Question 1

The Frustrated Contracts Act today requires that when a deposit is paid, the costs incurred can be split out of the deposit.

Accepted Answer

A) True 
 B)False  True

Question 2

Smedlap, a trucker, and Dewdney, a farmer, entered into a contract under which Smedlap agreed to haul all of Dewdney's pumpkin crop to market in time for the Halloween sales. However, the day before Smedlap was to pick up the pumpkins, he called Dewdney and told him that, since he had received such a good offer to sell his truck, he had sold it and therefore was not able to haul Dewdney's pumpkins. There was not enough time for Smedlap to buy another truck, but he was sure that Dewdney could make other arrangements and he hoped that he hadn't unduly inconvenienced him. Unfortunately, Dewdney was not able to make arrangements in time for the Halloween market, and instead he had to sell his crop to a pie-filling canner for much less than he could reasonably have expected at the market. Furthermore, the market owners were so disappointed by Dewdney's failure to deliver that they refused to give him their usual order for Christmas turkeys. In previous years, this turkey order had generated his major income for the year. He was forced to find another outlet for his turkeys, and again he ended up selling to commercial processors for a substantially lower price. As a result of these two events, Dewdney was unable to keep up his mortgage payments on the farm and eventually he lost it to the bank in a foreclosure action. Dewdney is now suing Smedlap to recover these losses. Identify the correct statement with respect to the question of whether Smedlap's conduct was a breach of contract.

Accepted Answer

A)  Smedlap simply cancelled the contract, which he was entitled to do as long as it was before performance was due. 
B)  This was not a breach because Smedlap did not do it maliciously, and he gave Dewdney what he honestly believed was adequate notice to make other arrangements. 
C)  The contract was discharged by frustration. 
D)  Smedlap is not liable because it was not his fault that Dewdney was unable to make other suitable arrangements. 
E)  This was a breach that consisted of self-induced frustration. 
A)  Smedlap simply cancelled the contract, which he was entitled to do as long as it was before performance was due. 
B)  This was not a breach because Smedlap did not do it maliciously, and he gave Dewdney what he honestly believed was adequate notice to make other arrangements. 
C)  The contract was discharged by frustration. 
D)  Smedlap is not liable because it was not his fault that Dewdney was unable to make other suitable arrangements. 
E)  This was a breach that consisted of self-induced frustration. E

Question 3

Carson arranged with his brother-in-law, Waxman, that he would try to buy a famous old B.C. coastal airplane, the Spruce Ghost, which Waxman would then buy from him to display in his flight museum. Waxman promised to pay Carson a 10% commission over the price that Carson had to pay to buy the plane, so that their price would be 110% of Carson's purchase price. Carson and the owner, Wonka, agreed on a price of $80,000. After reconditioning the plane but before delivering it to Carson, Wonka decided to take it up for one last nostalgic flight and, because of his carelessness, he crashed it on take-off. Although Wonka escaped uninjured, the plane caught fire and was totally destroyed. Carson was able to locate a similar plane for only $60,000 but Waxman wasn't interested. Carson sued his brother-in-law and Wonka. What is the likely outcome of this suit?

Accepted Answer

A)  Waxman will have to pay Carson $8000, the commission on the agreed sale price between Carson and Wonka. 
B)  Waxman will have to pay Carson $6000 as the commission he would have made on the purchase of the second plane. 
C)  Wonka will have to pay Carson damages (probably $8000) for breach of contract. 
D)  Because the contract between Carson and Wonka was frustrated by the destruction of the Spruce Ghost, Carson has no claim against anyone. 
E)  The Frustrated Contracts Act will require Carson to share in the expense of reconditioning the Spruce Ghost that Wonka had undertaken in preparation for sale. 
A)  Waxman will have to pay Carson $8000, the commission on the agreed sale price between Carson and Wonka. 
B)  Waxman will have to pay Carson $6000 as the commission he would have made on the purchase of the second plane. 
C)  Wonka will have to pay Carson damages (probably $8000) for breach of contract. 
D)  Because the contract between Carson and Wonka was frustrated by the destruction of the Spruce Ghost, Carson has no claim against anyone. 
E)  The Frustrated Contracts Act will require Carson to share in the expense of reconditioning the Spruce Ghost that Wonka had undertaken in preparation for sale. C

Question 4

When a court determines that a breach of contract has taken place and awards damages, what is the purpose of such an award?

Accepted Answer

The purpose is to pr

Question 5

In which of the following situations would the contract not be discharged by agreement?

Accepted Answer

A)  Both parties agree to let a new person be substituted into the contract in place of one of the old parties. 
B)  Both parties to the contract agree to call it off before either one has performed. 
C)  A condition subsequent that calls for termination of the contract has not been met. 
D)  The two parties have reached "accord and satisfaction" with regard to terminating the contract. 
E)  Both parties agree to call off the contract under which one paid the other $5000 for work that has not yet been performed, but the other now promises to return the $5000. 
A)  Both parties agree to let a new person be substituted into the contract in place of one of the old parties. 
B)  Both parties to the contract agree to call it off before either one has performed. 
C)  A condition subsequent that calls for termination of the contract has not been met. 
D)  The two parties have reached "accord and satisfaction" with regard to terminating the contract. 
E)  Both parties agree to call off the contract under which one paid the other $5000 for work that has not yet been performed, but the other now promises to return the $5000.

Question 6

Cleo entered into a contract with Harvey in June to redecorate his apartment before Christmas. However, in the middle of October, she informed him that she would not be able to do his job because she had been offered a big contract in Japan that would take her away until spring. Which of the following is true with respect to this situation?

Accepted Answer

A)  The most likely remedy would be for the court to award specific performance to make her do the job. 
B)  Harvey must wait until Christmas to see if Cleo actually performs before he can take legal action. 
C)  Cleo has repudiated the contract and Harvey can take legal action immediately. 
D)  Their contract has been frustrated by circumstances outside their original contemplation, and thus they are excused from their previous obligations. 
E)  Cleo could claim quantum meruit for any work she had done so far and that would be the end of the matter. 
A)  The most likely remedy would be for the court to award specific performance to make her do the job. 
B)  Harvey must wait until Christmas to see if Cleo actually performs before he can take legal action. 
C)  Cleo has repudiated the contract and Harvey can take legal action immediately. 
D)  Their contract has been frustrated by circumstances outside their original contemplation, and thus they are excused from their previous obligations. 
E)  Cleo could claim quantum meruit for any work she had done so far and that would be the end of the matter.

Question 7

The claim of frustration is not available in which of the following circumstances?

Accepted Answer

A)  The subject matter of the agreement is destroyed. 
B)  An event that forms the basis of the contract does not take place. 
C)  The law changes, making performance illegal. 
D)  A government policy prevents performance. 
E)  A change in circumstances makes it difficult or more costly for one of the parties to perform. 
A)  The subject matter of the agreement is destroyed. 
B)  An event that forms the basis of the contract does not take place. 
C)  The law changes, making performance illegal. 
D)  A government policy prevents performance. 
E)  A change in circumstances makes it difficult or more costly for one of the parties to perform.

Question 8

In a jurisdiction other than B.C., Mr. Buyer sued Mr. Seller for breach of contract because Mr. Seller failed to deliver a computer system on time in accordance with their contract. Mr. Seller argued that he was not in breach and that the contract had been frustrated. The computer had been destroyed by water when a careless driver knocked over a fire hydrant outside the warehouse holding the computer. No deposit had been paid. The court held that the contract was frustrated. Based on this ruling, how does the court handle the situation?

Accepted Answer

A)  Buyer will succeed against Seller for damages because the court will treat it as if it were an anticipatory breach. 
B)  The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system. 
C)  Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract. 
D)  The court will look at the costs incurred and any payments made, and will apportion the losses between the parties. 
E)  The court will treat the contract as if there were a common mistake about the existence of the subject matter. 
A)  Buyer will succeed against Seller for damages because the court will treat it as if it were an anticipatory breach. 
B)  The court will let the losses lie where they fell, despite any of Seller's costs in preparing the computer system. 
C)  Buyer will not have to pay anything to Seller unless Seller had requested a deposit at the time of contract. 
D)  The court will look at the costs incurred and any payments made, and will apportion the losses between the parties. 
E)  The court will treat the contract as if there were a common mistake about the existence of the subject matter.

Question 9

Indicate three conditions under which a contract may come to an end on the basis of frustration.

Accepted Answer

1. Where the contract is rendered imposs

Question 10

When a contract has been performed in all but a minor aspect of it, this is known as ________.

Accepted Answer

substantia

Question 11

In all but one of the following situations, the contract is frustrated. Identify the exception.

Accepted Answer

A)  Wacky had contracted to supply a health-food store jars of melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery, the government banned the sale of melatonin so that it could be properly tested under government auspices. 
B)  Craig, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down. 
C)  Tracey contracted to sing at a local club on March 10, but that morning the club was destroyed by lightning. 
D)  On December 1, Pak contracted to buy Scott's horse, to be delivered day December 10. On December 8, the horse contracted rabies and had to be destroyed. 
E)  You agree to paint Joe's house on the following Tuesday, but on the Monday before, through no fault of either party, the house is destroyed by fire. 
A)  Wacky had contracted to supply a health-food store jars of melatonin, a hormone now thought to be a miracle potion. After the contract but before the delivery, the government banned the sale of melatonin so that it could be properly tested under government auspices. 
B)  Craig, a trucker with whom you contracted last month to transport stoves tomorrow, phones to tell you that his truck has broken down. 
C)  Tracey contracted to sing at a local club on March 10, but that morning the club was destroyed by lightning. 
D)  On December 1, Pak contracted to buy Scott's horse, to be delivered day December 10. On December 8, the horse contracted rabies and had to be destroyed. 
E)  You agree to paint Joe's house on the following Tuesday, but on the Monday before, through no fault of either party, the house is destroyed by fire.

Question 12

The courts prefer to grant an equitable remedy where a breach of contract has taken place.

Accepted Answer

A) True 
 B)False

Question 13

Indicate any limitations on the availability of specific performance and injunctions.

Accepted Answer

These are equitable remedies, and theref

Question 14

Repudiation occurs when one party indicates that they do not intend to follow through with their end of the deal.

Accepted Answer

A) True 
 B)False

Question 15

When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a

Accepted Answer

A)  force majeure clause. 
B)  condition precedent. 
C)  "subject to" clause. 
D)  condition subsequent. 
E)  frustration clause. 
A)  force majeure clause. 
B)  condition precedent. 
C)  "subject to" clause. 
D)  condition subsequent. 
E)  frustration clause.

Question 16

Adams signed a contract in which he promised to sell his house to Jefferson for $225,000. The deposit to be paid was set at $4000, and the liquidated damages clause provided that the deposit would be forfeited in the event that the buyer breached the contract. The buyer did breach the contract. Because the cost of housing was falling, it was difficult, even after a reasonable time had passed, to find a new buyer. The highest offer was $218,000. Adams accepted. Which of the following is true with regard to Adams' remedies?

Accepted Answer

A)  He would be entitled to damages for money lost-$7000 plus selling costs. 
B)  He would be entitled to the $4000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages. 
C)  He could sue for an injunction to stop Jefferson from buying another house. 
D)  He could ask the court to order an accounting. 
E)  Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions. 
A)  He would be entitled to damages for money lost-$7000 plus selling costs. 
B)  He would be entitled to the $4000 only, if the court held that the deposit was an honest attempt of the parties to estimate damages. 
C)  He could sue for an injunction to stop Jefferson from buying another house. 
D)  He could ask the court to order an accounting. 
E)  Adams must sue for specific performance, which is the only remedy, an equitable remedy, available to the parties in land transactions.

Question 17

Complications can give rise to frustration of contract. When these complications are avoidable, the court will not likely make a finding of frustration of contract. Comment on what a prudent businessperson could do to minimize the risk.

Accepted Answer

See case Kreway v. Kreway. Good risk man

Question 18

When Mr. George sold his house, he rented an apartment and was forced to store some furniture until he bought another house. He attended the downtown office of Security Warehousing Ltd. and entered into a bailment contract that promised to safeguard the furniture. Four months later, his things were stolen from the warehouse, and when he asked for compensation for his loss, the company admitted it was in breach of contract, but said it was exempt from liability because of an exemption clause posted on the wall of the storage area where George had taken the furniture. The sign read "Not liable for loss due to fire or water." On these facts, which of the following would be his least successful argument to nullify the exemption clause?

Accepted Answer

A)  He failed to receive reasonable notice of the clause at the time of contract. 
B)  There has been a fundamental breach of the contract. 
C)  The Sale of Goods Act voids such an exemption clause. 
D)  On the strict construction of the clause, it doesn't cover the cause of the loss. 
E)  Such terms cannot be unilaterally imposed. 
A)  He failed to receive reasonable notice of the clause at the time of contract. 
B)  There has been a fundamental breach of the contract. 
C)  The Sale of Goods Act voids such an exemption clause. 
D)  On the strict construction of the clause, it doesn't cover the cause of the loss. 
E)  Such terms cannot be unilaterally imposed.

Question 19

Which of the following statements regarding novation is false?

Accepted Answer

A)  Novation refers to the creation of a new contract through the substitution of a third party for one of the original parties to a contract, with everyone's consent. 
B)  Novation requires that the new debtor assume complete liability. 
C)  Novation requires the creditor to accept the new debtor as principal debtor, not merely as a guarantor. 
D)  Novation requires the creditor to accept the new contract in full satisfaction and substitution for the old contract. 
E)  Novation requires the inclusion of a force majeure clause in order to be enforceable. 
A)  Novation refers to the creation of a new contract through the substitution of a third party for one of the original parties to a contract, with everyone's consent. 
B)  Novation requires that the new debtor assume complete liability. 
C)  Novation requires the creditor to accept the new debtor as principal debtor, not merely as a guarantor. 
D)  Novation requires the creditor to accept the new contract in full satisfaction and substitution for the old contract. 
E)  Novation requires the inclusion of a force majeure clause in order to be enforceable.

Question 20

Explain what is meant by specific performance in contract law.

Accepted Answer

This is an order by the courts

The Frustrated Contracts Act today requires that when a deposit is paid, the costs incurred can be split out of the deposit.

When a court determines that a breach of contract has taken place and awards damages, what is the purpose of such an award?

In which of the following situations would the contract not be discharged by agreement?

The claim of frustration is not available in which of the following circumstances?

Indicate three conditions under which a contract may come to an end on the basis of frustration.

When a contract has been performed in all but a minor aspect of it, this is known as ________.

In all but one of the following situations, the contract is frustrated. Identify the exception.

The courts prefer to grant an equitable remedy where a breach of contract has taken place.

Indicate any limitations on the availability of specific performance and injunctions.

Repudiation occurs when one party indicates that they do not intend to follow through with their end of the deal.

When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a

Complications can give rise to frustration of contract. When these complications are avoidable, the court will not likely make a finding of frustration of contract. Comment on what a prudent businessperson could do to minimize the risk.

Which of the following statements regarding novation is false?

Explain what is meant by specific performance in contract law.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

Agency and Partnership

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters

Exam 9: The End of the Contractual Relationship

The Frustrated Contracts Act today requires that when a deposit is paid, the costs incurred can be split out of the deposit.

When a court determines that a breach of contract has taken place and awards damages, what is the purpose of such an award?

In which of the following situations would the contract not be discharged by agreement?

The claim of frustration is not available in which of the following circumstances?

Indicate three conditions under which a contract may come to an end on the basis of frustration.

When a contract has been performed in all but a minor aspect of it, this is known as ________.

In all but one of the following situations, the contract is frustrated. Identify the exception.

The courts prefer to grant an equitable remedy where a breach of contract has taken place.

Indicate any limitations on the availability of specific performance and injunctions.

Repudiation occurs when one party indicates that they do not intend to follow through with their end of the deal.

When a contract anticipates some catastrophic event, such as a riot, invasion, earthquake, or flood that will interfere with the performance of the contract, this is referred to as a

Complications can give rise to frustration of contract. When these complications are avoidable, the court will not likely make a finding of frustration of contract. Comment on what a prudent businessperson could do to minimize the risk.

Which of the following statements regarding novation is false?

Explain what is meant by specific performance in contract law.

Managing Your Legal Affairs

Introduction to the Legal System

The Resolution of Disputes: the Courts and Alternatives to Litigation

Intentional Torts and Torts Impacting Business

Negligence, Professional Liability, and Insurance

The Elements of a Contract: Consensus and Consideration

The Elements of a Contract: Capacity, Legality, and Intention

Factors Affecting the Contractual Relationship

Agency and Partnership

Corporations

Employment

Intellectual Property

Real and Personal Property and Protection of the Environment

Priority of Creditors

Sales and Consumer Protection

Filters