Chapter 6 - Law of Contract

Question 1

contract

Answer 1

agreement between two or more person which creates an obligation to do or not to do a thing

Question 2

7 essential elements of a contract

Answer 2

Consideration
Offer
Capacity
Genuine consent
Acceptance
Legal object
Legal intention

Question 3

4 ways of ineffective contract

Answer 3

void, illegal, voidable, unenforceable

Question 4

void contract

Answer 4

contract which never had any legal existence or effect and which is not capable of being enforced

Question 5

illegal contract

Answer 5

contract which offends against public policy or a statute

Question 6

voidable contract

Answer 6

one or both parties has option to rescind. right to rescind limited where one party acted in such a way it becomes inequitable to allow contract to be cancelled

Question 7

unenforceable contract

Answer 7

essentials of valid contract, but cannot be sue upon for procedural reason (statute requiring it be in writing)

Question 8

offer

Answer 8

proposal to do or refrain from doing some specified thing usually followed by an expected acceptance, counter offer, return promise, or act.

Question 9

invitation to treat

Answer 9

ad used to induce the public to submit their own offers. not an offer capable of acceptance to form a contract

Question 10

when does offer release or expire (6 circumstances)

Answer 10

time limited is specified
to time limit but reasonable time has passed
revocation before acceptance
either party becomes insane or dies before acceptance
counter-offer is made
offer is rejected

Question 11

option agreement

Answer 11

separate consideration to keep offer open (payment of money)

Question 12

acceptance

Answer 12

must be a positive act, must be made by method specified or same method as offer

Question 13

postal acceptance rule

Answer 13

law gives responsibility to offeror to specify how offer is accepted. if mail, assume risks associated with mail

Question 14

consideration

Answer 14

something of value that is bargained for (right, interest, profit, or benefit)

Question 15

quantum meruit

Answer 15

as much as is deserved. no one benefits by labour and materials of another should be unjustly enriched. law implies a promise to pay a reasonable amount.

Question 16

4 quantum meruit examples

Answer 16

1. no amount specified
2. breach of contract occurred and innocent party performed partly and wants partial payment
3. contract void, but work performed on assumption of valid contract
4. new contract replaced original and accepted partial performance in place of original contractual obligations

Question 17

4 exceptions a contract is enforceable against an infant

Answer 17

1. provided for in statute
2. infant affirms contract after turning 19
3. infant performs or partially after turning 19
4. does no repudiate contract within 1 year after 19

Question 18

power of attorney

Answer 18

licensee advise parties to seek legal advice.

Question 19

s. 29 power of attorney act

Answer 19

valid only while donor is alive, expire when they become incapable or bankrupt

Question 20

power of attorney - s. 56 land title act

Answer 20

valid for 3 years

Question 21

common mistake

Answer 21

both parties have same mistake about fundamental term of the contract

Question 22

mutual mistake

Answer 22

both parties make fundamental mistake, but different mistake.

Question 23

unilateral mistake

Answer 23

one party mistaken about fundamental term and other party aware but does nothing to correct it. “non est factum = it is not my deed”

Question 24

duress

Answer 24

enter into contract under threat of physical force or imprisonment

Question 25

undue influence

Answer 25

superior position relation to another to induce to enter a contract (doctor/patient, etc.)

Question 26

unconscionable

Answer 26

material ingredients are proof of inequality in the position of the parties arising out of ignorance, need, or distress of the weaker, which left him in the power of the stronger and proof of substantial unfairness of the bargain obtained by the stronger

Question 27

5 terminations of contract

Answer 27

1. performance
2. agreement to waive performance or substitute another agreement
3. non-fulfillment of a condition precedent
4. frustration
5. breach of condition of contract accepted by injured party

Question 28

frustration

Answer 28

events outside control of parties destroy subject matter or fundamentally changes original contract

Question 29

3 terminations by breach

Answer 29

1. anticipatory breach
2. one party makes performance impossible
3. failure to perform at time stipulated

Question 30

4 remedies in contract law

Answer 30

1. damages (common law)
2. specific performance
3. injunction
4. quantum meruit