Contract 1
In December 2019, Ria and Mike were excited about a summer vacation trip and booked a flight with Air Canada to Italy. This was a long-awaited plan that celebrates their 7-year friendship. However, in March 2020, due to Covid-19, Air Canada announced the cancellation of all flights for the remainder of the year, including yours. Can Ria and Mike sue Air Canada for the breach of its contractual performance to them?
Since COVID-19 was an unforeseen and uncontrollable event that is beyond the control of the parties and prevents the airline and you from carrying out the terms of the contract, frustration will allow either party to terminate the contract
When the seller unknowingly makes an erroneous statement, not carelessly, regarding the type of processor contained in a computer during negotiations leading to the sale of the computer, what factors affect the contract and remedy available?
Innocent misrepresentation. Remedies: only rescission is available
A creditor with a claim against a sole proprietor would normally have a right against the sole proprietor, limited only to his contribution to the business (T/F).
False. Sole proprietor has unlimited liability, and any claim against him would extend to his personal assets
Upon termination without cause, what is an employee entitled to?
reasonable notice or pay in lieu of notice
A company purchases office furniture, but the chairs arrive slightly scratched. The chairs are still usable, and the company keeps them. What is the breaching term and the remedy?
Warranty; damages only
On June 1, Naomi sent Ryan a letter offering to sell her watch for $50. On June 3, she sent another letter that supposedly revoked her offer. On June 5, Ryan received Naomi’s offer and immediately put an acceptance letter into a mailbox. On June 7, Ryan received Naomi’s revocation letter. On June 9, Naomi received Ryan’s acceptance letter. Assuming the postal rule applies, do Naomi and Ryan have a contract?
There is a contract, since acceptance is communicated when mailed, and revocation is only effective when received.
Tips: it is best that you draw a timeline for this type of question
Rhys offers to sell a piece of artwork to Arveen for $5,000. Arveen responds by saying she'll buy it for $4,000. Rhys denies the $4,000 offer, but Arveen wanted the art piece so much that she later accepted the original offer 30 minutes later. At this time, Rhys has already sold the piece to another buyer. Rhys sued Rhys for breached of contract because Arveen believes they had a contract. Is she correct?
Arveen’s response is a counteroffer, which terminates the original offer made by Rhys
The corporation, having the same capacity as a natural person, may buy and sell, make contracts, own land, is obligated to pay tax under municipal, provincial and federal schemes, and may otherwise acquire all the rights and obligations of a natural person (T/F).
True
This type of dismissal occurs when the employer fundamentally changes the job.
Constructive dismissal
A construction contract states that the contractor must pay $1,000 per day for delays. The project is completed 5 days late. What is the name of this remedy used, and what will be the claimed amount?
Liquidated damages clause; enforce the agreed damages ($5,000)
Maks owns a successful construction company called Sutherland Ltd. He agrees to renovate Ava’s kitchen for $20,000. However, Ava informed Maks the day before the renovation date that she no longer wanted to renovate and would not pay for the project. Maks had purchased all materials in preparation for the project. Instead of seeking other renovation projects or returning materials he purchased specifically for Ava’s kitchen, Maks decided to store the materials and did no work for several weeks. He then sues Ava for the full $20,000, claiming his losses include the cost of the unused materials and lost income. Can he succeed?
This is the case of anticipatory breach. Maks can claim for restitution; however, his compensation might be reduced since he has a legal duty to mitigate, which he did not fulfill.
Rade recently migrated to BC to study at the business school. He got a job at a restaurant in Vancouver downtown to finance for the expensive tuition. The restaurant’s manager agreed to hire Rade for $10 per hour, knowing that Rade does not know the legal minimum wage requirement in BC of $16.75. Rade is happy to accept the offer as he would be able to support his life here in Vancouver. Is the contract valid?
No. While there is consensus, consideration, capacity, and intention, there is an issue of legality. The legal minimum wage is $16.75, and paying below this goes against the Employment Standards Act of BC.
Shareholders, directors, and officers owe a fiduciary duty to the corporation (T/F)
False. Only directors and officers
Mehrnoush, a graphic designer, is hired by TechWave Solutions, a small tech company, to create a new logo and design the company's marketing materials for a product launch. Mehrnoush decides her work hours, chooses the design software she prefers, and is free to work from any location. Mehrnoush uses her own computer, design software, and graphic tablet for the work. TechWave does not provide her with any equipment or resources other than the company's branding guidelines and product details. Mehrnoush is paid per project, rather than receiving a fixed salary. She has the opportunity to take on additional projects from other clients, meaning her income depends on how many projects she accepts and completes. If the project takes longer than expected or the material costs increase, Mehrnoush bears the cost of any extra time or materials. Is she an employee of TechWave? Using applicable tests if needed.
Applying the four-fold test, we find that Mehrnoush has (i) control over her working hours, (ii) provides her own tools for the job, (iii) has the opportunity to earn additional profits, and (iv) assumes the risk of any losses from her freelance work. Therefore, she is considered an independent contractor for TechWave rather than an employee
A retailer contracts to purchase 500 winter jackets for a seasonal launch, but the supplier delivers summer t-shirts instead. The goods cannot be used for the intended purpose. What is the breaching term and the remedy?
Condition; the non-breaching party may treat the contract as void or affirm the contract and claim damages
Nick sold a rare painting that he believed to be a replica for only $500 to Sophie. He listed it for sale, describing it as a "replica painting." Sophie, an art enthusiast, purchased the painting for the stated price. However, she had the painting appraised and discovered that the painting was an original artwork by a renowned artist, Jordan, worth $50,000. Can Sophie keep this painting as finders keepers?
This is the case of mutual mistake that destroyed the original intention of both parties. The contract is void for lack of consensus, and courts may rescind the contract, returning the painting to Nick and refunding Sophie her $500.
Gagandeep is a legally blind teacher who teaches piano to kids at Delta Secondary School. She relies on her trusted acquaintance, Elijah, to help her with a bank document. Gagandeep gives Elijah a limited power of attorney to manage her bank account for a specific transaction while she is out of the country. Unable to reach the document herself, Gagandeep relied on Elijah's explanation and signed it. Later it is discovered that the document was not a limited power of attorney but a general power of attorney, granting Elijah full control over all of Gagandeep's finances and property. Elijah obtained a car loan using Gagandeep’s account, which he later defaulted. The bank sued Gagandeep for breach of contract. What defense can she use?
Gagandeep can use non est factum defense because the document signed was fundamentally different from what she believed it to be. She thought it granted limited powers but it actually granted general powers. In addition, Gagandeep was not negligent because she took reasonable precautions by asking Elijah to explain the document. She could not verify its contents herself due to her visual impairment.
If the corporation is unable to finance its debts and goes bankrupt, creditors and lenders can come after the shareholders for payments (T/F)
False. Only the corporation is responsible for the debt as a legal person
Why is it in the employer's best interest to clearly state the ESA standards in an employee contract?
Common Law notice is often more generous; in the state of missing ESA standards in a contract or no clearly stated contract itself, courts will often provide Common Law notice to employees upon termination.
An employee is wrongfully dismissed but makes no effort to find new employment for several months. They claim full lost wages. What is the breaching principle and the remedy?
Duty to mitigate; damages are reduced
Domenic is looking to purchase a used car. The salesperson, Aleks, assures him that the vehicle has never been in an accident, confidently stating, “This car is in excellent condition and has no history of accidents.” Based on Aleks' statement, Domenic purchases the car. A few weeks later, Domenic discovers through a mechanic’s inspection that the car had previously been in a major accident, and the frame was poorly repaired, making it unsafe to drive. Aleks, as it turns out, had not checked the car’s history report but relied on the previous owner's verbal claims. What can Domenic claim and his possible remedy?
Aleks had negligently misrepresented Domenic. Aleks breached his duty of care as a professional salesman, which induced Domenic into a contract. Domenic is entitled to damages or rescission.
After returning from studying abroad, Mike rents a small storefront for his Italian restaurant. His lease is set to renew in one month, and he has invested heavily in renovations to the space. Seeing how successful Mike's business is, the landlord - Ria, tells Mike that she will only renew the lease if he agrees to double the rent, even though the market rate for similar properties has not changed. Under tremendous pressure and facing the threat of losing business, Mike agrees to the higher rent. What is your legal advice to Mike in this situation?
Mike can seek to rescind the rent increase by claiming he was under economic duress when signing the contract.
A partnership can be created by the conduct of the parties (T/F)
True. A partnership is defined as two or more people carrying on business with a view to profits. It doesn't need an agreement and can be implied by conduct.
What factors are used under Common Law Standards to determine reasonable notice?
Type of job, qualifications, bad faith conduct, length of service, employee's age, availability of similar employment
A supplier informs a buyer two weeks before delivery that they will not be fulfilling the contract. What is the breaching term and the remedy?
Anticipatory repudiation; the non-breaching party may treat the contract as terminated immediately and sue for damages. Or they can refuse the repudiation and wait and hope that the supplier follows through on the day of.