NCA Contract Law

Question 1

Under Canadian common law, what is 'consideration' and why is it necessary for a valid contract?

Accepted Answer

It is something of value exchanged between the parties (a benefit received or detriment incurred), required to distinguish enforceable contracts from gratuitous promises

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It means thinking carefully before signing a contract

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It is a cooling-off period before a contract becomes binding

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It only applies to contracts over $1,000

Question 2

What is the 'parol evidence rule' in Canadian contract law?

Accepted Answer

When a contract has been reduced to a final written form, extrinsic evidence generally cannot be used to add to, vary, or contradict its terms, subject to exceptions such as ambiguity, fraud, mistake, or collateral agreements

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A rule requiring all contracts to be witnessed

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A rule that verbal contracts are never enforceable

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A rule requiring all evidence to be presented verbally in court

Question 3

What is 'frustration of contract' under Canadian law?

Accepted Answer

When a supervening event, without the fault of either party, makes performance impossible, illegal, or radically different from what was contemplated, automatically discharging the contract

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When one party is frustrated with the other's performance

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When a contract is terminated by mutual agreement

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When a contract is breached by one party

Question 4

What remedies are available for breach of contract in Canadian common law?

Accepted Answer

Damages (expectation, reliance, restitution), specific performance, injunctions, rescission, and in some cases, quantum meruit — the primary remedy is expectation damages to put the innocent party in the position they would have been in had the contract been performed

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Only monetary damages

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Only the right to terminate the contract

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Only punitive damages

Question 5

What is 'promissory estoppel' and how is it applied in Canadian contract law?

Accepted Answer

It prevents a party from going back on a promise to waive or modify a contractual right when the other party has relied on that promise to their detriment, though in Canada it is generally used as a shield (defence) rather than a sword (cause of action)

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It is a type of breach of contract claim

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It is a rule about written contracts only

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It allows any promise to be enforced regardless of consideration

Question 6

What is the doctrine of 'unconscionability' in Canadian contract law?

Accepted Answer

It allows a court to set aside a contract or contractual term where there is an inequality of bargaining power between the parties and the resulting bargain is substantially unfair, taking advantage of the weaker party's vulnerability

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It means a contract must be performed consciously, not while asleep

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It applies only to consumer contracts

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It means the contract must be in writing to be fair