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Practice Questions and Answers on Contract Formation and Capacity

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York University
Administrative Studies
ADMS 2610
Marcela Porporato

Practice questions on Formation of Contract and CapacityAA has just offered to buy Bs boat for2000000 In telling A he accepts the offer B also tells him that the boat is in great condition something that B knows is not true When the contract is prepared it only refers to the boat and not Bs statement Of course when A gets the boat he finds is in need of substantial repairs A wants to return the boat and get his money back Advise A providing your reasons the answer can be approached in two ways based on different principles of contract law see Parole evidence rule and Misrepresentation Please use the Parol Evidence Rule ApproachAnswerAParol Evidence RuleAccording to the parole evidence rule A cannot do anything because the rule does not allow A to vary or contradict the terms of the written contractHowever there are exceptions to get around the ruleThe first is condition precedent A statement that the boat is in great condition is a condition precedent which must be satisfied before the written contract comes into existenceIf accepted this would mean that since the boat was not in great condition there is no contract and the parties would be restored to their precontract positionThe second exception is collateral agreementHere A will argue that his statement about the great condit
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