Yates ch09 - test bank PDF

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Business Law in Canada, 11e (Yates) Chapter 9 The End of the Contractual Relationship1) Which of the following is true with regard to ending a contract by performance, agreement, or breach? A) A contract can be ended by breach if there was a either a breach of condition or a breach of warranty. B) A...

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Business Law in Canada, 11e (Yates) Chapter 9 The End of the Contractual Relationship 1) Which of the following is true with regard to ending a contract by performance, agreement, or breach? A) A contract can be ended by breach if there was a either a breach of condition or a breach of warranty. B) A person has legally tendered performance if he pays a $500 debt in 25-cent coins. C) If a person properly tenders performance of a service that is rejected by the other party, he is required to try again and again. D) A contract ends by agreement when the parties include in the contract a "condition subsequent," i.e., a clause that says the contract will end upon the happening of a specified future event that then takes place. E) If one party to the contract has paid for a service, but now the other doesn't want to perform, the contract is ended by agreement as long as they both agree to call it off. Answer: D Diff: 2 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Applied Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge 2) Pat O'Grady owes Robinson $5000 in cash, but resents Robinson talking about O'Grady's debt among mutual acquaintances. O'Grady wants to know which of the following tactics would be legal performance. A) Deliver the money to his house (instead of to his office) at 3:00 a.m. on the due date B) Not pay Robinson until Robinson came for the money C) Pay Robinson on time but pay it all in dimes D) Pay him on time but with a cheque E) Pay him on time in $5 bills Answer: E Diff: 1 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Applied Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge

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3) Which one of the following is true with regard to the ending of a contract by performance? A) In law, a certified cheque is the same as cash. B) If a person owing money has tendered payment in a reasonable way, at a reasonable time, and it has been refused, he is free from any further obligation to pay. C) If a person attempts to perform services in accordance with the terms of the contract and the buyer refuses those services, the person attempting to perform can sue the buyer with no further attempt to perform. D) Legal tender consists of bills or coin in any amount. E) If a warranty is breached, the victim has no further obligation to perform under the contract. Answer: C Diff: 2 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Recall Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge 4) Which of the following is false with regard to ending a contract by agreement? A) A contract can be ended by the happening of a "condition subsequent" provided for in the contract. B) A contract can be ended by one party if he finds a better deal (e.g., by cancelling an order that has been accepted), as long as this is done before performance. C) A contract can be ended by agreement if neither party to the contract has performed his or her obligation. D) A contract can be ended by agreement if one party has performed his obligation and agrees to take something as satisfaction from the other although that other hasn't performed according to the contract. E) A contract can be ended by agreement by "mutual release." Answer: B Diff: 2 Type: MC Page Ref: 288 Topic: Ch. 9 - Discharge by Agreement Skill: Recall Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge

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5) Which of the following is true with regard to tender of performance? A) If the seller attempts to deliver the contract goods at the time and place designated in the contract but the buyer refuses delivery, the seller will have to make another attempt to deliver before he can sue for breach of contract. B) If Pete shows up at Valley Service Station to fix the gas pumps on the date and at the time he was supposed to, but Valley's manager tells him to come back later, Pete has no further obligations and can sue for breach of contract. C) If Walt attempts to pay Sarah the $750 debt he owes her with a cheque on the date and at the place designated in the contract, she will have to accept that cheque even though there was no mention of payment by cheque in the contract. D) If Ivan attempts to pay his $25 debt to Jan in 25-cent pieces, that attempt constitutes a lawful tender of Ivan's obligation. E) If Sam attempts to deliver the truckload of strawberries at Frank's produce plant at 8:00 p.m. Saturday, they cannot be refused as long as the delivery was before the specified July 10 deadline. Answer: B Diff: 3 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Applied Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge 6) Tufts and McDougal were having an argument about the law regarding performance of a contract. Which one of the following statements of theirs is correct? A) If Jed has to pay $500 to his mechanic, he can pay the whole debt in dimes and the mechanic has to take them. B) If Jed owes the mechanic $500, a cheque is as good as cash in law even if the mechanic said he wouldn't take a cheque. C) If Jed shows up with cash for the mechanic on the day and at the place designated in the contract, and the mechanic refuses to take it for some reason, Jed doesn't ever have to pay him. D) If Roscoe tries to deliver lumber to Jed in accordance with their contract and Jed doesn't take delivery of it, Roscoe can sue Jed for breach of contract without ever trying to deliver it again. E) If Joan owes a $500 debt due on a specific date, she doesn't have to pay until the creditor seeks her out for payment. Answer: D Diff: 2 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Applied Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge

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7) The principle of substantial performance can best be described as when A) all or most of the contractual obligations are fulfilled. B) a major term of the contract is mostly fulfilled. C) minor terms of the contract are yet to be fulfilled. D) minor terms of the contract are disregarded. E) only exact compliance with the contract will qualify as performance. Answer: A Diff: 1 Type: MC Page Ref: 277 Topic: Ch. 9 - Discharge by Performance Skill: Recall Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge 8) Suppliers of goods and services try to eliminate their liability, and the courts have discouraged this by applying the principle that some failures are so significant that there is no performance of the contract. This concept is known as A) repudiation. B) frustration. C) anticipatory breach. D) fundamental breach. E) exculpatory clause. Answer: D Diff: 1 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge 9) The case of Sail Labrador Ltd. v. Challenger One (The) involved an option to purchase and a breach of a contract that was inconsequential and immediately corrected. What did the Supreme Court of Canada hold? A) The contract had been substantially performed and the option was still available. B) The breach, although minor, rendered the contract unenforceable. C) The breach, although minor, rendered the contract voidable at the option of the non-breaching party. D) The contract had not been perfectly performed, so the contract was void. E) No breach can be considered inconsequential at law. Answer: A Diff: 2 Type: MC Page Ref: 278 Topic: Ch. 9 - Discharge by Performance Skill: Recall Objective: Chapter 9: 1. Illustrate how a contract is discharged by performance. Bloom's Taxonomy: Knowledge

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10) In Meditek Laboratory Services Ltd. v. Purolator Courier Ltd., a Purolator employee delivered equipment to the wrong address and then falsified documents. In a subsequent lawsuit, Purolator relied on an exemption clause that limited its liability "whether or not from negligence or gross negligence." What properly described the outcome in this case? A) The falsification of documents was done by the employee, not the company itself, so Purolator could not be liable. B) The falsification of documents was wilful, not negligent, so Purolator was not protected by this clause. C) The exemption clause protected Purolator because of the principle of "freedom to contract." D) The exemption clause was severed as being an illegal restraint of trade. E) The exemption clause was not applied, because it was not evidenced in writing. Answer: B Diff: 2 Type: MC Page Ref: 283 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge 11) Mikael recently started a home-based business selling custom fishing lures. He decided that he could make a lot more money selling his homemade lures on the Internet. Mikael is not the least bit technologically-inclined, but he knows that his next-door neighbour, Perm, does web design on the side. He decides to hire her to create a website for his new venture. Perm has him sign an agreement that includes an exemption clause that limits her liability in cases of negligence. In the course of designing the website, Perm becomes annoyed at Mikael because his dog keeps digging up her rose bushes. Rather than confront Mikael directly, Perm deliberately puts the wrong pricing information on Mikael's website to get him back. If Mikael suffers damages as a result and wants to sue Perm, what would the likely result be? A) The exemption clause would protect Perm because of the principle of "freedom to contract." B) The exemption clause would be severed as being an illegal restraint of trade. C) Perm's actions were outside the scope of the contract, so Mikael would have no claim in law. D) Perm only did freelance web design; as a non-professional she would not face liability. E) Perm's acts were deliberate, not negligent, so Perm would not be protected by the exemption clause. Answer: E Diff: 3 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge

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12) In the case of an anticipatory breach A) you have the right to demand the other side to perform, but you will not be required to perform yourself. B) you have the right to demand performance or to sue for breach. C) you must wait until the actual breach occurs before you can take any steps. D) the contract is declared void ab initio. E) the contract is unenforceable by either party. Answer: B Diff: 1 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge 13) Dagney was an author of a popular series of children's books. She signed an agreement with her publisher, in which she agreed to have a new book in the series written by October 15th. As noted in the contract, the timing was critical to ensuring the books would be on the shelves before Christmas and in order to coincide with a massive promotion the publisher had been planning. Dagney had a terrible case of writer's block. By October 3rd, she realized that there was no way that she would have the book finished by the deadline. She emailed her publisher, admitting that she would not have the book finished in time. What are the publisher's options? A) The publisher cannot take any steps until October 15th, assuming Dagney does not deliver. B) The publisher has no recourse because Dagney's case of writer's block has made performance impossible. C) The publisher has the right to demand performance or sue. D) The contract is voidable at the option of the publisher. E) The date set out in the contract is not an enforceable term; if Dagney gets the manuscript to the publisher in a reasonable time, she will not be in breach. Answer: C Diff: 3 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge

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14) In which one of the following instances would the seller most likely succeed in an attempt to escape liability by the use of an exemption clause when the buyer suffers a loss? A) A consumer transaction is involved and provincial legislation prohibits such exemption clauses in consumer transactions. B) The buyer of an expensive computer software program received, a month after the sale, an invoice on which was printed an exemption clause that he hadn't been shown before. C) The store had posted at the entrance to the dressing rooms a large sign reading "Not responsible for stolen articles," and the customer lost a briefcase in a fire that swept through the dressing rooms. D) There has been a breach of the fundamental obligation of the contract, and the court holds that on its true construction the parties did not mean it to cover a serious breach. E) Ralph bought a used lawnmower under a written and signed contract that contained an "as is" clause. Answer: E Diff: 3 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge 15) Which of the following is false with regard to remedies for breach of contract? A) The victim of a breach cannot recover damages that he could have avoided if he had tried to mitigate his loss. B) If the court holds that the liquidated damages clause in the contract is an honest attempt to estimate damages, the amount stated will be forfeited to the victim of the breach, even if he suffered no loss in fact. C) As a general rule, a person who breaches a contract is liable for all of the foreseeable loss that directly and naturally flows from the breach. D) Damages are awarded by the court to a person who has suffered loss because of a breach of a condition of the contract, but are not awarded for a breach of a warranty. E) A person who disobeys a court order (e.g., an order for specific performance) can be cited for contempt of court. Answer: D Diff: 1 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge

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16) Cleo entered into a contract with Harvey in June to redecorate his apartment before Christmas. However, in the middle of October, she informed him that she would not be able to do his job because she had been offered a big contract in Japan that would take her away until spring. Which of the following is true with respect to this situation? A) The most likely remedy would be for the court to award specific performance to make her do the job. B) Harvey must wait until Christmas to see if Cleo actually performs before he can take legal action. C) Cleo has repudiated the contract and Harvey can take legal action immediately. D) Their contract has been frustrated by circumstances outside their original contemplation, and thus they are excused from their previous obligations. E) Cleo could claim quantum meruit for any work she had done so far and that would be the end of the matter. Answer: C Diff: 2 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge 17) On the February 1, Smyth contracted to buy Dupont's van. They had agreed that Smyth would pay the price of $7000 on March 1 and take delivery and the risk on that date. Smyth then contracted to sell the van to Smithers on March 5 for $7600. On February 22, Dupont called Smyth and said he wasn't going to sell because he had decided to keep the van. On these facts, which of the following is false? A) Dupont's call is an express repudiation of the contract and is an anticipatory breach. B) Smyth could agree to call off the contract; neither of them had yet performed. C) Smyth could refuse to acknowledge a breach, but that would result in the possibility that the contract could be breached later. D) Smyth could acknowledge that Dupont was in breach but has to wait until after the performance date to sue him for breach of contract. E) Smyth could refuse to acknowledge a breach and press Dupont to complete the contact. Answer: D Diff: 2 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Applied Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge

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18) Which of the following statements is correct with respect to breach of contract? A) When a condition is breached, the victim can treat the contract as ended. B) When a condition is breached, a person can only sue for damages but must perform their part of the contract. C) When a warranty is breached, the victim can treat the contract as ended. D) When a contract for the purchase of goods is breached, the warranty will require that the goods be repaired by the seller. E) When a contract is repudiated before performance is due, the victim must wait until the time of performance before taking any action. Answer: A Diff: 1 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge 19) Which one of the following is false with regard to exemption (exclusion) clauses? A) Such clauses are prohibited in any sale of goods contract. B) To be part of the contract, such clauses must be brought to the attention of the parties before or at the time of contract. C) Even if there is an exemption clause in the contract, the court can hold that the exemption clause is of no effect if the breach is a fundamental breach. D) Where there is an exemption clause in a contract, the court will strictly construe that clause; i.e., the wording of the clause must cover the situation that occurred. E) An effective exemption clause is a barrier blocking the party wronged from his or her remedy, e.g., from damages. Answer: A Diff: 2 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 2. Describe when a breach of contract will be sufficient to relieve the opposite party from its obligations. Bloom's Taxonomy: Knowledge

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20) When an anticipatory breach has taken place (where a person, before performance is due, states that he will not perform the contract) A) the victim may sue immediately and not wait to see if the contract is performed or not. B) the victim must wait to see if the contract is performed, but damages are calculated from the time of the refusal. C) the victim can get someone else to do the job but then cannot sue the original party to the contract if it costs more. D) such a statement made before performance is due has no effect on the contractual obligations of the parties. E) the victim may not be able to recover damages that occur after the anticipatory breach. Answer: A Diff: 2 Type: MC Page Ref: 280 Topic: Ch. 9 - Discharge by Breach Skill: Recall Objective: Chapter 9: 2. Describe when a breach of contract will be suff...