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Business Law > Lecture 4 > Flashcards

Lecture 4 Flashcards

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1
Q

What are three things, disputes usually resolve around

A
  • The existence of the contract
  • the conduct of the parties at time of negotiating the agreement
  • performance of obligations under contract
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2
Q

Explain the term mistake?

A

When parties have a different understanding of terms of contract

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3
Q

What is another term for shared mistake?

A

Common mistake

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4
Q

if theres a shared mistake only in the recording of the terms, what may occur?

A
  • Both parties may ask the court to rectify (correct) the agreement, if there is a mistake on the document
  • if a mistake is fundamental to the contract, the contract becomes void
  • if a mistake goes to the value of subject matter there is no remedy
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5
Q

What are the different types of mistakes in regards to contracts

A
  • shared mistake
  • misunderstanding
  • one-sided mistake
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6
Q

Explain the term Misunderstanding (mutual mistake)

A
  • Each party has a different understanding of the contract, not aware of the other persons interpretation
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7
Q

what happens when there is a mistake as to the nature of document signed

A

Contract my be void “non-est factum”

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8
Q

Define the term exemption clause

A

-Attempt to limit or eliminate liability for one party to the contract

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9
Q

what type of contract are exemption clauses usually found in

A

Standard-form contracts

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10
Q

Exemption clauses does not have be brought to the attention of the other party. T OR F

A

False. These clauses have to be brought to the attention of the other

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11
Q

Exemption clauses create an equal bargaining position. T OR F

A

False, they create an unequal bargaining position

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12
Q

Explain the term Misrepresentation?

A
  • False and misleading statements that induce a person to enter a contract
  • If a term of contract, can sue for breach
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13
Q

Under Misrepresentation, the statement made must be a statement of Fact. T OR F

A

True

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14
Q

In what scenario is silence deemed as Misrepresentation

A

When the person who chose to be silent has a duty to disclose the information

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15
Q

Misleading another party without knowing or being careless into a contract is called?

A

innocent Misrepresentation

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16
Q

In what situations is remedy not possible?

A
  • if any wrongdoing by the person claiming rescission (the innocent party doesn’t have “clean hands”
  • Not available if the contract is affirmed
  • the subject matter is damaged or destroyed
  • innocent 3rd party
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17
Q

Explain the term Fraudulent misrepresentation

A
  • Intentionally and knowingly misleading another to induce him/her to enter a contract
  • May seek punitive damages in extreme cases
  • Easier to sue for innocent or negligent misrepresentation
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18
Q

What is the only remedy offered during an innocent misrepresentation

A

Rescission

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19
Q

If made innocent misrepresentation and fail to correct it before the contract is made what happens?

A

The innocent misrepresentation turns into fraudulent misrepresentation

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19
Q

If made innocent misrepresentation and fail to correct it before the contract is made what happens?

A

The innocent misrepresentation turns into fraudulent misrepresentation

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20
Q

Explain the term Negligent misrepresentation

A
  • If person making misrepresentation should have known what he/she was saying was false, he/she was careless
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21
Q

Explain the term duress

A
  • entering a contract because of coercion.

- Threats may be violence, financial pressure, scandal and can come from a non party

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22
Q

What remedy is offered during negligent misrepresentation

A

Rescission, tort of negligence

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23
Q

What remedy is offered during Fraudulent misrepresentation

A
  • Rescission, tort of deceit (intentional tort), criminal action
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24
Q

What is the remedy for misunderstanding

A
  • judge determines the most reasonable option

- if judge cannot decide, the contract becomes void on lack of consensus

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25
Q

What are the exceptions for Uni-lateral mistakes that lead to remedies

A

If a mistake goes to the identity of the other party, the contract becomes void
- if a mistake goes to the subject matter, the contract becomes void

26
Q

What does Section 361-365 of criminal code deal with

A
  • prohibit knowingly making false representations intended to induce someone to act on the representation
  • the falsification of employee records, books and other documents
27
Q

What is the remedy to duress?

A
  • Contract can be voidable

- criminal offence

28
Q

Explain the term Undue influence

A
  • abuse of trust relationship
29
Q

Remedy of Undue influence includes?

A
  • Contract voidable
  • although it can be rebutted by evidence
  • sometimes may have to be proven
30
Q

explain the term Unconscionability

A
  • Taking advantage of vulnerable persons situation
  • contract grossly unfair to the victim and the bargaining positions of the parties are no where near equal
  • Regulated by statute
31
Q

Explain the term Privity

A
  • Only the parties to a contract are bound to it or may enforce it
  • no third party can sue even tho they have something to gain from the contract
32
Q

What are the exceptions for privity in law?

A
  1. Agents acting for principals - agents are not a party
  2. Novation - new person taking over obligation of another in a contract (new contract is required)
  3. employees - contact claused often extend to employees
  4. interests in land
  5. trusts
33
Q

Define the term Assignment?

A
  • transferring a benefit under a contract to a third party
  • A debtor (purchaser) owes money to a creditor (dealer) then assigns debtor obligation to finance companies
  • Assignee takes assignment “subject to the equities”
  • Assignee cannot be in a better position than the assignor
  • only benefits are allowed to be assigned not obligations
34
Q

If debtor fails to pay both assignor and assignee usually join to sue. T OR F

A

True

35
Q

Statutory assignment allows assignee to sue directly if?

A

Assignment is absolute (complete and unconditional)
Assignment is in writing
Proper notice was given to a debtor

36
Q

Explain the term Negotiable instruments

A
  • Innocent third party may enforce a negotiable instrument against the person who made it
  • freely transferable from party to party
37
Q

Negotiable instruments are controlled by what?

A

They are controlled by federall bills of exchange act

38
Q

the innocent third party is a negotiable instrument is called? and explain their role?

A

Holder in due course
o Innocent third party who acquired possession of instrument
o Right to collect whether original obligations met or not
o If instrument is endorsed, that person can also be held liable for amount owed

39
Q

What are some examples of negotiable instruments

A
  • promissory notes - One person promises to pay another a certain sum of money at some future date or on-demand
  • Cheque - Drawer orders bank to pay a certain sum of money to a third party (the payee) on demand
  • Bill of exchange - an order to any person or business to pay money to someone either now or at a future time
40
Q

What are the ways of ending or discharging a contract

A
  • performance
  • breach
  • frustration
  • agreement
41
Q

explain the term performance?

A

One party have performed as required under the contract, it is discharged or where failure to perform is minor

42
Q

Explain the term conditions

A

– MAJOR TERMS OF THE CONTRACT, IF BREACHED CONTRACT ENDS, AND IF CONDITION IS NOT MET, THE CONTRACT ENDS

43
Q

explain the term warranties

A
  • Minor terms of the contract
  • a promise or guarantee made by the seller about the quality or characteristics of a good
  • if breached, other party must still fulfill their obligations but damages could be seeked from breaching party
44
Q

explain the term substantial performance?

A
  • o Substantially all obligations have been fulfilled, but a condition is breached in a minor way (not big, tiny little change)
    o May seek compensation for the small part breached
    o If contract required payment, must be cash unless otherwise specified
     Limits on coinage set under currency act
45
Q

explain the term tender performance

A

ready, willing, and able to perform; other party refuses to accept performance
other party refuses to allow the other party fulfil its obligation
Contract has been breached by refusal; performance no longer required

46
Q

Under tender performance, if a party refuses to accept its debt payment, is it now void

A

No, the money is still owed but the costs acquired to now get this payment is on the debtor. and he/she has to seek the payment

47
Q

What are three types of contract breaches

A

Repudiation - refusal to perform
Anticipatory breach - repudiation before the performance
Fundamental breach - breach of very essence of contract

48
Q

Anticipatory breach allows the victim have two options, what are those options?

A
  • treat contract as breached

- continue to demand performance

49
Q

If the victim of repudiation does not fulfil their own requirement of the contract what happens

A

He/she will be in breach

50
Q

Under the anticipatory breach, is it possible to change my remedy

A

NO, REMDY IS BINDING

51
Q

Exemption clause are in state to help lessen liability for breach. T OR F

A

TRUE

52
Q

A breach of contract can sometimes be deemed as a criminal offence. T OR F

A

True

53
Q

When is an exemption clause pretty much useless or not valid?

A

When it is not drawn to the attention of the other party

54
Q

Explain the term Frustration?

A

Outside, unforeseen event that is out of the control of either party and renders contract either impossible to perform or completely different than what parties contemplated

55
Q

Is frustration a breach? and if there is another way to perform, that was not originally stated, does it still have to be done?

A

No, frustration is not a breach because it is an outside event, and yes, if there is another way it has to be done

56
Q

What was the remedy associated with frustration and what is it now?

A
  • it is used to be a “nothing we can do mentality”

- now if the contract is frustrated, both parties undo what has already been done

57
Q

What are the terms to ending a contract based on agreement?

A
  • it takes a contract to end/change a contract
  • ## each side must receive new consideration
58
Q

Explain the term contract precedent?

A
  • contract begins only if a certain condition or conditions are met
59
Q

explain the term Condition subsequent

A

terms in contract specify when continuing obligations will end
e.g. termination date

60
Q

What are the remedies for a breach

A

Rescission
Damages - putting the victim in a position he/she would have been in if obligations fulfilled
Liquidated damages - term in the contract to limit damages
down payment
The victim must mitigate loss
accounting - when the defendant has profited off their wrongdoing (pay profits of wrongdoing to the victim
- Quantum Meruit - paying a reasonable price for services rendered

61
Q

what type of lawsuit is a sue over contract breach

A

a civil lawsuit (plaintiff and defendant)

62
Q

What are some equitable remedies involved in contract breach?

A
  • Specific performance - only if the subject matter of the contract is unique
  • injunction
  • \

Business Law (2 decks)

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