CASE 2 Habitation Apartments Ltd. borrowed $500,000 from the Good Times Bank and secured the loan by way of a three-year mortgage on its apartment building. The bank demanded additional security for the loan, and Simple, the president of the corporation, personally guaranteed repayment of the loan. Several years later, as a result of a dispute between shareholders, Simple was voted out of office as presi- dent along with most of the Board of Directors, and a new president and Board of Directors were selected by the shareholders. During the months that followed, the new president and Board of Directors reorganized the corporation's operations. As a part of the reorganiza- tion, it was necessary for the corporation to rearrange its mortgage loan with the bank. The bank agreed to extend the loan for a further three-year term but at a higher interest rate. Simple, who was still a shareholder of the corporation, was unaware of the new refinancing arrangement the corporation had made with the bank. A year later, as a result of tenant problems and a high vacancy rate, the corporation was unable to meet its mortgage payments, and the mortgage went into default. When the corporation failed to pay the mort- gage, the bank turned to Simple and demanded payment under the guarantee. Discuss the rights of the parties in this case and explain the possible outcome if the bank should take legal action against the corporation and the guarantor. Ltd. were to be delivered at the time of signing on Beatty might raise. Render a decision. CASE 10 Schuster & Co. owned two volumes of a rare edition of Geoffrey Chaucer's Canterbury Tales. One volume was in excellent condition. The second volume was in poor shape, but nevertheless intact. Schuster & Co. sold both volumes to MacPherson, a rare book merchant. MacPherson loaned the two volumes to a local library for a rare-book display. Unknown to MacPherson, only the volume in excellent condition was put on dis- play with a collection of other rare books. The second copy was placed in a display designed to show how rare books might be repaired, but the book was placed in such a position that neither its title nor its contents could be determined. A week after the books had been returned to their owner, Holt, a collector of rare books, telephoned MacPherson to determine if he had a copy of the Canterbury Tales for sale. MacPherson replied that he did, but it was "not in top shape." Holt then asked if the copy had been on display at the library, and MacPherson said, "Yes." Holt informed MacPherson that she had seen the display of books at the library and would be interested in purchasing the volume. A price was agreed upon, and Holt sent a cheque to MacPherson for the agreed amount MacPherson sent the volume that was in poor con- dition to Holt by courier. On its receipt, Holt complained that the volume was not the same one that had been on display at the library. MacPherson maintained that it was and refused to return Holt's money. Holt brought an action against MacPherson for a return of the money that she had paid MacPherson. Indicate the nature of Holt's claim and express an opinion as to the outcome of the case. CASE 4 Hansen admired a sports car that Sports Motor Sales Ltd. wished to sell. Hansen informed the company sales- man that he would buy the automobile if he could obtain a loan from the bank to cover part of the $17,000 asking price. The salesman agreed to hold the car until Hansen could check with his bank. Hansen discussed a loan with his bank manager. The manager stated that he would be prepared to make 240 | PART 3 The Law of Contract a $5,000 loan, but, due to the nature of the purchase, he must first get approval from the regional office. He indicated that this was usually just a formality, and he did not anticipate any difficulty in obtaining approval for the loan. Hansen then entered into a written agreement with Sports Motor Sales to purchase the sports car, with payment to be made in 10 days' time. Both parties signed the agreement, and Hansen paid a $100 deposit. The company retained the sports car pending payment of the balance. A few days later, the bank manager telephoned Hansen to say that he had encountered a problem with the loan approval. The most he could lend would be $4,000. As a result of the reduction in the loan amount, Hansen found himself $1,000 short. Advise Hansen of this position at law. Indicate how the case might be decided if Sports Motor Sales Ltd. wished to enforce the agreement. CASE 5 Marie-Claude operated a bowling alley in a commercial area that was adjacent to a residential area. Many small children used the parking lot near the bowling alley as a playground, and Marie-Claude was constantly ordering the children off the premises for fear that they might be injured by motor vehicles. One young boy, about six years old, was a particu- lar nuisance in that he would climb onto the flat roof of the bowling alley by way of a fence at the back of the building. Marie-Claude ordered the child off the roof on several occasions, but to no avail. The child continued to climb on the roof at every opportunity in spite of Marie- Claude's instructions to the contrary. On one occasion, when Marie-Claude was away from the premises, the child climbed to the roof and, while running about, tripped and fell to the ground. The fall seriously injured the child, and an action was brought on his behalf against Marie-Claude. Discuss the liability of Marie-Claude and her defences, if any. Render a decision. CASE 3 Armstrong Aggregates Co. wrote a letter to Bishop on May 2nd offering to sell him 200 tonnes of scrap mica at $180 per tonne. Bishop received the letter on May 3rd. A few weeks later, Bishop checked the price of mica, and discovered that the market price had risen to $185 per tonne. On May 22nd, Bishop wrote Armstrong Aggregates Co., accepting the offer. Armstrong did not receive Bishop's letter until May 30th. Armstrong refused to sell the mica to Bishop at $180 per tonne, but expressed a willingness to sell at the current market price of $187 per tonne. Bishop instituted legal proceedings against Arm- strong for breach of the contract that he alleged existed between them. Discuss the rights (if any) and the liabilities (if any) of the parties, and render a decision. CASE 1
Purchase answer to see full attachment