Introduction to Canadian Business Law
Midterm Exam
Course Introduction
Introduction to Canadian Business Law provides students with a foundational understanding of the legal principles and frameworks that govern business activities in Canada. The course examines the Canadian legal system, sources of law, and the roles of various legal institutions. Key topics include contract law, tort law, employment law, forms of business organization, and intellectual property. Through case studies and practical examples, students will gain insight into how laws affect business decision-making, minimize risk, and ensure compliance within the Canadian context.
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) Litigation directly involves lawyers, judges, and the court system because it is the process one person or a business must use to sue another.
A)True
B)False
Answer: True
Q2) Briefly describe the main reasons one party to a contract might decide to overlook a breach of contract by the other party.
Answer: A party to a contract might decide to overlook a breach of the contract if it is a minor breach and maintaining the business relationship is important and desirable. A minor breach is more likely to be quickly resolved directly between the parties, while litigation is a slow and expensive process for resolving a dispute.
Q3) Canadian law provides that business owners may discriminate in hiring practices and may ignore the laws of other countries; however, they must comply with the health and safety regulations governing the workplace.
A)True
B)False
Answer: False
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3
Chapter 2: The Canadian Legal System
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Q1) Quest Electrical Engineers Inc. contractually committed to provide specialized services to a construction project with specified deadlines for completion. Quest has to meet deadlines or face penalties. What type of law governs the relationship and conduct of the parties to this contract?
A) common law
B) corporate law
C) public law
D) private law
Answer: D
Q2) The Province of Newfoundland and Labrador enacted new regulations to better control hazardous waste disposal throughout the province. What type of law should specialized waste control businesses operating in Newfoundland and Labrador refer to in order to ensure their commercial activities are legally compliant?
A) civil law
B) statute law
C) equitable law
D) common law
Answer: B
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Chapter 3: Managing Legal Risks
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Q1) Benta recently purchased an office cleaning business with established long-term contracts to provide cleaning services to a number of large office building operators. Which of the following actions would immediately allow Benta to be aware of the potential legal risks with the building operators?
A) consult with a law firm to devise a legal strategy
B) consult and arrange insurance to cover legal risks
C) schedule introductory meetings with customers
D) review contracts and customer payment history
Answer: D
Q2) Which of the following would strongly support a business strategy for managing risks uniquely associated with commitments made by employees to suppliers or customers?
A) Identify a knowledgeable individual to be risk department manager.
B) Retain legal counsel to act as in-house counsel to the business.
C) Establish policies and financial limits for commitments to customers.
D) Deal with each risk and assign responsibility for each action.
Answer: C
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Chapter 4: Dispute Resolution
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Q1) What is the role of common law and statue law with regard to the litigation of a commercial dispute?
A) Both provide a source of the objective rules applicable to the disputed matter.
B) Each provides a source of the substantive rules applicable to the contested matter.
C) Both provide rules governing the legal foundation for determining how trials proceed.
D) Each contains rules that determine what the process leading up to trial will be.
Q2) One of the factors influencing whether negotiations to remedy a dispute will succeed is the effectiveness of the parties involved in the negotiations.
A)True
B)False
Q3) Identify the stages of a lawsuit and briefly describe the parties who would typically be involved.
Q4) How does a person who wins a case in civil court actually collect on the judgment? What limitations are there on his/her ability to collect?
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Chapter 5: An Introduction to Contracts
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Q1) When hearing a case, the court will generally assume equality of bargaining power, even though it is not always a valid assumption.
A)True
B)False
Q2) In most instances, the rules governing contractual disputes are based on the common law.
A)True
B)False
Q3) Why would a lawsuit be considered the least favourable choice of remedy for non-performance in a contractual business relationship?
A) The court's remedy will focus on the parties' economic realities.
B) The court will limit its remedy to focus on the specific disputed transaction.
C) The court will direct its decision strictly to the finding of the correct answer.
D) The court's decision will focus on the parties' best business options.
Q4) Identify and briefly describe the objectives that owners and managers should keep in mind when dealing with a customer who is attempting to expand or restrict an existing contract.
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7
Chapter 6: Forming Contractual Relationships
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Q1) What common distinguishing characteristic may be attributed to both an option agreement and a counteroffer?
A) Both can result in a lawsuit for damages if deliberately rejected by the offeror.
B) Both are subject to revocation by the offeror prior to a lapse of a set period of time.
C) Both form a separate contract that may or may not lead to the acceptance of an offer.
D) Both serve to prohibit the lapse of an offer before a set time period has expired.
Q2) Sometimes a contract is drafted in such a way that it fails to clearly and precisely express the essential terms of the offer. Which of the following would have the greatest influence on a court's willingness to interpret such an offer and resolve uncertainties?
A) the terms that would have resulted from completed negotiations
B) a stated workable formula for determining market price
C) evidence of a clear intention of the parties to create legal relations
D) certain matters in the agreement left to be decided in the future
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Chapter 7: The Terms of a Contract
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Q1) When the parties fail to address an important aspect of their contractual relationship, the law may help to "fill in the blanks" through implied terms.
A)True B)False
Q2) Briefly explain what is meant by the parol evidence rule. Identify when a court might avoid applying the parol evidence rule.
Q3) Marty has made his acceptance of an offer to purchase his house subject to his lawyer's approval. Why did Marty's lawyer advise him that it was essential for him to do so?
A) to ensure contractual obligations Marty incurs are limited to certain circumstances
B) to ensure that any price-variation clause will be detected and eliminated
C) to ensure that Marty will receive a fair price without losing the sale altogether D) to avoid having to negotiate a higher price to compensate for market changes
Q4) An implied term may be imposed by the court in order to give effect to the parties' intentions.
A)True B)False
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Chapter 8: Non Enforcement of Contracts
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Q1) If a contract is one that the Statute of Frauds requires must be written in order to be enforceable, what must appear in writing?
Q2) Even though Dalbert knew Rahim had consumed copious amounts of alcohol during the afternoon, both signed a contract written on a napkin whereby Rahim agreed to buy Dalbert's old car for top dollar. Upon regaining his legal capacity, if Rahim opts to repudiate the contract on the basis of an improvident agreement, how must he proceed to void the contract?
A) He must claim relief due to the effects of duress.
B) He must claim relief due to economic duress.
C) He must claim relief due to undue influence.
D) He must claim relief due to unconscionability.
Q3) Which of the following is a valid requirement under the federal Secure Electronic Signature Regulations issued in 2005?
A) to facilitate the association of a person's typewritten name with their unique signature
B) to ensure that typewritten names bind electronic contractual obligations
C) to ensure documents and signatures are evidenced in written form.
D) to ensure alterations to a document after it was signed can be evidenced
Q4) What must be proven in order to have a contract set aside for misrepresentation?
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Page 10
Chapter 9: Termination and Enforcement of Contracts
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Q1) Identify and briefly described the type and circumstances under which punitive damages are to be awarded as firmly established by the Supreme Court of Canada in the case of Whiten v. Pilot Insurance Co. (2002), 209 D.L.R,. (4th) 257 (S.C.C.).
Q2) Donelle agreed to rent her cottage to Juan for the first two weeks of June. Juan paid Donelle the rent due on May 29 by certified cheque. On the last day in May, a forest fire burned the cottage to the ground. What is the role of the doctrine of frustration with respect to the status of the contract?
A) It applies because Donelle has breached the contract.
B) It is not applicable; performance can be postponed.
C) It applies, as performance is no longer practical.
D) It is not applicable; the settled amount has been paid.
Q3) What must be used as the determining factor upon which a court will rely to settle a dispute involving the classification of a contractual term?
A) the conditions specified in the contract
B) the warranties set out in the contract
C) the implied terms relevant to the contract
D) the intentions of the contractual parties
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11
Chapter 10: Introduction to Tort Law
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Q1) A judge will likely rely on expert opinions from occupation experts, labour economists, and actuaries when determining the value of an injured plaintiff's diminished earning capacity.
A)True
B)False
Q2) What does the law consider to be a qualifying act with respect to the commission of a tort of assault?
A) non-consensual physical contact violating another's bodily security
B) the act of coming onto another person's property without consent
C) the intentional misrepresentation of facts
D) the intentional threat of imminent physical harm
Q3) When an employer is vicariously liable, the employee who actually caused the plaintiff's loss retains primary liability.
A)True
B)False
Q4) The tort of negligence is the most uncommon of the torts that arise in a business context.
A)True
B)False
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Chapter 11: The Tort of Negligence
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Q1) The law of negligence requires a court to consider the foreseeability test. In so doing, which of the following would allow the court to hold a defendant liable for negligence?
A) an unlimited or indeterminate class of victims entitled to compensation
B) an objective anticipation of an act or omission causing harm to the plaintiff
C) breach of the obligation to be mindful of the plaintiff's legitimate interests
D) a plaintiff's ensuing loss of profit arising from a misstatement
Q2) What distinguishes how the House of Lords would address a case involving negligence from how a Canadian court would address the same case?
A) the question of whether the case is novel posed by the Canadian courts
B) the imposition of a judicial policy based on competing interests
C) the question of whether the case is novel posed by the House of Lords
D) the imposition of reasonably exacting legal standards for business
Q3) Professional negligence is sheltered by the courts on the premise that a client's pure economic loss should be uncompensated because pure monetary loss is a harmless experience to the ordinary person.
A)True
B)False
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Page 13
Chapter 12: Other Torts
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Q1) What is the legal term for the group of parties recognized as having the ability to exercise some degree of control over land or buildings on that land?
A) occupant
B) occupier
C) licensee
D) tenant
Q2) Which of the following would most likely be used by a court to assess the quantum of an individual's actual monetary damages resulting from defamation?
A) the severity of injury from the falsehood
B) the remoteness of the damages
C) the severity of the defamation
D) the foreseeability of the damages
Q3) An owner of a building who uses one of the offices for his own business purposes is an occupier.
A)True
B)False
Q4) Identify the torts that endeavour to protect a business's property and its own reputation and the party whose actions typically give rise to this type of action.
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Chapter 13: The Agency Relationship
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Questions
Q1) Briefly discuss the importance of the agency relationship to business, including what it is, what it allows, how it is used, and the advantage derived from using it.
Q2) The application of which of the following is most likely to be created by the liability arising from agency principles with respect to employees and independent contractors?
A) the doctrine of vicarious liability
B) the common law principle of agency
C) the common law neighbour principle
D) the doctrine of primary liability
Q3) The employment contract of a manager of a business expressly recites her authority. How do other components of her authority come into existence?
A) via the more tangible form of a detailed job description
B) by conducting a fact-specific inquiry of the position's job description
C) via the nature of the position and business management requirements
D) by the strict utterance of instructions to the manager
Q4) There must be three key relationships at play in any given agency situation.
A)True
B)False
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15
Chapter 14: Business Forms and Arrangements
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Q1) Briefly discuss the liability of the partners for a breach of contract, including, among other things, the key point from this perspective.
Q2) A partnership is a simple form of legal relationship that automatically arises when two or more people do business together with the objective of making a profit.
A)True
B)False
Q3) The president of EcoAgents must affix the company's corporate seal to the bank's lending agreement he signed because this form of business entity lacks the legal capacity to borrow capital.
A)True
B)False
Q4) Which of the following will be most influenced by restrictions contained in the incorporating documents or by a shareholders' agreement?
A) transfer of ownership of shares
B) voluntary surrender of legal status
C) general application laws
D) perpetual existence of the entity
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) Which documents typically set out the rules governing the day-to-day operations of a corporation incorporated anywhere in Canada (depending on jurisdiction)?
A) general bylaws, banking bylaws, articles of association
B) memorandum of association, bylaws, articles
C) articles, bylaws, articles of association
D) banking bylaws, memorandum of association, general bylaws
Q2) Which of the following is a distinguishing characteristic of a Notice of Directors?
A) Particulars given must coincide with the number of first directors stated in the articles.
B) Names and addresses must prove Canadian residency of individual first directors.
C) Names and address must also be given for those persons acting as first directors.
D) Particulars of the first directors are set out in the entity's incorporating articles.
Q3) Briefly explain the particulars of a NUANS report, including what it is and how it is created. Briefly discuss the corporate name approval process, and explain the major weakness inherent in that process.
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17
Chapter 16: The Corporate Form: Operational Matters
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Q1) Briefly discuss statutory derivative actions, including what they permit and what is required for their commencement.
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) Traditionally, courts have shown little reluctance to say that a director or officer is automatically liable for a tort he or she committed on company time.
A)True
B)False
Q4) Which of the following would allow a party to avoid strict liability for a statutory offence?
A) showing reasonable care and due diligence
B) showing a lack of moral blameworthiness
C) showing the potential for rehabilitation
D) publishing the offence in the media
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Page 18
Chapter 17: Personal Property
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Q1) Which of the following is a valid criticism of the use of contractual clauses to limit bailment liability?
A) There is a social cost of courts having to inject businesses with ethical standards.
B) Courts will consider the contract price relative to losses to determine enforceability.
C) Courts apply different standards to commercial and consumer contracts.
D) They are vulnerable to various common law challenges.
Q2) What feature distinguishes bailment from a contract of purchase and sale?
A) Most commercial contracts are bailments, requiring payment for use of property.
B) Most bailments are gratuitous, requiring no payment for use of property.
C) A bailor retains ownership upon transfer of possession to the bailee.
D) A bailment is typically short-term, while contracts cover a longer term.
Q3) A key aspect of a bailment contract is often the limitation of the liability that the common law rules of bailment create.
A)True
B)False
Q4) Describe bailment, and discuss its key issues.
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Page 19
Chapter 18: Intellectual Property
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Q1) Identify the factors that must be considered in order to assess whether a dealing is fair.
Q2) What valid commonality do the elements of private study, research, criticism, and review share?
A) copyright exemption
B) fair dealing exemption
C) trademark exemption
D) confidentiality exemption
Q3) What is the role of a trademark?
A) to indicate the origin of a good or service
B) to indicate conformation to a standard
C) to distinguish the source's business name
D) to distinguish the guise of a product
Q4) In which of the following are paternity, integrity, and association the most important contributing factors?
A) patent rights
B) trademark rights
C) copyrights
D) moral rights
Q5) Discuss the rights attributable to a registered industrial design.
Page 20
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Chapter 19: Real Property
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Q1) Which of the following is a common policy shared among many world nations?
A) the restriction on the quantity of land allowed to be owned by foreign interests
B) the delegation of authority to control and use to municipal governments
C) the delegation of authority to regulate environmental risks to municipal government
D) the restriction on governments regarding the imposition of land ownership restrictions
Q2) 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
Q3) It is typical that a commercial lease will address such important matters as the responsibility for repairs and maintenance to the leased space and any common areas, as well as permitted alterations a tenant may make to the space and what happens with the alterations once the lease expires.
A)True
B)False
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Chapter 20: The Employment Relationship
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Q1) Hamal asked Rolene to a lunch meeting. During lunch, he suggested Rolene would enjoy better remuneration and opportunities for advancement with his company. One week later, Rolene gave her employer one month's notice of her termination of employment. In these circumstances, which of the following would provide the strongest support for a legal action by Rolene's former employer?
A) Rolene is obliged to give adequate notice of termination to an employer.
B) Rolene's ability to work for competitors is limited by restrictive covenants.
C) Rolene owes fiduciary obligations to her past employer.
D) Rolene's past employer may sue Hamal for inducing breach of contract.
Q2) Marne's contract states her employment arrangement is for one year, while Brelle's contract is silent on that point. In what way are Marne's employment obligations different from Brelle's?
A) Brelle must give notice of termination.
B) Marne is an independent contractor.
C) Brelle is casual employee who is not entitled to notice of termination.
D) Marne must give notice of termination.
Q3) List the essential content that should be included in an employment contract.
Q4) Define harassment and list the various forms that such conduct may take.
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Page 22
Chapter 21: Terminating the Employment Relationship
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Q1) Identify the changes that are considered to be fundamental to the triggering of an action for constructive dismissal.
Q2) Bad faith on the part of an employer is often the result of its claiming unfounded allegations of cause for terminating an employment relationship with an employee.
A)True
B)False
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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23
Chapter 22: Professional Services
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Q1) Triston is one of a number of shareholders of TVG Group Inc. who lost a substantial sum by relying on the negligently prepared audit of the company's previous fiscal year's financial circumstances. Which of the following would strongly support a viable avenue of recourse for these shareholders against the negligent professional?
A) a class action law suit that includes the company
B) a derivative action on behalf of the company
C) a derivative third-party claim by the company
D) a derivative action on behalf of the shareholders
Q2) Where shareholders have detrimentally relied on a negligently prepared professional audit to make investment decisions, their only recourse against the professional is their indirect right to bring a derivative action on behalf of the company.
A)True
B)False
Q3) In order to maximize the utility and manage the risk inherent to the engagement of professional services, business clients need knowledge of the workings of professional bodies.
A)True
B)False
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Chapter 23: Sales and Marketing: the Contract, Product, and Promotion
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Q1) Which of the following terms would be supported classically as being collateral but important with respect to sale of goods legislation?
A) warranty
B) innominate term
C) implied term
D) condition
Q2) Briefly discuss how the Sale of Goods Act enacted in 1893 protected buyers historically.
Q3) Which of the following should a legal risk manager insist upon with respect to advertising performance claims about a new product the company is promoting?
A) keeping improper practices secret
B) implementing a cynical marketing strategy to cover a lack of due diligence
C) establishing a justification through scientific evidence
D) speedily retracting false statements
Q4) Classification of the relevant term of the contract for sale of goods is essential to determining whether the goods sold by description actually correspond with the description.
A)True
B)False
Chapter 24: Sales and Marketing: Price, Distribution, and Risk Management
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Q1) Briefly explain why a distribution policy may be found to discriminate unfairly, what is the nature of the infraction, and what is the consequence of a positive finding of the commission of the offence by the Competition Bureau.
Q2) Which of the following is a valid criticism of the Competition Bureau's recent changes relating to anticompetitive activities that are intentionally designed to drive the final retail price of goods upward?
A) There is a lack of penalties to serve as a deterrent.
B) The onus of strict burden of proof is placed on the customer.
C) The double ticketing offence is decriminalized.
D) Consumer protection is limited to misleading advertising.
Q3) The Scanner Price Accuracy Voluntary Code requires that clear and legible labels must be affixed to the shelf next to the product.
A)True
B)False
Q4) Identify and briefly describe the conditions under which a producer may refuse to sell to retailers that are selling its products at unreasonably low prices.
Q5) Briefly discuss the regulation of door-to-door selling.
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Chapter 25: Business and Banking
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Q1) What is the second focus of a banking agreement?
A) the rights and obligations of the parties
B) the allocation of loss
C) the protection of privacy
D) the bank's ability to apply charges
Q2) Emily gave Pierre a cheque for $5000 as payment for the car he sold her. Pierre owed Henry $5000, and he provided Emily's cheque to Henry to satisfy the debt. Henry couldn't make it to the bank, so he gave it Nigel to deposit for him. How did Henry's bank respond to Nigel's request to deposit the cheque?
A) The Bills of Exchange Act required the bank to hold the cheque for 10 days.
B) Provided all endorsements were in order, the bank accepted the cheque for deposit.
C) The bank refused the cheque because acceptance effectively extended credit.
D) The bank was required by FINTRAC to verify the validity of the transaction.
Q3) Which of the following is a valid criticism of electronic transactions?
A) Safeguarding transfer authority is a major challenge for e-commerce.
B) Authorization codes are necessary in electronic messages.
C) There is a tradeoff between increased efficiency and the absence of rules.
D) Safeguarding transfer authority is a major challenge for customers.
Q4) Discuss the various aspects of the evolution of credit cards.
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Chapter 26: The Legal Aspects of Credit
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Q1) Identify the source of prevention of hidden charges by a lender that also enables a borrower to appreciate the cost of a loan transaction, and briefly discuss what is required to achieve these outcomes.
Q2) Which of the following is a valid criticism of the regulations currently affecting banks and other lending institutions in Canada with respect to consumer debt?
A) Federal government intervention in the system of credit hampers lenders' profit motive.
B) Time is required to shop around for better terms and less restrictive lending conditions.
C) Banks have the ability to extract whatever promise of security is deemed necessary to protect a loan.
D) The regulations are unable to limit lenders from extracting blanket personal guarantees for loans.
Q3) Identify three types of security pledges that are typically required for a commercial loan.
Q4) Identify the new federal government regulations that apply to credit cards issued by federally regulated institutions.
Q5) Explain the environmental due diligence process.
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Page 28
Chapter 27: Bankruptcy and Insolvency
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Q1) A sale of a bankrupt's assets that can be declared void because it was not made in good faith or for valuable consideration is legally known as a reviewable transaction.
A)True
B)False
Q2) What is the nature of a relationship in which a business sells inventory to a customer to which it is not related or connected in anyway?
A) intercommercial
B) arm's length
C) commercially reasonable
D) consumer transaction
Q3) A payment made with the intention of giving a related person priority over at least one other creditor within one year of a bankruptcy order is described under the Bankruptcy and Insolvency Act as a reviewable settlement.
A)True
B)False
Q4) Identify the actions of a debtor that will result in the debtor committing an act of bankruptcy.
Q5) 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
70 Flashcards
Source URL: https://quizplus.com/quiz/27019
Sample Questions
Q1) What options must a business owner decide upon when considering property insurance?
A) getting coverage for replacement value or actual cash value
B) getting coverage for the various forms of perils that are insurable by law
C) negotiating a non-cancellation or severability clause
D) negotiating to remove the exclusion clauses that fall within the intent of the policy
Q2) Within what jurisdiction does the topic of insurance fall?
A) provincial jurisdiction
B) federal jurisdiction
C) executive jurisdiction
D) municipal jurisdiction
Q3) A rider is written evidence of a change in an existing policy of insurance.
A)True
B)False
Q4) An insurable interest is typically described as being the insured's financial stake in what is being insured.
A)True
B)False
Q5) Discuss subrogation.
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