Module 2: Contracts I

Question 1

parol evidence rule

Answer 1

a rule that limits the evidence a party can introduce concerning the contents of the contract

Question 2

condition subsequent

Answer 2

an event or circumstance that brings an existing contract to an end when it occurs

Question 3

condition precedent

Answer 3

an event or circumstance that , until it occurs, suspends the parties obligations to perform their contractual obligations (contract is not in effect until condition is met)

Question 4

limitation of liability clause

Answer 4

a term of a contract that limits liability for breach to something less than would otherwise be recoverable (i.e. waivers, aka exemption clauses)

Question 5

exemption clause

Answer 5

a term of a contract that identifies events causing loss for which there is no liability

Question 6

liquidated damages clause

Answer 6

a term of a contract that specifies how much one party must pay to the other in the event of a breach

Question 7

penalty clause

Answer 7

a term which is not enforceable because it sets an exorbitant amount that one party must pay to the other in event of breach

Question 8

entire agreement clause

Answer 8

everything in the contract is expressed, excludes implied terms (could be bad if implied terms help protect you though)

Question 9

standard form contract

Answer 9

a take it or leave it contract, where the customer agrees to a standard set of terms that favours the other side (usually leases)

Question 10

option agreement

Answer 10

an agreement where, in exchange for payment, an offerer is obligated to keep an offer open for a specified time

Question 11

variation of contracts

Answer 11

traditionally (and in some provinces i.e. ON) all variations of a contract must be support by fresh (new) consideration. in BC, if party which agrees to a gratuitous variation does it voluntarily, new agreement can still be enforceable, notwithstanding (despite) lack of fresh consideration

Question 12

business efficacy

Answer 12

judges can imply terms that are necessary to make a contract workable i.e. assumed that staircases are built to code

Question 13

objective standard test

Answer 13

a test based on how a “reasonable person” would view the matter

Question 14

equal bargaining power

Answer 14

the legal assumption that parties to a contract are able to look out for their own interests

Question 15

rebuttable presumption

Answer 15

a legal presumption in favour of one party that the other side can seek to rebut or dislodge by leading evidence to the contrary

Question 16

promissory estoppel

Answer 16

a doctrine whereby someone who relies on a gratuitous promise may be able to enforce it

Question 17

pre-existing legal duty

Answer 17

a legal obligation that a person already owes