CONTRACTS (PG. 590-620)

Question 1

CONTRACT

Answer 1

A formal agreement between two or more parties that is done voluntarily and creates rights and obligations among the parties.

Question 2

CONTRACT LAW

Answer 2

Stipulates the rights and obligations of the parties involved (mutual promises on which parties of the contract can rely)

Question 3

OFFER AND ACCEPTANCE

Answer 3

Contract begins with an offer, and if accepted, will bind both parties to the terms of the contract

Question 4

OFFEROR

Answer 4

Person making the offer

Question 5

OFFEREE

Answer 5

Person accepting the offer

Question 6

CONSIDERATION

Answer 6

A contract that provides some type of benefit to the other party in exchange for the completion of the promise or service rendered

Question 7

SEAL

Answer 7

A seal on a contract is sufficient to eliminate the requirement for consideration

Question 8

INTENTION TO CREATE A LEGAL CONTRACT

Answer 8

The law presumes that both parties intend to honour the terms of the contract

Question 9

UNDUE INFLUENCE

Answer 9

When one party to a contract dominates another party in such a way as to deprive that person from making a qualified and independent decision

Question 10

DURESS

Answer 10

When one party to the contract uses threats (physical or otherwise) or economic pressure to coerce the other party into a contract.

Question 11

MATERIAL MISREPRESENTATION

Answer 11

When one party to the contract makes a false assertion that influences another party to enter into a contract

Question 12

LEGAL CAPACITY

Answer 12

Parties entering into the contract are over the age of majority (18 or 19) and held responsible for satisfying the terms of the contract

Question 13

DIMINISHED CAPACITY

Answer 13

Those that are incapcitated due to influence of alcohol or drugs

Question 14

LEGAL INTENT

Answer 14

The purpose or object of a contract must be legal (not violate any laws)

Question 15

CONTRACT DISCHARGE

Answer 15

When both parties to the agreement perform their respective obligations satisfactorily

Question 16

WAIVER

Answer 16

An agreement not to proceed with the original terms of the contract

Question 17

BREACH OF CONTRACT

Answer 17

A party to a contract who fails to perform his/her required obligations without obtaining a waiver from the other party

Question 18

DOCTRINE OF FRUSTRATION

Answer 18

External causes create circumstance where performing to the terms of the contract would lead to radically different results or obligations from what the parties originally contemplated

Question 19

DOMESTIC CONTRACTS

Answer 19

The rights and obligations of both spouses during their relationship, and may also specify the division of property and support obligations following a relationship breakdown

Question 20

MARRIAGE CONTRACTS

Answer 20

Typically deals with property division and support obligations between the married parties

Question 21

COHABITATION AGREEMENTS

Answer 21

Specify the rights and obligations of each spouse in a common-law relationship, during the relationship and after the relationship ends

Question 22

SEPARATION AGREEMENT

Answer 22

An agreement that deals with issues such as child and spousal support, and property division

Question 23

SHAREHOLDER’S AGREEMENT

Answer 23

Governs the business relationship between two or more individuals who own shares of a private corporation that they operate as active business

Question 24

BUY-SELL AGREEMENT

Answer 24

A shareholder’s agreement that includes provisions dealing with circumstances under which shares may or must be sold.

Question 25

RIGHT OF FIRST REFUSAL

Answer 25

If one shareholder wishes to sell his/her shares to an an outside party, the other shareholder’s should be given the opportunity to purchase the sahres on the same terms and conditions as those the third party offers.

Question 26

TAG ALONG PROVISION

Answer 26

Allows the shareholder certain rights on the sale of another shareholder’s shares to a third party

Question 27

DRAG ALONG PROVISION

Answer 27

Allows the selling shareholder to require the other shareholders to sell their shares as part of his/her sahre sale to a third party

Question 28

SHOTGUN PROVISION

Answer 28

A mechanisim disgned to be the ultimate means of resolving shareholder disputes

Question 29

CROSS PURCHASE ARRANGEMENT

Answer 29

The surviving shareholder(s) agrees to purchase shares the deceased owns at the time of death and obligates the deceased shareholder’s estate to sell the shares. Note: Funded by personally owned insurance

Question 30

PROMISSORY NOTE ARRANGEMENT

Answer 30

Corporation is the owner and beneficiary of insurance on the life of each shareholder. On death, the corporation receives the insurance proceeds on a tax-free basis.

Question 31

SHARE REDEMPYION ARRANGEMENT

Answer 31

The corporation is the owner and beneficiary of a policy on each shareholder. On death, the insurance proceeds are used to purchase the shares from the estate of the deceased shareholder

Question 32

SHAREHOLDER AGREEMENT - OWNERSHIP

Answer 32

Should set out the ownership structure…Who the shareholders are and how many shares of each class they own

Question 33

SHAREHOLDER AGREEMENT - FINANCING

Answer 33

Require each shareholder to contribute capital to the corporation at given times and in certain amounts

Question 34

SHAREHOLDER AGREEMENT - MANAGEMENT

Answer 34

Identify who are the directors, shareholder and officers of the corporation

Question 35

SHAREHOLDER AGREEMENT - DISPUTE RESOLUTION

Answer 35

Provisions for dealing with disputes, such as arbritation and mediation

Question 36

SHAREHOLDER AGREEMENT - VALUATION

Answer 36

Should provide a method for dtermining the value of the corporation’s shares in certain circumstances