THE LAW AND BUSINESS ADMINISTRATION IN CANADA
SECTION A: TRUE OR FALSE
40 Questions to be answered on computer answer card with HB pencil only!
For the True or False Questions
True = A
False = B
SECTION B: MULTIPLE CHOICE
25 Questions to be answered on computer answer card with HB pencil only!
For the Multiple Choice Questions Fill in the Bubble Matching Your Choice of
the Most Correct Answer –i.e.- A, B, C, D, or E
65 Questions in Total!
GOOD LUCK! SECTION A: 40 TRUE OR FALSE QUESTIONS
Please answer on the computer card.
1. A strong legal infrastructure is bad for attracting business investment to a
2. In a federal state like Canada, legislative powers are allocated by a
Constitution or like document between the national government and the
governments of the federal units (such as provinces). (T)
3. The most common meaning of civil law is that the law is contained in a
4. Civil law judges are bound to follow the decisions of judges in prior cases.
5. Corporations may not launch lawsuits in Canada, unless represented by
an “agent.”. (F)
6. The principal aim of tort law is to punish wrongdoers. (F)
7. A defendant in a negligence action will be liable for those types of
damages that are reasonably foreseeable, even though the plaintiff
suffered harm to a much greater degree than the “average” plaintiff would
8. A person who buys a house within one block of the runways at Pearson
International Airport will not be successful in a nuisance suit against the
9. The Hedley Byrnecase is precedent for the notion that a plaintiff may recover “pure economic loss”, where she has
suffered no physical injury or property damage. (T)
10.A professional can be liable for omitting to mention something relevant in
rendering an opinion. (T)
11.The role of self-governing professional organizations is to determine who
are allowed to identify themselves as professionals, to set standards for entrance, education and performance, and to discipline members who fail
to meet the standards. (T)
12.Professional organizations usually have the right to prosecute members
for violating codes of conduct or the terms of their license to engage in the profession. (T)
13.If an offeror states that his offer is open to for seven days, he may not
revoke that offer before the end of those seven days. (F)
14.The mailbox rule applies equally to notices of revocation sent through the
mail as it does to letters of acceptance sent through the mail. (F)
15.An option contract is only effective if the offeror is given something of value
(e.g., money) to keep his offer open exclusively to the optionee. (T)
16.Past consideration is no consideration. (T)
17.Even if I can prove offer, acceptance and consideration, I cannot enforce a
contract when I cannot show an objective intention to create legal
18.Injurious reliance is similar to promissory estoppel, except that in the case
of injurious reliance, one looks at a situation from the promisee’s
19.Contracts that are continuous or permanent in nature do not need to be
expressly ratified upon attaining the age of majority in order to be binding
upon the minor. (T)
20.In order to avoid a contract on the basis of incapacity due to alcohol or
drugs, the party alleging the incapacity need only prove that he was
incapable of rational decision at the time of the making of the agreement.
21.Corporations enjoy unlimited contractual capacity unless their powers are
limited by their articles of incorporation. (T)
22.Even though the object of a contract is neither contrary to a statute nor involves the commission of a crime or a tort, a court may nevertheless void
a contract for bringing the administration of justice into disrepute. (T)
23.The plaintiff in a breach of contract lawsuit carries the burden of proving
that the parties had the requisite capacity to enter into the contract and
that the contract is legal. (F)
24.A void contract is one that has been enforced but then declared illegal. (F)
25.Where there has been a “true mistake” recognized by law on which a
contract is based, the interest of the plaintiff will always prevail. (F)
26.The notion of a “voidable” contract is an example of the courts of equity
trying to protect an innocent party where the traditional common law
principles would not. (T)
27.A party relying on a mistaken assumption about either the subject matter
or its value under a contract may ask the court to rectify the contract. (F)
28.A contract formed under duress is void because it is illegal. (F)
29.There is generally no duty of utmost good faith when negotiating a contract
for the sale of land. (T)
30.In interpreting contracts, courts usually do not use the plain-meaning
approach or the liberal approach exclusively to the exclusion of the other.
31.Parol evidence is not admissible to show that an agreement is ineffective
unless a specified event happened. (T)
32.Courts may imply a term into a contract to reflect a long-standing industry
33.To find a reasonable interpretation of express terms, courts will give
greater weight to evidence that corroborates one party’s interpretation over
the other. (T) 34.Tendering performance is a method to discharge oneself from liability
under a contract. (T)
35.A subsequent agreement that alters important terms of a pre-existing
contract has the effect of discharging the parties from that first agreement.
36.A provision in a contract relieving parties from having to perform their
continued obligations in the event of an act of God is an example of a
condition precedent. (F)
37.A person who is entitled to have a contract performed is entitled to sue for
non-performance at any time. (F)
38.If two parties discharge their original agreement and in its place substitute
a new one, it is called novation. (T)
39.Many provinces enacted frustrated contracts legislation to allow courts to
better apportion the losses between the parties caused by the frustrating
40.Even though conditions have changed so as to make performing a
contract more difficult, a party cannot claim the contract has been
SECTION B: 25 MULTIPLE CHOICE QUESTIONS
Please answer on the computer card.
41. What are the three basis of liability in torts?
a) Fault, strict liability and absolute liability.
b) Fault, strict liability and vicarious liability.
c) Workers' compensation, strict liability and vicarious liability.
d) Workers' compensation, absolute liability and vicarious liability.
e) Fault, absolute liability and vicarious liability.
42. Greg is charged with aggravated assault and he elects to be trialed by
jury. In what court would he be trialed?
a) Small Claims Court. b) Federal Court, Trial Division.
c) Youth Court.
d) Superior Court.
e) Provincial Court.
43. Jamie sued Russ over a breach of contract for failure to complete an
agreement of purchase and sale. After a two-week hearing, the trial judge
decided in favour of the defendant, Russ. Jamie disagrees with the
decision and wants to appeal. How will the role of the appeal court differ
from the trial court?
a) The appeal court will ignore any findings of fact made by the trial court
and will completely rehear the case.
b) The appeal court relies on the findings of fact made by the trial
court and rarely permits new evidence.
c) The appeal court has one judge whereas the trial court has three.
d) The appeal court will rely on personal preferences in making a
decision whereas the trial court does not.
e) The appeal court will not rely on personal preferences in making a
decision whereas the trial court does.
44. The Acme Moving Company is moving a family into the fourth storey of a
condominium. The furniture includes a grand piano which does not fit
through the front door of the building. In order to get the piano into the
condominium, the movers remove a large window and erect a hoist to lift
the piano up the side of the building and into the condominium through
the window. Part-way up, something happens to the hoist and the piano
falls back to the ground landing on a car parked outside the building on
the road. On what basis could the owner of the car sue the movers?
a) On the basis of contributory negligence.
b) On the basis of conversion to the car.
c) On the basis of public nuisance.
d) On the basis of battery on the car.
e) On the basis of negligence and res ispa loquitur.
45. Mavis, a university student in need of money, volunteered for a medical
experiment. She agreed to sleep in a lab with electrodes attached to
various places on her body, including her head. The doctor told Mavis
that there would be no side effects from the experiment. After the first night, Mavis felt uncomfortable, but there did not seem to be anything
wrong. After the second night, places where the electrodes had been
attached were red and sore. After the third night, the skin where the
electrodes were attached was covered in blisters. Mavis went to see her
family doctor and was told that the electrodes had caused second degree
burns. Can Mavis successfully sue the doctor who is conducting the
a) No because she was paid for participating in the experiment.
b) No because the doctor had no way of knowing that the electrodes
would cause burns.
c) Yes because she was not adequately informed of the
consequences of the electrodes being attached.
d) No because she agreed to the experiments.
e) Yes because a doctor is strictly liable for any injury to his patients.
46. Fine's Flowers sustained a serious loss from the freezing of flowers and
plants in its greenhouse when the boilers shut down due to a lack of
water. The interruption in the water supply was caused by a failure of a
water pump. Fine's had arranged its insurance with the same agent for
many years. They relied on the agent to recommend appropriate
coverage and paid the necessary premiums without question. An
inspector for the insurance company had advised the agent that the
insurance policy with Fine's did not cover such matters as the failure of
the water pump, but the agent had not said anything to Fine's. As a result,
Fine's had no opportunity to arrange the required additional coverage.
Does Fine's have any claim against the agent?
a) No because the agent did not owe Fine's a duty of care to make sure
every aspect of the business was covered by insurance.
b) No because no one could have foreseen the pump breaking down
long enough for the greenhouses to get cold enough for the flowers
and plants to freeze.
c) No because although the agent owed Fine's a duty of care, the
required standard of care was met.
d) Yes because the agent committed a negligent omission in not
telling Fine's what the inspector said.
e) Yes because it was solely the agent's fault that the coverage was not
sufficient. 47. An investing company became interested in acquiring control of an
apparently prosperous family business. The investing company
commissioned a report on the prospective acquisition from a well-known
firm of investment analysts. The report estimated that the family business
was worth over $4 million and considered to be a sound investment.
Without reading the report, the directors of the investing company
decided that they should move quickly since they had heard rumours that
there was another prospective purchaser. They purchased all the shares
in the family business for $3.5 million. Subsequently, they learned that the
major asset of the family business was almost worthless and that they
had paid several times what the shares were worth. Can the investment
company sue the analysts?
a) Yes because the analysts had not met the required standard of care.
b) No because the analysts had met the required standard of care.
c) Yes because the analysts were the cause of the loss.
d) Yes because the analysts owed a duty of care to the investment
e) No because the analysts were not the cause of the loss, as the
investment company did not rely on the report.
48. Josie, a lawyer with a small law firm, learns that her client is planning to
commit a murder because the client asks for information about the best
way to avoid getting caught. When the client is caught by the police
shortly after the murder is committed, the police come to speak to Josie
about the client. Can Josie be required to answer the police's questions?
a) Yes, Josie could speak to the police because she counselled the client
how to commit murder.
b) No, solicitor-client privilege would prevent Josie speaking to the police