Chapter 1
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A sophisticated client A) does not require the services of a lawyer. B) is someone with formal legal training. C) distrusts and derides lawyers. D) understands the importance of the solicitor-client relationship. E) should represent themselves, rather than paying for legal services. 2) Raman is a sophisticated client. This means that she A) understands how to manage a lawyer-client relationship. B) is a small business owner. C) manages her legal affairs without assistance from a lawyer. D) has a law degree. E) will probably never find herself in a situation necessitating legal advice.
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3) In the context of a sophisticated client, "sophisticated" can best be defined as A) complicated, self-reliant, and cosmopolitan. B) confident, knowledgeable, and up-to-date. C) aggressive, dynamic, and forceful. D) refined and cultured. E) simple and naïve.
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4) Which of the following best describes the likelihood of a student becoming involved in a situation necessitating legal advice? A) A student, or someone close to the student, will always become involved in such a situation B) Because students cannot be sophisticated, they will often become involved in such situations. C) Legal advice is not available to students. D) A student, or someone close to a student, sometimes becomes involved in such a situation. E) Because students are not business people, they never become involved in such situations.
d
5) Becoming a sophisticated client will A) ensure that a business person never needs a lawyer. B) relieve a business person from having to conduct legal research. C) protect a business person from needing legal advice. D) result in a business person developing a bias against lawyers. E) help a business person manage her legal affairs more efficiently and effectively. 6) Having a good lawyer on your team is A) a legal requirement prior to incorporating a business. B) a critical component of being a sophisticated client. C) only necessary for large companies. D) a good alternative to becoming a sophisticated client. E) usually too expensive to be worthwhile. 7) William Shakespeare's Henry VI, Part II includes the line "The first thing we do, let's kill all the lawyers." The president of the Canadian Bar Association interpreted this quotation as A) a threat to all members of the legal profession. B) an offence meriting severe legal consequences. C) a comment on the importance of the "rule of law".
D) a lawyer-bashing joke. E) a humorous attempt to embarrass lawyers everywhere. 8) Which of the following best describes the role of the lawyer? A) The lawyer is simply one of the experts the businessperson consults. B) The client makes decisions regarding civil matters; the lawyer makes decisions regarding criminal matters. C) The lawyer makes decisions regarding civil matters; the client makes decisions regarding criminal matters. D) The client must follow the lawyer's instructions, as long as they are lawful. E) The lawyer makes the legal decisions for the client. 9) Which of the following statements best describes solicitor-client privilege? A) The lawyer makes decisions regarding civil matters; the client makes decisions regarding criminal matters. B) The lawyer makes the legal decisions for the client. C) The lawyer is the only expert a client should consult. D) Refers to the duty of the lawyer to keep the information provided by the client confidential. E) The lawyer must follow the client's instructions, even if they are illegal in nature.
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10) Which of the following is NOT a good reason for a business person to seek advice from a lawyer? A) The businessperson cannot understand the necessary legal information. B) The businessperson is facing criminal charges. C) The businessperson cannot find the necessary legal information. D) It would take too long for the businessperson to find the necessary legal information. E) The necessary legal information is available online.
d
11) For sophisticated clients, the availability of an abundance of legal information online is A) a negative development, because accessing this information tends to be more costly than retaining a lawyer. B) a negative development, because online information is rarely accurate or helpful. C) a neutral development, because lawyers are still the only ones able to access this information. D) a positive development, because it provides greater access to information they can use as part of their decision-making process. E) a positive development, because it means that they will no longer need to retain lawyers as part of their team. 12) When searching online for legal information, it is best to A) trust that if it is published online, it must be accurate. B) use American sources, as they tend to be more comprehensive than Canadian ones. C) gauge the accuracy of the information by the look of the website. D) never trust the information found on a website. E) seek advice from a lawyer when answers cannot be readily found. 13) Sophisticated clients A) know that it is better to hire a lawyer than to conduct research on one's own. B) are willing to pay for legal advice at any cost. C) have the skill and confidence to find basic legal information. D) tend to be embarrassed to request legal advice. E) do not need to retain a lawyer. 14) One reason for the general lack of respect for lawyers is that
A) many people do not understand the role of the lawyer in the solicitor-client relationship. B) the cost of legal advice generally outweighs its benefit. C) lawyers who breach their duties are generally not subject to any punishment. D) lawyers are rarely able to provide information or advice relevant to business matters. E) lawyers are not bound by a Code of Professional Conduct. 15) The role of the lawyer is to A) provide legal advice relevant to the client's situation, which the client has no choice but to follow. B) provide legal advice relevant to the client's situation, which the client is free to ignore. C) delay the client's decision-making process. D) tell their clients what they must do. E) tell their clients what they must not do. 16) The primary purpose of an initial consultation with a lawyer is A) for the prospective client to decide whether to retain the lawyer. B) for the prospective lawyer to help mediate the current dispute. C) to discuss the availability of Legal Aid. D) to develop strategies for dealing with the legal situation in question. E) to arrange payment of the lawyer's fees up front.
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17) The decision to enter into the lawyer-client relationship should be A) a mutual decision made primarily on the basis of trust. B) made primarily on the basis of cost. C) solely up the client, as he or she is the one paying for the services. D) solely up to the lawyer, as he or she is the one with the legal training. E) made quickly to ensure that no one else can retain your lawyer.
d
18) When setting up a small business, the best approach to follow is to assume that after the business has been set up and commences operating A) a lawyer will no longer be required. B) the lawyer you chose to assist you in the start-up of the business will provide free legal services for the duration of the business's operation. C) the lawyer you chose to assist you in the start-up of the business will continue to represent you. D) the lawyer you chose to assist you in the start-up of the business will refer you to a different lawyer. E) you will not need legal advice, as long as you are a sophisticated client. 19) Which of the following is NOT an advantage to maintaining an ongoing relationship with your lawyer? A) The lawyer will know and understand you and your business. B) The lawyer will view you as her client, giving you and your requests priority. C) The lawyer will automatically track your business activities, so that he or she can provide constant advice and guidance. D) The lawyer will be able to customize his or her legal advice, so it will be even more useful to you. E) The lawyer will be able to provide legal advice more efficiently, thereby reducing your legal costs. 20) When someone refers you to a particular lawyer, you should A) retain the lawyer regardless of their area of practice. B) ignore the referral as irrelevant. C) ensure the referral is being given by someone you trust. D) ensure the referral is from a family member, rather than a mere friend. E) retain the lawyer regardless of who gave you the referral. 21) A lawyer referral service
A) provides the names and phone numbers of lawyers who practice in a particular area of law. B) regulates the legal profession in the interest of the public. C) will enable a businessperson to retain a lawyer without need for an initial consultation. D) is an online fee-based service providing guaranteed results. E) is also known as "Legal Aid". 22) A provincial law society A) operates primarily to enhance the commercial interests of its members. B) has as its mandate the provision of free legal services, in the public interest. C) is a self-governing body for businesspeople seeking legal advice. D) is a self-governing body for lawyers. E) operates primarily to offer low-cost legal advice to members. 23) The Canadian Bar Association is A) an organization responsible for reviewing lawyers' accounts. B) a disciplinary body for members of the legal profession. C) a professional organization that represents judges and lawyers. D) focused on enhancing public safety in the liquor distribution industry. E) the national society for legal aid services.
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24) Legal aid is A) universally available, regardless of subject matter or financial need. B) available to anyone who can demonstrate financial need, regardless of subject matter. C) only available for business law issues. D) available subject to substantive and financial eligibility requirements. E) available exclusively for criminal law issues, subject to demonstrated financial need. 25) Which of the following statements is most accurate? A) If you have a legal problem and cannot afford a lawyer, one will be provided for you. B) If you qualify for legal aid, you will automatically be exempt from all legal costs. C) Everyone qualifies for legal aid. D) Everyone can afford a lawyer. E) If you have a legal problem and cannot afford a lawyer, you may be eligible for legal aid.
d
26) If you collect money as a result of a settlement or judgment obtained through the assistance of legal aid, you will A) probably be able to keep the full amount of the settlement of judgment. B) probably have to repay some or all of the legal aid benefits you received. C) probably be ineligible to enforce the settlement or judgment if the debtor refuses to pay. D) be required to turn the amount of the settlement or judgment over to legal aid. E) be required to turn the amount of the settlement or judgment over to the court. 27) Legal Aid Ontario will NOT cover any of the following except A) defamation. B) wrongful dismissal. C) change of name. D) criminal matters. E) personal bankruptcy. 28) The BC Legal Services Society may pay for a lawyer for a low-income client if the client has a legal problem involving any of the following except A) serious family problems.
B) mental health or prison issues. C) commercial litigation. D) criminal charges. E) immigration problems. 29) A small business owner A) is wise to obtain legal aid for its business matters, rather than having to incur legal costs. B) should always use duty counsel, rather than having to retain a lawyer. C) is usually not able to receive legal aid with respect to the legal issues involving the business. D) should retain duty counsel to draft contracts outlining legal duties. E) is automatically entitled to legal aid assistance. 30) Which of the following statements regarding duty counsel is accurate? A) There is an advantage to using duty counsel rather than retaining one's own lawyer. B) There is a lengthy application process to obtain duty counsel. C) Duty counsel typically take on your entire case and represent you at trial. D) Duty counsel are available to assist in a wide range of business law issues. E) Duty counsel can provide limited assistance in certain court matters.
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31) Duty counsel are typically available A) in criminal courts, family courts, or immigration courts. B) to review and draft a variety of contracts. C) in superior court bankruptcy matters. D) for small claims and real estate disputes. E) for commercial litigation.
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32) Duty counsel are A) court lawyers who assist individuals who are not represented by a lawyer. B) retired lawyers and judges who volunteer through legal aid societies. C) non-lawyers who provide advice to those in financial need. D) legal assistants who offer legal services at rates significantly lower than those charged by lawyers. E) law students who are fulfilling requirements established by a provincial law society.
d
33) Legal fees A) are always calculated in a single, specified way. B) are typically negligible. C) should not be discussed with a lawyer until a bill has been prepared. D) should be discussed during the initial consultation with the lawyer. E) are rarely the subject of confusion or misunderstanding. 34) Which of the following statements is true? A) Some people don't retain lawyers even when they need them because they are afraid of the cost. B) It is a popular misconception that legal services can be very costly. C) Lawyers should always be retained, regardless of the cost. D) It is considered unprofessional to raise the issue of fees during a consultation with a lawyer. E) All lawyers bill clients on an hourly basis. 35) Contingency fee agreements A) may result in a lawyer not receiving any legal fees for the work done on a file. B) are not subject to any restrictions. C) must be prepared for all lawyer-client relationships. D) are typically used for real estate purchases, the drafting of wills, and incorporations.
E) are synonymous with retainer agreements. 36) Which of the following statements regarding provincial law societies is false? A) Provincial law societies may set maximum contingency fees for certain types of cases. B) Provincial law societies may restrict the use of contingency fee agreements. C) Provincial law societies provide free legal services to people in need. D) Provincial law societies may offer a fee mediation service. E) Provincial law societies provide online information on lawyers' fees. 37) Typically, lawyers bill on the basis of which of the following? A) A fixed fee, a stipend, or a pro rata distribution. B) A fixed fee, an hourly rate, or a contingency fee. C) A fixed fee, a pro rata distribution, or a contingency fee. D) A stipend, a pro rate distribution, or an hourly rate. E) A stipend, an hourly rate, or a contingency fee.
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38) Which of the following statements regarding retainers is false? A) The lawyer may require the client to "top up" the retainer as funds are withdrawn from the trust account. B) A retainer helps ensure that a lawyer will be paid for his or her legal services. C) Provincial law societies typically restrict the use of retainers to personal injury or product liability cases. D) A retainer is deposited into a trust account, to the credit of the client. E) Before commencing work on a matter, a lawyer usually requests that a retainer be paid.
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39) A retainer A) works as a deposit. B) is the amount a client must pay that is in addition to regular legal fees and disbursements. C) is the amount a lawyer will receive when charging based on a contingency fee agreement. D) refers to the costs incurred by a lawyer on a client's behalf. E) works to secure the release of an arrested person.
d
40) Provincial law societies A) exist primarily to assist clients with complaints concerning fees. B) deal with complaints regarding a lawyer's conduct. C) provide compensation to clients who are unhappy with legal services. D) guarantee success in litigation matters. E) are non-profit law firms offering a range of legal services. 41) If you have a complaint about the fees being charged by your lawyer A) you can have your bill reviewed by a court official. B) your provincial law society represents your only course of action. C) you must participate in a fee mediation service. D) you should not discuss your concerns with your lawyer directly. E) you should begin by commencing a court action. 42) Fee mediation A) is compulsory whenever a client raises a concern about a lawyer's bill. B) involves a neutral mediator who tries to facilitate a mutually acceptable resolution of a dispute over fees charged by a lawyer. C) involves a review of a lawyer's bill by a court official. D) involves a judge who determines whether or not a lawyer's bill is reasonable. E) is offered by every provincial law society as the primary means of dispute resolution for complaints
regarding
lawyers' fees.
43) A client who is unable to resolve a fee dispute with a lawyer can have the lawyer's bill reviewed by a court official. These court officials have the power to A) impose fines on either the client or the lawyer. B) require that the client and lawyer attend fee mediation. C) decide that the bill is too high and reduce it accordingly. D) authorize compensation to be paid by the provincial law society. E) order that a lawyer be taken into custody. 44) A provincial law society's complaint-resolution process usually begins with A) a hearing before a panel. B) a formal investigation. C) oral submissions by legal counsel. D) a review of the complaint by a court official. E) an attempt at mediating the dispute between the client and the lawyer.
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45) Complaints made to the provincial law society regarding a lawyer's conduct may result in a hearing. This hearing A) involves the testimony of witnesses and the entering of other evidence. B) is held before a superior court judge. C) is held in the absence of legal counsel. D) results in compensation being paid to the client who made the complaint. E) can result in a finding of misconduct, although the law society does not have the power to impose penalties.
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46) If you cannot resolve a fee dispute with your lawyer, you should A) sue your lawyer for non-payment. B) refuse payment on legal grounds. C) make a formal complaint to the bar association. D) have your bill reviewed by the appropriate court official. E) refuse payment on ethical grounds.
d
47) If a law society panel finds a lawyer guilty of misconduct, the penalty could include all of the following except A) a suspension. B) incarceration. C) disbarment. D) a fine. E) costs of the hearing. 48) If you believe that you have suffered a financial loss because of your lawyer's misconduct A) you should wait as long as possible before you proceed. B) you should have the matter reviewed by a taxation or assessment officer. C) you may be compensated by the bar association at the end of their investigation. D) you will automatically be awarded compensation by the provincial law society at the end of their hearing. E) you may need to seek legal advice from another lawyer. 49) Lawyers' rules of professional conduct A) are recommended guidelines only. B) establish professional and ethical obligations of lawyers.
C) are generally not taken seriously by members of the legal profession. D) will, if breached, automatically result in a lawyer facing criminal charges. E) are established by the Canadian Bar Association. 50) Which of the following statements best describes the difference between law and ethics? A) Ethics tells us what we must do; law tells us what we should do. B) A person need not worry about acting legally, as long as she acts ethically. C) Law tells us what we must do; ethics tells us what we should do. D) If a person acts unethically, he has broken the law. E) Law and ethics are interchangeable. 51) Many people lack trust or confidence in lawyers because A) most lawyers are unethical. B) lawyers who act unprofessionally are not subject to any penalty. C) few provincial law societies have established rules for professional conduct. D) a few well-publicized cases involving lawyers has tainted the reputation of the whole profession. E) lawyers have no professional or legal obligations.
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52) The Canadian "Code of Professional Conduct" for business people A) is the same as the lawyers' code of conduct. B) establishes the professional and ethical obligations of businesspeople. C) was created by the provincial business society. D) has been used to prosecute a number of high-profile cases. E) does not exist.
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53) Sophisticated clients who are starting a business should A) opt not to prepare a code of conduct, because of potential liability exposure in the event of a breach. B) only concern themselves with ethical behaviour that is required by law. C) make a commitment to ethical behaviour and prepare a statement of values. D) consult a lawyer about how to engage in unethical behaviour undetected. E) refrain from reporting illegal or unethical behaviour.
d
54) You can enhance the success of your business by A) personally adopting core values and incorporating them into a code of conduct for the business. B) relying on the Canadian Code of Professional Conduct for Businesspeople. C) retaining a lawyer who is willing to engage in unethical conduct on your behalf. D) not seeking legal advice in cases where your conduct may be questionable, as you will then be bound by the lawyer's code of professional conduct. E) incorporating core values into a code of conduct, regardless of whether or not you adopt those values personally. 55) Which of the following does NOT represent a core ethical value identified by the Josephson Institute for Ethics? A) Courage B) Respect C) Caring D) Fairness E) Citizenship 56) According to the Josephson Institute for Ethics, the core ethical value of trustworthiness has as its supporting ethical principles A) respect, autonomy, courtesy, self-determination. B) citizenship, philanthropy, voting. C) caring, kindness, compassion. D) justice, fairness, impartiality, equity. E) truthfulness, sincerity, candor, integrity, promise keeping, loyalty, honesty.
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 57) "The first thing we do, let's kill all the lawyers." is a popular quotation from William Shakespeare, the meaning of which is open to debate. 58) A sophisticated client knows how to form and use the solicitor-client relationship to facilitate making good business decisions. 59) Generally, good business decisions cannot be made without consideration of the appropriate laws. 60) A sophisticated client never conducts legal research on his or her own, but always seeks advice from a lawyer. 61) It is always wise to retain legal counsel when you are facing criminal charges. 62) In making business decisions involving legal issues, a sophisticated client will tend to complete some research of the relevant law on her own. 63) The time and cost to be incurred by hiring a lawyer is irrelevant: It is always worthwhile to get legal advice from a lawyer.
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64) Sophisticated clients understand that success depends on good business decisions, and good business decisions depend on appropriate information (including legal information). 65) In the lawyer-client relationship, the decision-maker is the lawyer, not the client.
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66) Solicitor-client privilege refers to the lawyer making all the decisions for the client. 67) The solicitor-clent privilege refers to the duty of the lawyer to keep the information provided by the client confidential. 68) There is sufficient information in the Yellow Pages to help a person decide whether a particular lawyer would be appropriate.
d
69) Given the growing complexity of the law and the consequence that more lawyers specialize, a business person might have multiple lawyers. 70) It is more advantageous to retain your own lawyer than to simply use duty counsel. 71) Small business owners are usually able to receive legal aid with respect to the legal issues involving the business. 72) A retainer is the amount a client must pay to a lawyer over and above regular legal fees. 73) Provincial law societies may restrict the use of contingency fee agreements. 74) Most provinces set a minimum contingency fee for family law cases. 75) A complaint made to the provincial law society about a lawyer's conduct does not result in compensation being paid to the client who made the complaint. 76) Clients who believe that they have suffered financial loss due to their lawyer's misconduct should not
procrasti nate as limitation periods may exist. 77) If a complaint regarding a lawyer's conduct cannot otherwise be resolved, and the law society decides the complaint is valid, then the lawyer will face automatic disbarment. 78) Ethics depends on a person's conscience, rather than on what the law says. 79) Ethical behaviour implies integrity, honesty, and professionalism. 80) A code of professional conduct is needed because the vast majority of lawyers are unethical. 81) Compliance with a code of ethics in an organization is unrelated to whether or not top management practises ethical behaviour. 82) In 2005, Canada was ranked number one in the world on a list of countries perceived to be free of corruption. 83) Core ethical values, and their supporting ethical principles, should be used as the basis for a business code of conduct.
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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 84) What term can be used to describe someone who understands the role of a lawyer, when and how to retain one, and how to manage the lawyer-client relationship? 85) Complete the following quotation from William Shakespeare's Henry VI, Part II: "The first thing we do, let's ________".
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86) When making significant business decisions, when should business people consult their lawyers? 87) In the lawyer-client relationship, who is the decision-maker? 88) When must a lawyer follow a client's instructions?
89) What must a business person consider before asking a lawyer for assistance in making a business decision?
d
90) Why is it unnecessary (and undesirable) for a client to seek legal advice for every decision she must make? 91) If a business person cannot find important legal information on his own, or cannot understand the information he finds, what should he do? 92) When will a sophisticated client do her own legal research? 93) What recent development has given non-lawyers greater access to legal information? 94) How has the lawyer-client relationship been affected by computers and the Internet? 95) What is the main role of a lawyer? 96) Why might a business person have more than one lawyer? 97) Identify the sources you would consult when looking for an appropriate business lawyer. 98) Identify the advantages to a business person of maintaining an ongoing relationship with a lawyer.
B) He doesn't have to pay anything because the job was not completed, and so he can even get back what he paid. C) Promissory (equitable) estoppel D) He only has to pay a reasonable price for the work done. E) Doctrine of quantum meruit 58) With regard only to the requirement of consideration, which one of the following would be a binding contract? A) An agreement between a contractor and a homeowner that the owner would pay an additional $1,000 if the contractor would complete the existing contract according to all its terms B) A promise by Mr. Brent to pay $25 to John who found and returned Brent's wallet, which Brent didn't even know he had lost until John delivered it C) A promise to give $10 exchanged for a promise to give a can of pop D) A promise by Tom to drive a co-worker to Timmins, Ontario E) A written promise, but not under seal, to give John $50 on Saturday
58) ______
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59) Indicate which of the following is the correct statement about the effect of promissory estoppel 59) ______ on a promisor. A) Promissory estoppel must be distinguished from equitable estoppel. B) Promissory estoppel has no effect on a promisor because it only relates to statements of fact, not promises. C) When a victim relies on the promise and suffers injury, he can sue the promisor for compensation even where no consideration has been given in return for that promise. D) Promissory estoppel can be used as a defence only against a promisor who reneges on his promise. E) Promissory estoppel is known as injurious reliance in the United States and has the same effect in both American and Canadian law. 60) ______
61) Which of the following is correct with respect to consideration? A) It must be reasonable. B) It is binding even though a duty to so act already exists. C) It is to compensate for an act that happened in the past. D) It must be specific. E) At least some money must be involved.
61) ______
62) Which of the following shows the use of the doctrine of promissory (equitable) estoppel? A) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee
62) ______
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60) Which of the following shows the use of the doctrine of promissory (equitable) estoppel? A) Lee, a defendant, can use this doctrine as a defence against a plaintiff insisting on his full legal right when he had promised to forgive Lee some of Lee's legal obligation and Lee relied on that promise. B) George wants to force Elaine to honour her promise to pay him $2. After he paid for a video they watched, she was so moved by the movie she said she would pay half the cost. C) George told Hans that he would give him his printer. If he doesn't, Hans could use the doctrine to force him to do so. D) If Lam requests services from Jones and there is no mention of price, if Lam doesn't pay Jones, this doctrine can be used to force Lam to pay a reasonable amount. E) This doctrine can be used by a plaintiff to endorse a written promise signed and sealed (i.e., a seal has been affixed next to the signature of the promisor).
relied on that promise. B) George rented a video and watched it with Elaine. She thought the movie was great and said she'd pay half the rental price. George could use the doctrine to force her to pay as she promised. C) This doctrine can be used by a plaintiff to enforce a written promise that has been signed and sealed (i.e., a seal has been affixed next to the signature of the promisor). D) Lam contracted to supply Jones with steel. Before the steel was delivered, Lam's supplier increased the price. Lam could use the doctrine to force Jones to pay more to Lam. E) Val told Jim that she would give him her printer. If she doesn't, Jim could use the doctrine to force her to do so. 63) ______
64) Which of the following statements is correct with respect to promissory estoppel (equitable estoppel)? A) Promissory estoppel refers to the principle that, where a document is in writing and under seal, it is enforceable even where there is no consideration. B) Where Barbra relies on Raylene's promise and suffers a loss, Barbra can sue Raylene for compensation even though the promise is gratuitous. C) Where Able requests services from Cain, the doctrine of promissory estoppel requires a reasonable price to be paid even where no specific amount was agreed. D) Promissory estoppel means that Donna cannot revoke her offer where she has promised to hold it open for a specific period of time. E) Where Hank and Jim have a contract and Hank releases Jim from part of Jim's obligation, Jim can use that release, even though it was given without consideration, as a defence if Hank sues for breach of contract.
64) ______
65) Sam owed Joe $6,000 due January 12, 2012. On January 1st, Joe said he'd take $5,000 in full satisfaction of the debt if Sam paid him $5,000 on January 5th instead. Sam paid on January 5th. A week later, Joe wants to sue Sam for the $1,000 he (Joe) was legally owed. Which of the following is true? A) Joe would win because his forgiveness of the loan was gratuitous, i.e. unsupported by consideration. B) Joe would lose because of the doctrine of quantum meruit. C) Joe would lose because early repayment constituted consideration to support the new arrangement. D) Joe would win because they cannot change the original deal. E) Joe would lose because of the rule that past consideration is no consideration.
65) ______
66) As property manager of a 15-unit apartment block, you receive rent payments on the first of every month from each tenant. Mrs. Lone, in apartment 105, whose rent is $500 per month, lost her job and was in dire financial difficulties. You agreed to take only $400 per month. For the last ten months, she has paid only $400 a month, but you have learned that for 4 months she has had a new and even better-paying job. You are angry that she failed to tell you this and you want to sue her for the entire amount of back rent ($1,000). Which of the following arguments could she use most effectively against you? A) Promissory estoppel
66) ______
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63) Which of the following is not correct with respect to the adequacy of consideration? A) Existing duty: a change in the contract requires new consideration B) Must be of some value; love and affection are not enough C) Need not be fair, unless there are extenuating circumstances, i.e., insanity or fraud D) Need not be present if the agreement is under seal E) Need not be legal if both parties clearly consent
B) Undue influence C) Mistake D) Breach of contract E) Duress 67) ______
68) In Bawitko Investments Ltd. v. Kernels Popcorn Ltd., what did the Court of Appeal hold? A) Oral agreements do not constitute contracts within the meaning of legislation. B) A "contract to make a contract" is enforceable at law. C) A handshake is of no force or effect unless it accompanies a written agreement. D) A "contract to make a contract" is not a contract at all. E) A handshake "seals the deal", even if essential provisions have not been determined.
68) ______
69) Why is the case of Dickinson v. Dodds important? A) It illustrates the nature of an offer. B) It clarifies that when an offeror says an offer will remain open, it must remain open. C) It confirms that contracts must be in writing to be valid. D) It says that property can be sold to two different purchasers. E) It determines that offers, once made, can never be revoked.
69) ______
70) In Martel Building Ltd. v. Canada, what did the Supreme Court of Canada decide? A) There is no requirement that bidders be treated fairly, as caveat emptor applies. B) In a call for tenders, standard form contracts must always be used. C) A call to tender is an offer to contract and a binding contract may arise when a bid is submitted. D) A call for tenders is an invitation to treat which carries with it no legal status. E) In a call for tenders, there can be no discretion.
70) ______
71) The decision in Zynik Capital Corp. v. Faris confirms A) option agreements are, by their very nature, illegal. B) a Memorandum is not a binding contract, as it is missing an essential term. C) option agreements are, by their very nature, unenforceable. D) a Memorandum is sufficient to create a binding contract. E) a Memorandum satisfies all the elements of a contract.
71) ______
72) In Lanca Contracting Ltd. v. Brant (County) Board of Education, what was the issue facing the Court and what did the Court decide? A) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be, but only if the acceptance were
72) ______
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67) You owe Mr. Store $900 for goods received and want him to take $800 in full satisfaction of the debt. Which of the following is false? A) If he agrees with you and does take the $800, even if it is paid early at his request, he can still later sue you for the $100 forgiven. His promise not to demand the $100 from you was a gratuitous promise and therefore not binding. B) If Mr. Store agreed to take the $800 as full payment, but before taking it changed his mind, he would be entitled to the entire $900. C) If he actually takes the $800 in full satisfaction of the debt, statute law in many jurisdictions prohibits him from suing you for the $100. D) If Mr. Store agreed to take the $800 as full payment in exchange for your promise to sweep the floor of his store, he cannot sue for the $100. E) If you pay the $800 before the actual due date in consideration for his taking this as full payment, he cannot sue for the other $100.
communicated in writing. B) The Court had to decide whether an offer could be accepted by someone to whom it had not been conveyed, and the Court decided it could be. C) The Court had to decide whether a bid could result in a binding contract, and the Court decided it could not be. D) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided it had been. E) The Court had to decide whether notice of the acceptance was sufficient to create a binding contract, and the Court decided that only actual notice could ever suffice. 73) ______
74) What did the Court decide in Entores Ltd. v. Miles Far East Corp.? A) Because fax machines are becoming more popular, the Court created a new rule known as the fax rule exception. B) Because mail is the most common form of communication, the postbox rule does not need to be extended to telegrams. C) Because telex was instantaneous, there was no need to extend the postbox rule exception to that form of communication. D) Because the postbox rule is archaic, it should be abolished in its entirety. E) Because of the postbox rule, there is no need to specify a method of acceptance in contractual negotiations.
74) ______
75) In Gilbert Steel Ltd. v. University Construction Ltd., what did the Court find on the issue of consideration? A) A one-sided agreement is, in law, a form of unilateral contract. B) Because commercial parties dealing at arms' length were involved, a one-sided agreement is valid. C) A one-sided agreement is only binding if its essential terms are reduced to writing. D) A one-sided agreement is not enforceable. E) Because the Court will not look into the adequacy of consideration, a one-sided agreement is enforceable.
75) ______
76) Anmool verbally agreed to build a deck for Nikki for $1,000 by the 15th of September, in time for a lavish backyard barbecue she was planning. On September 13th, Nikki became concerned at Anmool's lack of progress. Anmool told Nikki he would complete the deck on time, for an additional $200. Nikki agreed and Anmool completed the deck on time. Which of the following is correct? A) Nikki does not owe Anmool anything, because his lack of professionalism vitiated the contract. B) Nikki owes Anmool $1,200, because that is what she agreed to, and such contracts are binding. C) Problems of consideration can be raised only in the commercial context, not when the parties involved are both individuals.
76) ______
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73) What was significant about the case of R. v. Commercial Credit Corp.? A) It abolished the postbox rule in Canada. B) It confirmed that acceptance by post is always appropriate. C) It determined that consideration is unnecessary in cases where consensus has been achieved in writing. D) It determined that the postbox rule should be extended letters of revocation as well as letters of acceptance. E) It is one of the few cases where the postbox rule has been extended beyond communication by mail or telegram.
D) Nikki owes Anmool $1,000; there is no binding obligation with respect to the additional $200 because Anmool had an existing duty to complete the deck on time. E) No legal obligations arise because the agreement is not in writing. 77) "Quantum meruit" means A) "as much as deserved". B) "the ultimate freedom to contract". C) "to stand on decision". D) "a shield but not a sword". E) "a meeting of the minds".
77) ______
TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 78) A formal contract is one that is signed and sealed.
T or F
79) A contract is a single promise, made by one person to another, enforceable in court.
T or F
80) Only the person or group to whom an offer is made can accept it.
T or F
81) An acceptance of an offer applies when and where it is received except when it is communicated by telephone.
T or F
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T or F
83) Only the essential terms of a contract must be set out in the offer.
T or F
84) All of the essential terms of a contract must be clearly specified.
T or F
85) Even though a person promises to hold an offer open for a specified period of time, the offeror can revoke that offer before that time if he feels like it.
T or F
86) Once a person has promised to hold an offer open for a specified period of time, he cannot change his mind.
T or F
87) An offer will end when the subject matter of the offer is sold to someone else.
T or F
88) The postbox rule makes it clear that, when people choose to communicate by mail, they take the risk of delay or loss, and the acceptance as a result will be binding only when or if received.
T or F
89) For the postbox rule to apply, the offer must be made by mail.
T or F
90) An invitation to treat is an offer published in the newspaper.
T or F
91) When the postbox rule applies, the place of mailing of the acceptance may determine the place of the contract.
T or F
92) If the postbox rule applies, a letter of revocation takes effect at the time of mailing.
T or F
93) A letter of revocation takes effect when received by the offeree.
T or F
94) An ad in the newspaper providing for a reward of a lost dog is an example of an invitation to treat.
T or F
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82) Generally, acceptance must be communicated to the offeror to be effective unless there has been a history of similar relations between the parties.
95) If a person offers to hold his offer open for a period of time, he can still revoke it before that time if he changes his mind.
T or F
96) When you pay for an option, this prevents a person from revoking his offer before the expiration of the specified time.
T or F
97) A revocation of an offer is effective only when it has been communicated to the offeree.
T or F
98) The courts may enforce an unfair bargain.
T or F
99) A person is required to honour a gratuitous promise if made under seal.
T or F
100) For the requirement of consideration to be satisfied, at least one of the parties must have performed what they promised.
T or F
101) The existence of a seal eliminates the need for the elements of a valid contract.
T or F
102) The promise of "love and affection" can constitute adequate consideration to support a contract.
T or F
103) The requirement of consideration is satisfied if "some money" is promised in exchange for an act.
T or F
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104) The courts will use quantum meruit to determine what should be paid when a person providing services is not allowed to finish by a breaching party.
T or F
105) The courts will examine the fairness of consideration when insanity, drunkenness, or undue influence may have affected the transaction.
T or F
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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 106) Why is an understanding of contract law important for a business person? 106) ____________ 107) ____________
108) Distinguish between a formal and a simple contract.
108) ____________
109) Distinguish between a void and a voidable contract.
109) ____________
110) Distinguish between a bilateral and a unilateral contract.
110) ____________
111) If the mail is a reasonable means for accepting an offer, is there a contract formed when the offeror drops a letter of revocation in the mailbox at the very same instant that the offeree drops a letter of acceptance in the mailbox? Explain.
111) ____________
112) Jones was a caterer; Smith was a florist. Jones won a contract to provide a banquet for a convention of florists. He wanted to decorate the hall with flowers. He sent a letter to Smith, describing what he wanted and asked for a price quote. Smith responded by a letter dated January 5, offering to supply the flowers for $5,000. Jones received the letter on January 10 and responded on the same date, saying his price was too high and that he would pay $4,500. While that letter was in the mail, but before it had been received by Smith, Jones learned that the convention was on artificial flowers and the organizers wanted no real flowers on display. On January 13, Jones quickly sent another letter telling Smith to ignore the letter of January 10 and that he wouldn't need any flowers at this time. This letter of the 13th was received on the 18th. Smith had received the letter of
Janu letter of ary acceptance on 10 the same day, on and had placed Janu orders to his ary suppliers for 15 the flowers. and The letter of sent acceptance was his received by
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107) List the five ingredients necessary to form a contract.
Jones on 112) January 20. Is there a contract between Jones and Smith? Explain.
____ ____ ____
113) ____________
114) Distinguish between an offer and an invitation.
114) ____________
115) What must be present in an offer before it qualifies as such?
115) ____________
116) "A good example of an offer is goods placed on the shelves in a self-service merchandising situation, so long as they are clearly marked in price." Explain the accuracy of that statement.
116) ____________
117) Sam had been a friend of Joe's for a considerable period of time and had often accompanied him as he sailed his classic yacht. Sam had often communicated to Joe how much he would like to have it. On Friday night, a friend told Joe that Sam had suffered some business reverses and was going to have to get rid of the yacht. Joe immediately wrote Sam a letter offering to purchase the yacht for $25,000. Unknown to Joe, Sam had written Joe a similar letter offering to sell the yacht for $25,000. These two letters had passed in the mail. Joe received Sam's letter about 12 noon on Saturday, and Sam received Joe's letter about 2:30 p.m. on Saturday. Are these people bound in contract? Explain.
117) ____________
118) Joe drove his car to a shopping mall and parked it there to attend a movie. The place where he parked was designated as a one-hour parking space on a sign at the entrance where Joe drove in. There were many similar signs around the shopping mall stating that people were parking their cars at their own risk. But this particular sign said that the time limit for parking there was one hour, and as a term of the contract anyone parking over this one-hour limit would have to pay a fee of $60. When Joe got out of the movie, he found a ticket on his car (a demand for payment of the $60). He refused to pay and was sued. What would be Joe's defence in these circumstances?
118) ____________
119) Joe offered to sell Harry his car and agreed to hold the offer open for one week, expiring Saturday at noon. The following Sunday, Harry phoned Joe to tell him that he decided to accept his offer and purchase his car. Joe said at that time that he had decided to keep the car and was just about to phone Harry to revoke the offer. Harry said, "Too bad," and demanded performance of the contract. Explain the legal responsibilities of the parties.
119) ____________
120) Joe offered to sell Harry his car for a specific price, and Harry indicated that he needed some time to think about it. Two days later, Joe sold the car to a third party. That afternoon Harry phoned up and told Joe that he decided to accept the offer and that he'd buy the car. Joe told him that it was too late; he had sold it to someone else. Harry said
that ed to him first, it and he insisted was that he go offer through with
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113) "For a contract to be binding, both parties must have a clear understanding of all the terms of that agreement." Discuss the accuracy of that statement.
the 120) contract. Explain the legal liability of the parties.
____ ____ ____
121) Joe offered to sell Harry his car for $500, but Harry said he needed some time to think 121) ____________ about it. A couple of days later, Harry phoned back saying that he'd give Joe $450 for the car. Joe refused to take this. Then Harry said, "All right, I'll accept your offer for $500." Joe said that he'd changed his mind and refused to go through with the deal. Harry sued. Explain Joe's legal liability. 122) ____________
123) Joe offered to sell Harry his car for $500. Harry responded by saying, "I accept, providing you install a new radio in that car." Explain the legal relationship between the two parties.
123) ____________
124) Mary received a non-solicited selection of compact discs in the mail, with a letter informing her that she was now a member of the CD of the month club. It also said that if she didn't want these CDs, she could simply send them back; otherwise, she would be billed $10 for each CD at the end of the month. She simply put them away, and did not respond. They continued to send her more CDs each month until she had received 100 of them over a period of 10 months. The club then sent her a letter demanding payment; otherwise, they would take legal action. Explain her legal obligation in these circumstances.
124) ____________
125) Explain the nature of the postbox rule.
125) ____________
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122) Indicate how consumers are protected in standard form contract situations.
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126) Harry saw Joe in his classic Buick at a local drive-in restaurant, and told Joe that he'd 126) ____________ like to buy it. He offered him $1,500. Joe said he had to think about it and that he'd let Harry know. Two days later, Joe decided that he needed the money and couldn't afford to keep the car. He wrote Harry a letter accepting his offer and mailed it that afternoon. The next day, Harry phoned telling Joe he'd changed his mind and that he needed the money for something else. Joe told him about the letter, and in fact Harry received the letter that day after the telephone conversation in which he attempted to revoke the offer. Joe insisted on going through with the deal. Explain the legal liability of the parties. 127) Harry saw Joe in his classic Buick at a local drive-in restaurant and talked about wanting to buy it. Joe offered to sell it to him for $1,500. Harry said he needed some time to think about it and that he would send him a letter. The next day, Joe changed his mind and mailed Harry a letter of revocation. The day after that, before Harry had received the letter of revocation, he sent a letter of acceptance to Joe. The next day the two letters arrived at their various destinations, Joe receiving Harry's letter of acceptance just after Harry received Joe's letter of revocation. Explain the legal liabilities of the parties.
127) ____________
128) Is an "agreement to agree" binding?
128) ____________
129) What are the ways in which an offer can come to an end prior to acceptance?
129) ____________