How Does the Doctrine of Business Efficacy Impact the Interpretation

question 13

Multiple Choice

How does the doctrine of business efficacy impact the interpretation of contracts?

• A) by permitting judges to strike out contractual terms that are commercially unreasonable
• B) by permitting judges to imply terms necessary to make the contract workable
• C) by permitting the parties to vary the wording of their contract to suit changing circumstances
• D) by permitting the parties to ignore contractual terms that are commercially unreasonable

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Definitions:

Order Paper

A financial instrument payable to a specific person or entity, thus requiring endorsement for transfer.

Indorsed in Blank

A signature on a financial instrument, such as a check or bill of exchange, without naming a beneficiary, allowing any holder to claim the document's value.

Bearer Paper

A negotiable instrument or securities that are payable to the holder or the person possessing the document.

Holder in Due Course

A party who has acquired a negotiable instrument in good faith and for value, and thus has certain rights to collect the instrument free of many defenses.