Short Answer Questions

Commercial Law Old Exams

Short Answer Questions

1. What is a Ratio?

It is the narrowest and necessary legal principles upon which a decision is based. Ratios are the binding aspects of a precedent. Ratios are the legal principles which bind future courts. The Ratio Decidendi (principal of precedence) has 2 aspects: 1) definitional - element of a previously decided case which is to be followed by future courts and 2) structural – every court is bound to follow any case decided by a court above it in the hierarchy of the court system.

2. What is the duty to mitigate in court?

A person who has sustained a loss as a result of a breach of contract must do what they can to mitigate (i.e. Limit the extent of their loss). The damages they recover at law will not include what they might have reasonably avoided.

3. What does the phrase Mutatis Mutandis mean and in what context was it used during this course?

In Latin means the necessary changes being made to statutes of Canadian Parliament and the Provincial Legislation.

4. In the context of Corporate Law, what does “locked in and frozen out” mean and how can such a situation be remedied?

Locked in - minority shareholders will have a hard time to sell their shares because no one wants them, so they must sell at a huge discount, or sell them to the majority shareholders to get rid of them. Most often, they are unable to sell and must remain a minority shareholder.

Frozen out - Minority shareholders do not have sufficient votes to get somebody on the board of directors, so they are frozen out of management (therefore they lack any real power/control)

Remedy – the use of provisions in a shareholder’s agreement and especially a shot-gun clause which gives the minority shareholder the option to sell their shares to the other shareholders at a fair price.

5. In the situation of a breach of contract, various equitable remedies are available. Name 3 such remedies.

Specific performance – the court orders the defendant to complete a specific act, injunction - a court order restraining a party from acting in a particular manner, such as committing a breach of contract, and rescission - to restore the parties to the positions they would have been in had the contract not been made at all.


6. What is the Law of Equity?

The law of equity is a set of rules which can be invoked to supplement the deficiencies of common law or to ease the working of common law actions and remedies. Equity is much more discretionary.

7. What are the elements necessary for the imposition of an equitable remedy in contract law?

- Plaintiff must have clean hands: can’t be guilty of unethical conduct- Can’t have acquiescence: no long delays, must act promptly- Requires substantial consideration – the seal, peppercorn or $1 is

insufficient- a court will refuse to intervene on equitable principals when to do

so would affect an innocent third party- a plaintiff must ordinarily be a party again when the remedy would

be awarded were they a defendant instead

8. Roscoe Pound is best known as an adherent to what School of Jurisprudential Though?

Philosophy of science of systems of law, Roscoe Pound is best known to the social engineering which led by scientific study of peoples’ needs and expectations and the prevailing values.

9. Briefly define a guarantee. Indicate when a guarantee might be employed and for whose benefit.

The person who promises to answer for the default of the principal debtor is called the guarantor and his promise is called a guarantee. A guarantee usually arises when a prospective creditor refuses to advance money, goods, or services solely on the prospective debtor’s promise to pay for them. The creditor must look first to the debtor for payment, and only after the debtor has defaulted may the creditor claim payment from the guarantor. The guarantee is for the benefit of the creditor.

10.What is a limited partnership and identify the danger to an investor if he/she participates in the management of such a partnership?

A partnership in which some of the partners limit their liability to the amount of their capital contribution so as to isolate their personal assets from the execution to satisfy the liability of the business. Limited partners are prohibited from taking an active role in the business, thus the major requirement for the formation of a limited liability is that there must also be one or more general partners. A limited liability partnership is utilized especially for investment purposes and for creative, no tax avoidance situations. If a limited partner does participate in the


management of such a partnership, he/she will become liable as a general partner, incurring a considerable personal risk. However, he/she can advise on the management, can examine the records of the firm, and inquire into its progress without incurring this liability.

11.What is Stare Decisis?

Stare Decisis is a theory of precedent, which means to stand by previous decisions in Latin. This is the technical name of the doctrine of precedent.

12.What does limited liability mean in the context of Corporate Law?

A shareholder has limited liability in the sense that they can only lose their capital investment and/or the amount of the price of the shares for which they have not paid.

13.State the purpose of damage awards in Tort and Contract.

Tort law – to place the injured party in the same position had the tort not occurred. Contract law – to place the injured party in the same position had the contract been completed.

14.What is the adversary system in the Canadian legal system? Define and explain.

In civil disputes it is up to the parties, not the court, to initiate and prosecute litigation, to investigate the pertinent factors and to present proof and legal arguments to the decision making tribunal. Fight theory by Jerome Frank stated that the basic concept is that presentation and prosecution is made by two self interested parties, with the court acting as an essentially passive arbitrator.

3 assumptions: 1) truth and justice is more likely to emerge, 2) the most accepted decision will come from a neutral person conducting a court, 3) the opportunity to be heard. 2 problems: 1) the parties are unequal, 2) a self-interest group can cover some evidence themselves, so there isn’t a consistent adversary system.

15.What is meant by the “Standard of Proof”? Name the civil Standard of Proof and criminal standard of proof.

The Standard of Proof is a set of specific elements that must be proven within tort law. The standard of proof in civil law is the Balance of Probabilities (need a majority of >50%) which requires that intention, causation, and proscribed harm be proven. (Standard of Proof in criminal cases is “guilty beyond a reasonable doubt - >90%).


16.What does the phrase Sine Qua Non mean and in what context was it used during this course?

“Sine Qua Non” means without that nothing and is also referred to as the “but for” test. If the accident would not have occurred but for the defendant’s negligence then his conduct is a cause of the injury. The act of the defendant must have made a difference, but it doesn’t have to be the cause.

17.Name the four basic duties an agent owes to his principal.

- Duty to Comply With the Contract- Duty of Care- Personal Performance- Good Faith

18.What is the “liberal” approach to contractual interpretation?

It’s “an approach that looks to the intent of the parties and surrounding circumstances, but does not ignore, the importance of the words actually used”. It stresses the circumstances surrounding the contract, the negotiations leading up to it, the knowledge of the parties, and any other relevant facts, thus it can lead to endless speculation of intent.

19.Briefly define “Gatekeeper Liability” as it exists in corporate law.

The purpose of gatekeeper liability is to control wrong doings by companies by making the directors liable for those duties owed to shareholders, employees, creditors, competitors, government, and the community at large. The category of persons to whom a duty is owed has expanded and the types of breaches of offences have increased and exposure of directors is no longer limited to financial liability. The rationale was that the normal sanctions and liabilities pinpointed on the business or actual wrongdoer were insufficient in reducing corporate wrongdoing.

20.What does the term Ultra Vires mean?

Ultra Vires in Latin means “beyond the power”. Delegated bodies can only create legislation within the jurisdiction given by statutes. So whenever an act or provision is passed by parliament or a provincial legislature and they are found by the courts to be outside the legislature’s jurisdiction, the act or provision is ultra vires therefore void.


21.What is the Corporate Veil?

A corporation has a separate existence from its shareholders. The separate entity principle gives rise to the limited liability of the corporation. It acts like a protection towards individuals within a corporation.

22.What does “piercing the corporate veil” mean and when will a court pierce it?

To pierce the corporate veil means to ignore the separate entity principle with the result that the individuals who control the corporation are responsible for their acts personally. The court will pierce the corporate veil in: 1) Taxation situations – statutory piercing, 2) agency law, 3) fraud, and 4) residence of the corporation.

23.Name the 6 elements necessary to establish a contract.

Offer, Acceptance, Consideration, Capacity, Intention to create legal relations, Legality of the contract.

24.What is the “Doctrine of Substantial Performance”?

The doctrine of substantial performance asserts that the promisor is entitled to enforce a contract when it has substantially performed, even though its performance does not comply in some minor way with the requirements of the contract. The promisor’s claim is, however subject to a reduction for damages caused by its defective performance to avoid its own obligations.

25.Briefly define the difference between a void and voidable contract. Discuss how a holding by a court that a contract is void or voidable is significant to innocent, subsequent, third parties for value.

Void contract – it was never formed in law, thus there is no agreement. Title/ownership of property at common law would not pass under void contracts and the initial party will be compensated for their loss from innocent subsequent third parties for value, whom left without remedy.

Voidable contract – a party has entered into a contract under some condition, either misapprehension or misrepresentation, that will render it unfair if the contract terms were enforced against them. Equity determines the contract voidable and will either set it aside or rescind it to restore the parties to the positions they would have been in had the contract not been made at all. Innocent, subsequent third parties for value are treated more fairly under equity and are not required to return the goods to the initial party.


26.Define consideration as it exists in the Law of Contract.

Consideration is the price for which the promise or act of the other is bought. When people make a contract it is about the exchange of money, goods, or services and an exchange of promises. The matter of exchange is called consideration.

27.Define “wrongful dismissal” in the context of employment Law. What is it? On what basis, if any, are damages awarded?

Wrongful dismissal is when an employer has broken a contract and fails to give the employee the notice to which he/she was entitled. In an employment contract, we must ask what amount of damages will compensate the employee for failure to receive the required notice of termination. For instance, the court has to determine what length of time would have been reasonable notice in the circumstances.

28.What is subordinate legislation? Give an example a subordinate/delegate body.

Subordinate legislation is legislation made by a person or body other than the sovereign parliament by virtue of power confirmed either by statute or by legislation which is itself made under statutory power. School board; they make regulations, order, rule etc…

29.What is standing?

People need standing to sue. That means the litigant or in particular the plaintiff must have a special interest and right to be indicated. The reason for the concept of standing is to prevent frivolous claims.

30.What is agency by estoppel? What is apparent authority in agency law? Give three examples of corporate law principles or issue upon which it has an influence and discuss that influence.

Agency by estoppel arises when the agent’s authority is merely apparent, not real. When one party allows another to believe that a certain state of affairs exists and the other person relies upon that belief, the first party will be prevented from afterwards stating that the true state of affairs was different. Agency by estoppel has relevance to the law of agency in two types of cases: apparent authority and holding out. An agent may acquire apparent authority from a past manner of transacting business with the principal or from trade custom. Such circumstances may make it appear to third parties that the agent has authority for the contract in hand. In fact, however, he/she does not have any real authority


for the purpose. There existed no understanding between the agent and the principal, express or implied, granting this authority.

Apparent authority is manifested in 3 ways: 1) the effect of publicly filing documents – if the documents prohibited either the corporation or one of its officers from carrying out certain acts, a third party could not rely upon what otherwise might be the officer’s apparent authority to perform those acts, 2) indoor management – a person dealing with a corporation is entitled to assume that its internal procedural rules have been complied with unless it is apparent that such is not the case, and 3) Pre-incorporation contract – a) the corporation is bound by the contract and is entitled to the benefits thereof as if the corporation had been in existence at the date of the contract and had been a party thereto, and b) a person who purported to act in the name of or on behalf of the corporation ceases…to be bound by or entitled to the benefits of the contract.

31.What is the Parol Evidence Rule? Identify 3 exceptions to it.

A rule preventing a party to a contract from later adding a term previously agreed upon, but not included in the final written contract, to contradict the contract. 3 exceptions: 1) the rule would not be applied to a written contract that never embodies all the terms, 2) it does not hinder the interpretation of express terms already in the contract, 3) the rule does not exclude evidence of an oral agreement that the parties may reach after they have entered into the written agreement.

32.What does the term “intra vires” mean?

Intra vires means within the power, or anything within the law.

33.Canada is described as having a constitution that is “Quasi Federal.” What does this mean?

This means that Canada is a country that has some federal aspects as well as non-federal aspects. Canada is referred to as being a federal country in the BNA act, there are 2 levels of government, and the lieutenant governor is not just a federal official, rather he/she posses all the prerogative powers of the Crown. However Canada is not federal country in the fact that judges on the Supreme Court of Canada are appointed by the prime minister, the federal government gives power to the provincial power, and the Charter of rights is adjudicated by the federal government.

34.What is a condition subsequent?

Condition subsequent is an uncertain event that brings a promisor’s liability to an end if it occurs.


35.What is a condition precedent?

A future or uncertain event that must occur before the promisor’s liability is established.

36.What is “non est factum” in contract law?

In Latin it means, “It’s not my doing”. It’s a clause that helps illiterate people to avoid contractual obligations, because it is grounds to impugn a contract from contractual liability.

37.What are the 4 basic categories for discharging a contract?

discharge by performance discharge by agreement discharge by frustration the contract provides for its own dissolution

38.What are the four basic limitations on the separate entity principle in corporate law?

1. Taxation – a Corporation is eligible to enjoy a lower tax rate on its first $200,000.

2. Residence – the residence of the controlling shareholder may determine the company residence.

3. Agency – the agent cannot represent a shareholder unless a shareholder agreement has been signed.

4. Fraud – when fraud has been committed the court will disregard the separate entity principles, but will see the directions have committed the fraud.

39.What is convention in the constitutional context? (What is a Convention of the Constitution)

Conventions are traditional and generally accepted principles that guide political actors in how they function. However, conventions are not enforceable by courts, for example responsible government.

40.What is the J.C.P.C?

Judicial Committee Privy Council. They were the final appellate court before 1949. It was comprised of law lords from the UK that listened to appeals from overseas dominions and colonies.


41.What is a Pre-trial Conference?

The litigant and the lawyers meet in front of a judge before the trial (not the same judge that hears the case). The lawyers present a brief on law to the judge in advance. The judge will tell the parties what their view of the outcome. It is done to promote settlements and free-up courts.

42.What is “Legal Realism?”

It looks at why legal decisions are made in the legal system. It’s a perspective of explanation not a perspective of evaluation. Legal realists look at cases in more depth.

43.Why is the case Donoghue v. Stevenson significant?

This case is significant because it established the neighbour principle, which clarified to whom we owe a duty, by rejecting the need for a contractual relationship for negotiation to exist. You owe a duty of care to your neighbour, and thus don’t need a contract. So third parties are permitted without a contract to sue in tort for negligence. The neighbour principle states that we owe a duty to persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation when I am directing my mind to the acts or omissions, which are called into question. The House of Lords decided that manufactures are liable in tort for damages when their products are most likely to be used without immediate examination. Manufacturers owe a duty of care to consumers and thus they could now sue manufacturers rather than the retailers. Previously, the consumer did not have a contract with the producer and thus could not sue them in tort, however they couldn’t really blame anyone else and the producer would have the most money.

44.What is rectification in law?

Rectification is a correction of a written document to reflect accurately the contract made by the parties. The rectification will be made if three conditions are met: 1) there is a complete agreement between the parties free from ambiguity, 2) parties didn’t engage in further negotiations, 3) the change in the written document appears to be an error in recording.

45.What is a court of “first instance” and give 3 examples.

It is the courts where action must first originate, for example, small claims court, family court, juvenile court, police court, traffic court.


46.What was the holding in Hodge v. The Queen and why is it significant?

Provinces are not delegates of the federal parliament, but in their own spheres they are supreme. It was significant because it allowed provincial legislation to be supreme within the province.

47.What are the four roles of the court?

Arbitrator of the constitution Interpreter of the legislation Arbitrator of private parties Protector of civil liberties

48.Explain the difference between a Warranty and a Condition in respect of the Law of Contract. What are the consequences of this classification? Illustrate with appropriate examples.

Essential terms of a contract are known as conditions and non-essential terms are known as warranties. The breach of a condition relieves the injured party from further duty to perform the contract, if they so elect. For example, it is an implied condition that the seller has a right to sell the goods. The breach of a warranty does not relieve the injured party from the bargain, they must perform their side, but they may sue for damages. For example, it is implied that the buyer of goods will have and enjoy quiet possession.

49.What is the Civil Law System?

It is the system of law derived from roman law that developed in continental Europe and was greatly influence by the Code Napoleon of 1804. The civil law theory is that a court always refers to the code to settle a dispute. If the code does not seem to cover a new problem then the court is free to reason by analogy to settle the problem from general principles in the code. In theory, a later court need not follow the earlier reasoning in a similar case.

50.What is a fiduciary and give an example?

A person holding a character of a trustee or a character analogous to a trustee in respect to the trust and confidence involved in it and the scrupulous good faith and candour which it requires. Or it is defined as a person having duty created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking. For example, a director has a fiduciary duty to the organization to avoid any conflicts of interest between the director’s personal interest and that of the corporation.


51.What is “legal positivism?”

Legal positivism seeks to answer what is the law, as opposed to what it should be. Positivism is a philosophy of analysis and can be considered as an objective test to create certain knowledge. Positivists are concerned with human conditions and moral values. They disclaim the concern whether law is good or bad and suggest no ethical evaluation of the law. The ultimate goal is to understand and identify what is law.

52.What is “Responsible Government” in the constitutional context?

It provides linkage between the legislative and the executive of the parliament. It is to ensure that an element of democratization to executive government at least in election of executive government and at least to the degree that the legislative branch is elected according to democratic principles. In Canadian Constitution, responsible government means, a) the appointment of persons to the executive who sits in the elected assembly and who have the supported elected assembly, b) the analog to this is that the Monarch or representative in giving assent must follow the advice of the executive rather than his or her own personal bias.

53.What are 3 bases for professional liability?

Criminal liability, professional liability, contractual liability, fiduciary liability, and tort liability.

54.What are the 3 primary duties of a Director of a Corporation and to whom are they owed?

The primary duties of a director are duties of care and skill and the duty of good faith which deals with: a) the duty to disclose an interest in contract with the company and b) the interception of corporate opportunity. These duties are owed to the corporation, shareholders, and the public. However, they can also be owed to employees, creditors, competitors, and the government.

55.What are “the articles of incorporation” as used in the law of corporations? Name four basis features of the “Articles of Incorporation”.

The articles of incorporation are the basic constitutional document of corporations incorporated in most Canadian jurisdictions. Under the articles of incorporation system, persons who wish to form a corporation sign and deliver articles of incorporation to a government office and in turn are issued with a certificate of incorporation. Features of the “articles of incorporation” include: name of the corporation, place where the registered office is situated, classes


and any maximum number of shares that the corporation is authorized to issue, rights and restrictions attached to each class, any restriction on the transfer of shares, number of directors, any restrictions on the business carried on.

56.What are the 2 amendment formulae identified in the Constitutional Act 1982? (2 amending formulae in respect to the entrenched aspects of the Canadian Constitution?)

The 7-50 rule - it requires the resolution of the Senate and House of Common, and resolution of legislative assembly of at least 2/3 of the provinces (7 provinces) with 50% of the population in aggregate of all the provinces. Unanimity provision – requires the unanimous approval of all the provinces. No change should be made to the Constitution unless there’s agreement of all 11 legislatures (parliament and the 10 legislatures).

57.What are the 2 basic legal rules concerning delegate bodies creating subordinate legislation?

Important regulations require the approval of the cabinet in the form of an order-in-council. The agency itself drafts these regulations and the minister responsible for the agency brings them before the cabinet. Lesser regulations may be authorized by the minister, the head of the agency, or even a designated officer of the agency.

58.The Sale of Goods Act applies to certain transactions. Describe the transactions as identified in the Act.

For the sale of goods act to apply the contract must be dealing with the transaction of “goods”, which is defined as “all chattels personal (tangible personal property), other than choses in action and money.

59. In an Insurance Contract, what is an insurable interest?

Insurable interest separates insurance from a wager. Insurable interest exists where the insured derives a financial benefit in the continuing existence of the insured object or suffers a financial loss from the loss of the object. Compensation will be paid by the insurer to the individual named as a beneficiary.

60.What is an injunction?

An injunction is a court order restraining a party from acting in a particular manner, such as committing a breach of contract. For the remedy to be available, the courts require the contract to contain a negative covenant, a promise not to do something.


61.What is a presumption in Tort Law or Contract Law? (What is a presumption in law? Give two examples)

With respect to intentional torts, it is presumed by the courts that the element of intention exists because it would be difficult for the plaintiff to prove the defendant had intent. Thus, because the plaintiff is taken to have established the element, it is up to the defendant to enter proof to reverse the presumption or conclusion.

With respect to contracts, the three elements: intention to create legal relation, capacity, and legality of the contract are all presumed by the courts. Intention to create legal relations is most easily refuted in family cases because the situation is very informal and nothing is generally documented. With capacity it is presumed that the promisor has the ability to bind him/herself in contract. Finally it is assumed that the contract is legal; the contract neither offends public policy nor violates any law.

62.Give 2 examples of procedures in our legal system in civil cases that might be said to encourage people to consider settlement rather than proceed to trial.

Pre-trial conference and the examination for discovery.

63.Define 2 approaches employed by the Courts to interpret statutes.

Plain meaning approach – dictionary definition, or the liberal approach – purposive, they look at the object of the statutes in the context it was create. The golden rule is to use the plain approach and if necessary the liberal approach.

64.What is the principle of remoteness in the Law of Contract?

The issue is just like in tort; it is whether the damages were foreseeable at the time of the contract. If a special use is to be made out of an item sold, that has to be communicated at the time of the contract.

65.Define the term of subrogation as it exists in Insurance Law.

The right of an insurer who has paid a claim to “step into the shoes” of the insured and sue the person responsible for the loss. (Person A gets hurt by Person B; Person A receives compensation from Insurance Company. A cannot sue B because insurance compensation is adequate, however, Insurance Co. can sue B to recoup the loss)


66.What principles of law are established by the case of Hedley, Byrne & Co. Ltd. V. Heller & Partners?

This case established the principle of expanded liability to third party for negligence misrepresentation. The result of the case seems to be that anyone who makes a misstatement is liable for losses suffered by a wider group than those with whom one has a direct contractual/fiduciary relationship. What Hedley Byrne did is achieved the neighbour principle with respect to professional liability and most importantly, in terms of negligence misrepresentation.

67.What is the remedy of specific performance?

The remedy is an order requiring a defendant to do a specified act (when financial compensation is inadequate) usually to complete a transaction, for example to finish a building contract. “The remedy of specific performance is most often applied to contracts for the sale of land. Courts granted specific performance originally on the argument that each piece of land is unique, and that consequently money damages are an inadequate remedy.”

68.What is a class action?

It is an action in which an individual represents a group and the judgment decides the matter for all members of the class at once. Courts are reluctant in having class actions because it takes away an individual’s right to litigate his own claim. However, this types of action does free the courts of many individual cases.

69.To whom are “costs” awarded in a court action?

Costs are awarded to the winner, whether it is the plaintiff or the defendant, because they shouldn’t have had to go through the court to reach settlement.

70.What is an “assignment” in Contract Law?

An assignment in contract law is the transfer of contractual rights.

71.What is a shotgun clause and where might you find it?

A shot-gun clause gives a party the option to buy or sell shares at a specified fair price per share. This has the appearance of fairness because it allows the party to extricate themselves (especially if they are “locked in and frozen out”) and it is fair in that the price offered by the other party will be fair because they don’t want to be taken advantage of since they do not know if the party will buy or sell. (like “you cut, I choose”) This is often the case with minority shareholders: an individual has 60% and the other has 40%, or 2 people together have 60% of the shares and work together to oppress the individual with only 40%. However, the


shot gun clause isn’t always fair to everyone, especially if one party is undercapitalized. If you have no money then you can’t realistically buy them out. In those cases the price per share will be determined by someone else so that the undercapitalized will be considered.

72.What are 3 implied conditions in the Sale of Goods Act?

Seller’s title – seller has right to sell the goods, description – goods sold by description will conform to the description, fitness – the goods are of a type that is suitable for the purpose for which they are bought (suitability and quality), sale by sample – when a sample has been provided, the actual goods supplied will correspond to the sample in type and quality.

73.What is a contingent fee in relation to legal services and when is it usually used?

Under a contingent fee arrangement, “the lawyer agrees to act on the basis that if the client is successful the lawyer will take as a fee a certain percentage of the proceeds of the litigation, and in the event that the client is unsuccessful the lawyer will make no charge for the services rendered. It is usually used when it is the only practical way of brining an action. It is usually a fairly high percentage of the winnings because you are overpaying the lawyer for the risk that nothing will be paid if you lose.

74.Why are tort damage awards greater in the U.S.A. as opposed to Canada?

For 3 reasons: a) Pain and suffering rewards in Canada have been subject to a limit by the Supreme Court in 1982 of 100,000 – they feel for the victims but any reward is arbitrary. Since then it has been indexed and the current maximum is 300,000. b) Juries make tort awards in the United States; in Canada these do not exist. Juries tend to be more emotional and as a result will award larger sums. c) Americans have jurisprudence that allows for higher rewards of punitive damages that can also be rewarded by the juries. 75.Who was the Emperor Justinian and what was his pre-eminent legal

achievement?

Emperor Justinian was the famous emperor of the Eastern Roman Empire in the 6th century A.D. He developed the Justinian Code, which was inherited by the whole of continental Europe and formed the foundation for most of the civil law legal system.

76.Describe what the “lapse of an offer” in contract law means, and then briefly define when an offer may lapse.


A lapse of an offer is the termination of an offer when the offeree fails to accept it within a specified time, or if no time is specified, within a reasonable amount of time. An offer may lapse when: 1) the offeree fails to accept within the time specified in the offer, 2) the offeree fails to accept within a reasonable time, if the offer has not specified any time limit, or 3) either of the parties dies or becomes insane prior to acceptance. When an offer has lapsed, the offeree can no longer accept the contract even if he is unaware that it has lapsed; it has become void and no longer exists.

77.What is the Indoor Management Rule?

Indoor Management rule is the principle that a person dealing with a corporation is entitled to assume that its internal procedural rules are complied with unless it is apparent that such is not the case. The internal issue is the effect on an innocent third party if the acts have been performed in an irregular manner. The similar authority on this point is the case of the Royal British Bank v. Turquand. In the absence of notice of the irregularity or of suspicious circumstances, everything that appears regular on its face may be relied upon by an outsider and will bind the company. An innocent third party may rely on the regularity of corporate act just as he may rely on the apparent authority of an agent.

78.Who was Jeremy Bentham and for what principle is he best known? Define it.

Jeremy Bentham is known for the principle of utility. The principle states that the goal of society should be to increase the sum total of human happiness, “the greatest happiness of the greatest number.”

79.What is the Royal Prerogative?

The royal prerogative is the residual of legal power. It is residing in the crown and passing through the crown to its representative, the Governor Council and the provincial legislature. The royal prerogative powers that currently exist, although they have both been taken away by statute include: 1) the power to appoint the prime minister or premier, 2) the power to dismiss the prime minister or premier, 3) the power to declare war, 4) the power to appoint an ambassador, and 5) the power to dissolve the elective of assembly.

80.What does the term “Special Damages” in tort and contract law refer to?

Special damages are those damages that can be easily calculated, such as wage losses and medical expenses.

81.Why is the Judicature Act Significant?


In 1865, in response to Charles Dickens commentary on court systems - Blique House, they created the judicature act which allowed for one set of courts simultaneously (equity and common law). However, both bodies of principles remained separate. This was applied in Canada and Manitoba.

82.What is the difference between holding property as joint tenants rather than tenants in common?

If you are a joint tenant and one of the joint tenants dies, then the interest of the ceased joint tenant get passed on to the surviving joint tenant. If a tenant in common dies, you are one of any number of owners in the property, the interest of that deceased tenant in common does not transfer automatically to the surviving tenants in common, but rather the property will devolve according to the will of the deceased or according to the intestate succession act.

83.What is Wheare’s definition of federalism, which he calls the federal principle?

The federal principle is the methods of dividing powers so that the general and regional governments are each, within a sphere, co-ordinate and independent.

84.What is a legal liability and give an example.

Liability – a right recognized by law which can be enforced against a legal person by court process.

85.What is the difference between Hume’s Physical and Normative laws?

Physical laws are laws of nature which we learn in studying the natural sciences like physics and chemistry. Normative law rules governing human conduct created and/or enforced by human beings. A person may break normative laws and face the consequences but we cannot break physical laws.

86.What is the “cabinet” in Canadian constitutional law?

Cabinet is made up of members of House of Common and Senate. It is an active part of the Executive. The PM is the head of the cabinet. The monarch control legally executive power while the Queen vested the formal executive power. The cabinet is not a democracy because it is a one person show, the Monarch only gets advice form the PM.

87.What is “legal aid”?

Legal assistance provided for poor litigants. This service is only available for domestic and criminal claims.


88.What does “delgates non potest delagare” mean – in what context is it used?

One of the institutional sources of law is delegated body. Delegated bodies have been given power and can create law within the jurisdiction given by the statutes. Delegates non protest delegare means “delegates can’t further delegate”.

89.What does the term “collateral agreement” mean?

An entirely separate undertaking which the parties were agreed upon and which they did not incorporate in their written contract, because the written contract seemed an inappropriate place for it.

90. In what situations can a contract of a minor be enforce against him and to what extent?

A minor must pay a reasonable price for all necessaries of their purchase, for example shelter, food, and clothing. Beneficial contract of service: a minor is bound to the terms of a contract of employment when it is found to be for his benefit.

91. In what situations is the doctrine of frustration applicable to discharge a contract?

Discharge by frustration occurs in two types of situations where the inability to perform is not their fault: a) Where performance has become literally impossible, or b) where performance is physically possible but performance would have a far different meaning for the parties then that which they conceived at the time of their agreement. The result of frustration is that the contract is discharged and the parties are relieved of further performance, any benefits already exchanged fall where they lie. There’s a bit of rough justice, so as a result, the English parliament also passed the frustrated contract act which allows for the reallocation of the benefits already exchanged.

92.List 10 criterions an individual should keep in mind when selecting a kind of business organization.

Limited liability Estate planning Borrowing requirement Employees Flexibility of structure Perpetual existence Number of proposed proprietors

Relationship of proposed proprietors

Applicable government requirements

available grants Costs Income tax consideration

93.What is the last Canadian province to have an upper house?


Quebec was the last Canadian province to have an upper house in 1966.

94.What are the 3 authoritative sources of constitution?

Legislative sources – a) the UK parliament, b) the Canadian parliament, and c) the provincial legislature which provinces can create their own constitution.

Judicial decision – are sources of constitution that involve key sections of constitutional legislation as interpreted by the court.

Royal prerogative power – is the king or queen’s ability to make law. This is residual of power.

95.List 4 categories of the persuasive sources of constitutional law?

Conventions, learned author’s writings, parliamentary privilege or custom of parliament, decisions from other jurisdictions.

96.Name 4 intentional torts

Assault and battery, fraud, false imprisonment, intentional infliction of mental suffering.

97.Name 4 ways in which the relationship of agent and principle can be established.

By express agreement - an agent agreement may be oral, written or in writing under seal.

By ratification – a person purports to act as an agent knowing she ahs no authority but hoping the proposed principal will alter the contract.

By estoppel – the agent’s authority is merely apparent and not real. By necessity

98.What is the ratio in the Maritime Bank case?

The lieutenant governor is not merely a federal official; rather the Lieutenant Governor passed all the prerogative power of the Crown. This is the indication of an equal and co-ordinate status between both levels of government.

99.What are the 2 component parts of the legislature in MB that must approve legislation

Legislation assembly and the Lieutenant Governor

100. Explain the principle of Res Ipsa Loquitur, and give an example of a fact situation where it would apply in a negligence action.


It means the facts speak for themselves. The injured party need only establish that the defendant cause the injury. For example, the plaintiff was struck by a barrel while standing in a street. It fell from the defendant’s supper window. The conclusion, unless the defendant could prove otherwise, is that the most likely cause of the negligent conduct was the defendant.

101. Describe 3 ways that civil liberties were protected prior to the Charter of Rights & Freedom.

Democratic system – people can elect the political leaders. If the elector abuses the use of power, they won’t be elected again.

Independence of the judiciary – judges are not responsible to legislative bodies for their decisions

The common law – if somebody does something to violate the civil liberty, they can be sued.

102. Name 2 major problems of enforcement.

Requirement of writing – relates to the statute of frauds which was repealed in Manitoba.

Ambiguous meaning – relates to uncertainty and void contract Capacity The privity of contract

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