ACCT 324 Module 2

Uniform Commercial Code (UCC) Section 2A-103(j) defines a lease as:

a transfer of the right to possession and use of goods for a term in return for consideration.

According to Article 2(A) of the Uniform Commercial Code (UCC), a lessee is a(n):

person who acquires the right to possession and use of goods under a lease.

Which of the following is false regarding the statute of frauds provision relating to an interest in land?

No leases are within the statute of frauds.

When the contracting parties do not intend to benefit someone but unintentionally do so, that third party is referred to as a(n):

incidental beneficiary.

For contracts involving a sale of automobiles, which of the following individuals will be held to a higher standard of behavior under the Uniform Commercial Code (UCC)?

A dealer of pre-owned cars

In the context of the Uniform Commercial Code (UCC), which of the following statements is true of merchants?

A merchant holds himself or herself out as having knowledge peculiar to the goods involved in the transaction.

Which of the following would not be considered an example of consideration?

A promise to pay your employees as required by law.

As discussed in the text, which of the following is true regarding Japanese law and consumers?

A special Consumer Contracts Law was developed to place consumers and businesses on a more equal footing in transactions.

A[n] ______ contract is a contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis.

Adhesion

Which of the following is true regarding an agreement to commit a crime or a tort?

An agreement to commit a crime is unenforceable, and an agreement to commit a tort is unenforceable.

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

An unliquidated debt is involved, and there is an accord and satisfaction.

Sally has a large farm and significant other assets. She agreed to loan her nephew Todd $100,000 with payments of principle and interest to be made yearly. A few years later she and Todd got into a dispute because Sally did not like his new girlfriend, Polly. Soon thereafter Todd got notice that Sally was suing him for not paying interest on the note. Todd defended on the basis that two years after the initial loan agreement was entered into, he and Sally entered into an oral agreement that he would perform services on her farm in lieu of paying interest on the note. If the court follows the reasoning of the court in the Case Opener involving Monroe Bradstad and Jeanne Garland, which of the following is the most likely result of the dispute between Sally and Todd involving whether he owes past interest amounts?

Assuming the court credits Todd's account of events, Todd will not be required to pay the interest amounts because the oral agreement will be considered a separate enforceable agreement.

Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff would have lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. Which of the following is correct regarding Yolanda's entitlement to the extra $10?

Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30.

Which of the following is a term for laws that limit the types of business activities in which parties may legally engage on Sundays?

Blue laws

Which of the following occurs when parties agree that they simply wish to discharge each other from their mutual obligations and therefore rescind or cancel the contract?

Mutual rescission

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. Tina discovers that she did not initially figure in enough of a charge for labor. She tells Bruce that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

Bruce will be required to pay because unforeseen circumstances are an exception to the preexisting duty rule.

Which of the following is used as a basis for discharge by operation of law when performance is still objectively possible but would be extraordinarily injurious or expensive to one party?

Commercial impracticability

Contracts containing conditions affecting the performance obligations of the parties are called ______ contracts.

Conditional

A[n] ___________ is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.

Contract

Which of the following areas does Article 2(A) of the Uniform Commercial Code (UCC) govern?

Contracts for the lease of goods

Which of the following is an example of a formal contract?

Contracts under seal letters of credit, but not executory contracts.

Which of the following represents the legal ability to enter into a binding agreement?

Contractual capacity

Which of the following occurs when a party threatens to file a criminal lawsuit unless consent is given to the terms of a contract?

Duress

Which of the following occurs in Australia whenever an illegitimate threat is made to hold on to goods unless a payment is made or an agreement is entered into?

Duress of goods

Which of the following statements is true of the scope of the Uniform Commercial Code (UCC)?

Each state is allowed to rewrite parts of the UCC to reflect the wishes of its state legislature

In most cases, when a minor marries, she or he is considered ____.

Emancipated

Today's law of contracts originated from judicial decisions in ______.

England

The reasoning in innocent misrepresentation cases resembles the reasoning in a[n] ______ case.

Mutual mistake

A statement releasing one of the parties to an agreement from all liability, regardless of who is at fault or what the injury suffered is, would be referred to as a[n] ______ agreement.

Exculpatory

Which of the following occurs when a person reaches the age of majority and states, either orally or in writing, that he or she intends to be bound by the contract entered in to as a minor?

Express ratification

A[n] ______ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Fraudulent misrepresentation

When duress is at issue, the _____ needed for legal consent has been removed by the specifics of the threat.

Free Will

Which of the following doctrines arose from cases in England in which parties who had contracted for rooms along a parade route for a king's coronation, received their money back when the coronation was canceled because the king became ill?

Frustration of purpose

Which of the following is true regarding illusory promises?

Illusory promises are not consideration.

If the subject matter of an offer is destroyed, the offer _______.

Immediately terminates

Which of the following is true regarding the Uniform Electronic Transactions Act?

It seems to create an electronic version of the mailbox rule.

As a general rule, most states will not allow a minor to disaffirm contracts for which of the following?

Life insurance, health insurance, and psychological counseling

Under which of the following type of damages do the parties specify in advance the damages if there is a particular kind of breach?

Liquidated

All states except ______ adhere to the admission exception to the statute of frauds.

Louisiana and California

A[n] ______ mistake is a mistake that is shared by both parties to an agreement.

Mutual

Which of the following occurs when the parties to the agreement wish to replace one of the parties with a third party?

Novation

Contract law is said to be based on a[n] ___________ theory, meaning that the existence and interpretation of the contract is based on the outward manifestations of intent by the parties.

Objective

A contractual condition of satisfaction may be judged by either a[n] ______ or ______ standard.

Objective; subjective

The person who makes an offer is called a[n] ___________.

Offeror

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

Partial payment is consideration if an unliquidated debt is involved.

A condition ______ is a particular event that must occur in order for a party's duty to arise.

Precedent

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise?

Promissory estoppel

Which of the following types of damages are designed to punish the defendant and deter him and others from engaging in similar behavior in the future?

Punitive

Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states?

Reliance damages

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount.

Satisfaction

Which of the following is true regarding the Uniform Commercial Code?

Some elements of a contract under the common law have been modified under the UCC for contracts for the sale of goods.

Which of the following terms would be considered material terms?

Subject matter, price, parties, quality, and quantity

Which of the following was the result on appeal in the Case Opener involving the claim that Michael Jordan owed $5 million based on his agreement to pay the plaintiff's mother on the premise that he was the father although it was later determined that the child was not his?

That the agreement to pay $5 million could be rescinded based on either a mutual mistake of fact or based on the mother's fraud.

Mary and Jason discuss the fact that a new teacher is being hired for business law at their school. Jason mentions that he does not yet have a book, and Mary agreed to sell Jason a used business law book for $30 for the upcoming semester. When the new semester begins, the new business law teacher announces that a new custom business law text will be used that is only available in the campus bookstore. Jason wants a refund. Which of the following is Mary's best defense?

That Jason knew of the change of change of teacher and bore the risk of mistake.

What was the result in Stewart Lamle v. Mattel Inc., the case in the text in which the plaintiff claimed that in discussions Mattel agreed to a three-year license agreement to distribute a board game the plaintiff created, and that the agreement was confirmed by Mattel through an email, but that Mattel later wrongfully refused to enter into a written contract and follow through with the deal?

That it was up to a jury to decide matters including whether the parties intended to be bound by the oral agreement and whether an email contained the material terms of the oral contract.

Which of the following is the majority rule regarding a minor's misrepresentation of his or her age?

That misrepresentation does not affect the minor's right to disaffirm the contract.

What did the appellate court rule in the case in the text, Power Entertainment Inc., v. Football League Properties Inc., involving the enforceability of an alleged oral agreement by which the plaintiff assumed a third party's debt owed to the defendant in return for the defendant transferring a licensing agreement to the plaintiff?

That the oral agreement fell outside the statute of frauds if the plaintiff satisfied the main purpose doctrine.

Which of the following statements is true of the Contracts for the International Sale of Goods (CISG)?

The CISG provides guidance when a party to an international sales contract initiates litigation.

Which of the following states that if a writing, or term in question, appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to outside evidence, with the words being given their ordinary meaning?

The Plain Meaning Rule

When acceptance is examined under the common law, how do the basic requirements for a valid acceptance compare with those for a valid offer?

The basic requirements for a valid acceptance parallel those for a valid offer.

Which of the following is true when an offer authorizes a certain mode of acceptance but does not require it, and an offeree attempts to accept the offer through a method other than the authorized means?

The contract is not formed until the acceptance is received by the offeror.

Blaine and Amanda orally agreed with Medical Center X for an in vitro fertilization procedure that would not result in the birth of an autistic child. They later signed a written contract stating that the medical center could not promise an absence of physical or mental defects and assumed no responsibility for such defects. The child conceived had autism. Which of the following is the most likely result of the parents' suit for breach of the oral agreement if the court follows the decision Scalisi et al. v. New York University Medical Center discussed in the text?

The medical center will prevail based upon the written contract.

Susie and Sam have significant funds invested with a stock broker named Will and also with other brokers. Susie and Sam decided to divorce. Susie was really interested in investments, so the divorce decree provided that Susie would retain "all investment accounts," and Sam would receive a "cash settlement" from funds the parties had in the bank. Six months after the divorce was final, it was discovered that Will had absconded to parts unknown with all the money invested with him. Susie could have withdrawn the funds at the time of the divorce, before Will left town, but she had no reason for concern and left the funds there for investment purposes. After discovering Will's wrongdoing, Susie asked Sam to renegotiate the divorce agreement, but he refused. Which of the following is the most likely result of their dispute if the court follows the decision of the court in Simkin v. Blank, discussed in the text?

The original divorce agreement will be enforced only in part because based on their mutual mistake in regard to investing with Will, the parties will be required to renegotiate the part of the contract involving the investments with Will.

Which of the following parties must sign a document coming within the statute of frauds?

The party against whom action is sought

Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist and why?

The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sally's promise was supported by valid consideration.

Which of the following statements is true of incidental beneficiaries?

They do not have the rights to enforce other people's contracts.

Why did equitable remedies come into being?

To fashion remedies when the existing laws did not provide any adequate ones.

What is a purpose of the parol evidence rule?

To restrict evidence from being admitted that substantially contradicts an agreement in its written form.

A contract is ______________ if one or both of the parties, without breaching the contract, have the ability to either withdraw from the contract or enforce it.

Voidable

Because their contracts are ____, minors have the right, until a reasonable time after reaching the age of majority, to _____ or void their contracts.

Voidable; disaffirm

As a general rule, when is revocation effective?

When it is received by the offeree.

Which of the following is true regarding distinguishing an offer from an invitation to negotiate?

Whether an offer in fact existed is a question of fact.

If nothing is stated to the contrary in the terms of an auction, an auction is presumed to be ______.

With reserve

A[n] ______ is a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing.

admission

A(n) _____ occurs when a party to a contract transfers his or her rights to receive something under the contract to a third party.

assignment

Bob agrees to sell his farm to Joseph for $80,000. He then transfers his right to receive Joseph's payment to Kiara. In this scenario, the transfer of Bob's rights to Kiara is an example of a(n) _____.

assignment

A person who transfers his or her rights to receive something under a contract to a third party is referred to as a(n) _____.

assignor

Which of the following is an element of a legally binding contract?

capacity

The law of contracts is primarily _______________ law.

common

Which of the following is an offer made by an offeree to an offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer?

counteroffer

Ronald contracts with Saba to have her deliver some machinery to his factory. Saba then transfers her duty to Liam, a third party, who delivers the machinery to Ronald. In this scenario, the transfer of Saba's duties to Liam is an example of a(n):

delegation

A party transferring her or his duties under a contract to a third party is referred to as the _____.

delegator

Paul pays a premium of $20,000 every year on a life insurance plan. The insurance company will have to pay his wife an annual pension of $30,000 on Paul's death. Thus, Paul's wife will be referred to as a _____.

donee beneficiary

Jason contracts with Kylie to paint her house. In exchange, the small amount of money that Jason owes to a local bank will be paid off by Kylie. In this scenario, the bank is referred to as the:

intended beneficiary.

A third-party beneficiary:

is created when two parties enter into a contract with the purpose of benefiting a third party.

As discussed in the text, a main purpose of the statute of frauds is to prevent unreliable _____ evidence from interfering with a contractual relationship.

oral

When determining whether a contract falls under Article 2 of the Uniform Commercial Code (UCC), first determine if the:

sale is for goods and then determine if the contract is predominantly for the sale of goods.

Article 2 of the Uniform Commercial Code (UCC) applies to:

sale of goods.

How many states still allow a contract without consideration to be enforced if it is under seal?

ten

Under Article 2 of the Uniform Commercial Code (UCC), a mixed sale is best described as a contract:

that combines a good with a service.