Week 4 - Questions and Answers
Chapters 8 and 9 (7 edition)
Chapters 9 and 10 (8 edition)
Chapter 8 (7 edition) / Chapter 9 (8 edition)
(Please refer to the Week 4 Course Notes for the corresponding page numbers and
questions for both the 7 and 8 editions.)
Question: Why do the courts make certain exceptions to the general rule concerning
the capacity of infants to bind themselves in contract?
Answer: If infants could never be bound in contract, then adults would never
contract with them, and the infants wouldn’t be able to secure the
necessaries of life by way of contract.
Question: If an adult entered into a contract without realizing that he was dealing
with an infant, would the adult be in a position to enforce the agreement?
Would your answer to this question apply under all circumstances?
Answer: This question depends on a number of factors. In a contract for
necessaries, the adult is able to enforce the contract whether he knows of
the age of the minor or not. If the contract is for non-necessaries, the adult
may not enforce the contract if the lack of knowledge is through no fault on
the part of the minor. If the minor has lied about his age, then the adult
may be able to enforce the contract if denying enforceability would create
a fraud on the contracting adult.
Question: Under what conditions or circumstances would an “agency of necessity”
Answer: Where a child requires the necessaries of life and acts as agent binding
parents or guardians for money used to acquire them.
Question: How does the capacity to contract of a minor differ from the capacity to
contract of an insane or drunken person?
Answer: A minor’s lack of capacity will end when the minor reaches an appropriate
legal age, the capacity of drunk or insane persons will change when their
drunkenness or insanity ends. The time for avoiding a contract entered
into while lacking capacity may be somewhat shorter for the drunken
person, a minor has a reasonable amount of time to avoid a contract after
reaching the age of capacity.
Question: How does the law limit the capacity of a bankrupt person to enter into a
1 binding contract?
Answer: A bankrupt cannot enter into a contract for more than $500.00 without
obtaining permission and without notifying the other contracting party of
Question: Distinguish between “illegal” and “void” with respect to contract law.
Answer: An illegal contract is generally one which is prohibited by law, and may
attract criminal sanction. A contract void due to illegality is simply one that
cannot be enforced due to some illegality, for example, a change in zoning
by-laws that prevents the building of a structure.
Question: Identify the three major classes of contract considered to be in restraint of
Answer: Contracts that violate anti-trust legislation such as the Competition Act;
contracts for the sale of business that contain restrictive covenants limiting
the vendor’s ability to operate a competing business; contracts restricting
a former employee’s ability to work in a competing business after leaving
Question: Explain the rationale behind the passage of the Competition Act.
Answer: The Competition Act is designed to maintain a “free” market by preventing
companies with too much power, through market share, from limiting the
production and sale of new products. Theoretically, this promotes
competition for goods in the marketplace, fostering development of new
goods and services as a benefit to the public.
Question: Why are courts reluctant to enforce restrictive covenants in contracts of
employment? Under what circumstances would such a covenant be
Answer: The employee is presumed to be able to exploit his or her job skills
acquired through employment, and the courts view it as very serious to
limit a person’s ability to earn a living.
Question: Discuss the application of public policy or the “public interest” to contracts
of employment containing a covenant that would limit the ability of an
employee to compete with the employer in a given area for a period of
Answer: The public interest or policy concern is the consideration of whether the
public will be deprived of an important good or service as a result of the
restrictive covenant. For example a small community may be seriously
affected by the restriction of a doctor or dentist from practicing.
Question: An employee is caught stealing money from her employer, confesses to
2 the theft, and agrees to repay the money taken. The employer, in
response, promises not to report the incident to the police. Discuss the
validity or enforceability of the employer’s promise.
Answer: This is an agreement to obstruct justice, and is not enforceable at law. If
this theft came to the attention of the authorities, and they decided to
prosecute, then the employer is a compellable witness.
Tope has a suit against Herbert for 3 things. First, they can complain that Herbert
was not the owner of the product design, as he was asked to complete this