8 Special business contract

Which of the following situations involves a bailment?

• A)   The sale of a clock to a consumer.

• B)   Bringing a computer in for repair

• C)   Giving a parcel to a courier for delivery

• D)   Both A and B

• E)    Both B and C

Clyde’s car breaks down on the way home from work. He has the tow truck driver tow it to Atlas Motors, a repair shop. The car is left in the parking lot, since the shop is closed, and Clyde leaves the keys in the car and a note under the door of the shop. Unfortunately, the lot is not very secure and the car is stolen that night. Which of the following is TRUE?

• A)   Atlas had a duty to show reasonable care for the car.

• B)   The onus will be on Atlas to show that the theft was not due to their negligence.

• C)   Atlas was a bailee for hire of the car

• D)   There was no bailment, since Atlas was not aware that Clyde had left the car with it.

• E)    All of the above.

You stay overnight at the Flea Bag Motel and your Rolex watch is stolen from your room. You forgot to lock your room while you were out, and it seems likely that the thief entered it that time. There was a conspicuous notice on the door – although you didn’t read it – under the Innkeepers Act, limiting its liability for loss or injury to goods to $40. Can you sue the motel for your loss beyond that amount? Why or why not?

• A)   No. It was your own negligence that caused your loss.

• B)   No. When you checked in, the motel did not expressly agree to accept responsibility for your personal possessions.

• C)   Yes. A motel is not an “inn”.

• E)    No. The motel complied with and is protected by the Act.

• D)   Yes. The notice required by the Act was not brought to your attention.

Which of the following does a bailee (custodian) have?

• A)   Possession.

• B)   A right to a lien for unpaid work

• C)   Ownership

• D)   Both A and B

• E)    All of the above

Jane takes her $15,000 car to Ace Auto Repairs to have a new transmission put in. When the repair was completed Ace gave Jane a bill for $2,000. Jane said she will pay $500 now and the rest when she gets a job. As a result, which of the following statements is TRUE?

• A)  Jane has the right to have the car returned to her right now

• B)  Ace has the right to keep her car until Ace is paid, but it cannot sell Jane’s car

• C)  Ace has the right to sell Jane’s car and keep all the money from the sale of the car

• D)  Ace has the right to sell Jane’s car but can only keep the money that it is owed

• E)  Jane will be liable for $2,000 plus punitive damages

Renee signed the Acme T-shirt Company’s purchase order for an order of 200T-shirts with the picture of a polar bear wearing sunglasses on the front to sell through her retail shop. The contract contained a term that stated “Seller warrants that the goods will be of merchantable quality.” On receiving the T-shirts, Renee discovered the logo of the polar bear had been printed upside-down. Which of the following statements best describes Renee’s legal position?

• A)   The court will decide whether the defective printing of the logo is a breach of a condition or a warranty.

• B)   The Sale of Goods Act will specify whether the defective logo is a breach of condition or warranty.

• C)   This is a breach of a condition and Renee can cancel the contract.

• D)   The terms of the purchase order will determine if this clause is a condition or a warranty.

• E)    Renee will be awarded pecuniary and punitive damages.

Pack-it Co. sold a packaging machine to Boxes Ltd. and nothing was said in the contract about any guarantee of quality or performance. The machine broke down after one day of use. Which of the following statements is true?

• A)   Boxes Ltd bought “as is” and must pay the cost of the repair itself.

• B)   The Sale of Goods Act implies a term of fitness for general use into the agreement even though the parties said nothing about it.

• C)   The courts will imply a warranty into an agreement by common law principles.

• D)   Boxes may rely on Pack-it’s express warranty.

• E)    None of the above.

Maria’s Distributing Inc. sells 20 fax machines to Bill’s Electronics Ltd. for $2,000 to be paid in 30 days. No other terms are agreed to. The fax machines are delivered to Bill’s the next day. Forty-five days later, Bill’s puts up a going out of business sign and advertises these fax machines at $50 each. Bill’s has not made one payment to Maria’s. Which of the following is true?

• A)   Maria’s Distributing Inc. is the owner of the fax machines.

• B)   Bill’s Electronics Ltd. is the owner of the fax machines

• C)   Because Bill has not paid, Maria’s Distributing Inc. can repossess the fax machines.

• D)   Both A and C.

• E)    Both B and C

1.      Susan Luckman decided to change her car and decided to purchase a white 2013Toyota Corolla from Brice Used Car Dealers. Two weeks later, Susan went to pick up her new car and discovered that the windshield wipers and lights were not working properly. Susan refused to accept the car and pay the remainder of the agreed purchase price. Which of the following statements is TRUE?

• A)  Susan must accept the car but can claim against Brice for the cost of the necessary repairs.

• B)  Brice breached a warranty of the contract and as such Susan has the right to terminate the contract and obtain a refund of the monies already paid.

• C)  Brice breached a condition of the contract and as such Susan will be entitled to terminate it and obtain a refund of the monies paid.

• D)  Brice has fundamentally breached the contract and Susan can seek punitive damages

• E)  Susan will be obliged to accept the car and pay the remainder of the price as the contract was substantively performed by Brice

Jack Ripper, a thief, stole Samantha’s car and sold it to Mary. Mary was unaware  that the car had been stolen and believed Jack when he told her that it belonged to him. Two months after purchasing the car, Mary sold it to Albert who subsequently sold it to Charles. The police who had been investigating the theft of the car, eventually traced it to Charles. Which of the following statements is TRUE?

• A)  Charles can sue Albert, Mary and Jack for breach of contract

• B)  Because Mary was not aware that Jack Ripper had stolen the car she obtained a good title to it.

• C)  Albert as an innocent purchaser of the car could pass on a good title to it to Charles

• D)  Samantha does not have the legal right to recover the car from Charles as Charles was an innocent purchaser for value.

• E)  None of the above.