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Business Law: An Alternative the Best Completes the Statement

Choose the one alternative that best completes the statement or answers the question and explain why in one to two sentences.

1. Which of the following best describes the role of the lawyer?
The client makes decisions regarding civil matters; the lawyer makes decisions regarding criminal matters.
a. The lawyer is simply one of the experts the businessperson consults.
b. The client must follow the lawyer's instructions, as long as they are lawful.
c. The lawyer makes the legal decisions for the client.
d. The lawyer makes decisions regarding civil matters; the client makes decisions regarding criminal matters.

2. Which of the following will override a particular provincial common-law rule as articulated by a trial-court judge of the highest trial level court in the province?
a. A contrary ruling by a small claims court judge
b. A new provincial statute to the contrary in another province
c. A contrary ruling by an appeal court judge in another province
d. A similar subsequent ruling by a trial-court judge in another province
e. A contrary subsequent ruling by the Court of Appeal of the province

3. Which one of the following is not generally recognized as a source of the common law?
a. Roman civil law
b. The law of equity
c. Local British customs and traditions
d. Church (or canon) law
e. The law merchant

4. In Rothmans, Benson & Hedges Inc. v. Saskatchewan, the Supreme Court of Canada
a. held that only the federal legislation was invalid.
b. held that only the provincial legislation was invalid.
c. concluded that the federal and provincial legislation were in conflict, with the result that paramountcy would apply.
d. concluded that the federal and provincial legislation were not in conflict; one simply went further than the other.
e. held that both the federal and provincial legislation were invalid.

5. Which of the following is not a rule of natural justice?
a. A person must be allowed to retain a lawyer.
b. A person must be given an opportunity to put his side forward.
c. The decision maker must be impartial.
d. A person affected by a decision must be notified that the decision is to be made.
e. A person must be given the opportunity to cross-examine a witness or complainant if that is the only way to defend himself.

6. Which one of the following statements is correct with respect to how the passage of the Charter of Rights and Freedoms affected parliamentary supremacy?
a. The federal parliament is now supreme and can override anything done by the provincial legislatures or the courts.
b. Under the Charter of Rights and Freedoms, the Supreme Court can declare some things done by both levels of government unlawful.
c. The power of the parliament and the provincial legislatures is now supreme in the areas assigned to them under the Constitution.
d. With the passage of the Charter of Rights and Freedoms, the Parliament of Canada has become Canada's final court of appeal.
e. Now in Canada there is an effective system of checks and balances where the prime minister on some occasions can overrule decisions made by parliament or the Supreme Court of Canada.

7. Although nothing at all had been stolen, the store detective thought Al and Ed had stolen some records. After they exited from the store, the detective said to both of them, "Hold it! You'll have to wait right here for the police; you'll be charged with theft!" While Ed stopped and protested, Al just hurried off and drove away. Ed felt compelled to submit to the detective. After some time the police finally arrived. It was only then that the detective realized that no crime had been committed. Ed was released. On these facts, which of the following is true?
a. Both Al and Ed could sue for assault and battery.
b. Neither Al nor Ed could sue because neither was confined in a closed space.
c. Only Ed has a cause of action for false imprisonment (i.e., a legal right to sue).
d. Both Al and Ed could sue for the tort of false imprisonment because there had been no crime committed.
e. Both Al and Ed could sue for the tort of false imprisonment because both had been falsely accused of committing a crime.

8. A land appraiser prepared an appraisal of a property for a real-estate development company. The appraiser had been told that the appraisal would be used by the company to attract potential investors. Because the appraiser forgot to check the recent changes in the zoning by-laws, the appraisal was not accurate; the investor, a party unknown to the appraiser, was misled about the value of the land and, consequently, suffered a financial loss. On these facts, which of the following is true?
a. A land appraiser owes a duty of care to his client, and to potential investors only if he knows the name of the investor.
b. A land appraiser owes a duty of care to his client, the company, but not to any potential investors.
c. The investor might sue the appraiser for "negligent misstatement causing economic loss."
d. A person cannot be sued for words that cause loss, only for actions that cause physical injury.
e. The investor must suffer his own loss, because an investor takes the risk and so must take care.

9*. Which of the following statements is correct with respect to the law of consideration?
a. Consideration must have some value but need not be specific.
b. Without consideration or a seal, there can be no contract.
c. Consideration need not be specific, just so both parties got something out of the deal.
d. For a contract to be binding something valuable must have changed hands. This consideration may have been paid before the agreement (past consideration) or at the time of the agreement (present consideration), but future consideration is no consideration.
e. The amount of consideration to be paid in a contract must be reasonable (that is, fair) from the point of view of each party.

10. Jed, who lived on Cape Breton Island, needed money for a trip to France. He decided to sell his electric guitar. On Monday, October 29, he called the owner of a music store in Halifax and offered to sell his Fender Stratocaster guitar for $400, the offer to be open until Friday noon, November 2. Jed told the store owner to send a letter of acceptance since he (Jed) would be away for a few days. The store owner examined his inventory and mailed a letter of acceptance on Thursday, November 1. When Jed returned home on Saturday, November 3, the letter had not yet arrived, so that afternoon he sold the guitar to a music teacher in his town. The store owner in Halifax sued for breach of contract. Which of the following is true?
a.The letter of acceptance was effective when it was received, and by then Jed had sold it, so there was no contract.
b. The offer was revoked before the store owner accepted.
c. The offer lapsed before the store owner accepted.
d. Sending a letter by mail was not a reasonable method of acceptance.
e. The acceptance was effective before the offer lapsed, so there was a contract between Jed and the store owner.

11. Joe was in a bar and saw his friend Sam. Sam had a considerable amount to drink. Sam offered to sell Joe his Porsche automobile for only $15,000. Joe made sure to have Sam sign a written agreement to that effect. The next day, Joe went to pick up the car, but Sam didn't remember anything about it. Even when Joe showed him the written agreement signed by him, Sam refused to deliver the car. Joe sued. Which of the following correctly states the legal position of the parties?
a. As long as Joe can produce the agreement in writing, there is nothing Sam can do to get out of the deal. Once Sam has signed the document, he is responsible for its contents.
b. If Joe can show that there was no indication that Sam was drunk, even though Sam was completely incapacitated, he will be required to go through with the deal.
c. Being drunk is no excuse; the contract is binding.
d. Sam will not have to go through with the deal because no money has yet changed hands.
e. Sam just has to show he was legally intoxicated, and he will not be bound.

12. When John bought a car from his father's old classmate, Joe, he was only seventeen years old. The price of the car was $5000. He paid $1000 down and was to pay the remaining $4000 over time. With these facts in mind, which of the following statements is true? (Read each statement separately.)
a.If John has an accident and refuses to pay the balance, Joe could successfully sue John for breach of contract.
b. Even if the car is defective, John could not sue Joe.
c. If the car is defective, John could sue Joe for breach even though Joe could not sue him.
d. If John has an accident because of his negligent driving and he refuses to pay, Joe could successfully sue him in negligence to get around any difficulty in suing him in contract.
e. If Joe didn't realize John was only 17 years old, he can enforce the contract against him no matter what his age.

13. Smith ran a software-design business. He needed someone to handle some of the product demonstrations, so he hired Janet to do this work. In the employment contract, he insisted that Janet promise that if she left the firm, she would not work for Smith's competitors within a stated period of time and within a stated geographical region. If Janet now wishes to leave the job, indicate the statement that accurately describes the likely effect of her promise.
a.If the court holds such a promise to be invalid, then the whole employment contract is necessarily void as well.
b. Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job.
c. Such promises are in restraint of trade and thus the courts invariably hold them to be invalid.
d. Such promises are valid only if given under seal.
e. If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged, then it will enforce it.

14. The equitable remedy of rectification is granted by the courts in which of the following situations?
a. The parties to a contract disagree as to the meaning of a term in their contract.
b. Because of a mistake, a written document does not include a corrected term to which the parties had orally agreed.
c. A person buys something that he later learns he already owned.
d. The seller made a fraudulent misrepresentation that induced the buyer to buy.
e. The seller of goods has made an innocent misrepresentation that persuaded the buyer to buy.

15. Dubocovich had contracted to supply a health-food store with jars of Melatonin, a hormone reported in the media as a miracle potion. After they contracted, but before delivery, the government banned the sale of Melatonin so that it could be properly tested under government auspices. Dubocovich told the owner of the store, Mr. Wei, that he wouldn't be delivering the Melatonin because of the government ban. The demand for the Melatonin was high. Mr. Wei was very upset with Dubocovich for failing to honor his contractual obligations. Furthermore, he had given Dubocovich $5,000 in advance, which Dubocovich needed and used to pay the freight costs in bringing the drug to his warehouse. Wei sued Dubocovich for breach of contract. Which of the following is correct with respect to the legal position of the parties?
a.This is an example of a frustrated contract and Wei will lose, since the loss will remain where it has fallen.
b. Wei will be able to get back his $5,000 minus a portion of any costs Dubocovich incurred in preparing to perform the contract.
c. When a contract is frustrated in this way, the frustrating party is responsible for any losses incurred by the other party.
d. Wei will be successful in his breach of contract action.
e. The contract is illegal and void.

16. Which of the following statements is correct with respect to breach of contract?
a. When a contract for the purchase of goods is breached, the warranty will require that the goods be repaired by the seller.
b. When a condition is breached, the victim can treat the contract as ended.
c. When a contract is repudiated before performance is due, the victim must wait until the time of performance before taking any action.
d. When a condition is breached, a person can only sue for damages but must perform their part of the contract.
e. When a warranty is breached, the victim can treat the contract as ended.

17. *To which one of the following contracts would the Sale of Goods Act apply?
a. A contract for the assignment of a company's accounts receivable
b. A contract with a dentist to have a tooth filled
c. A contract by which two computer programs were swapped for two others
d. A contract for a table where title to the table will not pass to the buyer until some future date
e. A contract for the purchase of a farm

18. Slipstream bought a new lawnmower for mowing his own yard at home from Mulcher Mowers Ltd., a lawn and garden tools dealer in Vancouver. Unfortunately, while there were no major defects with the machine, a number of small things kept going wrong: the blade kept going out of adjustment, the starter rope broke twice, a wheel fell off, the handle loosened and wobbled, and the machine stalled in heavy grass. During the summer, Slipstream had it repaired six times. These small annoyances continued and finally, in disgust, he returned the mower to Mulcher. However, Mulcher?s manager (a university graduate) pointed out to Slipstream that their contract contained a very extensive exemption clause excluding ?all conditions or warranties, express or implied, statutory or otherwise,? and refused to accept the mower back or to return Slipstream's money. Slipstream commenced legal action. Which of the following statements best describes Slipstream?s legal situation?
a. The Sale of Goods Act prohibits the use of such exclusion clauses generally.
b. Such clauses are always effective just as long as the two parties have agreed to their inclusion in the contract.
c. All such exclusion clauses are void.
d. In a sale of new goods by a dealer to a private consumer for his own use, legislation prohibits the seller from excluding these basic warranties with respect to fitness and quality.
e. Such clauses are only effective when there is a breach of the fundamental term of the contract, which is likely not the case here because the defects were all minor.

19.Which of the following is not federal legislation?
a. Food and Drug Act
b. Competition Act
c. Sale of Goods Act
d. Hazardous Products Act
e. Motor Vehicle Safety Act

20. Mr. Olde died. Mrs. Olde was treated by a psychiatrist who advised her that part of her difficulty was her trying to make financial decisions that had previously been made by her husband. Upon his advice, she contracted with him to examine her financial situation and to give her a letter advising her, in detail, what steps she should take with regard to twenty or so pressing business decisions. His fee would be $2,000. As agreed, he attended her home one evening and examined all the financial records. She issued a cheque payable to him for $2,000; die cheque was drawn on the Bank of Montreal, Austin Street branch. As promised, his letter of advice was delivered on the following day'a one-paragraph letter in which all he advised was that she transfer the two income-producing properties into his name so that he could "take care of things for you." Mrs. Olde attended her bank immediately to stop payment on the cheque. Before she did, however, the psychiatrist had endorsed it over to his bank, the Royal Bank at Cambie and 16th Avenue. On these facts, which one of the following is true?
a. Mrs. Olde will have to pay the holder of the cheque because it is a holder in due course.
b. Mrs. Olde is the "drawee" of the cheque.
c. If Mrs. Olde can prove undue influence was used by the psychiatrist, she will not have to pay the holder of the cheque.
d. Because the parties deal with different banks, Mrs. Olde would not have to pay the holder of the cheque because she can successfully argue breach of contract.
e. The psychiatrist is the "acceptor" of the cheque.

Solution Preview

1. c. The lawyer makes the legal decisions for the client.

There are many different general responsibilities of a lawyer. This individual will represent clients in court, mediations, business transactions and other important legal proceedings or arrangements where the law will be discussed. The lawyer meets with the clients before, during and after legal proceedings to ensure that the client fully understands all aspects of their case. In general, the lawyer is the individual who represents another in all issues where legal representation is advised and deemed necessary.

2. e. A contrary subsequent ruling by the Court of Appeal of the province

Canadian law adheres to the doctrine of stare decisis. Lower courts must follow the decisions of higher courts by which they are bound. Decisions made by a province's highest court (provincial Courts of Appeal) are often considered as "persuasive" even though they are not binding on other provinces.

3. b. The law of equity
The law of equity is not a source of law; rather, is aset of legal principles, in jurisdictions following the English common law tradition, that supplement strict rules of law where their application would operate harshly

4. c. concluded that the federal and provincial legislation were in conflict, with the result that paramountcy would apply.

The Court of Appeal set aside that decision and declared s. 6 inoperative on the basis of a practical inconsistency between the two provisions. It held that the appeal should be allowed. The provincial legislation is not inoperative by virtue of the paramountcy doctrine.

5. a. A person must be allowed to retain a lawyer.
This concept is used only to demonstrate what is expected to happen during the proceedings alone. Retaining a lawyer has got nothing to do with fairness in terms of natural justice.

6. a. The federal parliament is now supreme and can override anything done by the provincial legislatures or the courts. ...

Solution Summary

The solution provides the best alternative that completes the statement and a brief explanation for why.

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