Exam 8: Factors Affecting the Contractual Relationship

Victims of misrepresentation who have affirmed the contract are bound by the affirmation and cannot later insist on

With regard to the law governing privity of contract and assignment, which of the following is true?

A computer salesman innocently misrepresented a fact about a StarSystem computer to a customer. Although this fact was not about a term of the contract, it did induce the customer to buy the computer. The customer has now learned the true facts and wants to return the computer. If the store refuses to take it back, the customer would ask the court for which equitable remedy?

Keri went to Crandon's computer outlet with her brother Paul, who was buying a laser printer. While she was waiting for him, she saw a poster saying the store was collecting funds for a special computer for a student recently disabled in an accident. The seller induced Paul to buy the model "X" printer by stating as a fact that the printer could interface with his iMac. Paul paid $400 for the printer. Also, Keri gave $15 to the student fund after the seller confirmed he was collecting for the student's computer. Later Paul and Keri learned that neither statement was true-the printer didn't work with Paul's computer and the store was doing nothing for the student-and that the seller didn't believe that either statement was true when he made them. On these facts, which of the following is true?

The Weyburn Farmers' Co-op contracted to sell a carload of grain to Mr. Takemori for $2000. The co-op assigned, in writing, its contractual right to receive the $2000 to the Royal Bank, to which it was indebted. The Royal Bank gave written notice of the assignment to Takemori. Unknown to the buyer and the seller, at the time of the contract the grain had been destroyed because of a train derailment caused by the negligence of the train conductor. On these facts, which of the following is true?

Explain what is meant by a "negotiable instrument."

When there is clear evidence that both parties agreed to something different than what was in the written document, the courts will rectify the document.

Joe, a student at the local college, had a one-year lease on a suite in a house owned by Sam. Sam sold the house to Jones without telling Jones about the lease. When he discovered Joe in the suite, he demanded that Joe leave. Explain the rights of the parties in terms of privity of contract.

Often a party to a contract wants to avoid his obligations by arguing that the contract was entered into because of a mistake, misrepresentation, undue influence, or duress. Which of the following is true with regard to these areas of the law?

The equitable remedy of rectification is granted by the courts in which of the following situations?

Able Company contracted to sell to Baker Company 400 barrels of chemical C for $12,000. Able Company assigned the entire $12,000 in writing to Mr. Long, who sent a letter informing Baker Company of the assignment and directing Baker Company to forward money to him instead of Able Company. Unknown to both companies, at the time of the contract the ship carrying the chemical had sunk and all cargo was lost. Which of the following is true?

Discuss the various remedies that are available where one of the parties to the contract is a victim of misrepresentation.

Explain what is meant by unjust enrichment.

Explain what is meant by a "statutory assignment."

When Gary went into Computer Heaven, Ltd. to get a better manual for the program he was trying to master, he was caught by a demonstration of a computer created by StarSystem Inc. He was fascinated by its performance. The salesman, Ross, told Gary that he should have this machine; that "it was the last computer, no other will ever be better"; that "UBC, Simon Fraser University, and BCIT just ordered over 1000 of them"; that he only had "a few left and the demand is so great it will take almost a year for the next shipment to arrive." When Gary said he needed a computer with at least 1 terabyte of hard drive space, Ross said this model had 2.5 terabytes. Gary was persuaded and contracted for it. Later Gary learned that every statement made by the salesman Ross was untrue, including the statement about the memory capacity. The model only had 400 gigabytes. On these facts, which of the following is true?

When you went home for Thanksgiving dinner, your great aunt, now 80 years old, seemed very unhappy. You learned that she had just signed a contract to buy an expensive condominium in a retirement community. She had attended a real estate "seminar" with her friend. In trying to think of a way for her to get out from under this contract, you review mistake, duress, undue influence, and unconscionability. Which of the following is false?

It came to your attention that your great-grandmother had signed a contract pursuant to which she would be paying $5000 for an electronic organ that retails in reputable stores for $3000. Furthermore, the interest being charged is 18%, even though today's rate fell to a 20-year low. This debt is totally out of line with her pension income. It is apparent that she was misled by the door-to-door salesman who came to her place. On these facts, which of the following laws is the most likely to help her?

Outline the restrictions on the ability of a person to claim non est factum.

An 80-year-old woman signed, in the presence of a solicitor, a contract for land by which she sold property to her daughter. She later asked the court to set the contract aside on the grounds of non est factum (mistake) and undue influence. Which of the following is true with regard to these grounds for the contract?

"Where fraudulent misrepresentation is involved, the victim can obtain rescission and/or damages but where innocent misrepresentation is involved, the only remedy is damages." Discuss the accuracy of that statement.