Exam (elaborations)

Chapter 7 The Elements of a Contract: Capacity, Legality, and Intention

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Chapter 7 The Elements Of A Contract: Capacity,

Chapter 7 The Elements of a Contract: Capacity, Legality, and Intention Business Law In canada 11th Edition By Yates -Test Bank

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Business Law in Canada, 11e (Yates)
Chapter 7 The Elements of a Contract: Capacity, Legality, and Intention

1) Which one of the following is an example of a contract that is binding on an infant in
jurisdictions other than British Columbia?
A) A contract to purchase a new stereo
B) A contract for a camera
C) A contract for baseball tickets
D) A contract for rent
E) A contract for professional hairstyling
Answer: D
Diff: 1 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Recall
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

2) Which one of the following is an example of a contract that is binding on an infant in British
Columbia?
A) A contract to purchase a new stereo
B) A contract for a camera
C) A contract for baseball tickets
D) A contract for a DVD purchase
E) A contract for a student loan
Answer: E
Diff: 3 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Recall
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

1
Copyright © 2017 Pearson Canada, Inc.

,3) When John bought a car from his father's old classmate, Joe, he was only seventeen years old.
The price of the car was $5000. He paid $1000 down and was to pay the remaining $4000 over
time. With these facts in mind, which of the following statements is true? (Read each statement
separately.)
A) Even if the car is defective, John could not sue Joe.
B) If John has an accident and refuses to pay the balance, Joe could successfully sue John for
breach of contract.
C) If John has an accident because of his negligent driving and he refuses to pay, Joe could
successfully sue him in negligence to get around any difficulty in suing him in contract.
D) If the car is defective, John could sue Joe for breach even though Joe could not sue him.
E) If Joe didn't realize John was only 17 years old, he can enforce the contract against him no
matter what his age.
Answer: D
Diff: 3 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Applied
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

4) Requirements of a contract include capacity of the parties to contract, legality, and intention of
the parties to be legally bound. Which of the following is false with regard to these elements?
A) A restrictive covenant prohibiting one party to the contract from competing with the other is
enforceable if it is reasonable between the parties and not contrary to public policy.
B) The court can presume the intention of the parties to be legally bound, but a party to the
contract can bring forward contrary evidence to rebut the presumption.
C) If an adult cannot sue the other party to the contract because he is a minor, neither can the
infant sue the adult.
D) A seller that contracts with an infant cannot avoid the difficulties of enforcing the contract by
suing him in tort instead of breach of contract.
E) A person with mental incapacity might still be held to a contract even if, at the time of the
contract, he didn't understand the nature and quality of his act.
Answer: C
Diff: 2 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Applied
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

2
Copyright © 2017 Pearson Canada, Inc.

,5) What does the decision in Bayview Credit Union Ltd. v. Daigle illustrate?
A) Businesspeople are at a risk when dealing with minors as if they are adults.
B) Parents are responsible for contracts made by their children.
C) Contracts made by children are void.
D) When a minor enters into a contract, there is no consideration.
E) A person under the age of majority cannot intend to enter into a contract.
Answer: A
Diff: 2 Type: MC Page Ref: 218
Topic: Ch. 7 - Minors/Infants
Skill: Recall
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

6) In Royal Bank of Canada v. Holoboff, the Bank sued Holoboff, a minor, who had sold his
client card and personal identification number (PIN) to a third party who defrauded the bank.
What was the result?
A) Holoboff was found liable for the tort of conspiracy to commit fraud.
B) Holoboff was found liable for breach of contract, despite being a minor.
C) Holoboff was not liable for anything, as minors can never be liable.
D) Holoboff's parents were automatically liable for Holoboff's tort.
E) Holoboff's parents were automatically liable for Holoboff's breach of contract.
Answer: A
Diff: 2 Type: MC Page Ref: 221
Topic: Ch. 7 - Minors/Infants
Skill: Recall
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

7) Randy, as his two older brothers before him, moved out of the house when he was quite
young. When he was 17, he and his older brother, Ted, wanted to buy a condominium in Nelson.
They both had jobs and the bank was willing to lend them money and take a mortgage on the
condo. Which of the following is a correct statement about the law governing this situation?
A) These contracts would be binding on Randy only if he disclosed the fact that he was a minor
to the other parties.
B) All contracts with infants are void.
C) The mortgage agreement would be binding on Randy as an adult if he continued to make
payments after reaching the age of majority.
D) A mortgage granted by Randy to the bank is effective until a court orders otherwise.
E) All infants' contracts are enforceable as soon as they become adults.
Answer: C
Diff: 2 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Applied
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

3
Copyright © 2017 Pearson Canada, Inc.

, 8) Ted, a seventeen-year-old high school student, was hired to perform in four episodes of
Gossip Gidget. To keep up with his schoolwork and gaming, he contracted with Mr. Tech of
Technoland for a $2000 laptop computer. He agreed to pay $500 down and the balance by
monthly payments of $250. Read each of the following separately and indicate which is true.
A) If Ted doesn't make his payments, Tech can sue Ted's parents because parents are liable for
the debts of their minor children.
B) This contract is void; therefore, Tech can repossess the laptop which is technically still his
whether Ted makes the payments or not.
C) If this contract is in writing and Ted doesn't make his payments, Tech can sue Ted for breach
of contract.
D) This contract is a legal contract enforceable by Ted.
E) This contract is a legal contract enforceable against Ted.
Answer: D
Diff: 2 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Applied
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

9) In which of the following situations would an infant be bound by the contract he has entered
into?
A) A contract for the purchase of a bike with which to race.
B) A government student loan.
C) A contract for the purchase of a new leather jacket, where the merchant was not aware that he
had several other jackets at home.
D) A contract for the purchase of theatre tickets.
E) A written contract for the purchase of a new stereo.
Answer: B
Diff: 2 Type: MC Page Ref: 217
Topic: Ch. 7 - Minors/Infants
Skill: Applied
Objective: Chapter 7: 1. Explain the capacity of minors.
Bloom's Taxonomy: Knowledge

4
Copyright © 2017 Pearson Canada, Inc.

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Exam (elaborations)

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