Contracts and Legislation

Question 1

Conditions

Answer 1

Major terms of a contract. If breached, contract ends (if other party wants to end it).

Example: contract calls for sale of truck but seller delivers a mini-van.

Question 2

Warranties

Answer 2

Minor terms of a contract. If breached, obligations continue but may seek damages.

Example: contract calls for sale of a navy blue truck but seller delivers a powder blue truck.

Question 3

How do you tell the difference between condition and warranties?

Answer 3

Reasonable Person Test: if a party had known ahead of time that the term was going to be breached, would he/she still have entered into the contract?

Question 4

What are the four ways to discharge of contracts?

Answer 4

1) Performance: complete (or almost complete) performance of contract.
2) Breach: breach of a condition of contract.
3) Frustration: an outside event makes performance impossible.
4) Agreement: where parties consent to end or modify contract.

Question 5

Performance

Answer 5

Once parties have performed as required, contract, is discharged.

Example: a pizza shop contracts with an office to supply 100 pizzas for a staff party for $1000.

Question 6

Tender of Performance

Answer 6

Ready, willing, and able to perform but other party refuses to accept performance.

Question 7

Substantial Performance

Answer 7

Almost all obligations fulfilled, but a condition breached in a minor way. May seek compensation for small part remaining.

Example: contract calls for delivery of 100 pizzas but you only receive 98.

Question 8

Breach

Answer 8

Incomplete or improper performance of contract.

Question 9

Repudiation

Answer 9

Breach by refusal to perform.

Question 10

Anticipatory Breach

Answer 10

repudiation before performance is due gives victim to two options:
a) continue to demand performance.
b) immediately treat contract as breached.

Question 11

Frustration

Answer 11

Where circumstances outside the parties’ control cause one of the following scenarios:
a) contract impossible to perform
b) performance still possible but would lead to a completely different result.

Question 12

Agreement

Answer 12

May modify or end a contract by agreement. All elements of contract must be present.

Question 13

Condition Precendent

Answer 13

Contract begins only if conditions are met.

Example: in contract to buy a house, purchaser must first be approved for a mortgage.

Question 14

Condition Subsequent

Answer 14

Terms in contract specify when continuing obligations will end.

Question 15

What remedies can courts order for breach?

Answer 15

1) Damages ($)
2) Equitable Remedies (non-$)

Question 16

Damages

Answer 16

Financial compensation to attempt to put victim in position she would have been in if contract properly performed.

Question 17

Three Types of Damages

Answer 17

1) Specific Damages: can be easily calculated (lost wages).
2) General Damages: cannot be easily calculated: (for pain and suffering).
3) Punitive Damages: designed to punish defendant rather than compensate victim.

Question 18

What are the two limitations on availability of damages?

Answer 18

1) Mitigation
2) Reasonable Foreseeability

Question 19

Mitigation

Answer 19

Victim must mitigate loss. Must take all reasonable steps to minimize the loss.

Question 20

Reasonable Foreseeability

Answer 20

Damages must be reasonably foreseeable at time contract entered into. Unexpected losses that are too remote cannot be claimed.

Question 21

When are equitable remedies available?

Answer 21

• damages not sufficient.
• no wrongdoers by plaintiff
• no innocent third party affected.

Question 22

What are the four types of equitable remedies?

Answer 22

1) Accounting of Profits
Quantum Meruit
Specific Performance
4) Injunction

Question 23

Accounting of Profits

Answer 23

Requires the defendant to disclose financial records and surrender profits to plaintiff.

Question 24

Quantum Eruit

Answer 24

Court may provide plaintiff with reasonable value of what plaintiff has done for the defendant. Usually calculated in terms of the market price or value of the services.

Question 24

Specific Performance

Answer 24

Requires breaching party to perform contract. Only if subject matter of contract is unique.

Question 25

Injunction

Answer 25

Requires a person to either do something specific or stop doing something specific.

Question 26

Sales of Goods Act

Answer 26

Provincial statutes that imply missing terms into sale of goods contracts. Sales of Goods Act applies if an actual sale occurs.

• if no purchase price stated, reasonable price is implied.
• if no closing date stated, payment to be made at reasonable time.

Question 27

Consumer Protection Act

Answer 27

Applies to consumers purchasing a product for their own personal use.