4. Misrepresentation in contract law A) automatically renders contracts void when entered into under fraudulent impressions. B) usually renders contracts voidable at the option of the innocent party, and where it is possible to do so, grant the remedy of rescission. C) is concerned with the general discussions involved with the contract's formation, not with specific terms. D) is an actual statement of fact which does not relate to the contract. E) is presumed negligent unless proven innocent.

5. Damages as a remedy will NOT be available in which of the following situations? A) Jones makes a negligent misstatement, persuading Smith to enter a contract with him. B) Jones, although being careful, makes an innocent misrepresentation, persuading Smith to enter a contract with him. C) Jones makes a fraudulent misrepresentation, persuading Smith to enter a contract with him. D) All of the above. E) None of the above.

6. Contracts where a duty of good faith exists A) applies to contracts where special trust or confidence exists. B) requires full disclosure of pertinent facts. C) normally considers partial disclosure fraud. D) are considered voidable at the option of the innocent party when one party purposely withholds information. E) all the above applies to contracts of where a duty of good faith exists.

7. Regarding the sale of land and the rights of others, the following applies: A) the buyer would need to consent in writing to any existing rights a third party may have in the land. B) any right of a third party will automatically terminate upon the sale of the land. C) privity of contract will not allow any third party to continue their interest in land if that land is being sold to another party. D) if the land is sold with rights that run with the land, then no consent from the new owner is needed. E) none of the above applies.

8. Scott, an independent businessman, is asking his wife to pledge her inherited family farm as security for a business loan he has arranged at the bank. She seems perfectly willing to do this. Yet, to avoid a possible later legal claim of undue influence, which would be wisest for the bank to do? A) Have the wife sign a paper to the effect that she was not unduly influenced. B) Have Scotts business lawyer explain thoroughly the legal implications of pledging the farm as security. C) Ensure Scott has explained very carefully the terms of the contract. D) Place all transactions under seal. E) Have the wife get independent legal advice.

9. Guido is an unsavory, unethical money lender who charges 35% interest. Upon learning that Sylvia, one of his clients, had become unable to make her weekly payment, Guido tells her that he has "a way of dealing with people who dont pay up," as he taps his baseball bat against his palm. She then promptly signs another loan agreement with Guido agreeing to a 50% interest rate over a longer period of time. Sylvia now wants to get out of this second contract. As a lawyer, what should you advise Sylvia to do? A) Nothing but pay the debt at 50%; the contract is enforceable. B) Claim that she entered the contract under dire circumstances. C) Claim that she entered into the contract under undue influence. D) Claim that she entered under duress. E) Claim that she entered because of fraudulent misrepresentation.

10. Kathy sells her business to Lucy for $40,000 including the stock, the goodwill, and the remainder of the lease on the building. The landlord agrees that Kathy may end her involvement with the leased building and that Lucy may take over the remainder of the lease on the same terms, and a new lease reflecting this agreement is drawn up and signed by the landlord and Lucy. This new lease is an example of A) a sublease. B) a statutory assignment. C) a novation. D) a trust arrangement. E) a negotiable instrument.

11. A novation agreement is only effective if the following occurs: A) the original party who is assigning his/her rights agrees to guarantee the performance of the new party. B) all parties to the agreement have already performed their obligations under the agreement. C) the original parties to the contract and the new party introduced by novation all give their consent. D) the creditor serves notice in writing on the debtor. E) the new party introduced by novation consents in writing.

12. Johnson Ltd. enters into a contract to supply glass bottles to Brine Co. for its line of baby dill pickles. Since it is a new relationship, both parties want the option to end the contract without problems, so they include a clause that allows either company to terminate the contract on 30 days' written notice. Johnson finds that Brine Co. is too slow in paying its bills and too quick to question quality. On March 1, Johnson Ltd. gives Brine Co. notice in writing that the contract will end on March 31. Brine Co. insists that the 30 days' notice clause means 30 working days, not 30 calendar days, and thus Johnson must supply Brine Co. until April 1. Johnson refuses. Brine Co. loses two weeks of production when its supply of bottles runs out and sues Johnson for breach of contract. Which is the most correct? A) This is a mistake, specifically a unilateral mistake arising from a false impression as to the very nature of the contract. One party could argue non est factum to avoid liability. B) This is a misunderstanding, and as such the courts will only assist them if there is a reasonable interpretation of 30 days; otherwise the parties will need to resolve the issue on their own. C) There is a duty to operate in good faith; the courts will not assist them in determining the correct interpretation. D) This is a case of innocent misrepresentation. The contract can be rescinded. E) This is a misunderstanding, and as such the courts may be called upon to determine the most reasonable interpretation of 30 days.

13. Simon bought a used yacht from Marvel's Marina and Boatyard for $70,000 to be paid in instalments over six years. Marvel assigned the $70,000 contract to Strait and Naro Finance (S&N). The first Simon knew of this was when he received copies of the finance contract and a notice to pay the payments to S&N. Which is the most correct? A) Simon must make the payments to S&N from now on. B) Simon can make the payments to either Marvel or S&N, and, if he makes them to Marvel, Marvel is obligated to forward them to S&N. C) Marvel cannot pass its contractual rights to someone else without Simon's consent. D) S&N cannot force Simon to pay it since the company lacks privity of contract with him. E) c and d.

14. James emails Jack. "I am selling my 2015 Lexus SUV for $8500. Would you like to buy it?" Jack, not believing his luck automatically replies, "Yes I'll buy your Lexus for $8500." Jack arrives at James office the same day with a certified cheque for the $8500. James tells Jack that he received his acceptance email, but thought he couldnt be serious. He asserts that he did not agree to sell his $85,000 luxury SUV for $8,500. Should Jack refuse to go through with the contract, and this matter goes to court, the court will most likely find that:

1. there is a binding contract for the sale of the Lexus because there is clearly an offer and an acceptance.
2. no contract arose because a reasonable person would know this is an obvious mistake and would not believe that James would offer to sell his 2015 luxury SUV for $8500.
3. Jack's refusal to pay is a breach of contract and the courts with award damages.
4. there is a binding contract for the sale of the Lexus because Jack didnt hear a revocation of from James regarding his acceptance.
5. there is a binding contract for the sale of the Lexus because the courts do not concern themselves with the adequacy of consideration.