Midterm Exam Review Questions - Fall 2022
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Jan 9, 2024
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Fall 2023 – MIDTERM EXAM REVIEW QUESTIONS
Bang Up Car Repair Inc. is a closely held corporation. Howard, Penny, Leonard and Sheldon are the shareholders. Howard owns 70% of the shares and the other three each hold 10%. Howard, Penny and Wil (a local accountant) sit on the board of directors. Together, Leonard and Penny operate the business. Leonard deals with the actual repair work and manages the repair shop, while Penny oversees the entire business.
Answer the following questions. Make sure you identify the area of law or legal principles that are relevant to each situation, define the applicable law and apply it to Bang Up’s circumstances. Include remedies and defences for each situation.
1)
Leonard and Penny discuss the need to purchase some new equipment for the repair shop.
In particular, Leonard says that they need a new hoist (that raises the cars in the air, so that the mechanics can work on the underside of the car). The current one they have is not
able to support a lot of the new larger size SUV’s and trucks. Leonard and Penny head over to Machine Art Inc. – a commercial business that supplies large equipment to car repair businesses. A gentleman wearing a name tag reading “Stewart, Art Specialist” approaches them. Leonard describes his needs with respect to the hoist to Stewart, who in
turn recommends the “Hoist-a-Matic.” He says, “In my opinion, the Hoist-a-Matic is by far the best in the industry.” Penny is concerned about the price, but Stewart assures her that it is worth it. Penny writes a cheque and signs a purchase order. The hoist is installed, but within a week, Leonard realizes that while the hoist works well, it is still not
strong enough to lift the bigger vehicles. What are the rights and obligations of the parties?
The plaintiff (Bang Up car Repair) will have a case for negligent or fraudulent misrepresentation against the defendant (Machine art inc).
To meet the criteria for misrepresentation:
A factual statement was made
The statement was false
The plaintiffs reliance on the statement made them sign the contract
Reliance on the statement caused the plaintiff harm
All 4 elements of misrepresentation are likely to be met here. The worker who was consulting them (Stewart) was presented to the defendant as an expert, and made the statement “In my opinion, the Hoist-a-Matic is by far the best in the industry.” And that it is worth it. As an expert in the field, his opinion should be taken as a statement of fact.
Secondly, the statement made by stewart would be false, as Leonard described the problem that they were facing and what their needs were. Stewart made the claim that it is worth it for them to purchase, but it did not fulfil their needs. Therefore this statement was false
Penny was hesitant to purchase the hoist due to the price, but signs the purchase order because of the word of Stewart telling her that it would be worth it.
1
This reliance on his statement caused the plaintiff harm, as the product does not operate the way that Leonard wanted or explained to Stewart. 2)
Bernadette brings her car to Bang Up for its regular maintenance. She makes an appointment to bring it in for a morning appointment. When she arrives very early in the morning, it is to find that the big garage door at the shop is closed. As
the sign says, she honks her car horn. Denise is the only mechanic who has arrived. She is not sure how to operate the big door, but presses the button. The door only opens half-way. Bernadette is not sure if she should drive in as she cannot see that clearly. Denise waves at her to come in, Bernadette inches her car into the repair shop, but keeps her eyes up, looking at the only partly open door as
she is passing underneath, hoping there is enough room for her car to pass. Suddenly, when she is halfway through, she hears what she thinks is a scrape, but turns out only to be the sound of Barry, another mechanic, entering from the front office into the repair shop. He so startles Bernadette that she panics and steps on the gas instead of the brake and ends up running over Denise who is still in front of the car trying to guide Bernadette into the garage. Bernadette and Barry run over to where Denise is lying on the ground unconscious. Barry calls 911 and Denise is rushed to hospital. There it is determined that she has a major concussion, a broken leg, as well as multiple broken ribs and a punctured lung. What are the rights and obligations of the parties?
The plaintiff (Denise) will have a claim of negligence on the defendant (Bernadette). Elements of negligence
Defendant owed plaintiff Duty of care
Defendant breached the Standard of care
Defendants breach of standard of care caused damages
The defendant suffered Damages
In order for the defendant to owe a duty of care, the defendant and plaintiff must have a sufficiently close relationship so that the defendant (being a reasonable person) could see how carelessness in their position could cause harm to the plaintiff. The defendant should notice that there is a person in front of them guiding them in, so any improper care in handling the car could cause harm.
Every reasonable person has a standard of care. The defendant should know how to handle this situation as they have their drivers license. By accelerating uncontrollably when hearing the sound of a scrape, the defendant fell below the duty of care
The plaintiff suffered damages
2
3)
While Denise is out of commission in the hospital, Leonard expresses his concern to Penny, that they are short staffed in the repair shop. Penny sends her friend’s son, Mike to work for Leonard. Mike dropped out of high school, and so Penny has arranged to help him out as a favour to her friend. Leonard does not think this is a good idea as Mike has no experience. Michael comes to work every day for a week, but doesn’t really do anything. As a matter of fact, he is causing a lot of problems. In the middle of the second
week, after Mike has broken the hoist while “horsing around,” Leonard tells Mike that he
can collect his cash from Penny and go home. Mike can:
(a)
Sue for breach of the employment contract
(b)
Not sue because no contract was ever formed
(c)
Sue Leonard for professional liability
(d)
Not sue because of equitable estoppel
(e)
Sue for undue influence
4)
Mike is angry about being fired by Leonard. Mike decides to write out about on his social media accounts. He says on social media that Leonard, “is a liar and a cheat and is
notorious for over-charging his customers.” Leonard finds out about the messages, because a customer asks him about it.
(a)
Leonard can sue Mike for product defamation
(b)
Leonard can sue Mike for slander
(c)
Leonard can sue Mike for libel
(d)
Leonard can sue Mike for the tort of deceit
(e)
Leonard can sue Mike for fraudulent misrepresentation
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