Unformatted text preview: ADMN 390: Assignment 3 Your Name: 1 of 7 Assignment 3
Complete Assignment 3 after Unit 8. Follow the general directions provided under “Course Assessment” in the Study Guide. MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question. ONE MARK EACH (8 marks for section) 1. To which one of the following contracts would the Sale of Goods Act apply? A) A contract for the assignment of a companyʹs accounts receivable B) A contract with a dentist to have a tooth filled C) A contract by which two computer programs were swapped for two others D) A contract for a table where title to the table will not pass to the buyer until some future date E) A contract for the purchase of a farm TRU Open Learning ADMN 390: Assignment 3 Your Name: 2 of 7 2. Slipstream bought a new lawnmower for mowing his own yard at home from Mulcher Mowers Ltd., a lawn and garden tools dealer in Vancouver. Unfortunately, while there were no major defects with the machine, a number of small things kept going wrong: the blade kept going out of adjustment, the starter rope broke twice, a wheel fell off, the handle loosened and wobbled, and the machine stalled in heavy grass. During the summer, Slipstream had it repaired six times. These small annoyances continued and finally, in disgust, he returned the mower to Mulcher. However, Mulcherʹs manager (a university graduate) pointed out to Slipstream that their contract contained a very extensive exemption clause excluding ʺall conditions or warranties, express or implied, statutory or otherwise,ʺ and refused to accept the mower back or to return Slipstreamʹs money. Slipstream commenced legal action. Which of the following statements best describes Slipstreamʹs legal situation? A) The Sale of Goods Act prohibits the use of such exclusion clauses generally. B) Such clauses are always effective just as long as the two parties have agreed to their inclusion in the contract. C) All such exclusion clauses are void. D) In a sale of new goods by a dealer to a private consumer for his own use, legislation prohibits the seller from excluding these basic warranties with respect to fitness and quality. E) Such clauses are only effective when there is a breach of the fundamental term of the contract, which is likely not the case here because the defects were all minor. 3. Which of the following is not federal legislation? A) Food and Drug Act B) Competition Act C) Sale of Goods Act D) Hazardous Products Act E) Motor Vehicle Safety Act TRU Open Learning ADMN 390: Assignment 3 Your Name: 3 of 7 4. Mr. Olde died. Mrs. Olde was treated by a psychiatrist who advised her that part of her difficulty was her trying to make financial decisions that had previously been made by her husband. Upon his advice, she contracted with him to examine her financial situation and to give her a letter advising her, in detail, what steps she should take with regard to twenty or so pressing business decisions. His fee would be $2,000. As agreed, he attended her home one evening and examined all the financial records. She issued a cheque payable to him for $2,000; die cheque was drawn on the Bank of Montreal, Austin Street branch. As promised, his letter of advice was delivered on the following day—a one‐paragraph letter in which all he advised was that she transfer the two income‐producing properties into his name so that he could ʺtake care of things for you.ʺ Mrs. Olde attended her bank immediately to stop payment on the cheque. Before she did, however, the psychiatrist had endorsed it over to his bank, the Royal Bank at Cambie and 16th Avenue. On these facts, which one of the following is true? A) Mrs. Olde will have to pay the holder of the cheque because it is a holder in due course. B) Mrs. Olde is the ʺdraweeʺ of the cheque. C) If Mrs. Olde can prove undue influence was used by the psychiatrist, she will not have to pay the holder of the cheque. D) Because the parties deal with different banks, Mrs. Olde would not have to pay the holder of the cheque because she can successfully argue breach of contract. E) The psychiatrist is the ʺacceptorʺ of the cheque. 5. In which one of the following situations is a chose in action (intangible property) given as security by a debtor to the creditor? A) Mr. Jason grants a chattel mortgage on the family car to secure repayment of money borrowed for a trip. B) A farmer gives his future crop to the bank as security for the repayment of money borrowed for seed. C) A dentist assigns her accounts receivable to the bank that lent her money for the purchase of a business. D) Jeff buys a piano under a conditional sale contract. E) A programmer pawns his computer. TRU Open Learning ADMN 390: Assignment 3 Your Name: 4 of 7 6. Holtz hires Joe, a builder, to convert his attic into an apartment, so that Holtzʹs mother can move in. Joe employs two carpenters, an electrician, and a plumber to do the actual work. When making payments to Joe, Holtz holds back the 10% required by statute. After waiting the legislated minimum period, Holtz discovers that several liens have been registered against his property. It turns out that Joe failed to pay the various subcontractors for their work. Which one of the following statements best describes Holtzʹs position? A) Holtz has no liability to any of those involved with the job except Joe, because he has a contract only with Joe. B) If Holtz has complied with the statutory requirements, his obligation will be limited to the amount of the holdback, even if the amount owed under the liens is far greater. C) Holtz and Joe are equally liable to the lien claimants, because of recent amendments to the buildersʹ lien legislation. D) Holtzʹs mother will be liable to both Holtz and the lien claimants, as she will be taking the benefit of the renovations. E) Holtz bears the sole liability to the lien claimants for any debts arising out of their work on his property. 7. Which one of the following statements about bankruptcy is false? A) Bankruptcy law may allow a debtor to escape from having to pay his debts. B) All creditors of a bankrupt debtor are treated equally and will receive shares of the assets directly in proportion to how much is owed to each of them. C) A debtor who has been discharged from bankruptcy is released from his previous financial obligations. D) Bankruptcy refers to a situation in which a debtor who cannot pay debts transfers his assets to a trustee who acts on behalf of creditors. E) Bankruptcy law is identical in every province of Canada. TRU Open Learning ADMN 390: Assignment 3 Your Name: 5 of 7 8. Jung was a mechanic doing work on Samriʹs car. Jung told Samri he had done some work on the car that he had not done and charged him for it. Samri didnʹt have the money to pay and so gave Jung a promissory note due the following month. Which is incorrect with respect to legal position of the parties? A) If Jung passes this note to Green to pay an outstanding bill for parts he has supplied to Jung, Green can successfully demand payment from Samri despite the fraud. B) If Green canʹt collect from Samri, he can turn to Jung for full payment. C) If Jung passes this note to Green to pay an outstanding bill for parts he has supplied to Jung, but Green knows of Jung’s fraud against Samri, Samri could successfully raise Jung’s fraud as a defence against Green. D) If Samri finds out about Jungʹs fraud, he can raise that fraud as an effective defence when Jung sues on the promissory note. E) If Jung passes this note to Green to pay an outstanding bill for parts he has supplied to Jung, Green will be in no better position to collect than was Jung. Samri can successfully raise Jungʹs fraud as a defence. SHORT ANSWER In no more than three sentences, write the answers to the following four questions. THREE MARKS EACH (12 marks for section) 1. The Sale of Goods Act places certain obligations on the seller with respect to conveying good title. What are those requirements? 2. Distinguish between a cheque and a bill of exchange. 3. In secured transactions‐type legislation, such as a Conditional Sale Act, the Bills of Sale Act, the Personal Property Security Act, etc., what is the purpose of a registration? 4. What alternatives are available to the bankruptcy process? TRU Open Learning ADMN 390: Assignment 3 Your Name: 6 of 7 ESSAY QUESTIONS 1. Explain the significance of a ʺmanufacturerʹs warrantyʺ on products such as a camera and a radio, and discuss why, from the seller’s point of view, it may be considered necessary with respect to the Sale of Goods Act. Give an example of a situation where such a “warranty” will be ineffective. (15 marks) 2. Discuss the bankruptcy and insolvency process from initiation to discharge from the point of view of the creditor, indicating how that creditorʹs interests are, or are not, protected. Assuming you are a creditor, will it make any difference whether the debtor is an individual or a company? (20 marks) CASE STUDIES 1. Sam had been saving his money for a long time. He went to dealer, Off Road Sales, to discuss buying a four‐wheel drive vehicle. The Off Road salesman discussed several models. About the Range Rover he said, ʺThis vehicle has the best safety record of any in its class.ʺ Sam, who had lost a sister in a highway accident, was persuaded by that statement and contracted for a new Range Rover. The standard form contract said in small letters that that there were no warranties express or implied. The vehicle did not run properly; something was wrong with the steering mechanism and Sam had to wrench the wheel to prevent it from running into oncoming traffic. Does Sam have any recourse against Off Road? Explain how you have reached you conclusion. (10 marks) 2. Mr. Hume owes you $2000 for consulting services satisfactorily completed for him last January. He had agreed to pay you on January 20. He has not responded to your calls or letters. Six months later, you have learned the following interesting facts about Hume: • He has a bank account • Five years ago, he transferred his interest in the family home to his wife for $1. • He also owes four others who have completed work for him. • A Mr. James owes Hume $4000 for a boat sold to him by Hume. TRU Open Learning ADMN 390: Assignment 3 Your Name: 7 of 7 Keeping in mind what you have read in Unit 1, what steps can you take to recover all or part of the money Hume owes you? Assess the effectiveness of each. (15 marks) 3. Farida is a single mother immigrant with refugee status. Her comprehension of English is low and her knowledge of the Canadian legal system is almost non‐existent. Just after she rented a small unfurnished basement suite, Roger from Fly‐by‐Night Furnishings Inc. came knocking on her door to sell her furniture. He showed her a catalogue, fabric samples, a small chair and a table that he said were of the same quality as the furniture he was selling. Since Farida desperately need furniture and the prices seemed affordable, she picked out a sofa bed, two chairs, two tables and a chest of drawers. Roger got her to sign a long contract with much small print for a total amount of $3,000. He accepted a cheque for $2,000 – Farida’s total savings – and had her sign a promissory note, due in six months, for the balance. There was no stamp on the promissory note. When the furniture arrived six days later, it was obviously of lesser quality than the samples. In fact a leg fell off the sofa the first time Farida sat on it and when she opened up the bed, the mattress shown in the catalogue was missing. She couldn’t find a copy of the contract and when she tried to call Roger but the Fly‐by‐Night number was “no longer in service.” By that time, her cheque had been cashed so Farida thought she had no alternative but to keep the furniture. However, she decided not to make any payments on the promissory note. Six months later, she received a letter from Cut‐throat Finance Company demanding payment in full. A month later, a bailiff came to the door with a document that said he was entitled to repossess the furniture as it was part of security for a chattel mortgage. When she talked to a local lawyer she learned that a rumour was going around that Cut‐Throat was managed by Roger’s brother. If you were the lawyer, what information and advice would you give Farida about her situation, including preventative measures she could have taken if she had been aware of her legal rights? (20 marks) TRU Open Learning ...
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This note was uploaded on 12/27/2009 for the course ECE Coen 243 taught by Professor Drlajam during the Winter '07 term at Concordia Canada.
- Winter '07