankruptcy law is identical in every province of Canada. C) All creditors of a bankrupt debtor are treated equally and will receive shares of the assets directly in proportion to how much is owed to each of them. D) Bankruptcy law may allow a debtor to escape from having to pay his debts.

E) A debtor who has been discharged from bankruptcy is released from his previous financial obligations. 37) After graduating, a student set up a business as a systems analyst. His monthly billings are healthy, about $10,000 a month. He rents his office, hardware, and furniture and owns few assets. He rents his apartment, has no car, and spends most of his income on concerts. If he approaches you, a bank manager, to borrow $50,000 for the purpose of increasing his working capital, which of the following securities would you most likely request? A) Chattel mortgage B) Assignment of accounts receivable C) Floating charge debenture D) Security under sections 426 and 427 of the Bank Act E) Conditional sale contract 38) When the transaction is registered, the creditor's rights include all of the following except A) contractual remedies upon default. B) right to sue debtor rather than seize security. C) right to order the debtor arrested or detained. D) resell the security. E) seize the security.

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39) A company in the delivery business bought a $29,000 truck under a conditional sale contract. Because of business reverses they are now unable to make the payments. Which of the following is accurate with respect to the legal position of the parties? A) If the secured creditor seized the truck, under the Personal Property Security Act the debtor has a set period of time in which to pay what is owing and costs and get the truck back. B) The remedy of the conditional seller, as a secured creditor, is limited to the seizure of the truck. C) The creditor would have to serve notice on all interested parties before it could seize the truck. D) The seller would have to get a court order before it could seize the truck. E) The seller would have been in a far more favourable position if it had obtained a chattel mortgage instead of using a conditional sale agreement.

40) You are in debt to three creditors for $200,000, and the debt is increasing because you are not able to meet your monthly financial obligations. Which of the following is false with regard to your situation? A) If you become bankrupt, you are restricted from carrying certain activities until you are discharged. B) It is illegal for you to transfer assets to a spouse or friend to shield them from your creditors C) If you become bankrupt, your assets are conveyed to a trustee in bankruptcy who deals with them for the benefit of your creditors. D) The Bankruptcy and Insolvency Act provides a procedure to avoid bankruptcy by making a proposal to your creditors for satisfying their claim E) If your long-time financial well-being would be served by bankruptcy, you must ask your creditors to begin the procedure; you cannot begin it yourself. 41) Which of the following debts continue even after a bankrupt has been discharged? A) Unsecured loans B) Secured loans C) Past maintenance for dependents D) Judgment debts E) Ordinary debt 42) If a bank as chattel mortgagee fails to register the mortgage of a car, which of the following is false? A) A potential purchaser of the car from the chattel mortgagor would not find the bank's interest recorded in the central registry.

B) If the chattel mortgagor would sell the car to a third party and not pay the chattel mortgagee, the third party's claim would override that of the chattel mortgagee. C) The chattel mortgagee has lost his security and thus all his legal rights. D) If a trustee in bankruptcy seizes the car from the chattel mortgagor, the trustee's claim would override that of the chattel mortgagee. E) The failure to register would not affect the rights of the chattel mortgagee against the chattel mortgagor if no third party is involved. 43) A company named Printers World Ltd. bought a $9,000 plotter under a conditional sale contract and, because of business reverses, is unable to make the payments. Which of the following is accurate with respect to the legal position of the parties? A) The seller could seize the goods without a court order only if it had properly registered the conditional sale contract. B) The seller could only seize the goods, and could not instead opt to sue the company. C) The seller could seize the goods only if it obtained a court order. D) The seller could seize and sell the same day because it had already waited three months after default before taking any action. E) The seller could seize the goods but, before resale can take place, the debtor must be given notice and an opportunity to redeem.

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44) After some careful research, Jake decided what kind of car to buy. He made an offer to Mr. Frank, a private party, to buy his car only after searching the registry for any liens. The registry reported that there were no liens registered against the vehicle. The seller accepted his offer of $8,000. After Jake had had the car for only three weeks, the car was seized by a conditional seller. Which of the following is true? A) The conditional seller has the right to keep the car for the sole reason that it has title to it and could assert its claim whether it properly registered with the central registry or not. B) The conditional seller could not keep the car if it had not registered its claim properly. C) If Jake had failed to search the registry, he could not get the car back whether or not the loan transaction had been properly registered. D) If they have not properly registered the security, the conditional seller has lost all rights and claims. E) Jake cannot keep the car nor can he complain to the seller, because the seller never said the car was free and clear of liens or encumbrances.

45) Which of the following is primarily liable on an accepted bill of exchange? A) Payee B) Drawer of the bill C) Drawee or Acceptor D) No one E) Endorser 46) With regard to negotiable instruments, which of the following is false? A) A drawer of a cheque can refuse to pay any holder of it if the drawer can prove that the payee obtained the cheque by fraud. B) A cheque that has been certified cannot be countermanded by the drawer. C) A negotiable instrument used to advance credit in a consumer transaction must be marked "consumer purchase". D) Bills of exchange can be made payable for some future date. E) A cheque is a bill of exchange drawn on a bank, payable on demand. 47) Jones did work for Smith, who agreed to pay him in advance by cheque. Smith prepared a cheque for Jones. In which of the following situations would Smith have to honour the cheque to Green after it had been transferred to her by Jones?

A) Where Green was Jones's girlfriend who had been given the note as a gift. Jones had not yet started the job. B) Where Green and Jones had worked together in a scheme to cheat Smith. C) Where Green knew that Jones had taken the completed cheque from Smith's desk while Smith was out to lunch. D) Where Green operated a finance company and, while not knowing Jones but recognizing Smith's signature and knowing his good reputation, had given Jones $400 for the $500 cheque. E) Where Jones had changed the $500 to read $5000 by adding a zero and rubbing out the word hundred and writing thousand over it. The alteration was clearly visible on the cheque. 48) The bulk sales acts in place in some provinces are designed to do which of the following? A) To set minimum statutory standards for goods sold by description in large, unpackaged quantities B) To provide relief to commercial purchasers when a ship's cargo is destroyed C) To enable commercial debtors to sell their products at a reduced price in order to pay back their creditors in a more timely way D) To prevent merchants from selling all or almost all of their business's assets before a creditor can take action to stop them E) To give priority to creditors who are owed money in respect of inventory sold to the debtor within the last 30 days

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49) In Re Fancy, a businessman knew that he was facing substantial losses from pending litigation. Shortly before declaring bankruptcy, he transferred his interest in the matrimonial home to his wife. What was the result? A) The Court declined to exercise jurisdiction, because a bankrupt has no status to appear in court. B) The Court reversed the transfer, determining it was a prohibited settlement under the Bankruptcy and Insolvency Act. C) The Court allowed the transfer, because transfers between spouses are exempt under the Bankruptcy and Insolvency Act. D) The Court allowed the transfer, determining the wife was not a co-conspirator. E) The Court reversed the transfer, because it was unnecessary: The wife would automatically receive the matrimonial home once the bankruptcy took effect.

50) Elizabeth gave a guarantee to the Bank in support of a loan to Tomasz. Over the next few years, the Bank and Tomasz made a number of alterations to the loan agreement. The effect of these changes was to significantly increase the amount owing to the Bank. Elizabeth had no notice or knowledge of these changes, nor she did not consent to any such changes. What is the likely result? A) Guarantees are a mere formality; only Tomasz has obligations to the Bank. B) The failure to notify Elizabeth would release both Elizabeth and Tomasz from their obligations. C) A guarantee is executed under seal, therefore it will be presumed valid regardless of defect. D) Elizabeth is bound by the changes to the loan, because guarantees are, by their nature, continuing. E) The guarantees are likely to be invalid and unenforceable against Elizabeth. 51) Pursuant to the Bills of Exchange Act A) any negotiable instrument used to advance credit in a consumer transaction must be marked "Consumer Purchase". B) promissory notes must now be executed by more than one signatory prior to transfer to a holder in due course. C) certified cheques have been replaced by letters of credit. D) cheques are now considered to be legal tender. E) floating charges are automatically issued against the general assets of a corporation. 52) Which of the following statements regarding the securing of debt is true? A) The term guarantee, otherwise known as an indemnity, refers to a primary debt obligation.

B) To avoid problems related to consideration, lending institutions often require that guarantees be placed under seal. C) Because of the principle of caveat emptor, a creditor has no obligation to protect the interests of a guarantor. D) In every province, there is now a requirement that a guarantor appear before a notary public. E) As guarantees are mere formalities, there is little point in getting legal advice prior to executing one. 53) A continuing guarantee A) allows a creditor to advance further funds without affecting the obligation of the guarantor to pay in the event of default. B) is a written commitment not to pursue a legal claim against another. C) allows a breaching party to pay an amount specified in a contract, rather than facing a lawsuit for damages. D) is a primary obligation of a third party to pay a debt along with a debtor. E) is an equitable principle assuring that when security is repossessed, there will be a period of time during which the debtor can still make payment.

54) After a creditor has taken possession of collateral, the debtor's right to reclaim it on payment of any money owing is known as a A) constructive trust. B) collateral contract. C) right to salvage. D) right to redeem. E) right of settlement.

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55) Attachment takes place when A) a debtor receives some value under the contract. B) a purchase money security interest arises. C) notice of a security arrangement is given. D) after-acquired assets are secured. E) a contract is executed.

56) A purchase money security interest A) will be automatically subordinate to any general security agreeement, even if registered within the specified time period. B) is now obsolete, in light of the Personal Property Security Act. C) is also known as floating charge. D) is prohibited in most provinces. E) will prevail over a general security agreement covering all of a merchant's assets, if it registered within the specified time period. TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 57) Real and personal property can be used to secure a loan. 58) Both a chattel and a chose in action can be used to secure a debt. 59) The debtor usually retains possession of the goods used to secure a debt while the creditor has the right to seize them for default. 60) In case of default by either the creditor or debtor, breach of contract remedies apply. 61) When a mortgage is taken on personal property in a PPSA jurisdiction, the borrower temporarily transfers

title to

lender. 62) The assignment of book accounts is the conditional right to collect on outstanding accounts in the event of default. 63) Crops still in the ground and products in the process of being made can be used as security. 64) Legislation and the principles of contract and common law primarily protect the interests of the debtor in the event of a default. 65) Having a lien perfected simply means the claimant must begin a court action to enforce it. 66) If no builders' liens are registered within the specified time, the owner gives the holdback to the general contractor. 67) When the value of the security is not great enough to cover the debt, a secured creditor is an unsecured creditor for that outstanding amount. 68) Some debtors can submit a reorganization proposal to avoid bankruptcy.

69) When creditors receive notice of a consumer proposal from an insolvent debtor, they must demand a meeting or the proposal will be automatically accepted. 70) The Bankruptcy and Insolvency Act allows a supplier of goods to a bankrupt to seek return of those goods.

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71) As long as the debtor lives up to the terms of an accepted consumer proposal, creditors cannot take action against him/her. 72) The practice of paying out one creditor over another is known as fraudulent preference. 73) With few exceptions, once a bankrupt is discharged, there is no longer an obligation to pay back the creditors. 74) Bankruptcy is a wholly voluntary process designed primarily to protect debtors from abusive creditors.

75) Where a debtor has committed an act of bankruptcy, a creditor who is owed more than $1000 can petition the court to force that debtor into bankruptcy. 76) When a tenant fails to pay rent on a leased commercial property, the common law right of distress is available to the landlord. 77) A Division I proposal is available only to consumer debtors with less than $75,000 in claims against them. 78) A "confirmed letter of credit" is another name for a "standby letter of credit". 79) Settlements involve the transfer of assets for nominal or no consideration. 80) Student loans survive bankruptcy and remain payable for up to 10 after the debtor ceases to be a student. 81) If a fraudulent transfer is made to a bona fide purchaser for value, the transaction can still be reversed for a period of one year.

82) Any substantial change in the nature of the contract between the creditor and the debtor without the guarantor's consent will relieve the guarantor of any obligation. 83) Because of the special nature of a guarantee, there is no requirement for consideration. SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 84) Distinguish between personal and real property. 85) Explain what is meant by a "chose in action." 86) "The main purpose of security is to provide some recourse to the person claiming to be paid, if some dispute arises about the quality of the performance of the contract." Discuss the accuracy of that statement. 87) Distinguish between a conditional sale and a chattel mortgage. 88) "Joe bought a car from Harry's Fine Cars on time under a conditional sale agreement. It ran fine for a while, then he had a series of problems with it that made Joe regret ever entering into the transaction. Joe simply stopped paying, knowing that the only thing that Harry could do was repossess the goods." Explain the accuracy of the final statement.

89) In secured transactions-type legislation, such as a Conditional Sale Act, the Bills of Sale Act, the Personal Property Security Act, etc., what is the purpose of a registration?

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90) Joe bought a car from Harry's Fine Car Lot and owed him $5,000 on the deal, which he was paying back at $500 a month under a conditional sale agreement. Harry assigned that conditional sale agreement to Ace Finance Company, and they served notice on Joe that he was to make his payments in future to them. Joe knew, however, that his deal was with Harry, and he ignored the notification and continued to make the payments to Harry. What danger does he face in these circumstances? 91) Explain how a bill of sale can be used as a security.

92) What is used as security in assignment of book accounts?

93) What purpose is served by requiring the creditor to register his secured transaction?

94) What is the primary remedy available when goods have been used to secure a loan which has been defaulted? 95) Who is responsible for repossessing the goods? 96) Where, in the face of default, goods are repossessed and resold, but the amount recovered is not enough to cover what is owing, what are the rights of the creditor? 97) Explain the purpose of the Personal Property Security Act as used in Ontario and the western provinces. 98) Give three examples of types of things that can be used as security under the Personal Property Security Act. 99) Distinguish between attachment and perfection under the Personal Property Security Act. 100) In the event of a default, if the creditor elects to repossess and resell the goods, how does he protect his right to claim for deficit?

101) Where a debtor has defaulted and the creditor, under the Personal Property Security Act, repossesses and resells the goods, what is his obligation with respect to overages or underages? 102) Explain what is meant by a floating charge. 103) Explain what constitutes a bulk sale and how they are controlled in some jurisdictions. 104) Explain the purpose of the Fraudulent Preferences Act (name will vary from province to province). 105) What is the purpose of the Fraudulent Conveyances Act? (The name varies with the province.) 106) Distinguish between a guarantee and an indemnity. 107) Why is the distinction between a guarantee and an indemnity important? 108) A guarantee must be supported by consideration, just like any other contractual obligation. Explain what consideration is present when one person guarantees the debt of another.

109) Owen had borrowed money from a credit union to purchase a car, and the credit union had required a security against the car, which they registered under the Personal Property Security Act. As well, Owen's father guaranteed the loan. Some months later, Owen decided to go back to school, and he had to sell the car to do so. He returned to the credit union and, at his request, the credit union gave up the security they had against the vehicle, knowing that they still had the loan guaranteed by Owen's father. Explain the wisdom of this move.

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110) Owen borrowed money from a credit union, guaranteed by his father, to buy a car. The credit union also registered a security interest under the Personal Property Security Act against the vehicle. Owen defaulted and, instead of repossessing the vehicle, the credit union demanded payment from the father. Explain the legal position of the father under these circumstances.

111) Owen bought a car from Ace Fancy Cars Ltd. on time. The salesman claimed that it had a new engine and new transmission. Security was registered against the vehicle under the Personal Property Security Act, and Owen's father was required to sign a guarantee to support the debt. Two months later, the car broke down, and upon inspection, it was discovered that, in fact, a used motor and transmission had been installed, not a new one. Owen refused to make any further payments and demanded his money back. The car dealership ignored their right to repossess the vehicle and demanded payment from Owen's father. Explain Owen's father's rights in these circumstances. 112) Joe worked as a subcontractor for Harry in framing a house owned by Sam. When it became apparent to Joe that he was not going to be paid by Harry, what rights did Joe have under these circumstances? 113) What obligations are placed on the owner of property in respect of builders' liens? 114) Explain what happens when the owner of property fails to hold back the appropriate amount when making payments to the general contractor. 115) Explain the purpose of the bankruptcy process. 116) Explain how the rights of the creditors are protected under bankruptcy legislation. 117) How is the debtor rehabilitated under the bankruptcy legislation?

118) Distinguish between bankruptcy and insolvency. 119) Explain two methods for a debtor becoming bankrupt. 120) What alternatives are available to the bankruptcy process? 121) Explain the role of the trustee in bankruptcy proceedings. 122) When a supplier of goods such as a wholesaler transfers those goods to a debtor, who then goes bankrupt, explain the supplier's legal position. 123) Once the bankrupt has been discharged, explain his status. 124) What is a bankruptcy offence? Give an example. 125) What is the effect on a corporation when it goes bankrupt? 126) Distinguish between receivership and bankruptcy where corporations are concerned. 127) What significant amendment was made to the Bills of Exchange Act in 1970?

128) Distinguish between "bankruptcy" and "insolvency". 129) What is the role of the Superintendent of Bankruptcy? 130) What is the effect of a payment made in preference to one creditor over another?

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131) What is the result of a settlement that takes place within a year of bankruptcy? 132) Provide an example of legislation that gives the federal government priority over all other creditors, including secured creditors. 133) What is the effect if a debtor fraudulently transfers property to a bona fide purchaser for value?

134) A security not fixed on any particular assets until default or some other specified event is known as a ________. ESSAY. Write your answer in the space provided or on a separate sheet of paper. 135) In a creditor/debtor transaction, explain the purpose of security and how that purpose can be realized. 136) Explain how, in a creditor/debtor transaction, the exposure of a guarantor is limited and his rights protected. 137) Discuss the bankruptcy and insolvency process from the point of view of the creditor, indicating how that creditor's interests are or are not protected. 138) Compare assignment of contractual rights with negotiation of a negotiable instrument, indicating the advantages and disadvantages of each. 139) "Bankruptcy is a convenient way to avoid paying your debts." Discuss the accuracy of this statement. 140) Discuss alternatives to bankruptcy, and why these alternatives might be preferable to bankruptcy itself.

141) Discuss situations in which a secured creditor may opt not to seize property used as security, and the rationale for taking this approach.

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1) B 2) A 3) B 4) D 5) D 6) B 7) E 8) D 9) C 10) D 11) D 12) B 13) E 14) D 15) D 16) C 17) B 18) E 19) E 20) C 21) E 22) E 23) E 24) E 25) A 26) B 27) D 28) C 29) A 30) E 31) E 32) B 33) A 34) A 35) A 36) C 37) B 38) C 39) A 40) E 41) C 42) C 43) E 44) B 45) C 46) A 47) D 48) D 49) B 50) E 51) A

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52) B 53) A 54) D 55) A 56) E 57) TRUE 58) TRUE 59) TRUE 60) TRUE 61) FALSE 62) TRUE 63) TRUE 64) FALSE 65) FALSE 66) TRUE 67) TRUE 68) TRUE 69) TRUE 70) TRUE 71) TRUE 72) TRUE 73) TRUE 74) FALSE 75) TRUE 76) TRUE 77) FALSE 78) FALSE 79) TRUE 80) TRUE 81) FALSE 82) TRUE 83) FALSE 84) Personal includes tangible and non-tangible forms such as movables, called "chattels," and intangible property, called "choses in action." Real property deals with land and things such as buildings permanently affixed to that land. 85) A non-tangible form of personal property where one person has a right or a claim against another that has some value, such a debt. 86) This statement is inaccurate. The main purpose of the security is to make sure that there are funds available or somebody (a guarantor) who will pay when the obligation of the creditor has been properly performed. 87) In a chattel mortgage transaction, the debtor owned the property and then used it as security for the loan. In a non-Personal Property Security Act jurisdiction, the title actually is transferred to the creditor. With conditional sale, however, the sale takes place in two stages. First the possession is given to the debtor, and later title is transferred upon payment of the last installment. In Personal Property Security Act jurisdictions, the title is given to the debtor even with a conditional sale, and the security takes the form of a charge or lien registered against the property. 88) The statement is inaccurate. In fact, Harry can do anything that he can do under a breach of contract action. If he doesn't want to retake the goods, he can sue for breach of contract and damages instead. 89) The purpose of registration is to notify third parties of the existence of the security, and to ensure that the claims of the creditor, once properly registered, prevail against all such third parties, even where they be subsequent purchasers or other money lenders. 90) Harry's Fine Car Lot had the right to assign under these circumstances; the notification creates a statutory assignment giving Ace Finance the right to collect the payment that otherwise would have gone to Harry. Joe must make these payments to Ace. If he fails to do it, and Harry fails to pass them on to Ace, Ace will be able to

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succe ssfully sue Joe for payments not received and win. 91) A chattel mortgage uses a bill of sale to temporarily transfer the title of the property to the creditor as a form of security. Once the debt is properly paid, the title will be transferred back. The transfer is accomplished by a bill of sale; thus, this document creates the security. In Personal Property Security Act jurisdictions, the title doesn't actually transfer to the creditor. 92) In these circumstances, the debtor would be a business person having accounts owed to him, pursuant to his business. He borrows money from the creditor, and to give the creditor security that he'll be repaid, the debtor gives the creditor, through assignment, the right to collect on those accounts that are due to the debtor as part of the business, in the event of default. This provides security to the creditor's position. 93) It notifies other people that the goods are being used as security and protects the creditor so that, once registration is accomplished, he has priority over other people who might claim an interest in the property, who are deemed to be notified by the registration. 94) Repossession of the goods. 95) The creditor, himself, usually through his agent called a bailiff. 96) This varies from jurisdiction to jurisdiction and with the type of subject matter. In B.C., for instance, with consumer sales, once you have repossessed and resold, that exhausts the remedies. In other provinces, so long as the resale has taken place in a proper manner, the deficit may be recovered as damages in a breach of contract action. 97) Its purpose is to bring all of the various methods of using personal property to secure debt under one process and one act. 98) Tangible goods, such as cars, boats, and machinery; as well as intangible personal property, such as assignment of contracts, debts, leasing arrangements, even negotiable instruments, share certificates and the like. 99) The creditor's rights under the Personal Property Security Act are said to attach against the chattel, or anything used as security when the contract is executed or partially executed, for example, the monies advanced. Perfection, however, gives rights to the creditor against third parties, and that takes place when the secured transaction is registered or where the creditor obtains possession of the thing he used as security. 100) This varies from province to province. Generally, proper notices must be given. Also, the goods must be disposed of in a commercially reasonable manner, which may involve public auction or even a private sale, providing that the parties are at arm's length. 101) Any surplus must be returned to the debtor. The right to sue for a deficit varies from province to province. For example, in consumer sales in British Columbia, a creditor cannot sue for a deficit. 102) A floating charge is likely obsolete, given the Personal Property Security Act, but involves a charge against manufactured goods or the stock and trade of a particular company that is not attached to any particular item until there is a default. This allows those goods to be sold, the stock replenished, etc., without interference. In the event of a default, however, the floating charge is said to descend and attach, and then acts like any other secured transaction. 103) A bulk sale is where some business is selling not only its normal stock and trade, but such a large portion of that stock and trade or other assets of the business that normally wouldn't be sold (such as shelving, counters, etc.), that it's no longer consistent with the debtor continuing business. In these circumstances in some jurisdictions, the Bulk Sale Act requires that all creditors be notified of the sale and approve. 104) This Act prohibits the debtor from favouring one creditor over another by paying them first and having no money left to pay the other(s). 105) This Act is designed to prohibit a debtor from conveying property and assets to others, such as a wife, relative, or friend, in order to make those assets unavailable to the creditors. 106) A guarantee is an agreement to pay a debt if the debtor fails to pay. An indemnity, however, is involved where the indemnifier assumes the obligation along with the debtor. This is not a contingent or secondary liability, but involves a direct obligation. 107) In some provinces, a guarantee has to be evidenced in writing under the Statute of Frauds, but an indemnity does not. (Note that British Columbia requires both to be evidenced in writing, and Alberta has even more stringent requirements.) 108) If a creditor would not have advanced the money without such a guarantee, then the advancement of the money to the debtor provides consideration to the guarantor. Where the creditor has refrained from suing the debtor because of such a guarantee, that also qualifies as consideration.

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109) It was foolish on the part of the credit union, because if Owen defaults, they will not be able to go against the father unless the father actually was consulted and gave his permission to the change. This is a fundamental change in the relationship between the debtor and the creditor that can hurt the guarantor and to which the guarantor is not party. He is relieved from his guarantee under these circumstances. 110) The credit union has every right to demand payment from the father instead of repossessing the car. Once the father pays, however, he steps into the shoes of the credit union and has the right to repossess the car and have it sold, just like the credit union did. 111) Owen's father has the same defences available to him that are available to Owen. The fraudulent misrepresentation involved would give Owen the right to rescind the contract and refuse to make further payments. The guarantor has similar rights and can raise the same defences. 112) He could file a builders' lien against the property owned by Sam. 113) Under the relevant legislation, the owner retains a percentage of what they would otherwise pay to a general contractor, called the "holdback". In most provinces, the amount is set at 10%. After the short period of time during which liens must be registered, the owner will check the registry and, if there are no liens, the owner will pay the holdback to the general contractor. 114) He can be required to pay out, in addition to what he has already paid out to the general contractor, an amount equal to the hold back and make this available to the suppliers and subtrades. 115) To ensure that creditors realize as much as possible on the debt, and secondly, to ensure that the debtor is rehabilitated, with the potential to be a productive member of society without the burden of insurmountable debt. 116) A trustee in bankruptcy is appointed and the assets of the debtor are transferred to the trustee, who then sells them or otherwise deals with them in such a way as to insure as much as possible to the creditors. 117) The debtor, after a period of time during which the assets are distributed to the creditors, is discharged from the bankruptcy and allowed to continue on with his activities, no longer burdened by debt. Note exceptions such as student loans and family maintenance obligations. 118) Insolvency is simply not being able to pay your debts as they become due, whereas bankruptcy is a legal process whereby the assets of the debtor are transferred to a trustee in bankruptcy. 119) Voluntary assignment, where the debtor chooses to go to a trustee in bankruptcy and voluntarily assign his assets to that trustee; and receiving order, where the creditors go to court and obtain a receiving order, whereby the assets of the debtor are forcibly transferred to a trustee in bankruptcy and then distributed to the creditors. 120) The Bankruptcy and Insolvency Act allows the debtor, in both commercial and consumer situations, to make a proposal to his creditors. For a certain period of time, those creditors are prohibited from taking other actions while the proposal is considered. If the creditors agree to the proposal, which is usually to pay back a portion of the amount owed in full satisfaction of the debt owed, or to pay over a longer period of time, and the debtor does that, bankruptcy is avoided. 121) The function of the trustee is to receive the assets of the debtor, to deal with them in such a way that as much as possible is realized from them, and then distribute those funds to the creditors. 122) So long as those goods remain in the possession of the bankrupt debtor or the trustee and haven't been resold, destroyed, or otherwise disposed of, the supplier can reclaim them within a period of 30 days of supplying those goods. 123) He is free of debt and is no longer responsible for the debts and obligations he had prior to the bankruptcy process. There are exceptions (student loans, family maintenance payments). 124) A bankruptcy offence is some act on the part of the debtor whereby he tries to cheat the creditors. This can be by lying, by hiding assets, by transferring them to other people, falsifying records, refusing to disclose them, etc. 125) If it goes through the bankruptcy process, the corporation is dissolved at the end. 126) Bankruptcy is the formal process done under the bankruptcy and insolvency legislation, and if a corporation goes through this process, it is dissolved at the other end. Receivership can be a private arrangement made with a creditor, whereby the creditor, as a condition of loaning money, has the right to take over the management of the company in the event of a default. The company is not dissolved when this process takes place; rather, the management is changed. 127) That negotiable instruments used to advance credit in consumer transactions had to be stamped "consumer purchase," which reduced the rights of a holder in due course holding such notes. 128) Bankruptcy is the process by which a debtor's assets are transferred to a trustee in bankruptcy who deals with them

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for the benefits of creditors. Insolvency simply means a person is unable to pay debts as they come due. 129) The Superintendent of Bankruptcy is the government official in charge of this area and the one responsible for appointing official receivers in various bankruptcy districts in Canada. 130) It is void. 131) It is void. 132) For example, Income Tax Act (s. 224), Excise Tax Act (s. 317) 133) The transaction is valid and cannot be reversed. 134) floating charge 135) This requires that students understand and demonstrate a knowledge of both the nature of security and the reasons for it. The object is to assure the creditor that they will be paid even where the debtor falls on hard times and finds himself in a position of not being able to honour his obligations even where he wants to. Students should then go on to explain the different ways that this assurance can be given. They should do this in depth, showing they understand the nature of each example. Some examples are using tangibles such as personal property as security under the Personal Property Security Act or intangibles like accounts receivables as well. Students should also indicate other ways security can be obtained, such as the guarantee, builders' liens, real property mortgages, and various forms of negotiable instruments that also have some advantage to the creditor. They should also have something to say about the procedure required to protect their security, such as attachment and perfection under the Personal Property Security Act, and how that is accomplished. They can also talk about how the goods have to be kept for a time before being resold and the requirement to handle the repossession and resale in a businesslike manner. 136) A guarantor is in a unique position and the parties must ensure they do nothing to weaken the position of the guarantor. First, it should be observed that the guarantor is in no worse position than the debtor; that is, any defence that the debtor has against the creditor, the guarantor has as well (except infancy). Where the debtor defaults and the creditor turns to the guarantor for payment, the guarantor is subrogated to the rights of the creditor, taking over the creditor's position and rights against the debtor. The main thrust of the question, however, is to ensure that students understand that the creditor and debtor cannot change their agreement in any way that weakens the position of the guarantor, without the permission of the guarantor. If there is a security as well as the guarantee, the creditor cannot release that security without the OK of the guarantor, or the guarantor will no longer be obligated under the debt. Similarly, if interest rates or terms of payment are changed or more money advanced without the approval of the guarantor, he will be released from the debt. It should be noted that permission to advance more funds and make these changes may be included in the original agreement, and the guarantor will then have no complaint. 137) Bankruptcy involves the assets of the debtor being transferred to a trustee in bankruptcy, who then deals with those assets (usually selling them) and distributes the proceeds to the creditors on a pro rata basis. When personal bankruptcy is involved, secured creditors maintain their security in the goods used as security, and so have first claim with respect to them. There are other preferred creditors, such as the trustee, government and municipal claimants, landlords, and employees, who have the next claim for a specified amount. Anything left is distributed to the general creditors. Often, after these first claims have been met, there is nothing left for the general creditors. To make matters worse from the point of view of the creditor, the trustee will not take all of the debtor's assets. Some jurisdictions will exempt tools, certain furniture, and even the matrimonial home in some circumstances. Also, the trustee will not bother with assets that he will have difficulty selling or that are more trouble than they are worth. After the bankruptcy process is completed, the bankrupt is then discharged and the creditors no longer have any claim. From the point of view of a general creditor in such circumstances, the process probably gets them as much as possible and prevents the debtor from dissipating what assets she does have. When a corporation is involved, the trustee in bankruptcy will take over the business and may continue to operate it, sometimes putting in a different management team in order to realize as much as possible for the creditors. After the process is completed, the company will be dissolved. Students should also point out the alternatives to bankruptcy available to the individual as well as a company. Here the parties try to make a deal with their creditors to try to avoid the bankruptcy process. Usually the creditors will be paid a certain percentage of their claim. This is attractive to creditors because they keep a customer and usually get more than they would have if the debtor had gone through the bankruptcy process. A down side is that

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the creditors to seek judgment and seize property are delayed while these proposals are worked out. Good students right will differentiate between Division I proposals (used to protect commercial debtors from action by creditors) and s for Division II proposals (used to protect consumers with debts less than $75,000), and protection available for large the corporations under the Companies' Creditors Arrangements Act. 138) This can be a relatively short response but the principles here are the heart of negotiable instruments. Students should first make it clear that they understand what an assignment of contractual rights is, and what the consequences are for the rights of the parties. When contractual rights are assigned from one party to another, the person receiving them is in no better position than is the person who assigned those rights to him. Any defence that the creditor had against the assignor, he has against the assignee as well. Another way of saying this is that the assignee takes subject to the equities between the parties. Students should give examples to indicate they understand. For example, if Joe had done work for Sam and Sam owed Joe $2,000, Joe could assign that claim to George, but George would take subject to the equities. Thus, if Joe had done a poor job and this became apparent before Sam paid the money, Sam would have a good defence against Joe if Joe were to sue to enforce the debt. Sam has that same good defence and can raise it against George when George tries to enforce the debt, because George only got what Joe had to give. Since Joe's rights were defective, that's what George got, defective rights. It is vital that students show that they understand this restriction on the rights given in assignment before dealing with negotiation of a negotiable instrument. First they must show that they understand what a negotiable instrument is (a cheque, bill of exchange or promissory note) and also indicate an understanding of negotiationthat is, after the delivery of the completed instrument from the maker/drawer to the payee, the subsequent transfer from the payee through the various third-party holders that may come into possession of the instrument. The key here is that students show that if a holder of the instrument is innocent and otherwise qualifies as a holder in due course (this should be expanded as well), that holder in due course will actually get better rights than the initial party to the instrument. The holder in due course will be able to enforce it against the drawer despite the presence of breach of contract, fraud, or any but the most serious of problems, and even then that must relate to the authenticity of the instrument itself. 139) Students should note that this attitude is one taken by some debtors, who may even declare bankruptcy on more than one occasion. This attitude, however, is clearly an abuse of the process. Those debtors who are tempted to abuse the process should realize that committing bankruptcy offences will likely result in fines and, and or in the alternative, imprisonment. Also, when a debtor has been abusing the process (e.g. by failing to cooperate, hiding assets, etc.) the courts will be reluctant to grant an unconditional discharge. Conditions can include, for example, a requirement that the bankrupt first pay a significant amount to creditors. Bankruptcy does not allow a bankrupt to simply walk away from his or her debts. If a debtor becomes bankrupt, he or she will lose most of his or her property. A bankrupt will also find if difficult in the future to conduct business, or to make personal credit purchases. During the bankruptcy process, the bankrupt is required to continue to make regular surplus income payments tot he Trustee for distribution to creditors. Furthermore, some obligations even survive a discharge from bankruptcy (such as fines, alimony and maintenance payments, some civil damage awards, student loans, etc.). 140) If a debtor becomes bankrupt, he or she will lose most of his or her property. A bankrupt will also find if difficult in the future to conduct business, or to make personal credit purchases. A personal bankruptcy will remain on an individual's credit record for approximately six years, but the ultimate effect on the person's credit rating can be ongoing. If a corporation becomes bankrupt, it will not survive. To avoid bankruptcy, students should identify a variety of possible alternatives. First, a debtor should contact creditors to try to work out alternative arrangements for paying the debt in question. A second possibility is a consolidation loan to enable a debtor to consolidate various debts owed. This can facilitate a more manageable payment schedule and often a lower rate of interest. Sometimes individual creditors will agree to take less than they are owed. Under the BIA, there are also formal alternatives. The first is a Division I proposal for corporations and people with debts over $75,000. These proposals are very flexible. Division II proposals are available for people with debts less than $75,000. Consumer proposals stop all legal actions by unsecured creditors. In either case, if a proposal is accepted and properly performed, the debtor's obligation is complete. Another alternative may include an orderly payment of debt program (available in some provinces). For corporations owing in excess of $5 million, there is a further alternative available under the Companies'

Credi tors Arrangement Act (which provides protection to debtors with some advantages over the BIA). 141) When a debtor defaults, a secured creditor should be careful in seizing property used a security. While the creditor may have this right, there may also be other remedies the creditor may wish to pursue that may end up being more effective. By seizing property, the creditor may lose the right to pursue some of the alternative avenues. In several jurisdictions, the right to sue for a deficiency is lost once the creditor elects to take possession of the goods. (Students should refer to the specific situation in their province.) Even in jurisdictions where a creditor retains the right to sue for a shortfall after goods have been sold, this right may be subject to the goods having been properly cared for and sold in a way that is commercially reasonable. It is important for the creditor to balance the risks of suing (with the risk that nothing may be realized) with the benefits of taking possession of the collateral (which will at least provide something). Good students will also note that there is a possibility that the debtor can be rehabilitated (and even kept as a good customer). This should also be weighed as part of the creditor's decision.

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