PowerPoint 7

Question 1

Most minors’ contracts are ___.

Answer 1

Voidable.

Question 2

What is the process of avoidance for minors?

Answer 2

• Minor has option to accept or avoid contract.
• Must choose soon after reaching majority.
• Must return benefits if avoid contract.

Question 3

Voidable

Answer 3

Means that one party (that did not have the capacity) can choose whether to continue the contract or not.

Question 4

If contract is for ___ ___ ___, there is no violability.

Answer 4

Necessities of life.

Question 5

What types of minors’ contracts are enforceable?

Answer 5

Policy of ensuring minors basic needs of life.

Question 6

What are the categories of enforceable contracts?

Answer 6

• Contracts for necessities of life.

- Employment contracts.

Question 7

Mentally Disabled Persons

Answer 7

Judicially declared mentally incompetent.

Question 8

Mentally disabled persons have ___ ___ to contract.

Answer 8

Total incapacity.

Question 9

Contracts with mentally incompetent but not judicial declared persons are mostly voidable if…

Answer 9

The other party knew of the disability.

Question 10

For those with mental disabilities, there are ___ ___ that allow various degrees of guardianship.

Answer 10

Court orders.

Question 11

Can you contract for the necessities of life for mentally disabled persons?

Answer 11

Yes.

Question 12

Guardianship Order

Answer 12

Guardian is responsible for all decisions (taking away autonomy).

Question 13

Trustee Order

Answer 13

Guardian is responsible for only financial decisions.

Question 14

Can intoxication render contracts voidable?

Answer 14

Possibly.

Question 15

How can intoxication render a contract voidable?

Answer 15

Too drunk to understand circumstances and other party aware of extent of intoxication.

Question 16

A business corporation is different from a person. True or false?

Answer 16

False. They are the same.

Question 17

If a contract is created in breach of company charter, the contract is ___ and ___.

Answer 17

Valid, enforceable.

Question 18

Only ___ ___ can have capacity.

Answer 18

Legal persons.

Question 19

What are the two types of legal persons?

Answer 19

• Human beings.

- Corporations.

Question 20

Associations are usually ___.

Answer 20

Unincorporated.

Question 21

What types of organizations are associations?

Answer 21

Clubs, charities, societies.

Question 22

Associations usually lack ___, unless specified by statute.

Answer 22

Capacity.

Question 23

Aboriginal people have full capacity if they are living…

Answer 23

Away from band area.

Question 24

Aboriginal people have limited capacity if ___ on band land.

Answer 24

Indian.

Question 25

Indian defined under the Indian Act generally lack...

Answer 25

Contractual capacity.

Question 26

Can property on band land be used as security for debt?

Answer 26

No.

Question 27

Can property on band land be transferred to an outsider?

Answer 27

Only with Crown consent.

Question 28

Band Land

Answer 28

Property located on Indian reserve.

Question 29

Statute of Frauds is generally in force except in...

Answer 29

BC and Manitoba.

Question 30

Statute of Frauds

Answer 30

An ancient English statute that stipulates a contract may need evidence in writing.

Question 31

What is covered under the statute of frauds?

Answer 31

- Guarantee for repayment of debt. - Sale of interest in land. - Contracts not to be performed within one year.

Question 32

How can mistaken identity prevent the creation of a contract?

Answer 32

- Mistake of identity was material (important). | - Other party knew of mistake at time of contract.

Question 33

How can mutual mistake about subject matter prevent the creation of a contract?

Answer 33

If no agreement on subject then no consensus. No contract because no true agreement. Better to argue there was no contract.

Question 34

Frustration

Answer 34

Contract becomes impossible. The entire benefit of the contract has been destroyed.

Question 35

Can the purchaser recover the price if they received some benefit?

Answer 35

No, it is all or nothing. The purchaser can recover price only if no benefit received.

Question 36

Non est factum

Answer 36

"This is not my deed," for example, if someone delivering flowers and they say sign here, but you were actually signing a prenup. Exception to the rule that if you don't read a contract it is still binding.

Question 37

Duress

Answer 37

Illegitimate threat of harm. Can be duress of person, duress of goods, economic duress.

Question 38

Economic duress can be claimed if:

Answer 38

- Threat made in bad faith. - Victim could not reasonably resist. - Victim acted promptly once pressure removed. - Victim protested at the time. - Victim did not have legal advice before succumbing.

Question 39

Undue Influence

Answer 39

Overpowering will. Rule depends on parties' relationship. Two types.

Question 40

What are the two types of undue influence?

Answer 40

- Pre-existing fiduciary relationship. | - No pre-existing fiduciary relationship.

Question 41

Difference between fiduciary and beneficiary.

Answer 41

Fiduciary owes something to the beneficiary, but the beneficiary owes nothing to the fiduciary.

Question 42

Example of fiduciary relationship:

Answer 42

Doctor-patient relationship.

Question 43

Improvident

Answer 43

Unfair.

Question 44

Unconscionable Transaction

Answer 44

One that no fair-minded person would offer, and no right-minded person would accept.

Question 45

Who is responsible for rebutting presumption in undue influence, the fiduciary or the beneficiary?

Answer 45

The fiduciary party.

Question 46

How would a fiduciary party rebut the presumption in undue influence?

Answer 46

- Show the transaction was fair. | - Independent advice.

Question 47

If there is no fiduciary relationship in undue influence, what has to be proven, and by whom?

Answer 47

The party alleging undue influence must prove that the contract was unfair.

Question 48

Unconscionable transaction presumed if...

Answer 48

- Contract was improvident. | - Inequality in bargaining power.

Question 49

Is a contract void if it is illegal?

Answer 49

Yes.

Question 50

What are examples of illegality?

Answer 50

- Statutory. - Common law. - Public policy.

Question 51

Mr. Bundy Case

Answer 51

Mr. Bundy is old and doesn’t have the right state of mind. Has a son who is criminal and needs money. Son convinced bank manager to lend them money, but says they need collateral. Get Mr. Bundy to sign a cosigning agreement that if he doesn’t pay back the loan, they can take his farm. Looks sketchy, bank manager drives out to their farm. Someone who has a right state of mind wouldn’t think it is a good agreement. Son has bad criminal record so it is obvious the farm would be taken away. Didn’t pass the “smell” test, seems unfair.

Question 52

Prohibition on carrying on business may be limited ___ or ___.

Answer 52

Temporally or geographically.

Question 53

Can you limit employee's ability to work unreasonably?

Answer 53

No, limiting temporally or geographically has to be reasonable.

Question 54

Why would restraint of trade be used?

Answer 54

- To keep ex-employee from competitor. | - To keep store vendor from new establishment.

Question 55

What is the burden to prove that a restraint of trade is reasonable?

Answer 55

Restraint tested against total circumstances.