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Questions and Answers

What must be proven to establish unconscionability in a contract?

One party's financial stability

Mutual agreement between both parties

Inequality of bargaining power and an improvident bargain (correct)

Required written form

What is the primary legal remedy available when misrepresentation undermines a contract's validity?

Rescission (correct)

Damages compensation

Specific performance

Modification of contract terms

What is one primary reason for enforcing contracts in business relationships?

To increase competition among businesses

To allow for frequent renegotiation

To eliminate the need for legal representation

To ensure a foundation of reliability (correct)

Which factor could render a contract voidable?

A party agreeing to the terms under duress Signup and view all the answers

Which type of contracts are considered void due to statutory illegality?

Contracts violating specific laws Signup and view all the answers

Which of the following statements about contracts contrary to public policy is true?

They may be void to protect societal interests. Signup and view all the answers

What does the term 'unconscionability' refer to in contract law?

Unfair terms resulting from exploitation of weaknesses Signup and view all the answers

What characteristic distinguishes a fundamental mistake in contract law?

It undermines the entire contract's validity. Signup and view all the answers

Under what circumstance can a contract involving minors be treated differently?

When the contract is signed but the minor is given a choice to void it Signup and view all the answers

Which of the following best illustrates misrepresentation in a contract?

A seller promising unrealistic results without basis Signup and view all the answers

According to the Statute of Frauds, which type of contract typically requires written form?

Agreements for long-term contracts Signup and view all the answers

What is one of the main roles of contract enforcement in commerce?

To create a predictable business environment Signup and view all the answers

What does it mean for a contract to be voidable?

One party may choose to affirm or reject it. Signup and view all the answers

Which example best illustrates an unconscionable contract?

A contract that includes excessive interest rates Signup and view all the answers

Which of the following is NOT a recognized exception to contract enforceability?

Prior negotiations Signup and view all the answers

What risk does recognizing misrepresentations aim to mitigate in contract law?

The risk of fraud and deception Signup and view all the answers

What is the general rule regarding contracts involving minors?

They are typically voidable at the minor's discretion. Signup and view all the answers

Which type of contracts involving minors are exceptions to the general voidable rule?

Contracts for necessities. Signup and view all the answers

What might render a contract voidable due to mental incapacity?

The individual lacks the ability to understand the contract's nature. Signup and view all the answers

What is meant by duress in the context of contracts?

Threats or coercion that force a party to agree. Signup and view all the answers

What is the effect of contracts formed under undue influence?

They are voidable at the affected party's discretion. Signup and view all the answers

What is a key characteristic of unconscionability in contracts?

Exploitation of a party's weakness resulting in unfair terms. Signup and view all the answers

How do courts generally assess a party's mental capacity regarding contracts?

By assessing the ability to comprehend the nature and effects of the contract. Signup and view all the answers

What is the legal consequence of a contract formed under duress?

It is voidable, allowing the coerced party to seek legal remedies. Signup and view all the answers

What is the primary purpose of tort law?

Compensate victims for harm caused by others Signup and view all the answers

What distinguishes intentional torts from negligent torts?

Intentional torts are deliberate actions Signup and view all the answers

Who typically initiates a tort action?

The injured party (plaintiff) Signup and view all the answers

Which type of liability holds employers accountable for the actions of their employees?

Vicarious liability Signup and view all the answers

What occurs in contributory negligence?

The plaintiff is partially responsible for their harm Signup and view all the answers

What is the burden of proof required in tort cases?

Balance of probabilities Signup and view all the answers

In tort law, which type of damages refers to monetary compensation?

Pecuniary damages Signup and view all the answers

What differentiates tort law from criminal law?

Tort law focuses on compensating victims, while criminal law censors behavior Signup and view all the answers

What is the primary purpose of damages in contract law?

To restore the innocent party to their pre-breach position Signup and view all the answers

In anticipatory breach, when can the innocent party sue?

Immediately upon clear indication of non-performance Signup and view all the answers

Which type of damages is aimed at putting the innocent party in the position they would have been in if the contract had been fulfilled?

Expectation damages Signup and view all the answers

What is the legal obligation of the innocent party regarding damages?

To take reasonable steps to reduce losses Signup and view all the answers

Which equitable remedy requires the exact fulfillment of contract terms?

Specific performance Signup and view all the answers

What can happen if the innocent party fails to mitigate their damages?

Their recoverable damages may be reduced Signup and view all the answers

Which of the following is NOT considered an equitable remedy?

Expectation damages Signup and view all the answers

What is the purpose of punitive damages in contract law?

To punish wrongful conduct Signup and view all the answers

What is the primary purpose of the Statute of Frauds?

To mandate written contracts for specific scenarios. Signup and view all the answers

Which of the following is NOT a situation that requires a written contract under the Statute of Frauds?

Employment contracts lasting less than six months. Signup and view all the answers

How have courts adapted to electronic signatures in contract law?

Accepting typed email signatures in specific cases. Signup and view all the answers

Which of the following methods is NOT a way to terminate a contract?

Aggravated damages from a third party. Signup and view all the answers

What differentiates conditions from warranties in a contract?

Conditions are essential terms allowing termination, warranties are minor terms allowing only damages. Signup and view all the answers

Which scenario exemplifies 'frustration' in contract termination?

A natural disaster makes performance impossible. Signup and view all the answers

What crucial role do courts play when a contract is breached?

Determining whether a term is a condition or a warranty. Signup and view all the answers

Which of the following best describes a 'breach of contract'?

Failure to fulfill contractual obligations. Signup and view all the answers

Study Notes

Canadian Business Law Overview

This overview focuses on contract and tort law
It provides essential insights for businesses operating in Canada
It covers legal doctrines, business structures, and potential risks
The guide helps understand the legal landscape for commercial interactions

Contract Enforceability

Reliability: Contract enforcement builds trust in business relationships
Predictability: Enforcing contracts creates a predictable business environment, essential for planning
Integrity: Maintaining integrity in commercial interactions through upholding contractual agreements
Exceptions: Unequal relationships, duress, undue influence, unconscionability, misrepresentations, and mistakes can invalidate contracts
- Contracts with minors are typically voidable, except for necessities like food or medical care
- Contracts involving minors for beneficial services can be upheld
- Mental incapacity can make contracts voidable if the party lacks understanding of the contract terms

Duress and Undue Influence

Duress: Involves threats or coercion to force agreement
Undue influence: Involves unfair manipulation to compromise free will
Contracts formed under duress/undue influence are voidable

Unconscionability

Definition: Unfair terms resulting from exploitation of weakness
Proof: Requires inequality of bargaining power and improvident bargains
Consequence: Unconscionable contracts are voidable

Misrepresentation and Mistakes

Misrepresentation: False statements leading to contract formation
Mistake: Fundamental errors undermining the contract
Remedy: Rescission, aiming to return parties to their pre-contractual positions

Illegal and Unenforceable Contracts

Statutory illegality: Contracts violating specific laws are unenforceable
Public Policy: Agreements contrary to public interest may be void
- Overly broad restrictive covenants limiting business activities are examples

Writing Requirements in Contracts

Most contracts don't require a written form to be enforceable
The Statute of Frauds mandates written form for specific contract types like guarantees, land transactions, and complex agreements

Technology and Contract Law

Electronic signatures are increasingly common in modern contracts
Provincial legislation guides the use of electronic signatures
Some courts accept typed email signatures

Termination of Contracts

Performance: Fulfillment of all contractual obligations
Agreement: Mutual decision to end the contract
Frustration: Unforeseen events making performance impossible
Breach: Failure to fulfil contractual obligations.

Breach of Contract: Conditions vs. Warranties

Conditions: Essential terms allowing termination and damages
Warranties: Minor terms; only permitting damages
Determining the nature of breached terms plays a crucial role.

Exemption and Limitation Clauses

Purpose: To limit or exclude liability for breaches
Court Scrutiny: Clauses assessed for validity, applicability, and whether they're unconscionable/violate public policy

Ethical Considerations in Contract Breaches

Ethical considerations play a significant role in business practices
Companies must consider legal and ethical implications and impacts

Timing of Contract Breaches

Present Breach: Occurs at the time of agreement
Anticipatory Breach: Expected before performance date; allows immediate legal action

Entitlement to Remedies

Damages: Monetary compensation for breach (expectation, punitive, aggravated)
Purpose: Restore the innocent party to their pre-breach position

Duty to Mitigate Damages

Legal Obligation: Innocent party must attempt to reduce losses
Examples: Finding alternative goods/services
Impact: Failure to mitigate can reduce recoverable damages

Equitable Remedies

Specific Performance: Requiring exact fulfillment of contract terms
Injunctions: Orders to prevent specific actions
Rescission: Restoring parties to pre-contractual positions
Restitutionary Quantum Meruit: Compensation based on benefits received

Introduction to Tort Law

Definition: Civil wrongs outside of contracts
Purpose: Compensate victims for harm caused by others
Types: Intentional and negligent torts

Tort Law vs. Criminal Law

Purpose: Tort law compensates victims; criminal law censures behavior
Action Initiator: Tort: Injured party; Criminal: Crown prosecutor
Burden of Proof: Tort: Balance of probabilities; Criminal: Beyond reasonable doubt