NPPE Contract Law Fundamentals 2

Question 1

What is the legal effect of a counter-offer in the formation of a contract?

Accepted Answer

It terminates the original offer and substitutes a new offer

Answer

It modifies the original offer and both remain open

Answer

It creates a binding contract if the original offeror does not object

Answer

It extends the time for acceptance of the original offer

Question 2

Which type of contractual term, if breached, entitles the innocent party to terminate the contract and claim damages?

Accepted Answer

Condition

Answer

Warranty

Answer

Innominate term

Answer

Representation

Question 3

An engineer signs a contract that includes an exclusion clause in fine print, not drawn to their attention. Under Canadian contract law, what is the most likely effect of this clause?

Accepted Answer

It may be unenforceable if the party seeking to rely on it did not bring it to the other party's attention at or before contract formation

Answer

It is void because it was in fine print

Answer

It is fully enforceable regardless of notice

Answer

It is only enforceable if the engineer has a law degree

Question 4

Under the doctrine of frustration in Canadian contract law, a contract is frustrated when:

Accepted Answer

An unforeseen supervening event makes performance impossible or radically different from what was agreed

Answer

A party finds it more expensive than expected to perform

Answer

A party is dissatisfied with the other party's work quality

Answer

Government regulations change after contract signing

Question 5

What distinguishes liquidated damages from a penalty clause in Canadian contract law?

Accepted Answer

Liquidated damages are a genuine pre-estimate of loss enforceable in Canadian courts; a penalty clause intended to punish is unenforceable

Answer

Liquidated damages must be paid before breach; a penalty clause is paid after

Answer

Liquidated damages apply only to construction contracts; penalties apply to service contracts

Answer

There is no distinction — both terms are synonymous in Canadian law

Question 6

Under Canadian contract law, which of the following is required for a contract modification to be binding?

Accepted Answer

Mutual consent and consideration, or execution under seal

Answer

Only the agreement of the party benefiting from the modification

Answer

Written form in all cases

Answer

Notarisation by a lawyer