Law Chapter 8

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Exam

Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1)
Which of the following statements is TRUE?

1)

_______
A)
A party seeking to receive the benefit of a promise does not have to provide consideration if it placed its
seal upon a document in which the promise is contained.
B)
A person can provide consideration by making a promise that will either create a benefit for itself or
impose a detriment upon the other party.
C)
Consideration must be adequate but it does not have to be sufficient.
D)
Love and affection can serve as consideration if a contract is created between family members.
E)
none of the above

2)
A gratuitous promise

2)

_______
A)
is one that is not given in exchange for consideration.
B)
occurs when a person promises to provide a benefit in exchange for love and affection.
C)
generally cannot support the enforcement of a promise.
D)
is enforceable if it is placed under seal.
E)
all of the above

3)
Patricia and Charlie entered into a written agreement. Patricia promised to pay $5000 to Haden, who is
Charlie's brother. Charlie placed his seal on the document, but Patricia did not do so. Three days later,
Charlie promised that he would design a new computer program for Bethany, Patricia's sister, in
exchange for Patricia's promise. Which of the following statements is the most accurate?

3)

_______
A)
Patricia's promise is enforceable because Charlie placed his seal on his agreement with her.
B)
Charlie's promise is enforceable because it was given in exchange for Patricia's promise to pay $5000.
C)
Patricia's promise is not enforceable because it was not given in exchange for consideration.
D)
Patricia's promise is not enforceable because each party to a contract must provide a benefit to the other
party.
E)
none of the above
4)
Because he was in love with her, Noriel promised to sell his car to Marina for $500. At the time of that
agreement, Marina stressed that the deal was purely commercial and made it clear that she did not share
Noriel's hopes for an intimate relationship. Before the sale was performed, Noriel fell in love with
another woman, Valerie. He therefore now refuses to transfer the car to Marina. The actual market value
of the car is $7500. Which of the following statements is TRUE?

4)

_______
A)
Marina can enforce Noriel's promise to transfer the car, but only if she pays the actual market value of
the car.
B)
Marina cannot enforce Noriel's promise to transfer the car because that promise was only supported by
past considerationit was based on the fact that Noriel was previously in love with Marina.
C)
Marina cannot enforce Noriel's promise because love and affection are not good consideration.
D)
Marina cannot enforce Noriel's promise because her promise did not provide adequate consideration.
E)
none of the above

5)
In exchange for Miles' promise to pay $10 000 to the Society for Prevention of Cruelty to Animals, Fran
promised to give up eating meat for one year. Which of the following statements is TRUE?

5)

_______
A)
because neither party will receive a direct benefit, a contract was created only if the parties' agreement
was placed under seal
B)
The facts demonstrate a mutual exchange of value.
C)
Fran has not given consideration because she has only suffered a detriment.
D)
Fran's promise is gratuitous because Miles does not receive anything of value from her.
E)
The facts demonstrate the doctrine of promissory estoppel.

6)
Which of the following statements is TRUE?

6)

_______
A)
Consideration can never consist of a promise to perform a pre-existing obligation.
B)
Consideration is unnecessary as long as the word "seal" was printed on a form that a contractual party
read.
C)
because of the significance of the privity of contract doctrine, exceptions can only be created by the
legislature, and not by the courts
D)
Promissory estoppel can be used as a sword, but not as a shield.
E)
The courts generally do not require adequate consideration because they believe that each person can
look after their own interests by deciding how much to demand under a contract.

7)
Mohana promised Ian that she would pay $10 000 to him on his birthday. Ian gave nothing in exchange
for that promise and neither party placed their seal on the document containing Mohana's promise. Ian
demanded payment on his birthday. Mohana refused, primarily on the basis that she had recently become
quite annoyed with him. Ian then threatened to start a lawsuit. However, he also offered to settle that
lawsuit in exchange for payment of $7500. Mohana agreed in an attempt to avoid paying the full $10 000.
Several weeks after paying $7500, however, she learned that her initial promise was not actually legally
enforceable. She also learned that Ian, who was a lawyer, was aware of that fact all along. Which of the
following statements is the most accurate?

7)

_______
A)
Mohana can recover $7500 from Ian because his threat to sue her for payment of $10 000 was not made
honestly.
B)
Mohana cannot recover $7500 from Ian because she paid that money in exchange for his forbearance to
sue.
C)
Mohana can recover her $7500 because Ian did not give consideration in exchange for her initial promise
to pay $10 000.
D)
Mohana would have been required to pay $10 000 to Ian if he had placed his seal on the document that
contained her promise.
E)
none of the above

8)
Fred owed a debt of $10 000 to Regina. Because he had lost his job and was experiencing financial
difficulties, he hoped that she would take pity on him and would not insist upon payment. Fred therefore
said to Tyra, who was Regina's colleague, "If you can get her to drop the matter, I'll make it worth your
while." Tyra felt sorry for Fred and said that she would do her best. A week later, she called Fred and
explained that Regina had agreed under seal to forgive the $10 000 debt. Fred replied by saying, "Many
thanks. Come by my house and I'll pay you $500 for your effort." Which of the following statements is
TRUE?

8)

_______
A)
The agreement between Tyra and Fred is enforceable because Fred's promise to pay $500 is past
consideration.
B)
Tyra would not be entitled to any payment from Fred if he did not state the specific amount of $500.
C)
Although Regina is no longer entitled to receive $10 000 from Fred, she can still recover a reasonable
amount from him.
D)
Regina cannot sue under the agreement that was created between Tyra and Fred.
E)
Regina can still recover $10 000 from Fred because he did not use his own seal.

9)
Which of the following situations illustrates the concept of gratuitous consideration?

9)
_______
A)
Pam placed an advertisement in a newspaper that promised to pay $10 000 to anyone who returned her
lost cat to her.
B)
In exchange for his promise to pay $5, Pam promised Dave that she would guard a parking lot in which
his car was located during a sporting event. Several minutes later, she promised Earl, who had also
parked there, that she would guard the same parking lot during the same sporting event if he promised
to pay her $7.
C)
Pam asked Dave, who is a real estate agent, to locate a house in which she could operate a small
accounting business. After he directed her attention to such a house, she promised to pay $10 000 to him.
D)
Pam has threatened to sue Dave for $10 000. She is quite sure that she would win the case in court.
However, because she is very fond of him, she has also generously offered to settle the matter for $6000.
E)
none of the above

10)
Parker Inc promised to pay $100 000 cash to Coltrane Ltd in exchange for a shipment of widgets. The
widgets were actually delivered on October 1st and the price was to be paid on October 15th. On October
13th, Parker informed Coltrane that it would not be able to afford to pay any more than $75 000. Which
of the following statements is TRUE?

10)

______
A)
Coltrane will be able to recover the full contract price even if it accepts Parker's offer to satisfy the $100
000 debt by both paying $75 000 in cash and delivering a used truck to Rollins Corp, which is another
company with which Coltrane has close ties.
B)
There is no mutuality of consideration, and therefore the contract is invalid, because Coltrane actually
delivered the widgets before Parker was required to pay the purchase price.
C)
Coltrane will not be able to recover the full contract price if it agrees accept $75 000 from Parker on
October 14th in complete satisfaction of the $100 000 debt.
D)
Coltrane will be able to recover the full contract price even if it promises under seal to accept $75 000 in
complete satisfaction of Parker's debt.
E)
If the parties are located in Alberta, Ontario, British Columbia, Manitoba, the Northwest Territories,
Nunavut, Saskatchewan, or the Yukon, Coltrane will not be able to recover the full contract price as long
as it has accepted Parker's offer to pay $75 000 in complete satisfaction of the $100 000 debt.

11)
Sarah was an orphan. Her uncle Rocco agreed to act as her guardian until she became an adult. In that
role, he borrowed money to pay for her education. She promised to repay him when she became an adult.
Sarah later became an adult and married Stepan. Stepan also promised to repay Rocco for the money
that he had spent on Sarah's education. Sarah and Stepan, however, now refuse to pay the money. Rocco
has sued Stepan on his promise. Which of the following statements is TRUE?

11)

______
A)
Stepan's promise to Rocco is past consideration.
B)
Stepan's promise to Rocco is not sufficient consideration.
C)
Assuming that a valid contract was created between Rocco and Sarah, Stepan does not have privity to
that agreement.
D)
Rocco is not entitled to receive any money from Stepan.
E)
all of the above

12)
Maria went on vacation in May. She expected that her garden would be fine because May is normally a
very rainy month. In fact, it did not rain at all during May. Her neighbour, Hector, therefore watered her
garden because he knew that she would not want her plants to die. When she returned from her vacation
in early June, she thanked Hector and promised to pay him $200 for his time and effort. Select the best
answer.

12)

______
A)
Maria's promise is unenforceable because there was no mutuality between her promise and Hector's
work.
B)
Maria's promise would have been enforceable if it had been placed under seal.
C)
Maria's promise is unenforceable because it is gratuitous.
D)
Maria's promise is unenforceable because it was given in exchange for past consideration.
E)
all of the above

13)
Which of the following situations illustrates a contractually enforceable promise?

13)

______
A)
Suneeta had a contract with a construction company to build a deck in her backyard. Halfway through
the project, the cost of materials suddenly increased. Although the original agreement did not require her
to do so, Suneeta agreed to pay an additional $2000 to the construction company to off-set the additional
expenses that it would encounter in the remainder of the project.
B)
Suneeta promised to pay $5000 to a firefighter who responded to a routine call to extinguish a fire at her
house.
C)
Suneeta promised to pay $500 to her father for a birthday present that she had received from her parents
two weeks earlier.
D)
Suneeta borrowed money from a bank. Under the terms of that agreement, she was required to pay the
bank $10 000 cash on June 1st. On May 28th, she explained to the bank that she would not be able to pay
the full amount on schedule. On the same day, she also persuaded the bank to accept a cheque for $7500
in satisfaction of the full debt.
E)
none of the above

14)
Which of the following explains why the courts will not enforce an agreement that was created on the
basis of a pre-existing public duty?

14)

______
A)
A promise by a public official is binding only if it is placed under seal.
B)
The performance of a public duty does not confer a benefit upon anyone.
C)
As a matter of public policy, it would be undesirable if a public official with a pre-existing public duty was
motivated to perform for wealthy citizens, but not poor citizens.
D)
Because public duties usually concern very serious matters, such as police investigations and firefighting,
there is nothing that a citizen could give that would provide adequate consideration for a promise to
perform a pre-existing public duty.
E)
Citizens should not have to pay for services that public officials, like police officers and firefighters,
perform while they are off-duty.

15)
Rande promised to provide a series of lectures on tort law to a group of professional athletes in exchange
for payment of $10 000. Shortly before the lectures were scheduled to take place, Rande promised to
provide a publishing company with a recorded set of lectures on tort law in exchange for $15 000. The
publishing company agreed that Rande's planned lecture for the group of professional athletes would be
the subject of the recording. Which of the following statements is TRUE?

15)

______
A)
If Rande fails to provide the lecture as promised, he may be held liable for breach of contract to both the
group of professional and the publishing company.
B)
Rande's promise to the publishing company would be enforceable only if it was made under seal.
C)
Rande does not have a contract with the publishing company because a pre-existing contractual
obligation cannot be re-used for the purpose of supporting a new contract.
D)
Although Rande has contracts with both the group of professional athletes and the publishing company,
he can only demand payment from one of them.
E)
Rande does not have a contract with the group of professional athletes because he re-used his promise to
provide a lecture in order to support his contract with the publishing company.

16)
Which of the following statements is TRUE?

16)

______
A)
As a general rule, a promise to perform a pre-existing contractual duty to one party cannot provide
consideration for a new contract with a different party.
B)
As a general rule, a promise to perform a pre-existing public duty can provide consideration for a new
contract.
C)
As a general rule, a creditor's promise to accept a lesser sum in complete discharge of a larger debt is
unenforceable.
D)
As a general rule, a promise to perform a pre-existing contractual duty to one party can provide
consideration for a new contract with that same party.
E)
all of the above
17)
Which of the following propositions is TRUE in the context of the doctrine of promissory estoppel?

17)

______
A)
The doctrine of promissory estoppel is effective only if the representee relied upon a statement by the
representor.
B)
The representee cannot rely on the representor's gratuitous promise if the representor was guilty of
inequitable behaviour.
C)
Once legal rights are affected by the doctrine of promissory estoppel, they can never be revived.
D)
Promissory estoppel can only be based on representations of existing or past facts.
E)
Promissory estoppel can be used as a sword but not as a shield.

18)
JB Inc sold a piece of equipment to SubSurf Ltd for a total price of $240 000. Under the terms of their
contract, SubSurf was required to pay $10 000 on the first day of each month for twenty-four months.
The contract also stated that if SubSurf was late on any single payment, JB was entitled to demand
immediate payment of the entire outstanding amount. SubSurf made the first four payments on time. For
the next six months, however, it was habitually late by at least one week. JB did not object to receiving
those late payments. However, when SubSurf did not pay the eighth instalment on the first day of the
next month, JB demanded immediate payment of the entire outstanding amount. Which of the following
statements is TRUE?

18)

______
A)
The doctrine of promissory estoppel is inapplicable because JB did not make an effective representation.
B)
SubSurf must immediately make a lump sum payment of $240 000 to JB.
C)
JB is estopped from complaining about the late payments as long as SubSurf can prove that it relied upon
the fact that the first ten payments were accepted without objection.
D)
The parties' contract is invalid because SubSurf's promise to immediately pay the entire outstanding
amount if it failed to perfectly comply with the repayment schedule was a gratuitous promise.
E)
The doctrine of promissory estoppel is inapplicable because it can only be used as a sword.

19)
Deecey renovated Reece's shop in exchange for the promise of $75 000. Reece had enough money to pay
the entire bill, but simply did not want to do so. Reece also knew that Deecey's financial situation was
very weak and that it might be forced into bankruptcy if it did not receive at least $25 000 for its work.
Reece therefore offered to pay $25 000 in full satisfaction of the outstanding debt. Because of the
circumstances, Deecey accepted that offer and promised that it would not demand payment of the
additional $50 000. Reece paid $25 000 to Deecey. However, Deecey now claims that it is entitled to the
additional $50 000. Which of the following statements is TRUE?

19)

______
A)
The doctrine of promissory estoppel is inapplicable because Deecey's representation concerned a past
fact (the value of the work that it performed for Reece).
B)
Reece cannot rely on the principle of promissory estoppel because its own behaviour was inequitable.
C)
Deecey will want to rely on the principle of promissory estoppel because Reece's behaviour was
inequitable.
D)
The doctrine of promissory estoppel is inapplicable because Reece is trying to use a gratuitous promise
as a sword, rather than a shield.
E)
The doctrine of promissory estoppel is not applicable because Deecey is trying to use a gratuitous
promise as a sword, rather than a shield.

20)
Bruce and Rosie entered into an agreement. He promised to transfer a necklace to her mother and she
promised to deliver a computer to his father. Which of the following statements is most likely to be
TRUE?

20)

______
A)
As long as Bruce transferred the necklace to Rosie's mother, Bruce's father could demand delivery of the
computer from Rosie.
B)
There is no contract between Rosie and Bruce because neither her mother nor his father are parties to
the agreement.
C)
There is no contract between Bruce and Rosie because there was no mutuality of consideration.
D)
As long as Bruce's father relied upon the terms of the existing contract, and as long as he did not act
inequitably, he could compel Rosie to transfer the computer to him on the basis of the doctrine of
promissory estoppel.
E)
none of the above

21)
Dunlop sold tires to Mew. The parties' contract prohibited Mew from re-selling the tires unless its sub-
buyer agreed to abide by Dunlop's list price for the tires. Mew re-sold the tires to Selfridge. Under its
contract with Mew, Selfridge agreed to (i) abide by Dunlop's list price, and (ii) pay $50 to Dunlop for each
tire that it sold in violation of that list price. Selfridge re-sold ten of the tires to its own customers for less
than Dunlop's list price. Which of the following statements is TRUE?

21)

______
A)
As a result of the contract between Mew and Selfridge, privity of contract exists between Dunlop and
Selfridge.
B)
Selfridge is required to pay $500 to Mew.
C)
Selfridge is required to pay $500 to Dunlop.
D)
Selfridge is required to pay $500 to Dunlop only if Selfridge's contract with Mew is under seal.
E)
none of the above

22)
Which of the following statements is TRUE?

22)
______
A)
An assignment of contractual rights sometimes is created by operation of law and without regard to the
assignor's intention.
B)
If the parties have tried, but failed, to create a statutory assignment, they cannot rely on an equitable
assignment.
C)
An equitable assignment is valid only if it is unconditional and complete.
D)
An assignee under an equitable assignment acquires its rights "subject to the equities," but an assignee
under a statutory assignment does not.
E)
The doctrine of vicarious performance is a type of assignment.

23)
ABC Construction agreed to build a pool for Miranda in exchange for $100 000. The pool was to be built
during the month of May, but payment was not due until the end of August. The pool was completed on
schedule. However, because it was experiencing financial difficulties, ABC orally assigned its contractual
rights against Miranda to Mirth Enterprises in early June. In July, Miranda discovered that the pool
leaked. Because ABC denied responsibility, Miranda had the problem fixed by another company at a cost
of $20 000. The evidence now indicates that the problem was in fact caused by ABC's breach of contract.
ABC failed to use appropriate materials when it constructed the pool. Which of the following statements
is TRUE?

23)

______
A)
Because of the assignment, Miranda can sue Mirth on the basis of ABC's breach of contract.
B)
The assignment may be equitable, but it cannot be statutory.
C)
ABC can collect $100 000 from Miranda regardless of when she received notice of the assignment.
D)
Mirth can collect $100 000 from Miranda only if it notified her of the assignment before the pool began to
leak in July.
E)
The assignment may be statutory, but it cannot be equitable.

24)
Bentley Inc operates a sporting goods store. In January, it purchased a shipment of baseball bats from
Tadpole Manufacturing Ltd for $20 000. In February, Tadpole orally assigned its rights under that
contract to J&H Collections. In May, Bentley purchased a shipment of footballs from Tadpole for $15 000
under a separate contract. Immediately after delivery, Bentley discovered that the footballs were
defective. They had been improperly treated with a chemical that completely destroyed their leather
exterior. The footballs consequently are completely worthless. Both contracts between Bentley and
Tadpole required payment to be made by the end of June. Which of the following statements is TRUE?

24)

______
A)
Because the assignment is statutory, J&H can sue Bentley without joining Tadpole as a party to that
action.
B)
Even if Bentley paid for the baseball bats as soon as they were delivered (even though payment was not
required until the end of June), it will have to pay the price a second time to J&H, if J&H provides written
notice of the assignment before the end of June.
C)
J&H can collect $20 000 from Bentley as long as it notified Bentley of its assignment before the end of
June.
D)
Because the assignment is equitable, J&H can collect $20 000 from Bentley regardless of when it notified
Bentley of the assignment.
E)
none of the above

25)
Which of the following rules applies to an equitable assignment?

25)

______
A)
The assignment must be written.
B)
The assignment is valid only once the debtor is given written notice.
C)
The assignment must be placed under seal.
D)
The assignment must be unconditional.
E)
none of the above

26)
Which of the following statements is TRUE?

26)

______
A)
As long as the required formalities are satisfied, a contractual obligation can generally be assigned by
using either a statutory assignment or an equitable assignment.
B)
All common law provinces and territories allow statutory assignments, but only some of them allow
equitable assignments.
C)
If there are two assignees of the same debt, a court will always favour the assignee that received its
assignment first.
D)
An assignee acquires rights against the debtor only if it provides new consideration to the debtor.
E)
none of the above

27)
Carlos entered into a contract with Keisha. He promised to design a computer system for her business
and she promised to pay $50 000 to his brother, Mikey. When that contract was created, Keisha agreed
that Carlos would receive her promise on trust for Mikey. Which of the following statements is TRUE?

27)

______
A)
The facts illustrate the concept of vicarious performance.
B)
Carlos is the beneficiary of a trust.
C)
Keisha is the trustee of a trust.
D)
because Carlos and Keisha agreed to create a trust, their contract is valid even without consideration
E)
none of the above

28)
The employment exception to the privity doctrine

28)

______
A)
can be applied in a case the involves vicarious performance.
B)
is a form of equitable assignment.
C)
is usually necessary because the employer did not provide consideration to the customer.
D)
was created by statute.
E)
allows an employer to acquire rights in a contract that was created between a customer and an
employee.

29)
Sentinel Safety Inc entered into a contract with Glengarry Shopping Mall to provide security. The parties'
contract contained a clause that said "Neither Sentinel nor its employees or agents shall be held liable in
an amount that exceeds $10 000 for any loss or damage that may be caused in the performance of this
agreement." In effect, Glengarry promised that it would not sue the named parties for more than $10
000. Elaine works as a security guard for Sentinel. As part of her job, she regularly patrols the Glengarry
Shopping Mall. Which of the following statements is TRUE?

29)

______
A)
The facts involve the contractual concepts of a stranger, vicarious performance, and sufficient
consideration.
B)
If Elaine carelessly damaged part of the mall's property while on patrol, she would be protected by a
statutory exception to the privity of contract doctrine.
C)
Elaine could not be held liable for more than $10 000 if she caused property damage to Glengarry
Shopping while shopping there on her day off.
D)
because she was not a party to the contract between Sentinel and Glengarry, Elaine would not be entitled
to limited liability if she carelessly damaged part of the mall's property while on a regular patrol
E)
The facts involve the contractual concepts of privity of contract and promissory estoppel and mutuality of
consideration.

30)
The decision in London Drugs Ltd v Kuehne & Nagel International Ltd is primarily authority for which of
the following propositions?

30)

______
A)
In certain circumstances, an employee is entitled to enforce an exclusion clause that is contained in a
contract that was created between an employer and a customer.
B)
Sufficient consideration may consist of either a benefit provided to another person or a detriment to
oneself.
C)
A trust can be used to avoid the consequences of the privity of contract doctrine only if the parties
actually intended to create a trust.
D)
Forbearance to sue may be sufficient consideration even if the underlying claim was not actually valid.
E)
A promise to perform a pre-existing contractual obligation that is owed to one party may provide
consideration under a new contract with a different party.

31)
Which of the following refers to a TRUE exception, rather than an apparent exception, to the privity
doctrine, in the sense that a person is entitled to sue on a contract despite the fact that he or she is not a
party to that contract?

31)

______
A)
equitable assignment
B)
employment
C)
trust
D)
legal assignment
E)
all of the above

32)
The word "estop" means

32)

______
A)
"to guess."
B)
"to prove."
C)
"to promise."
D)
"to prevent."
E)
"to deny."

33)
The traditional doctrine of estoppel, rather than promissory estoppel, requires proof

33)

______
A)
of an intention to create a new contract.
B)
of either consideration or seals from both parties.
C)
of a representation regarding a past or present fact.
D)
that one of the parties acted inequitably.
E)
of detrimental reliance by the representor.
34)
The contractual rule that requires an exchange of value

34)

______
A)
is based on the need for clear evidence of an agreement and therefore does not apply if the parties'
agreement is written, rather than oral.
B)
cannot be satisfied by the provision of love and affection because that rule requires each party to provide
a physical benefit, rather than services or actions.
C)
generally requires proof that each party provided sufficient consideration, but it does not also require
proof that each party provided adequate consideration.
D)
is best explained through the doctrine of privity.
E)
can be satisfied by the use of a seal because a seal is itself a form of valuable consideration.

35)
Lewis is a wealthy entertainer. While watching a telethon that was aimed at raising money for medical
research, he was overwhelmed by a sense of grief and sorrow. He consequently picked up the telephone,
dialed the number on the screen, and promised to donate $5 000 000 within one month. The volunteer on
the other end of the line thanked Lewis and assured him that “the money will be put to good use.” Two
days later, before Lewis had sent in a cheque, the telethon organizers announced that, because of the
public’s overwhelmingly positive response, and in particular because of Lewis’s generous promise, their
organization would be able to build a research facility that they previously believed was beyond their
budget. They also announced that they would name the facility the Jerry Medical Research Park, after
Thomas Jerry, a local surgeon who recently had died. Lewis became very angry. He had long hated Jerry
and he was horrified at the thought of paying for a building named in his enemy’s honour. He therefore
informed the telethon organizers that he had changed his mind and that he would not be sending any
money. The telethon organizers have now sued for breach of contract. Which of the following statements
is TRUE?

35)

______
A)
Lewis will be contractually obliged to honour his promise as long as the telethon organizers agree to drop
Thomas Jerry’s name from the new research park.
B)
Lewis is required to honour his promise as a result of the doctrine of promissory estoppel.
C)
there is no contract in this case because Lewis merely promised to pay, and did not actually pay any
money, and therefore did not provide consideration.
D)
Lewis is contractually obliged to honour his promise if the telethon organizers can prove that, in reliance
upon his promise, they already have hired architects and contractors to build the new facility.
E)
none of the above

36)
As a result of her participation in a telemarketing scheme, Susan was charged with several counts of
fraud. Because she knew that the courts had recently started to take a much harsher approach to such
crimes, and because she already had been convicted for similar offences in the past, she was anxious to
"beat the rap." She therefore called Anqwaan, her brother-in-law, who was also a lawyer, and begged for
his help. Anqwaan initially hesitated. Anqwaan already was very busy with his practice. Furthermore,
although they were related, Anqwaan had met Susan only a few times and he did not know her much at
all. He did, nevertheless, eventually agree to take on the case. As a result of his excellent service, Susan
was acquitted on all charges. A few days after the trial ended, Anqwaan sent Susan a bill for his legal
services $15 000. As a family courtesy, Anqwaan had, in fact, charged Susan only half of his usual hourly
rate. Susan nevertheless was very upset. As she correctly notes, she and Anqwaan had never discussed
his fee and she had never actually promised to pay him anything. Which of the following statements is
TRUE?

36)

______
A)
If Susan had promised to pay $15 000 immediately after the trial ended, and before Anqwaan raised the
subject of his fee, Susan's promise necessarily would be seen by a judge as past consideration.
B)
There cannot be a contract on these facts because, given his relationship to Susan, Anqwaan already had
a moral, family obligation to act on her behalf.
C)
Even though the parties never discussed Anqwaan's fee, the court may find that Susan implicitly
promised to pay for Anqwaan's services and that, by taking the case, Anqwaan implicitly accepted that
offer.
D)
because the parties never discussed Anqwaan's fee, they could not have created a contract
E)
none of the above

37)
Laetitia agreed to provide certain services to Hans in exchange for a payment of $10 000. Although
Laetitia fully performed her side of the agreement, Hans refuses to pay anything. He insists that Laetitia
does not have a right to sue for breach of contract because, in performing the services, she was merely
doing something that she had become obliged to do even before she entered into her agreement with
Hans. Hans' position is correct if Laetitia's pre-existing obligation was

37)

______
A)
some type of public duty.
B)
for some reason unenforceable.
C)
supported by a seal, rather than by consideration.
D)
a private obligation owed to a third party.
E)
none of the above.

38)
Gabriel entered into a contract with Paradise Equestrian Services. (PES) The purpose of the contract was
to allow Gabriel's son, Archie, to learn to ride horses. The situation was somewhat complicated by the
fact that while Gabriel lived in Prince Edward Island, Archie was starting college in British Columbia,
where PES was also located. In an attempt to make it easier for Archie to take action on the contract, if
any problems arose, Gabriel made sure that the agreement contained Paragraph 13, which says, "The
promise given by PES is hereby acquired legally by Gabriel and equitably by Archie." Which of the
following statements is TRUE?

38)

______
A)
The facts demonstrate the concept of vicarious performance.
B)
Archie can sue on the contract only if he personally provided consideration.
C)
As a result of Paragraph 13 of the contract, Archie can properly be classified as trust beneficiary, rather
than as a third party beneficiary.
D)
The tactic that Gabriel tried to use in this case was abolished by the Privy Council in Vandepitte v
Preferred Accident Insurance Co.
E)
Archie is a party to the contract by virtue of an assignment.

39)
Cookie entered into a contract with Muhammad. Muhammad was required to pay $25 000 to Cookie, and
he was entitled to have an engine modified and installed in his speedboat. Jane vicariously performed
part of the contract. Which of the following statements is TRUE?

39)

______
A)
If Jane performed carelessly and caused some sort of loss to the party on the other side of the contract,
then the party who suffered the loss must sue Jane rather than the other person who actually signed the
contract.
B)
Vicarious performance occurs only under an assignment.
C)
Jane almost certainly vicariously performed on behalf of Cookie.
D)
Vicarious performance will be recognized by a court of equity, but not by a court of law.
E)
One of the parties undoubtedly breached the contract.

40)
Sid and Nancy entered into a contract. Part of that contract was subsequently assigned to Johnny. Which
of the following statements may be TRUE?

40)

______
A)
One of the parties assigned the contract to Johnny even though the other party strenuously objected to
that development.
B)
The assignment must have happened by operation of law, rather than in response to a party's intention.
C)
As a result of a statutory assignment, Johnny became entitled to receive half of the money that Nancy
owed to Sid under the contract.
D)
Johnny is now required to provide personal services to either Sid or Nancy.
E)
none of the above

TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false.
41)
A gratuitous promise is never enforceable.

41)

______

42)
Alpha Corp entered into an agreement with Beta Inc. Alpha promised to transfer certain equipment to
Beta and Beta promised to pay $50 000 to Gamma Ltd. Alpha has provided sufficient consideration but
Beta has not.

42)

______

43)
Epsilon Inc and Delta Ltd entered into an agreement. Epsilon promised to pay $10 000 to Delta in March.
Delta promised to deliver a piece of machinery to Epsilon in June. Epsilon paid the money in March. It is
now April. The parties do not yet have a contract because while Delta has given a promise, it has not yet
performed that promise.

43)

______

44)
Dina threatened to sue Chris for $25 000 unless he immediately paid her $10 000. Chris paid $10 000. He
will be entitled to recover that money as long as he later proves to Dina that her initial belief was
mistaken and that she never did have a right to sue him for $25 000.

44)

______

45)
Luke threatened to sue Leia for $50 000 unless she immediately paid $30 000 to him. Leia paid $30 000
as requested. She can later recover that money if she proves that Luke never honestly believed in the
validity of the lawsuit that he threatened.

45)

______

46)
Past consideration never satisfies the requirement of mutuality of consideration.

46)

______

47)
Tracey is a police officer. While she was on vacation, she agreed to act as a security guard at a concert in
exchange for payment of $500. She performed the work, but the concert promoter refuses to pay her. He
is entitled to do so because the law wants to discourage public servants like Tracey from improperly
taking advantage of their special skills for private gains.

47)

______

48)
A promise to perform a pre-existing contractual obligation cannot provide consideration under a new
contract with the same party. That rule always reflects commercial reality.

48)

______
49)
Zeta Corp was contractually obliged to pay $25 000 cash to Omega Inc on June 15th. On June 1st, Omega
agreed to discharge the entire debt if Zeta immediately gave a cheque worth $15 000. Zeta did so.
Nevertheless, on June 15th, Omega demanded payment of another $10 000. It is entitled to receive that
amount.

49)

______

50)
The Canadian government announced its plan to create and circulate a new $100 bill. Because Marta
knew that Bernie was an avid collector of currency, she promised to give him the first new $100 bill that
she received from her work at a flea market. The agreement was placed in writing and Bernie applied his
seal to the document. Shortly after the government released the new $100 bills, Marta received one from
a customer at the flea market. She is required to deliver it to Bernie.

50)

______

51)
Hofflehass Architectural Ltd was hoping to persuade the Town of Buchanan to create a new beachfront
resort. Buchanan said that it was not yet willing to commit itself to such a project. However, it also said
that it would likely agree to any proposal that met certain specifications. On that basis, Hofflehass spent
$150 000 in creating a proposal that met all of the town's specifications. It presented the proposal and
further explained that it would charge $2 000 000 to actually undertake the construction project. The
town's officials, however, said that they were no longer interested in a beachfront resort. Although
Hofflehass cannot force Buchanan to pay it $2 000 000 to create the proposed resort, it can use the
doctrine of promissory estoppel to recover its expenses of $150 000.

51)

______

52)
The doctrine of promissory estoppel operates only if the representee relies upon a statement made by the
representor.

52)

______

53)
A statutory assignment involves three parties the assignor, the assignee, and the debtor.

53)

______

54)
An assignment can only be created by an intentional act of the assignor.

54)

______

55)
As a wedding anniversary present for himself and his wife, Louisa, Mario entered into an agreement with
Stanislaus, a world famous pianist. Under the terms of that agreement, Mario promised to pay Stanislaus
$52 000. Stanislaus promised that he would provide weekly lessons for one year for both Mario and
Louisa. After two weeks of lessons, Mario completely lost interest, but Louisa is eager to continue.
Stanislaus, however, refuses to go on. Louisa has the right to demand the remainder of the lessons from
Stanislaus because the courts generally assume that if one party (such as Mario) enters into a contract
for another person (such as Louisa), the promise provided by the other contractual party (such as
Stanislaus) is held on trust.

55)

______

1)

E
2)
E
3)
C
4)
E
5)
B
6)
E
7)
A
8)
D
9)
E
10)
C
11)
E
12)
E
13)
D
14)
C
15)
A
16)
C
17)
A
18)
A
19)
B
20)
E
21)
E
22)
A
23)
B
24)
E
25)
E
26)
E
27)
E
28)
A
29)
A
30)
A
31)
B
32)
D
33)
C
34)
C
35)
E
36)
C
37)
A
38)
C
39)
C
40)
A
41)
FALSE
42)
FALSE
43)
FALSE
44)
FALSE
45)
FALSE
46)
TRUE
47)
FALSE
48)
FALSE
49)
FALSE
50)
FALSE
51)
FALSE
52)
TRUE
53)
TRUE
54)
FALSE
55)
FALSE

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