Federation of Law Societies of Canada

National Committee on Accreditation

SAMPLE
Examination for
Contracts

Candidate No.:
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 SAMPLE
Examination for Contracts

General conditions of ALL NCA exams:

This is a three (3) hour, open book exam.

Answers should be double-spaced and written in blue or black ink (no pencils).
All answers must be completed on the pads provided unless space is expressly
provided within the examination booklet.
The examination will be graded on a pass/fail basis (50% is a pass).

WRITE LEGIBLY. Writing considered illegible by the examiner may result in your
exam not being fully graded or your exam being disqualified.

You must return the exam questions in the envelope provided along with your answers.
Failure to return the questions will result in the automatic disqualification of your exam.

The contents of the examination, including the exam questions,

must not be disclosed or discussed with others.

Each exam may have its own special instructions; therefore it is important for you
to read these carefully before starting.

Instructions specific to this exam:

1. You will be assessed primarily on your knowledge of the cases and statutes found in the
assigned Casebook (as supplemented in the Syllabus), and, as part of that, your capacity to
recognize the legal issues raised by the fact situations that form the bases for the questions
and, thereafter, your analysis and assessment of the competing arguments relevant to each
of those issues.
2. Unless you are relying on cases or statutes not covered by the syllabus, there is no need to
include full citations when you are referring to a case or statute. The name of the case and
the name and relevant section of the statute will suffice.
3. Do not feel obliged to provide an initial summary of the facts; rather, deploy the facts in your
analysis and assessment of the various issues.
4. If quoting from any source, use quotation marks and identify the source. Failure to do so will
result in grade reduction and, in egregious instances, automatic failure.

These sample exams are simply indications of the style/types of questions which may be
asked in each exam; they do not reflect the content or actual format/structure of
questions nor of their value. Actual exams vary from subject to subject and from exam
session to exam session.

SAMPLE Examination for Contracts

2
QUESTION ONE (25 marks, 45 minutes)

The City of Ottawa has issued a call for tenders for garbage compacting equipment. Three
garbage compactors are to be purchased. The specifications are detailed in terms of the
amount of garbage each compactor is able to handle per hour. Other clauses in the
specifications state:

[23] The tender will only be let on the basis that the equipment is less than five years old
[Built in 2008 or after.].

[27] All tenders must be sealed and received by the City of Ottawa Purchasing
department no later than 5pm on December 2nd, 2012.

And later on:

[41] Bidders who are unable to supply in accordance with the specifications must submit
full particulars for approval to the Purchasing Department.

[42] The City reserves the right to reject any and all tenders, and to waive any informality
therein. The lowest or any tender may not necessarily be accepted.

[43] All tendering will be in accordance with the City of Ottawa’s policy manual on
tendering public contracts.

A term of the City of Ottawa’s policy manual on public tendering states that tenders will always
be awarded on the basis of “lowest evaluated tender”. The policy manual defines “lowest
evaluated tender” as “the tender meeting the specifications at the overall lowest cost to the
City”.

On November 10th, Doubleday Garbage Ltd (DGL) deposited a tender with the City outlining
that its three compactors would cost $300,000. However, on November 23rd, when George
Doubleday was reviewing the bid documents sent to the City by his sales staff he realized that
one of the garbage compactors he proposed selling was in fact built in 2007. He immediately
faxed to the City purchasing department particulars outlining that one of his compactors was in
fact built in 2007. He then called Mary Bolan, the City’s chief purchasing officer to discuss
whether she had received his fax. Mary indicated that she had and that she couldn’t see any
problem with his bid. Based on this conversation George did not do anything. If Mary had
objected, he had intended to file another tender bid, at a higher price, but based on all three
garbage compactors being built after 2008.

On December 2nd, the city opened the sealed bids it had received. In addition to the DGL bid,
there was one from Clean Sweep Ltd (CSL). CSL’s bid met all the specifications and quoted a
price of $375,000. Upon opening the bids, Mary indicated that she would be recommending to
City Council that the city accept DGL’s bid. When Arthur Badger, the proprietor of CSL, heard
the difference in bid prices, he yelled out that he couldn’t believe DGL was offering to sell
equipment that was less than five years old at those prices, and that he was going to see his
lawyer.

SAMPLE Examination for Contracts

3
On December 4th Mary received the following letter from Arthur Badger’s lawyer.

Please be advised that it has come to our attention that you are determined to
recommend to City Council that the recently tendered contract for garbage compactors
be given to DGL. It is our understanding that some, or all, of DGL’s equipment does not
meet the specifications of the tender documents. If my client was given the opportunity
to bid on the equipment without the need to meet the age specification, it would have
tendered a price below that of DGL’s. My client is prepared to settle this matter for his
out of pocket expenses and a modest return on investment being $25,000. We are
anxious to meet you to resolve this dispute and await your reply.

You act for the City of Ottawa. Mary has come to you for advice on what she should do and
what potential liabilities the city may have to either or both DGL or CSL.

SAMPLE Examination for Contracts

4
QUESTION TWO (25 marks, 45 minutes)

In May 2012 Adriano entered into a contract to carpet and tile the new offices of the William and
Mary Corporation, which had its headquarters in downtown Vancouver. The price was set at
$90,000 for the tile work and $100,000 for the carpeting. He was to finish the work in August
2012.

The Middle Eastern countries from which Adriano usually imported his carpets were still
suffering the effects of various blockades on their goods and did not have a sufficient supply of
carpet in Canada for the job. Adriano soon realized that he would not meet his deadline. He
had a meeting with William and Mary and laid out the problem. He told them he could have the
job done on time but he would have to order a more expensive carpet from Italy and that the
cost would be increased by $10,000. Otherwise, the job would be delayed by an additional two
months (until October). Mr. William and Ms. Mary were not impressed by this news. Mr. William
stated, “It is important to have the contract completed on time, do what you have to do to get it
done.”

Ahmed, the Sales Manager for William and Mary Corporation, approached Adriano and asked
that if his office could be completed first, he would pay a $2000 bonus. Adriano agreed to finish
the office first, but on condition that Ahmed should pay the $2,000 bonus to the local Humane
Society.

Adriano finished the project on September 28th. He billed William and Mary $200,000. William
and Mary sent a cheque for $190,000.

Ahmed has also refused to pay the Humane Society.

Adriano seeks your advice on whether he can sue William and Mary for the additional $10,000,
and Ahmed for the $2,000.

The Humane Society would also like to know its legal rights as, based on comments it received
from Adriano, it has gone and printed a new brochure publicizing its work, at a cost of $2,000.

SAMPLE Examination for Contracts

5
QUESTION THREE (30 marks total, each part 10 marks, 54 minutes total,
each part 18 minutes)

Five years ago the City of Windsor acquired Peche Island, a small island situated on the Detroit
River, approximately forty metres from the shoreline. The island has been a sanctuary for bird
life for many years, but access to the island has required the use of a boat. As part of its efforts
to increase tourism the City included in its long-range plan a proposal to build a pedestrian
bridge to the island.

Three years ago, in an effort to move the bridge proposal along, the City received money from
the Province of Ontario to undertake an engineering feasibility study. The City contracted with
Windsor Geological Services (WGS) to undertake the work. In the summer of 2009 WGS did the
survey work and filed its report. The report was extremely long but a summary on the front
page indicated the following details:

The most desirable access way to the island would be the construction of a cantilevered
pedestrian bridge using a reinforced cement base constructed on dry land. Such a plan
would be aesthetically pleasing and could create a signature attraction to the area
although the cost of such a proposal would be high. An alternative and far cheaper
construction method would be to use piles driven across the riverbed at 5 metre
intervals. The riverbed is mostly sandstone although there are pockets of packed sand
in the middle of the riverbed. There are no geological or engineering reasons that would
prevent the building of a pedestrian bridge.

Further on in the report, some ten pages after the summary, the following clause appeared:

WGS has based its geological survey on current river conditions. If the main channel of
the Detroit River was to be dredged, the change in currents could have an impact on
silting and/or erosion, which may adversely impact upon the depth of the riverbed to
Peche Island.

In 2010 the Federal Government, the government responsible for navigable waters, dredged the
Detroit River so that larger ships could pass through the great lakes system. The City was
aware of this work.

In February 2012 the City called for tenders to build a pedestrian bridge. As part of the tender
package the City enclosed the engineering report of WGS. At the time of calling for the tenders,
the City had no reason to believe that the riverbed conditions had changed, although it had
done nothing to check this out, and simply assumed that bidders would do whatever was
necessary to prepare their bids. The City also indicated that it was open to all types of
proposals and that tenders would be evaluated giving equal weight to aesthetic design and low
price.

Boco Developers Ltd. (BDL) submitted a bid, together with a tender deposit of $30,000, of
$250,000. BDL’s bid was a ‘bare bones’ approach, building a simple wooden bridge using piles
driven into the riverbed. BDL had utilized the WGS’s report to make its bid, although it had only

SAMPLE Examination for Contracts

6
read the summary sheet and had done no other site inspection or its own geological work to
prepare its bid. BDL was motivated into placing a bid because they owned land adjoining the
river, and knew that such a bridge would further enhance the resale value of their residential
developments. BDL was in the business of building residential houses and had no experience
in building bridges. However, since the owner of BDL had made an inspection of the area, and
was able to hit a simple wedge golf shot across the water, he thought, “how difficult could it be
to build a bridge”.

When the City opened the bids, it was disappointed at the fact that BDL’s bid was the only one
submitted, and that it had no aesthetic design whatsoever. Nevertheless, because the city was
desperate to have something moving on this initiative it accepted BDL’s bid and signed a
contract in March 2012. The only contractual term read:

The City of Windsor agrees to pay $250,000 to BDL as total compensation to construct a
pedestrian bridge between the foreshore and Peche Island to be completed by August
2012.

BDL commenced building a bridge in May 2012. Within a few short weeks it ran into problems.
Under the contract it had included a sum of $100,000 to complete the piles at 5m intervals
across the riverbed. However, when it started pile driving, it became obvious that the riverbed
had undergone significant changes from 2009. A great deal of silting had occurred in some
parts and erosion in others. Where silting has occurred, the piles cannot be driven to a depth
sufficient to find a stable base. And where erosion has occurred, the piles can no longer be
made of wood but required steel to meet the additional depth required to find stable sandstone.
With their cost climbing way above the contract price, BDL has pulled out of completing their
contract.

A. You are the solicitor for the City of Windsor. The City wishes to enforce the contract with
BDL. Please advise on the likelihood of success and what possible defences BDL will have
to such a claim. [10 marks, 18 minutes]

B. Now assume that in April 2012 the Federal Government enacted the following legislation:

Detroit River Navigable Waters Act

An Act to ensure the unhindered passage of navigable water to shipping in the

Detroit River Basin.

1. No construction work is to commence on open water that may impede river

navigation without first gaining approval of the Minister of Transport.

2. No permanent work (piles, docks, causeways) may be commenced without

first gaining approval of the Minister of Transport.

3. It is an offence to permanently change the contour of any navigable waters.

SAMPLE Examination for Contracts

7
 BDL was unable to secure the approval of the Minister of Transport. They could build a
cantilevered bridge without ministerial approval that would not impede shipping or change
the contour of the riverbed, but the cost of such a bridge would be $350,000. BDL is yet to
start construction of any bridge and have approached the City to see if they can renegotiate
the contract price.

You are the solicitor for the City of Windsor. The City wishes to enforce the contract with
BDL and insists that BDL must build a cantilevered bridge, which, in fact, will be a much
better design, as it is aesthetically pleasing. Please advise on the likelihood of success and
what possible defences BDL will have to such a claim. Please indicate if the City is liable for
any increase in cost or has to refund the bid deposit. [10 marks, 18 minutes]

C. Now assume it is July 2012. BDL completed the bridge in ignorance of the passage of the
Detroit River Navigable Water Act. The bridge has piles driven across the riverbed at 5m
intervals. The cost is clearly above the contract price but BDL still thinks that it will add
value to their residential development. BDL never got ministerial approval. After it became
aware of the Act, BDL had preliminary discussions with the Minister, arguing that since
shipping never used that side of the Detroit River the bridge did not impede shipping. The
Minister did not agree with that interpretation of the legislation but indicated that it was highly
unlikely that the ministry would prosecute for any contravention of the Act that may have
occurred. In fact, the Minister supported the improved public access to Peche Island.

You are the solicitor for the City of Windsor. The City has received an invoice from BDL for
$350,000, the actual cost of building the cantilevered bridge, but without any profit margin
for BDL. The City wishes to know what is their contractual liability to pay this, or any part, of
BDL’s invoice. [10 marks, 18 minutes]

SAMPLE Examination for Contracts

8
QUESTION FOUR (20 marks, 36 minutes)

David Peier was interested in purchasing a property in a new subdivision in Banff, Alberta. The
subdivision was the work of Cressey Development Ltd (CDL). When David inspected the
subdivision in June, 2012 he was impressed with the views across the river, however, he
noticed that a large black hydro power line strung between wooden power poles ran beside the
river and marred the pristine view. When he questioned Margaret Dawson, CDL’s agent,
Margaret indicated that it was the intention of CDL to bury the overhead hydro power lines in a
couple of weeks’ time and that such a condition could be part of the sale and purchase
agreement. Margaret also told David that on this development CDL needed to have a deposit of
one third the asking price, namely $100,000, with remaining $200,000 paid on closing. David
replied:

“Well as long as the condition about the buried hydro power line was part of the
agreement, I will pay the asking price of $300,000 and pay a deposit of $100,000.”

Margaret said:
“Well then, we have a deal, I will draw up the papers and send them to you.”

David gave Margaret a cheque for $100,000. Written on the cheque was, ‘deposit payment for
purchase of Banff section, closing to be by August, 2012.’

A week following their meeting in Banff, Margaret sent David a standard sale and purchase
agreement recording all the details but omitting any clause concerning the hydro power line.
David did not notice the omission.

In August, when David came to close the purchase, he noticed that the hydro power lines were
still not buried. Margaret assured him that they would be buried in September, and that the
delay had been caused by a shortage of hydro workers to do the necessary work. David, who
had since seen another property in Banff more to his liking, said he was not going to close the
deal and wanted his deposit back.

You act for CDL. You have received the following letter from David’s solicitor.

Please be advised that we act for David Peier. This letter will act as formal demand for
the return of our client’s deposit on the grounds that CDL were in breach of contract.

Advise CDL of their legal rights in this matter.

SAMPLE Examination for Contracts

9
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