Canadian Business Law
Question Bank
Course Introduction
Canadian Business Law provides an overview of the legal principles and regulations affecting businesses operating in Canada. The course covers topics such as the Canadian legal system, contract law, torts, employment law, forms of business organization, agency relationships, sale of goods, and the protection of intellectual property. Through case studies and practical examples, students will learn how legal concepts are applied in real-world business scenarios and gain an understanding of their rights and responsibilities under the law. The course also addresses current legal challenges, ethical considerations, and regulatory issues that impact the contemporary Canadian business environment.
Recommended Textbook
Canadian Business and the Law 5th Edition by Dorothy Duplessis
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Page 2
Chapter 1: Knowledge of Law As a Business Asset
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Q1) Novel Swings Inc. has a contract to begin construction of a school's swing set on June 15th and work is to be completed by August 1st. After weeks of wet weather, the ground was unsuitable for work to begin in June and Novel will not meet the completion deadline. Which of the following best describes the legal statutes of the contractual relationship between Novel Swings and the school?
A) The contract is void due to wet weather.
B) The contract requires renegotiation.
C) The contract is in good standing.
D) The contract has been breached.
Answer: D
Q2) What was the outcome of U.S. government reluctance to regulate the activities of its banks, financial institutions, and markets?
A) U.S. destabilization left global markets unaffected.
B) There was severe destabilization of global markets and economies.
C) Subprime mortgage lending continued to grow.
D) U.S. banks, markets, and financial institutions flourished.
Answer: B
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Page 3
Chapter 2: The Canadian Legal System
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Q1) The early English court of equity established rules that focus on what would be fair given the specific circumstances of a case, as opposed to what the a strict application of the common law might dictate.
A)True
B)False
Answer: True
Q2) A recent decision of the Supreme Court of Canada established a new ground of entitlement to spousal support under the federal Divorce Act. Which of the following describes the effect the decision will have on provincial family law courts determining spousal support cases?
A) Provincial courts will seek exemption under the "notwithstanding clause."
B) The decision applies only to support cases outside of the province of Quebec.
C) Superior court decisions must be followed and applied by all inferior courts.
D) Courts apply the new law if it complies with the parties' religious convictions.
Answer: C
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4
Chapter 3: Managing Legal Risks
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Q1) During a recent takeover of a competitor, Jordden Jeans Corp. was able to realize significant cost savings due to advice from its lawyer throughout the negotiation process. How does this result support the primary function the organization's risk manager required the lawyer to fulfill?
A) provide current industry knowledge
B) provide advice at a reasonable cost
C) provide business evaluation skills
D) provide practical bottom-line advice
Answer: D
Q2) A cost-benefit analysis is conducted to assess the benefits of substituting a key compound in a herbal health specialty product formula. The substitution would involve the use of an untested inexpensive compound. What business function should be analyzed for legal risk?
A) costing
B) production
C) marketing
D) analyzing
Answer: B
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Chapter 4: Dispute Resolution
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Q1) Davey Jones Law Offices acts as legal counsel to a large commercial client. The client has instructed Mr. Jones to prepare and file a litigation claim naming a competitor as the opposing party in the lawsuit. What title is given to Davey Jones's client in the initiating document?
A) respondent
B) petitioner
C) plaintiff
D) defendant
Q2) Davey Jones Law Firm has filed a claim with the court on behalf of its client, naming Gaston's Commercial Fabricators Inc., as the opposing party. What title is given to Gaston's in the initiating document?
A) plaintiff
B) defendant
C) respondent
D) petitioner
Q3) The process of discovery includes the examination of documents, oral testimony, and expert reports.
A)True
B)False
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Page 6
Chapter 5: An Introduction to Contracts
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Q1) A year ago, you negotiated a contract with a supplier on behalf of your company. The contract was broken six months ago, and the supplier is about to commence legal proceedings for the breach. Can you personally be held liable for the losses resulting from the breach? Explain.
Q2) Which of the following is an example of a contract that would be governed by legislation and NOT by common law?
A) a contract involving the sale of goods governed by the Sale of Goods Act
B) a contract involving the supply of services governed by the Employment Act
C) a contract retaining a lawyer to perform legal services on behalf of a client
D) a verbal contract involving an exchange of services for a set monetary price
Q3) In a strictly legal sense, which of the following is synonymous with the reasonable person test?
A) an objective standard
B) the degree of bargaining power
C) a subjective standard
D) an agreement on essential terms
Q4) Identify and briefly describe the necessary elements that must be present in order for a court to recognize a contract as a legally binding agreement.
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Page 7
Chapter 6: Forming Contractual Relationships
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Q1) What is meant by the term "firm offer"?
A) the consideration given in return for something to be received
B) an offer that is irrevocable prior to its acceptance
C) the monetary consideration exchanged for an offeree's promise
D) a promise to keep an offer alive for a set period of time
Q2) Briefly describe how a store maintains the option of refusing to complete a transaction involving a product it displayed at a cash register. Identify and briefly describe the effects of any legislation that may affect the store's ability to refuse to complete a sale to a customer.
Q3) Identify and briefly describe the provisions of the Uniform Electronic Commerce Act that deal with communication of acceptance messages. Identify and briefly explain what step an electronic trader must take to avoid disputes involving where acceptance becomes effective.
Q4) A standard form contract requires one party, typically a consumer, to enter into it without benefit of negotiation.
A)True
B)False
Q5) Briefly describe the options available to a party to a contract who wishes to avoid problems related to cost increases.
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Chapter 7: The Terms of a Contract
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Q1) Nigel is the owner of a small drapery manufacturing business. He has several contracts with three fabric suppliers. Nigel believes the only obligations he owes to his suppliers are recited in the contracts. Under what circumstances would Nigel know immediately that his assumption was wrong?
A) a situation whereby a supplier's misconduct adversely affects his business interests
B) a situation that enables one party to eliminate the application of the Sale of Goods Act
C) a situation where an entire contract clause forestalls suppliers' arguments relating to his guarantee
D) a situation where a price-variation clause doesn't allow a supplier to offset increased costs
Q2) Why would a businessperson use contractual terms as a planning feature of the law?
A) to limit liability and block the use of the parole evidence rule
B) to limit liability and shield against possible future events
C) to limit liability and prevent collateral oral agreements
D) to limit liability and buffer against certain future events
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Chapter 8: Non Enforcement of Contracts
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Q1) A contract will be set aside for mistake only if one party realized the other party was mistaken at the time of entering the contract.
A)True
B)False
Q2) How is a wilful omission with regard to relevant information during pre-contractual negotiations regarded in law?
A) as a false statement of fact that causes someone to enter a contract
B) as permissible because each party must look out for their own interests
C) as an error made by one or both parties that seriously undermines a contract
D) as a breach of the duty to disclose information without being prompted
Q3) Which of the following would affect the status of a contract entered into by a minor upon that individual attaining the age of majority?
A) The contract is ratified after attaining legal capacity.
B) The contract involves enforceability by some statute.
C) The contract involves a non-continuing interest.
D) The contract is of a permanent or continuous nature.
Q4) What must be proven in order to have a contract set aside for misrepresentation?
Q5) What is an "electronic signature," and is it legally valid?
Q6) When is a contract considered to be contrary to public policy? Give an example.
Page 10
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Chapter 9: Termination and Enforcement of Contracts
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Q1) Which of the following possibilities would a party considering the non-performance of a contract weigh?
A) the actual anticipated gains versus the likely cost of breach
B) the moral cost to society of unethical commercial activity
C) that actual moral cost balanced against the economic gains
D) the ethical cost to the essential functioning of business
Q2) Which of the following would give rise to the ability of one party to terminate a contract and bring an action for damages?
A) breach of an express term of the contract
B) breach of an innominate term of the contract
C) breach of a warranty of the contract
D) breach of a condition of the contract
Q3) The remedy of rescission is not available if the plaintiff does not bring an action seeking rescission within a reasonable time.
A)True
B)False
Q4) Briefly describe what is meant by an anticipatory breach. Explain why this type of breach is actionable and identify and briefly describe any distinguishing characteristic with respect to seeking a remedy.
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Chapter 10: Introduction to Tort Law
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Q1) What would a court most likely rely on when awarding damages to compensate an innocent party for their loss in a case involving joint tort-feasors?
A) each tort-feasor's ability to pay damages
B) each tort-feasor's risk of wrongful conduct
C) each tort-feasor's level of responsibility
D) each tort-feasor's contributory negligence
Q2) How would a court determine the amount by which to reduce a plaintiff's award where that party has also acted negligently?
A) by considering the defence alleging contributory negligence by the plaintiff
B) by determining the degree to which a plaintiff is responsible for their own loss
C) by apportioning liability for the loss between all of the joint tort-feasors
D) by determining that the loss sustained was much less than it might have been
Q3) What legal term is derived from the Latin word meaning "crooked"?
A) deceit
B) tort
C) thief
D) fraud
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Chapter 11: The Tort of Negligence
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Q1) Identify and briefly describe the rule that follows the legal principle that only the type of injury must be foreseeable.
Q2) Sony Corporation is thinking about having purchasers of its PlayStation product sign an arbitration clause that takes away their right to sue in court. What benefit might you reasonably expect Sony to achieve with such a clause?
A) It's a good public relations idea.
B) It's likely to reduce exposure to class action suits.
C) It's an actual way to remove liability.
D) It's effective provided customers receive legal advice.
Q3) What is the commonality that exists in law between the tort of negligent misstatement and negligent misrepresentation?
A) Both strongly support a claim arising from third-party reliance.
B) Both must arise from communication with a professional.
C) Both may be perfectly justifiable.
D) Both arise from communication.
Q4) Identify and briefly describe what a defendant must show in order to successfully rely on the defence of volenti non fit injuria. Include a brief explanation of the major significance of this defence to commercial liability insurers.
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Page 13
Chapter 12: Other Torts
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Q1) Businesses face liability for the tort of negligence as well as under nuisance legislation for what is known as a "slip and fall."
A)True
B)False
Q2) The Trade-marks Act contains a statutory form of action that bears a strong resemblance to the tort of passing off.
A)True
B)False
Q3) Which of the following is a distinguishing characteristic of injurious or malicious falsehood?
A) The burden of proof requires a plaintiff to establish malicious harm to his reputation.
B) The plaintiff must prove a false statement harming her reputation was intentional.
C) The burden of proof requires a plaintiff to establish a negative product statement is false.
D) The plaintiff must prove a malicious statement about service or products and its falsehood.
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Chapter 13: The Agency Relationship
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Q1) A principal whose identity is unknown to a third party who has no knowledge that the agent is acting in an agency capacity is legally known as an undisclosed principal.
A)True
B)False
Q2) Explain why agency by estoppel forces a principal to be bound by an unauthorized contract. Contrast and briefly discuss this with respect to a principal's position under agency by ratification.
Q3) Which of the following would most strongly support a determination of the existence of a contract between a principal and a third party?
A) whether the principal actually likes the deal
B) the extent to which the agent is remunerated
C) the extent of the agent's actual authority
D) the timing of the agent's acceptance of a retainer
Q4) Actual authority is a relationship that exists when one party represents another party in the formation of legal relations.
A)True
B)False
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15
Chapter 14: Business Forms and Arrangements
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Q1) Voyageur Enterprises Inc. will continue in existence perpetually unless it is dissolved through voluntary surrender of its legal status or by court order for failing to comply with statutory regulations.
A)True
B)False
Q2) The vehicle most commonly used as an investment device is a limited liability partnership, in which at least one partner has unlimited liability and the rest have limited liability.
A)True
B)False
Q3) What is the source of the laws that specifically govern the relationship between partners and third parties?
A) the Law of Partnership
B) the Law of Agency
C) the Partnership Act
D) the Agency Act
Q4) List at least 6 of the 10 optional rules prescribed by the Partnership Act in each province with respect to the relations between partners.
Q5) Discuss the distribution of the profits of a corporation.
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Chapter 15: The Corporate Form: Organizational Matters
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Q1) Tammel's father established and trademarked his McDonald's Drive Inn business in 1962. He passed its ownership to her when he retired. The McDonald's franchise and its golden arches came into existence 20 or so years later. Eventually, a McDonald's franchise opened in Tammel's small city. Tammel was approached to discuss the legalities of the confusing business names. As a result of this unintentional conflict, what would be the most favourable and likely outcome for Tammel and her business?
A) As the first to register the name, Tammel will be entitled to carry on as is.
B) She can be compensated for having to re-establish her corporate identity.
C) She can sue for trademark infringement and the tort of passing off.
D) The registrar of the corporations branch will dissolve Tammel's company.
Q2) Why are corporations seen as being capable of remedying many of the shortcomings found in the sole proprietorship and partnership business forms?
A) because corporations are easily formed business entities
B) because none of a corporation's assets are at risk
C) because some of the owners' assets in a corporation are at risk
D) because of a corporation's existence as a separate legal entity
Q3) Briefly discuss how the offences of insider trading and tipping are dealt with in Canada.
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) Which of the following operates in such a way that a corporation is liable, with respect to contractual obligations, to the outsider as opposed to the directors who acted on the corporation's behalf?
A) doctrine of constructive notice
B) principles of indemnification
C) identification principle
D) principles of agency
Q2) What common law decision provides the leading analysis of the principles underlying the corporate opportunity doctrine?
A) Re City Equitable Fire Insurance Co. [1925] 1 Ch 407
B) Canadian Aero Service Ltd. v. O'Malley [1974] S.C.R. 592
C) Peoples Department Store v. Wise (2004), 244 DLR (4th) 564 (S.C.C.)
D) BCE v. 1976 Debenture Holders (2008) SCC 69
Q3) In assessing a claim for oppression, a court must determine (i) whether the evidence supports the reasonable expectation of the stakeholder, and (ii) whether the reasonable expectation of the stakeholders was violated by the oppressive conduct. Identify the factors that must be considered by the court in order to answer both of these questions.
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Chapter 17: Personal Property
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Q1) Shawna received a factory recall notice from her GM dealership. She accepted the dealership's offer to drive her to work when she brings the car in for the service recall. What will be the certain result when Shawna hands the dealership her car keys?
A) An agreement on price for the service will be created in advance.
B) An incidental storage bailment will be created.
C) A very high standard of care will be expected.
D) The dealership will lose the right to retain property for payment.
Q2) Which of the following exemplifies possession without ownership?
A) granting a trademark registration to an applicant
B) granting a licence for use of a bio-waste technology
C) registering a transfer of a freehold interest in land
D) registering a company's truck under its business name
Q3) What is the most significant effect of the responsibility of the standard of care placed on common carriers with respect to the property they carry?
A) Defences relate mainly to events within a carrier's control.
B) A bailor is required to prove fault.
C) Defences mainly relate to the circumstances of the carrier.
D) Carrier liability for mishaps is severely limited.
Q4) Identify the risks relating to personal property.
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Chapter 18: Intellectual Property
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Q1) What is the most important factor contributing to Roger's review of his organization's strategic information, products, databases, and specialized know-how?
A) implied obligations
B) the determination of economic value
C) the security of confidential business information
D) express obligations
Q2) Fair dealing is a permitted defence to copyright infringement that allows the copying of works for unlimited purposes.
A)True
B)False
Q3) Nancy is currently reviewing the serialized one-line definitions, known as claims, noted on her client's application. What is name given to Nancy's role?
A) patent lawyer
B) patent holder
C) patent agent
D) patent officer
Q4) Identify the factors that must be considered in order to assess whether a dealing is fair.
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Page 20
Chapter 19: Real Property
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Q1) Marina has given the required 90 days' notice that she will not be renewing her lease to her landlord. Marina's business has leased space from this landlord under a periodic tenancy arrangement.
A)True
B)False
Q2) If a bank has foreclosed on a property located in Alberta, Saskatchewan, or British Columbia and has been left with a deficiency after its sale, the vendor cannot personally sue individual borrowers and can sue only corporations that have waived their statutory protection.
A)True
B)False
Q3) The rights of the mortgage lender are limited to a combination of the following three remedies: suing the borrower, taking possession of the land, and foreclosure.
A)True
B)False
Q4) Identify the basic terms generally contained in an agreement of purchase and sale of real property.
Q5) Briefly discuss joint tenancy.
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Chapter 20: The Employment Relationship
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Q1) Explain why the distinction between an employee and an independent contractor is important.
Q2) Laws that specify minimum standards in a workplace are provided by employment equity legislation.
A)True
B)False
Q3) What governing body was given the role of enforcing employment equity legislation?
A) the Canadian Human Rights Commission
B) provincial human rights commissions
C) the Supreme Court of Canada
D) the Canadian Employment Standards Commission
Q4) A company is reviewing each step of its employee hiring process to ensure that it is avoiding discriminating practices. Identify and list the elements that the company should do to meet this goal with respect to this particular process.
Q5) Laws designed to improve the status of certain designated groups are contained in employment standards legislation.
A)True
B)False
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Chapter 21: Terminating the Employment Relationship
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Q1) Briefly explain how a low-level employee may pursue an action for constructive dismissal and any benefits that may flow to that employee as a result.
Q2) What are the primary factors that tend to lengthen the period of notice an employee is entitled to on termination?
A) a high degree of specialization, age, and economic climate
B) the character of employment, and the availability of similar employment
C) the inducement to join, length of service, and industry practice
D) the length of service, age, company policy, and industry custom and practice
Q3) In a matter involving an alleged wrongful termination of employment, why would a lawyer encourage the dismissed employee to commence an action for defamation against the employer?
A) Higher damages and the possibility of a punitive damage award for defamation will result.
B) Damages for intentional infliction of mental suffering are limited to the notice period.
C) Additional damages for intentional infliction of mental suffering will result.
D) Damages are limited to the notice period, but an award of punitive damages is possible.
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Page 23
Chapter 22: Professional Services
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Q1) How has the Supreme Court of Canada limited the potential for third-party claims for economic loss (in the Hercules Managements v. Ernst & Young case)?
Q2) Which of the following is synonymous with a "retainer" with regard to professional services?
A) the client's contractual obligation to provide accurate information for the professional opinion
B) a document setting out the terms of liability of the professional for professional negligence
C) a written promise of the professional to act in the best interests of the client
D) the advance payment requested by the professional to fund the professional's services
Q3) Explain how professions derive their ability to be self-regulating. Briefly discuss the criticisms of the professional self-regulating model and measures that have been taken to remedy the problem in other common law jurisdictions.
Q4) Briefly discuss the effects of a limited liability partnership on liability for partners of a firm and the firm itself.
Q5) Identify specific obligations that apply to a professional as fiduciary.
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Page 24
Chapter 23: Sales and Marketing: the Contract, Product, and Promotion
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Q1) Marta went to the local office supply store to buy a few packages of grey linen bond paper. The clerk showed Marta laminated covered samples but refused to let her open the wrapped packages for comparison purposes. She made the purchase but was asked by her office manager to return the paper because it was too thin. According to the Sale of Goods Act, why will the merchant likely have to accept the return of the product?
A) The seller refused the opportunity to compare goods with a sample.
B) The buyer relied on the description of goods by the seller.
C) The buyer made the intended use known at the time of purchase.
D) Goods sold by description must correspond to the description.
Q2) From what source is the labelling and packaging legislation that applies to alcohol, milk, and margarine products derived?
A) trademark law
B) federal legislatures
C) municipal lawmakers
D) provincial legislatures
Q3) Identify the warranties that are implied in sales transactions by the Sale of Goods Act.
Q4) Briefly discuss the right of repudiation with respect to the sale of goods.
Q5) Discuss regulation relating to the product component of the marketing mix.
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Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Price discrimination involves a producer's attempts to drive the final retail price of goods upward and the imposition of recriminations upon noncompliant retailers.
A)True
B)False
Q2) Which of the following is a distinguishing characteristic of the Personal Information Protection and Electronic Documents Act?
A) Failing to disclose full contract terms is an offence.
B) The absence of a similar provincial law allows the federal act to be applied provincially.
C) All provinces have endorsed the disclosure of specified goods and services information.
D) All provinces regard the failure to provide a copy of a contract as an offence.
Q3) The regulations affecting telemarketing do not extend to faxes, Internet communications, or automated, prerecorded messages.
A)True
B)False
Q4) List the sources of legal risks in marketing that relate to price.
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Chapter 25: Business and Banking
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Q1) In practical and legal terms, the focus is shifting to electronic banking, which includes a growing range and variety of transactions that previously required less formal documentation.
A)True
B)False
Q2) What essential technical requirement must be present in order for an instrument to become negotiable without investigation as to its validity through reference to circumstances or other documents?
A) a payee's endorsement
B) an authorized signature
C) a drawer's endorsement
D) an unconditional obligation
Q3) Which of the following is subject to the law of negotiable instruments?
A) credit cards
B) money laundering
C) cheques
D) electronic transfers
Q4) Identify the additional duties implied on the bank with respect to the banking contract by common law and banking practice.
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Chapter 26: The Legal Aspects of Credit
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Q1) Discuss the letter of commitment and describe the basic terms that are detailed in this type of financing document.
Q2) A letter of commitment contains the actual loan agreement between the lender and the commercial borrower; the borrower, lacking bargaining power, must meet those terms if it wants the loan.
A)True
B)False
Q3) Which of the following companies would risk the revocation of its operating licence for harassing, threatening, and exerting undue pressure on a defaulting borrower?
A) banking institution
B) collection agency
C) credit bureau
D) credit card company
Q4) The lenders required EcoEnergy Inc. to pledge the new equipment it had financed as collateral security for the loan. With respect to commercial loans, this is an uncommon practice among lenders.
A)True
B)False
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Chapter 27: Bankruptcy and Insolvency
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Q1) What must be acquired in order for a business to continue to function after its insolvency proposal has been approved by its creditors?
A) approval of the court
B) appointment of a trustee
C) majority approval by creditors
D) debtor-in-possession financing
Q2) What is the term for an order of a court declaring a person to be bankrupt?
A) bankruptcy order
B) order of insolvency
C) assignment into bankruptcy
D) creditor assignment in bankruptcy
Q3) What legislation allows a debtor to seek remedies in order to bring closure to its obligations when a creditor has indicated that the debt is unworthy of the time it would take to collect?
A) the Bankruptcy and Insolvency Act
B) the Bankruptcy Act
C) the Insolvency and Bankruptcy Act
D) the Insolvency Act
Q4) Identify the purposes that a proposal is intended to achieve.
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Chapter 28: Insurance
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
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Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) Within what jurisdiction does the topic of insurance fall?
A) provincial jurisdiction
B) federal jurisdiction
C) executive jurisdiction
D) municipal jurisdiction
Q2) What insurance product would protect against loss for injury and property damage related to the operation of a business's vehicles?
A) a product that covers personal injury and negligent property damage
B) a product that covers loss of profit while the vehicle is being repaired
C) a product that offers replacement value
D) a product that covers personal injury
Q3) Briefly explain why the law places the duty of disclosure on the insured.
Q4) Which of the following can be attributed to the effect of adequate insurance coverage?
A) a cornerstone of an effective risk management program
B) exorbitant business expenses
C) an effective panacea for all legal risks
D) a loss of integrity among directors and officers of large corporate institutions
Q5) Identify and briefly describe the basic kinds of insurance.
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