Final exam 2017 without answers

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COMM 393

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Jan 9, 2024

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UNIVERSITY OF BRITISH COLUMBIA SAUDER SCHOOL OF BUSINESS COMMERCIAL LAW FINAL EXAMINATION WINTER 2017 Time: 2.5 HOURS Value: 100 MARKS (suggested time for each question is shown) All questions must be answered. USE PEN ONLY. Instructions: (a) Identify the legal issues raised in the questions. (b) Then discuss these issues, incorporating into the discussion, the relevant materials studied in the course, including reference to any cases discussed in class . The source of any legal principles stated should be identified. (c) Attempt to resolve each problem into a solution, although the method and reasoning are more important than the conclusion reached. (d) Facts not stated may be assumed but the necessity for making the assumptions and their relevance should be clearly established in your answer. (e) This examination is designed to reveal skill in recognizing legal problems, understanding of materials studied in the course, and the ability to use those materials in handling new situations. (f) In the following questions, assume that the parties are of full age and capacity unless otherwise described, and that the transactions take place in British Columbia. (g) The readings from the Syllabus have been included for your reference at the end of the exam. You may detach them for ease of review if you wish.

COMM 393 FINAL EXAMINATION, WINTER 2017 QUESTION #1 15 MARKS – 22 MINUTES Bob arrives at the Vancouver Aquarium to go shark cage diving. A Vancouver Aquarium employee says hello and hands him a contract to sign. The contract includes the following exclusion clause: Acknowledgment of Risk and Exclusion Clause Please Read Carefully and Check the Box To Confirm you Have Read and Understood the Following:  I acknowledge and agree that shark cage diving entails known and unanticipated risks, which could result in physical or emotional injury, paralysis, death, or damage to myself, to property, or to third parties .  I understand that sharks are unpredictable and dangerous and can cause substantial bodily harm and even death. I agree to never extend any of my body parts outside of the cage.  I hereby assume full responsibility for any risk of bodily injury, death, or property damage, now and forever, arising out of or related to participation in this shark cage diving activity whether foreseen or unforeseen and whether caused by negligence, equipment failure, attacks by sharks or any marine life or otherwise, I hereby separately agree to indemnify and save and hold harmless Vancouver Aquarium, its directors, officers and employees, from any loss, liability, damage, or cost that they may incur, now and forever, arising out of or related to shark cage diving. Bob checks all three boxes in the clause, signs and dates the form and returns it to the employee. Bob stands in a cage that is lowered by the employee into the Vancouver Aquarium’s shark tank. He is submerged up to his shoulders and is given a diving mask to view the sharks swimming around the cage. He takes a deep breath and submerges and puts both his hands outside of the cage. A nearby shark bites off Bob’s right thumb. a) 10 MARKS – 15 MINUTES Does the exclusion clause apply to protect the Vancouver Aquarium from any liability surrounding the loss of Bob’s thumb? Explain the legal basis for your conclusions. b) 5 MARKS – 7 MINUTES Bob has chosen to sue the specific employee who lowered him into the tank as well as the Vancouver Aquarium for damages. Can the employee rely on the exclusion clause? Explain the legal basis for your conclusions.

QUESTION #2 15 MARKS – 23 MINUTES At the end of a time-consuming 3-week trial, Jack Jones, a senior partner at Suethem LLP, called the travel agent his law firm used for the firm’s travel business, at Book It Now Vacations. He had used this agent many times for travel for firm business. He now asked the agent to find the best all- inclusive deal at the Great Barrier Reef in Australia, for himself, his wife, and their two sons. His intention at the time was to reimburse the firm with his share of the contingency fee from the trial, as the cost of the trip was $34,000 in total. When Suethem received the bill for the trip, the managing partner of the firm told Book It Now that Jack, and not the firm, should be responsible for the bill. He explained that the trip was Jack’s personal travel and that, regardless, the cost of the trip was well beyond the amount that any partner at Suethem was allowed to spend without the unanimous consent of all the partners, which had not been given for this trip. a) 10 MARKS – 15 MINUTES b) 2 MARKS – 3 MINUTES Jack Jones ended up not being paid the fee he expected. Explain what a contingency fee is and why Jack may not have been paid. c) 3 MARKS – 5 MINUTES The managing partner for Suethem is not having much success explaining to Book It Now that Jack’s expenses should not be charged to the firm. The managing partner now tries a different tactic and tells Book It Now, “Suethem LLP is a limited liability partnership so the debts of each of its partners is not the responsibility of the partnership”. Is the managing partner correct? Explain the legal basis for your conclusions. QUESTION #3 20 MARKS – 30 MINUTES George has agreed to sell Peppa his house in Vancouver for $5,000,000. Peppa is a housewife with no experience with real estate. George is an investment banker who has sold three of his previous homes. They have signed a valid purchase agreement dated June 28 th 2017 (to confirm, at this point, they have a valid contract). The agreement provides for a closing date of August 30 th 2017 (the “ Closing Date ”). On the Closing Date, George will vacate the house and hand over the keys to Peppa and, in return, the purchase price (less the deposit) will be transferred to George. Peppa paid George a deposit of $50,000 on June 28 th . The purchase agreement contains the following term: Purchaser’s Default Should the purchaser fail to complete the sale for any reason (the “ Purchaser’s Default ”) on the Closing Date, any deposit paid by the purchaser shall be absolutely forfeited to the

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seller as liquidated damages (the seller and purchaser hereby agreeing that such amount constitutes a genuine pre-estimate of the damages which the seller will suffer as a consequence of the Purchaser’s Default). In July, Peppa realizes that instead of George’s house, she would much rather purchase a farmhouse in Armstrong, British Columbia. On July 4 th , Peppa calls up George and says, “I will not be purchasing your home and I demand my deposit back. I revoke my consent to this contract.” a) 8 MARKS – 12 MINUTES Can Peppa “revoke her consent to the contract” at this point without consequence? Why or why not? What should George’s next steps be? Explain the legal basis for your conclusions. b) 12 MARKS – 18 MINUTES George plans to keep the deposit. On what legal basis could he argue that he is entitled to keep it? QUESTION #4 20 MARKS – 30 MINUTES Sam, a parking lot attendant at Cutcost Inc. (“ Cutcost ”), was pushing a long line of shopping carts through the Cutcost parking lot. The carts were properly held together and secured by a rope leading back to him from the front cart. When Sam came upon another cart in the parking lot he stuck it on to the front of the line of carts, which was something Cutcost had warned him not to do – the last time he had done this the untethered cart had come loose and had damaged a car. Maggie and her friend had just parked their car in the lot and were in the midst of a conversation so Maggie was intently looking at her friend as she exited from behind her car into the parking lot. Just as she exited, another car (driven by Hilda) reversed suddenly, and not seeing Sam, proceeded directly into Sam’s path of travel. Sam yanked the carts out of the way, and of course the untethered cart came loose and moved swiftly off into Maggie’s direction. Had Maggie looked to her right she would have seen the loose cart which had come free and which was rapidly approaching her. Maggie did not notice the cart and was hit with full force, knocked to the ground, and suffered severe injuries, including a broken arm and a concussion. As a result of her injuries, Maggie was off work for almost 4 months, and now wants to recover damages for her injuries and for her lost wages. a) 10 MARKS – 15 MINUTES : b) 6 MARKS – 9 MINUTES

Maggie had Joe Black, a CPA, prepare a statement of current and future wage loss for her claim, which she advised him she would use as evidence of her wage loss. She presented his summary in court when her claim for damages went to trial. She was awarded the full amount listed in Joe’s report. After Maggie had signed a release for the final settlement of her claim (agreeing that she cannot pursue any further legal action), she noticed that Joe had not included an allocation for the amounts she was owed under the company’s profit-sharing scheme for the time she had been off work, resulting in a loss of about 12% of the earnings she would have been entitled to. Maggie is clearly upset about this, and is asking whether there is any way she can obtain the 12%. Advise Maggie, referring to relevant law and any cases discussed in class. c) 4 MARKS – 6 MINUTES Assume that Cutcost is liable to Maggie for at least a portion of her losses. Will the shareholders of Cutcost be held liable for Cutcost’s liability to Maggie? Explain the legal basis for your conclusions. QUESTION #5 8 MARKS – 12 MINUTES Veronica graduated from Sauder two years ago with a finance specialization. She is now working for the top financial services firm in Canada, Riverdale Financial LP (“ Riverdale ”). With her large income, she wants to find a stable investment to “shelter” it (a way to shield portions of her income from tax). She goes to see a tax specialist at Riverdale, Archie. Archie tells her to invest in vacation development properties that are well regarded in the finance industry as stable and very effective tax-sheltering investments. Relying on Archie’s advice, Veronica invests $100,000 into the properties. Two years later, the real estate market crashes and Veronica loses the whole $100,000 investment. Veronica finds out from a friend at the firm that Archie was working for the developers of the properties at the time he recommended them as investments and that he was receiving 20% of all revenue from the properties as part of his fee. a) 4 MARKS – 6 MINUTES Veronica now wishes to sue Archie for her lost investment. What type of action should she bring and will she likely be successful? Explain the legal basis for your conclusions. b) 4 MARKS – 6 MINUTES QUESTION #6 22 MARKS – 33 MINUTES

Matt went sunglasses shopping at ICU Co. with his girlfriend, and, after having had a lot of fun trying on sunglasses they located a pair for Matt that they both liked. He took the style number of the pair they had found, gave it to a clerk, and she ordered them in his size and in the colour he wanted. When the glasses arrived, he tried them on, and they fit. However, after wearing them for a few days, he realized that they did not filter out enough sunlight, which he required as he wore contact lenses. Because of this, he feels the sunglasses are useless. A friend has told him he should return the sunglasses. a) 6 MARKS – 9 MINUTES Explain to Matt whether he can return the sunglasses. Explain the legal basis for your conclusions. b) 4 MARKS – 6 MINUTES Matt’s girlfriend, with her keen eye for fashion, noted that the glasses looked different on him than the ones they had earlier selected. She recognized that the side arms of the glasses Matt received were patterned, whereas the ones he had tried on were plain. Will this allow Matt to return the glasses? Explain the legal basis for your conclusions. c) 4 MARKS – 6 MINUTES ICU Co. had inserted a clause in the sale contract that Matt received with the glasses which said that “all glasses are sold “as is, where is” and any statutorily implied conditions and warranties are hereby exempted”. Will this affect any legal rights Matt has to return the sunglasses? d) 4 MARKS – 6 MINUTES ICU Co. buys their stock from a wholesaler in Italy, who ships the goods to them. When the shipment containing 100 pairs of assorted frames, including Matt’s glasses, arrived, most of the glasses were damaged . ICU Co. wants to claim the loss for the damaged glasses from the wholesaler, but they deny any liability, saying that Speedysender, who they used to ship the glasses over, is the one who is responsible. Advise ICU Co. if they have any legal rights against the wholesaler. e) 4 MARKS – 6 MINUTES ICU Co. sent one of its directors, Martha, on a trip to Italy to find a new wholesaler. Martha visited many wholesalers and found one that had amazing quality inventory at the lowest prices Martha

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had ever seen. At a board meeting after her trip, Martha is asked for an update on what she found. Martha says she did not find anything worthwhile. Without disclosing it to anyone at ICU Co., Martha incorporates a company that sells eyeglasses supplied by the wholesaler she had found. The other directors find out and are furious. Advise ICU Co. if they have any rights against Martha. Explain the legal basis for your conclusions. CLASS TOPICS READINGS THE LAW IN ITS SOCIAL AND BUSINESS CONTEXT Sources of Law Textbook 4 th edition: 1-4, 9-18 (note: pages 22-52 from the 3 rd edition are posted in Canvas as they are not included in the 4 th edition) Textbook 5 th edition 1-20, 21-46  Common Law v. Civil Law  Statute and Precedent Court Systems and Procedures The Constitution Act and the Charter of Rights and Freedoms LIEBMANN V. CANADA CB 460 Alternate Dispute Resolution FORMATION OF A CONTRACT Intent, Offer, Acceptance and the Writing Requirement Textbook 4 th edition:101-103, 70-86, 152-157, 234-236 Textbook 5 th edition 127-129, 96-115, 177-183 R V. 279707 ALBERTA LTD. CB 528 RUDDER V. MICROSOFT CORP. CB 532 MONTANE VENTURES V. SCHROEDER CB 539 Consideration Textbook 4 th edition: 90-101 Textbook 5 th edition 116-132 CALIGUIRI V. TUMILLO CB 544 TULSA HEATERS INC V. SYNCRUDE CANADA LTD. CB 548

FORMATION OF CONTRACT CONT’D Capacity to Contract Textbook 4 th edition: 111-114 Textbook 5 th edition 137-140 INFANTS ACT – Supplement RE COLLINS CB 544 Legality of Object Textbook 4 th edition: 114-127 Textbook 5 th edition: 140-157 MAKSYMETZ V. KOSTYK CB 559 PHOENIX RESTORATIONS LTD V. BROWNLEE CB 562 GROUNDS UPON WHICH A CONTRACT MAY BE SET ASIDE Misrepresentation Textbook 4 th edition: 141-143 Textbook 5 th edition: 166-168 COLLINS V. DODGE CITY EAST CB 570 WEINMAN V. BRINKMAN CB 574 Undue Influence, Duress and Unconscionability Textbook 4 th edition: 143-147 Textbook 5 th edition: 169-176 BUCKWOLD WESTERN LTD V. SAGAR CB 579 INTERPRETATION OF THE CONTRACT THE PAROL EVIDENCE RULE Interpretation Textbook 4 th edition: 162-164, 168-169 Textbook 5 th edition: 188-190, 194-196 BKDK HOLDINGS LTD V. 692831 BC LTD CB 584 BLACKSWAN GOLD MINES LTD V. GOLDBELT RESOURCES CB 589 Parol Evidence Rule Textbook 4 th edition: 165-167 Textbook 5 th edition: 191-192 GENERAL TIRE CANADA V. AYLWARDS LTD CB 598

THE DISCHARGE OF CONTRACTS BREACH OF CONTRACT AND REMEDIES Discharge of the Contract Textbook 4 th edition: 197-211 Textbook 5 th edition: 223-242 JEDFRO INVESTMENTS LTD. V. JACYK CB 606 SATURLEY V. LUND CB 612 Breach of Contract & Damages Textbook 4 th edition: 217-223, 226-232, 237 Textbook 5 th edition: 224-249, 252-262 BREALTA ENERGY INC V. FIRST CAPITAL MANAGEMENT LTD CB 618 WESTCOAST TRANSMISSION V. CULLEN CB 624 BLACKCOMB SKIING ENTERPRISES V. SCHNEIDER CB 629 MIDTERM REVIEW EXCLUSION CLAUSES Midterm Review See Canvas for details Exclusion Clauses Textbook 4 th edition: 224-226 Textbook 5 th edition: 250-252 DAWE V. CYPRESS BOWL CB 637 GREEVEN V. BLACKCOMB CB 646 MALONEY V. DOCKSIDE CB 650 SPECIAL TYPES OF CONTRACTS Sale of Goods SALE OF GOODS ACT Supplement Textbook 4 th edition: 241-254, 404 Textbook 5 th edition: 268-280 KOBELT MANUFACTURING CO V. PACIFIC RIM CB 658

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PRIVITY OF CONTRACT PORELLE V. EDDIE’S AUTO SALES LTD CB 642 KOVACS V. HOLTOM CB 678 BEVO FARMS LTD V. VEG GRO INC CB 682 Privity of Contract Textbook 4 th edition: 175-194 Textbook 5 th edition: 201-206 PEACOCK V. ESQUIMALT & NANAIMO RAILWAY CO. CB 602 THE LAW OF TORTS PROFESSIONAL LIABILITY: THE LEGAL CHALLENGES Negligence, Contributory Negligence and Vicarious Liability Textbook 4 th edition: 21-24, 30-44 Textbook 5 th edition: 47-50, 56-70 WALDICK V. MALCOLM CB 472 HOLLIS V. DOW CORNING CB 474 MORSI V. FERMAR PAVING CB 477 Negligent Misstatement Textbook 4 th edition: 48-50, 52-64 Textbook 5 th edition: 74-89 RANGEN V. DELOITTE & TOUCHE CB 484 HERCULES MANAGEMENT LTD V. ERNST & YOUNG CB 492 FIDUCIARY DUTIES AGENCY Fiduciary Duty Textbook 4 th edition: 50-52 Textbook 5 th edition: 76-78 HODGKINSON V. SIMMS CB 494 STROTHER V. 3464920 CANADA LTD CB 497 Agency Textbook 4 th edition: 269-282 Textbook 5 th edition: 295-308 PEMBERTON BENCHLANDS HOUSING CORP V. SABRE TRANSPORT CB 688

BUSINESS ORGANIZATIONS: THEIR FORMS, OPERATION AND MANAGEMENT Sole Proprietorships and Partnerships Textbook 4 th edition: 318-340 Textbook 5 th edition: 344-368 LANZ V. LANZ CB 710 SCRAGG V. LOTZKAR CB 712 PEN-BRO HOLDINGS V. DEMCHUK CB 718 Corporations – Formation, Legal Nature and Internal Affairs Textbook 4 th edition: 343-354, 365-378 Textbook 5 th edition: 369-390 DATA BUSINES FORMS LTD V. MACINTOSH CB 732 BUSINESS ORGANIZATIONS: THEIR FORMS, OPERATION AND MANAGEMENT cont’d CHALLENOR V. NUCLEUS FINANCIAL NETWORK INC CB 728 UNIVERSAL PROPERTY MANAGEMENT V. WESTMOUNT CB 738 CANADIAN SPORTS SPECIALISTS INC. V. PHILLIPPON CB 744

Final exam 2017 without answers

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