1. What is meant by the term "meeting of the minds"? How is it significant to the formation of contracts?

7. Distinguish between an offer and an invitation to treat. Give an example of each. How does the distinction help to promote commercial activity?

11. Identify and briefly explain the various ways in which an offer may come to an end.

14. What is a "counter-offer"? What effect does a counter-offer have on an offer?

16. What is the difference between a bilateral contract and a unilateral contract? How is each type of contract accepted? 17. Can an offer ever be accepted through the offeree's silence? Why or why not?

18. What is the difference between instantaneous and non-instantaneous forms of communication? How is that difference relevant to the formation of contracts?

2. Danuta Swinton was unhappy with a very large maple tree in her front yard. She therefore contacted West End tree Service (WETS) to discuss the problem. At the end of their discussion, WETS's manager wrote up a document, entitled "Tree Removal," that provided an estimated price of $1950. That price was broken down into three elements: $950 to cut down the tree, $800 to remove the logs and debris, and $200 for a city permit. The work could not be done without the permit. During the same meeting, Danuta signed an application for a tree removal permit. Acting on Danuta's behalf, WETS sent the application to the city along with a cheque for $200. Two weeks later, after the city had issued the permit, WETS went to Danuta's house during the middle of the day, cutdown the tree, and hauled it away. When she returned home from work that evening, however, Danuta paid $200 for the permit, but refused to pay anything more. She has persuaded the court that she never actually asked WETS to do anything more than obtain the permit, and that she never thought that they had a contract to actually perform the work. In contrast, WETS has explained that it would never simply obtain a permit on behalf of a customer. Unless it gets paid to actually remove a tree, the job is not worth the hassle. All of WETS's competitors have the same policy. Does Danuta have to pay for WETS's services in removing the tree? Did the parties have a contract?

4. Parktown Realty Inc developed an upscale condominium complex. On October 1, Miranda Wine signed an offer to purchase one of the units. Part of that document said, "This offer is irrevocable by the Purchaser until one minute before midnight on the fifteenth day after its date, after which time if not accepted, this offer shall be null and void." As both parties were aware, the real estate market was highly volatile at the time that Miranda signed her offer to purchase. In the preceding months, prices had gone up and down, quite unpredictably. On October 10, Park-town signed that document with the intention of accepting Miranda's offer. Because of an oversight, however, the company did not mail the signed document back to Miranda until October 14. Miranda eventually received the letter on October 20. By that time, the real estate market had collapsed and she was no longer interested in buying a condominium unit at the original price. She therefore insists that her offer lapsed before it had been turned into a contract by Parktown's acceptance. Is she correct?

6. Ahmad owned Regent Arms, an apartment block in downtown Vancouver, which he wished to sell. He knew that Felicity, a real estate developer, was interested in such properties. Therefore, on Thursday, he faxed this offer to her: "I will sell Regent Arms to you for $5 000 000. If you wish to accept this offer, please do so as soon as possible. I promise that I will not make a similar offer to anyone else while you are considering this proposal." Felicity was very interested in the offer but received it just as she was about to leave for a meeting in Medicine Hat. When she returned on the following Monday, she immediately faxed a letter purporting to accept Ahmad's offer. He replied that since he had not heard from her earlier, he had sold Regent Arms to another party on Saturday. Felicity now claims that because Ahmad had done nothing to communicate the revocation of his offer, his offer was still open for acceptance when she sent her fax to him. Is she correct? Has the offer lapsed or been revoked? Explain the arguments that Ahmad and Felicity might make if their dispute goes to court.

7. Mack Darin owns and operates a store in a rough downtown neighbourhood. Last week, he received a shipment of switchblade knives. He placed one of the knives in his store window, alongside a small notice board that said, "Switchblade Knives$25 each." That display soon caught the attention of Constable Boot, a member of the local police department. Darin was arrested and charged with a crime under section 7 of the Prohibited Weapons Act, which says that it is illegal to "manufacture, sell, rent, or offer for sale or rent . . . any knife . . . which has a blade that opens automatically by hand pressure applied to a button, spring, or other device in or attached to the handle of the knife." There is no doubt that the switchblade that appeared in Darin's store window falls within that description. Is it therefore safe to assume that Mack Darin has committed a crime? Explain your answer.

9. Ten years ago, Edgar's daughter, Tina, married Hussein. Because the young couple could not afford to buy a house by themselves, Edgar placed a down payment of $90 000 on a home and told his daughter and son-in-law that they could live in the house and that if they paid monthly mortgage instalments of $1000 until the mortgage was satisfied, he would transfer the clear title into their name. Unfortunately, Tina and her parents recently had a falling out. Although Tina and Hussein have regularly paid the monthly mortgage instalments and wish to continue doing so until the mortgage is paid off (which they predict will occur in about seven years), Edgar has purportedly revoked his offer and stated that he intends to pay the remaining mortgage instalments and permanently live in the house himself. Did the parties act with an intention to create legal relations? Was the contract proposed by Edgar's initial offer a bilateral contract or a unilateral contract? Have Tina and Hussein fully accepted Edgar's offer?

If not, can Edgar revoke his offer? If it was a unilateral contract, were Tina and Hussein obligated to pay the full mortgage once they began to make instalment payments?

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2. Is it possible for a person to enter into an enforceable contract without receiving any benefit from the agreement?

3. Explain the difference between "sufficient consideration" and "adequate consideration." Will either type of consideration support the creation of a valid contract? Explain your answer.

6. What is "past consideration"? In light of the bargaining process that underlies a contract, explain why judges hold that past consideration is no consideration at all.

13. "A seal is a type of consideration." Is that statement true? Explain your answer.

15. Explain the relationship between the requirement of consideration and the privity of contract doctrine.

2. The Goldberg Conservatory, a music school, ran a notice in several newspapers to announce that it had decided to have a new organ built and installed on its premises. The notice also asked for donations to help fund the project. John Sebastien, a local businessman and patron of the arts, responded to the notice by immediately promising the Conservatory that he would donate $100 000. He explained that a cheque would be sent within a month, after he had made suitable arrangements with his accountant. Before he was able to send a cheque, however, Sebastien's finances suffered a severe setback as a result of several failed business ventures. He therefore informed the Conservatory that, with regret, he would not be able to make a donation after all. The Conservatory insists that he no longer has a choice in the matter. While admitting that it had planned to acquire the organ in any event, it says that it would be unfair if it were to be deprived of the money that Sebastien had promised. It also says that Sebastien is legally obligated to fulfill his promise. Is Sebastien's promise enforceable?

3. Hardy Construction Ltd contractually agreed to build an office complex for Schtick Corp. Under the terms of that contract, Hardy Construction would incur a financial penalty if it failed to complete the project on schedule. Hardy Construction hired Laurel Electric Co as a subcontractor to install wiring in the building. The terms of that subcontract required payment of $50 000 on completion. Laurel Electric began work immediately but later discovered that it had honestly underestimated the cost of performance. Accordingly, it approached Hardy Construction and stated that unless it was promised an additional $20 000, it simply would not be able to complete the job. Hardy Construction realized (i) that it could not possibly find a replacement for Laurel Electric on such short notice, and (ii) that any delay in completion of the project would trigger the penalty provision contained in its contract with Schtick Corp. Hardy Construction consequently agreed to Laurel Electric's request. Nevertheless, although Laurel Electric subsequently completed its performance on schedule, Hardy Construction refuses to pay more than $50 000. Does it have a right to work in law? Regardless of its legal position, why might Hardy Construction consider honouring its promise to pay an extra $20 000? Explain whether you believe that the law should more closely reflect business practice.

4. After being charged with a serious crime, Anthony Lampleigh wrote to Tammy Braithwait, a lawyer, asking for assistance. After setting out the facts of the case and the precise nature of the allegations against him, Lampleigh asked in his letter to Braithwait, "Will you please help me avoid prosecution on these charges?" Braithwait wrote back in very simple terms, stating merely that she would "do everything possible to achieve the desired result." Braithwait then used considerable ingenuity, and expended considerable time and expense, in persuading the government to drop the charges against Lampleigh. When Braithwait conveyed that news, Lampleigh gratefully said, "Thank you so much. For your efforts, I will prepare a cheque for $25 000 and have it delivered to your office tomorrow." In fact, Lampleigh never sent any cheque to Braithwait. After the initial joy and relief wore off, Lampleigh felt far less thankful and he now refuses to pay anything at all. Braithwait insists that she is entitled to a contractual payment of $25 000, but Lampleigh argues that his promise of that amount was given in exchange for past consideration and therefore is not enforceable. How would a court resolve the parties' dispute?

8. Everlast Tire Co, which manufactures automobile tires sold a shipment of tires to Automotive Wholesaler Inc. Under the terms of that contract, Automotive Wholesaler was allowed to resell the tires below the price suggested by Everlast if (i) the sub-buyer was a business in the car industry, and (ii) the sub-buyer promised not to resell below the price suggested by Everlast. Automotive Wholesaler then sold the tires to AJ's Used Cars Ltd. Under the terms of that contract, AJ's, which was engaged in the car industry as a used car dealer, promised Automotive Wholesaler that it would not resell the tires below the price suggested by Everlast. AJ's also promised Automotive Wholesaler that if it broke that promise, it would pay $100 to Everlast for each tire that was sold below the manufacturer's suggested price. In fact, AJ's did sell 10 tires to individual customers at prices that were well below the price suggested by Everlast. Everlast now argues that it is entitled to recover $1000 from AJ's. Is that true? If not, does the result seem fair? And if not, what are the simplest means by which Everlast could have arranged the resale of its tires so that it would be able to enforce the promise that AJ's made to Automotive Wholesaler?

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2. Why does the law treat minors differently than adults? Give examples of contracts that will be enforced even if a person has not attained the age of majority. 3. What is the key difference in how the law treats contracts entered into by a minor as compared to contracts entered into by a person lacking mental capacity?

5. Can a person enter into a contract while intoxicated? What might an adjudicating court be concerned about in assessing incapacity due to intoxication?

7. Why must a business person be particularly careful when contracting with or on behalf of an association?

9. Describe some risk management techniques that businesses can use to ensure that contracts it creates are enforceable.

15. Explain why the plea of non est factum is part of the law of mistake. 16. What makes a contract illegal? Will every illegal contract be set aside in its entirety? 17. Describe the doctrine of public policy. In what situations might something be presumed contrary to public policy? Why might this be of concern for Canadian businesses?

19. What are the five factors that courts will assess when determining whether economic pressure exerted during the formation of a contract was illegitimate?

20. When two people enter into a contract for the sale of goods, do they establish a fiduciary relationship? Why or why not?

1. Erin had always been independent. Shortly before her seventeenth birthday, she moved out of her parents' house and bought a used car, which she needed for her fledgling chocolate-covered-cranberry enterprise. She agreed to pay $15 000 for the car, $5000 as a down payment and the rest in monthly instalments over one year. She used the car mostly to make deliveries and pick up supplies. After she had driven the car for three months, the bearings burnt out. Since Erin was in a position to hire a delivery person, she decided that she no longer wanted the car. Having studied the basics of contract law in high school, Erin attempted to return the vehicle to the car dealership, claiming that she had elected to avoid the contract. The dealership refused, having received an opinion from its lawyer that a contract for necessaries is enforceable against a minor. Erin replied that the car was not a necessary, and that the contract was therefore not enforceable. Do you think that Erin will be permitted to avoid her contract with the dealership? Give reasons to support your position.

4. Michael is a young man with a long psychiatric history. One day he decided to apply for a credit card from his local bank. He filled out the forms, submitted them to the bank and soon after received a credit card. Not fully understanding the consequences of using the card for purchases, he quickly racked up thousands of dollars of debt. After numerous missed payments, the bank brought an action in court to sue Michael for the balance owing. Michael's lawyer argued that the contract was voidable because of mental incompetence. He submitted medical evidence to show that Michael was incompetent at the time he entered into the credit card contract. Will the bank be able to sue for the outstanding balance? What additional piece of information would be helpful to make a conclusive determination here?

8. Several years back, Golden Joe's Geology bought a 1000-acre package of land in the Northwest Territories. When he purchased the property, Joe was sure to purchase the mineral rights as well. For years, Joe spent his summers panning for gold on the property. Recently, quite by accident, Joe discovered that his land is at the heart of a potentially lucrative diamond stash. Joe is overjoyed and has decided to sell his property so that he can retire to a tropical locale. He has agreed to sell the property and mineral rights to Prospectus Prospecting, which will invest the money needed to mine and process the diamonds. The agreement is drawn up and signed by both parties, and everyone is satisfied. However, when the actual land transfer is about to take place, it is discovered that the Crown grant of property to Joe has been substantially revoked. As a result, the land available for sale is in fact reduced by 90 percent. Is Joe still entitled to performance of the contract with Prospectus? Explain why or why not. As a prudent business manager, could Joe have better protected himself against such a possibility? Explain how. 9. Emond is an experienced fisherman. A local restaurant hired Emond to procure 500 kilograms of herring, which it would freeze and serve to customers over the coming months. The restaurant's herring dishes are popular amongst its customers, and it was imperative that Emond return with a good catch so that the restaurant could meet its demand. Emond set out to sea, only to learn that the area where he normally goes for fish contained very few herring. It was a poor fishing year, and other fishers had already taken the bulk of the herring. There were other areas where Emond could fish for herring, but they were much farther away and Emond did not care to venture so far off course just to get fish for the restaurant. Emond returned empty-handed and the restaurant sued for loss of profits. Emond claimed in his defence that the lack of fish meant that the contract was frustrated and therefore Emond was relieved of his obligations. Will Emond succeed in this argument? Why or why not?

13. In 1995, Oli Bonli was 88 years' old. He owned some land that he agreed to lease to Mr Turner for five years with an option to purchase the land when the lease expired. The purchase price for the land at the end of the five-year lease term was set at $100 000, payable over 20 years at $5000 per year. No interest was payable under the agreement. In fact, the value of the land in 1995 was $167 000, much higher than the purchase price. Land prices in the area were skyrocketing at this time and Mr Turner knew it. At that time, Mr Turner was 47 years' old and he personally drafted a written contract on the terms agreed to. He had Mr Bonli come to his office to sign the contract at 7:00 am, when no one was likely to be around. Mr Bonli did not obtain independent legal advice before entering into the contract. Despite being a long-time farmer on the same piece of land, Mr Bonli made two errors in the legal description of his land on the contract. At that time, age was catching up to Mr Bonlihe had good days and bad days when he was very confused. Very shortly after signing the contract, Mr Bonli denied that he had sold his land and told someone that he thought he had actually bought land from Mr Turner. In 1996, Mr Bonli was taken to a nursing home as he could no longer care for himself properly. By the end of the lease term in 2000, the value of Mr Bonli's land had risen to $418 000. Mr Turner then sought to exercise his option to purchase the land for $100 000 pursuant to the payment terms of the contract. Mr Bonli's estate refused to sell the land to Mr Turner, claiming that the contract was unconscionable. If you were the judge deciding this case, would you find the contract to be unconscionable? Why or why not?