6 Contract terms and conditions

Which of the following statements is TRUE? In a standard form contract

• A)  a court will interpret the contract in favour of the party that wrote it if there is confusion

• B)  a company does not have to point out any unusual terms if the contract is made between two companies

• C)  consumers must beware and carefully read all the terms as the court will not protect them if they did not notice a disclaimer clause

• D)  lawyers for both sides usually negotiate all the terms

• E)   signatures cannot be done electronically, only in person

Which of the following could be used as a way to get around the parol evidence rule? The court could find that

• A)  the contract was partly written and partly oral

• B)  there was a collateral contract

• C)  the contract was made under duress

• D)  both A and B

• E)   there is no way to get around the parol evidence rule

 Which of the following may be a reason the court will add an implied term to a contract?

• A)   The parol evidence rule

• B)   The original term was unclear and this would add clarity to the contract

• C)   It was a term usually used in the industry so it needed to be added

• D)   The term was so obvious the two sides would have easily agreed to it when the contact was made

• E)    Once a contract is formed no new terms can be added

Nerdo Computers had an insurance policy on its premises, for which it paid a premium of $525 per year. It found a new broker who offered a much lower rate, so it wrote to its current broker to cancel its existing policy. The broker replied that there would be a $100 cancellation fee. Which of the following facts or arguments would help Nerdo avoid having to pay the fee?

• A)   If the fee is not mentioned in the contract

• B)   If the fee can be characterized as a penalty

• C)   If the fee is not a genuine pre-estimate of damages.

• D)   Both B and C

• E)    All of the above

Annie Leonard buys a computer from Technicon Co. for $2,000 on terms. Annie puts $100 down as a deposit, promising to return in a week with the balance and pick it up. She decides not to complete the deal. Technicon’s profit on a computer sale is $1,000. What happens now?

• A)   Annie can get her deposit back.

• B)   Technicon can keep the deposit but cannot sue Annie for the loss of profit.

• C)   Technicon can keep the deposit and sue Annie for $1,000.

• D)   Technicon must refund the deposit but then can sue Annie for the loss of profit.

• E)    Technicon can keep the deposit, deliver the computer to Annie, and sue her for $2,000.

Usuryx Co. charges interest on all credit. On its credit application form the term is stated as “interest on unpaid balance over 30 days at 1% per month.” Slident Co. has an amount owning beyond the 30 days period. Which of the following statements is TRUE?

• A)   Slident will have to pay interest at the rate of 1% per month.

• B)   Slident will have to pay interest at the rate of 5% per annum.

• C)   Slident will not have to pay any interest because the term violates the Interest Act.

• D)   Slident will have to pay interest at 12% per annum.

• E)    Slident will have to pay interest at 12% annually but not any administration costs.

A venue clause determines which of the following

• A)  the place for a contract to be made

• B)  the place for a contract to be performed

• C)  B and C above

• D)  the place a trial over a contract dispute will take place

• E)  the place where goods are to be shipped to

In a contract between The Bay and Chanel it stated that any legal disputes would be heard in the courts in Paris, France. This is an example of a

• A)   governing law clause

• B)   venue clause

• C)   mediation clause

• D)   arbitration clause

• E)   both A and B

Which of the following statements accurately states the requirements for a statutory assignment?

• A)   notice of the assignment must be given in writing to the debtor

• B)    in most provinces, notice of the assignment must be signed by the person making the assignment.

• C)   the assignment must be complete transfer

• D)   the assignment must not have any restrictions on it

• E)    all of the above.

Sue buys a stove from Leons and is to pay $300 per month for 15 months. Shortly after she gets the stove Leons tells her that she is to make her payment to the Ace Finance company. Sue is furious and does not want to deal with Ace. Sue sends a letter to Ace saying that she is transferring her debt   obligation to her father Donald. As a result 

• A)  Sue must pay Ace as it is a valid novation

• B)  Donald and Sue are both liable to Ace now

• C)  Donald must pay Ace as it is a valid assignment

• D)  Ace can insist payments must be made by Sue and not by Donald

• E)  Sue only has to pay Leons, since she never made a contract with Ace