Business Law in Canada, 11e (Yates)
Chapter 6 The Elements of a Contract: Consensus and Consideration
1) Which of the following is an ingredient necessary to form a contract?
A) Exemption clauses
B) Assignment
C) Capacity
D) Moral
E) Fairness
Answer: C
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
2) Berman made a documentary on the life of musician Artie Shaw. Shaw's representative was
cooperative and gave her permission to use certain songs if she received proper permission from
the copyright holders. The cost of the film was funded by her own savings, a private investor, the
Canada Council, the Ontario Arts Council, and deferred salaries and material costs. In March of
1987, the film won an Academy Award as the best feature documentary for 1986. In November
of 1987, Shaw's lawyer contacted Berman's lawyer: "... This letter states that Artie Shaw has a
35% profit participation in the motion picture... ." Which of the following accurately sets out the
legal position of the parties?
A) Shaw has a right to this share because the movie is about him.
B) The court will imply an agreement to this effect between the parties.
C) Shaw has no claim since there was no such agreement.
D) A public celebrity has the right to prevent this kind of exploitation if Berman refuses this
demand.
E) The court will award Shaw a reasonable profit because it is fair.
Answer: C
Diff: 3 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
1
Copyright © 2017 Pearson Canada, Inc.
,3) Which of the following is not an example of a contract?
A) A written promise to give your husband a ring for Christmas
B) A verbal agreement to work for someone starting next week
C) A verbal agreement for the sale of a car where neither the money or the car has yet changed
hands
D) An agreement not to sue someone for negligence in exchange for their promise to pay you a
specified amount
E) An implied promise to pay for a meal when you order it
Answer: A
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
4) Which of the following is an example of a unilateral contract?
A) Joe agrees to paint Sam's house for $500.
B) Joe pays $50 for groceries at a grocery store.
C) C returns a lost dog and claims the $50 reward.
D) Joe promises to give Harry his old boat when he gets his new one.
E) Sam orders a meal in a restaurant.
Answer: C
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
5) Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two
lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of
which of the following?
A) Invitation to treat
B) Offer
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: E
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
2
Copyright © 2017 Pearson Canada, Inc.
,6) Which one of the following is enforceable?
A) Mr. Ho promised to give his needy friend Mr. Jahn $100.
B) Ms. Jones promised to pay an additional $100 to Mr. Wood if Wood finished the existing
contract on time, according to the terms of the contract.
C) Mr. Baker was so sick of an old chair that, when Mr. Venson offered him $10 for it, he agreed
(i.e., promised to sell it to him), although the market value of the chair was $80.
D) Ms. Goode promised to send $10 to Mr. Paul, who kindly came and warned her when he saw
a tow truck approach her car.
E) An ad in the paper promises to pay $5 for the return of a lost ring, but the person who finds
and returns the ring never saw the offer in the newspaper.
Answer: C
Diff: 2 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
7) When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they
promise to use the funds for their summer camping program, this is an example of which one of
the following?
A) Gratuitous promise
B) When accepted by the club, a bilateral contract
C) When accepted by the club, a unilateral contract
D) Promissory estoppel
E) Inadequate consideration
Answer: B
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
8) An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll
give you a StarSystem tablet/laptop with a Roland PR-1011 wi-fi printer for only $1299!!! Pick
it up today." This is an example of which of the following?
A) Offer
B) Invitation to treat
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: B
Diff: 1 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Recall
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
3
Copyright © 2017 Pearson Canada, Inc.
, 9) The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side
of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800.
The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller,
5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd
was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All
right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking.
Which of the following is true?
A) There is no contract because Lloyd's last offer was revoked.
B) There is no contract because Lloyd's last offer had been rejected by a counter-offer.
C) There is no contract because Lloyd's last offer had lapsed after a reasonable time.
D) There is a contract because at one point in the conversation Lloyd was willing to sell and the
owner was willing to buy four trees.
E) There is no contract because there is a presumption in law in these circumstances that the
parties did not intend to create a legal relationship.
Answer: B
Diff: 3 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Applied
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
10) An ad in the morning paper read: "Brand new Spartan 6s smartphone $349. No payment until
January. We make your first payment." This is an example of which of the following?
A) Invitation to treat
B) Offer
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: A
Diff: 1 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Recall
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
4
Copyright © 2017 Pearson Canada, Inc.
Chapter 6 The Elements of a Contract: Consensus and Consideration
1) Which of the following is an ingredient necessary to form a contract?
A) Exemption clauses
B) Assignment
C) Capacity
D) Moral
E) Fairness
Answer: C
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
2) Berman made a documentary on the life of musician Artie Shaw. Shaw's representative was
cooperative and gave her permission to use certain songs if she received proper permission from
the copyright holders. The cost of the film was funded by her own savings, a private investor, the
Canada Council, the Ontario Arts Council, and deferred salaries and material costs. In March of
1987, the film won an Academy Award as the best feature documentary for 1986. In November
of 1987, Shaw's lawyer contacted Berman's lawyer: "... This letter states that Artie Shaw has a
35% profit participation in the motion picture... ." Which of the following accurately sets out the
legal position of the parties?
A) Shaw has a right to this share because the movie is about him.
B) The court will imply an agreement to this effect between the parties.
C) Shaw has no claim since there was no such agreement.
D) A public celebrity has the right to prevent this kind of exploitation if Berman refuses this
demand.
E) The court will award Shaw a reasonable profit because it is fair.
Answer: C
Diff: 3 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
1
Copyright © 2017 Pearson Canada, Inc.
,3) Which of the following is not an example of a contract?
A) A written promise to give your husband a ring for Christmas
B) A verbal agreement to work for someone starting next week
C) A verbal agreement for the sale of a car where neither the money or the car has yet changed
hands
D) An agreement not to sue someone for negligence in exchange for their promise to pay you a
specified amount
E) An implied promise to pay for a meal when you order it
Answer: A
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
4) Which of the following is an example of a unilateral contract?
A) Joe agrees to paint Sam's house for $500.
B) Joe pays $50 for groceries at a grocery store.
C) C returns a lost dog and claims the $50 reward.
D) Joe promises to give Harry his old boat when he gets his new one.
E) Sam orders a meal in a restaurant.
Answer: C
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
5) Sam placed an announcement in the newspaper as follows: "$200 reward for the return of two
lost Siamese kittens." Joe read the ad, found the kittens, and returned them. This is an example of
which of the following?
A) Invitation to treat
B) Offer
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: E
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
2
Copyright © 2017 Pearson Canada, Inc.
,6) Which one of the following is enforceable?
A) Mr. Ho promised to give his needy friend Mr. Jahn $100.
B) Ms. Jones promised to pay an additional $100 to Mr. Wood if Wood finished the existing
contract on time, according to the terms of the contract.
C) Mr. Baker was so sick of an old chair that, when Mr. Venson offered him $10 for it, he agreed
(i.e., promised to sell it to him), although the market value of the chair was $80.
D) Ms. Goode promised to send $10 to Mr. Paul, who kindly came and warned her when he saw
a tow truck approach her car.
E) An ad in the paper promises to pay $5 for the return of a lost ring, but the person who finds
and returns the ring never saw the offer in the newspaper.
Answer: C
Diff: 2 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Applied
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
7) When Mr. Adams tells the local Boys' and Girls' Club that he will give them $5,000 if they
promise to use the funds for their summer camping program, this is an example of which one of
the following?
A) Gratuitous promise
B) When accepted by the club, a bilateral contract
C) When accepted by the club, a unilateral contract
D) Promissory estoppel
E) Inadequate consideration
Answer: B
Diff: 1 Type: MC Page Ref: 185
Topic: Ch. 6 - Elements of a Contract
Skill: Recall
Objective: Chapter 6: 1. Discuss the fundamentals of the contractual relationship.
Bloom's Taxonomy: Knowledge
8) An ad in the morning newspaper read "Absolutely the best offer anywhere in Calgary. We'll
give you a StarSystem tablet/laptop with a Roland PR-1011 wi-fi printer for only $1299!!! Pick
it up today." This is an example of which of the following?
A) Offer
B) Invitation to treat
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: B
Diff: 1 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Recall
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
3
Copyright © 2017 Pearson Canada, Inc.
, 9) The owner of a new building wanted four maple trees, 6 metres tall, planted on the north side
of the building. Lloyd Landscaper submitted his offer of four 6-metre maples planted for $800.
The owner said he would pay $600 for that. Lloyd said, for $600 he would supply four smaller,
5-metre trees. The owner said, "$600 for 5-metre trees plus a Christmas tree for my kids." Lloyd
was disgusted and said, "Forget it. I don't need this job." As he was leaving the owner said, "All
right, I'll accept your offer of $600 for the 5-metre maples planted." Lloyd kept on walking.
Which of the following is true?
A) There is no contract because Lloyd's last offer was revoked.
B) There is no contract because Lloyd's last offer had been rejected by a counter-offer.
C) There is no contract because Lloyd's last offer had lapsed after a reasonable time.
D) There is a contract because at one point in the conversation Lloyd was willing to sell and the
owner was willing to buy four trees.
E) There is no contract because there is a presumption in law in these circumstances that the
parties did not intend to create a legal relationship.
Answer: B
Diff: 3 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Applied
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
10) An ad in the morning paper read: "Brand new Spartan 6s smartphone $349. No payment until
January. We make your first payment." This is an example of which of the following?
A) Invitation to treat
B) Offer
C) Gratuitous promise
D) Bilateral contract
E) Unilateral contract
Answer: A
Diff: 1 Type: MC Page Ref: 188
Topic: Ch. 6 - Offer
Skill: Recall
Objective: Chapter 6: 3. Describe a valid offer.
Bloom's Taxonomy: Knowledge
4
Copyright © 2017 Pearson Canada, Inc.
