ACCT 324: Smartbook Chapter 13
Charlie offers Aaron $5,000 for some medical marijuana which is legal in the state. Aaron agrees, but the following day, the state legislature passes a law which basically makes any sale of marijuana, even for medicinal purposes, illegal. Does Aaron have to perform the contract? Yes, because Charlie and Aaron entered into the contract prior to the legislation outlawing the sale of marijuana. No, because the object of the contract is no longer legal. Yes, because all elements of the contract are present. No, because $5,000 is inadequate consideration for the marijuana.
No, because the object of the contract is no longer legal.
A judge has to decide how to interpret a contract that was a bit ambiguous in its terms. One general rule of interpretation is that the terms should reflect the intentions of the parties: _______. desire to void the contract at the time the contract was made to pay consideration at the time the parties took the issue to court
at the time the contract was made
The law of contracts is made up mainly from: _______. common law international law statutory law administrative law
common law
Rob promised Rupert that he would paint the inside of his house for $5,000. Rupert agrees to Rob's offer. If Rob fails to perform, a court could enforce the promise or award damages to Rupert. The enforceable promises between Rob and Rupert are known as a(n): _______. Multiple choice question. constitutional issue contract quasi-contract tort
contract
The terms of ______ contracts are all clearly set forth in either written or spoken terms. objective implied express subjective
express
Susan contracted with the owner of a local clothing shop to sell her knitted hats and gloves. All terms -- delivery date, quantity, selling price, etc., -- were clearly specified. When terms are clearly specified in the contract, this is known as a(n): _______. implied contract quasi-express contract express contract quantitative contract
express contract
Negotiable instruments are an example of ______ contracts. executory statutory regulatory formal
formal
Identify examples of a lack of genuine assent. (Check all that apply.) Duress Fraud Undue influence Change of circumstances
Duress Fraud Undue influence
Which of the following govern all contracts? (Check all that apply.) The Uniform Commercial Code Criminal law The Convention on Contracts for International Sales of Goods Common law
The Uniform Commercial Code Common law
The National Conference of Commissioners on Uniform State Laws and the American Law Institute drafted a set of commercial laws that could be applicable to all states. This effort was called the: _______. Uniform Contracts Code Uniform Code on Contracts Uniform Code on Agreements and Standards Uniform Commercial Code
Uniform Commercial Code
The law of contracts is primarily ______ law. constitutional quasi-constitutional uncommon common
common
A contract is ______ if some of the terms have not yet been performed. (Choose the BEST answer) implied express executory executed
executory
When there are requirements to the manner and look of a contract, then it is considered a(n) ______ contract. executory executed formal objective
formal
Contracts that have a special form or must be created in a specific manner are known as a(n): _______. implied contracts formal contracts void contracts informal contracts
formal contracts
In a conflicting versions of a contract, a(n) ________ contract will prevail over a typed contract.
handwritten
All contracts are either bilateral or: _______. executory unilateral multi-lateral quasi-contracts
unilateral
In a(n) ______ contract, the offeror wants the offeree to do something, not to promise to do something. bilateral unilateral objective subjective
unilateral
The bargained-for exchange or what each party gets in exchange for his or her promise under a contract is known as: _______. consideration a gift acceptance an offer
consideration
Darla was experiencing a great deal of pain. The pain was so bad that she went to the emergency room where she underwent emergency surgery for the removal of her appendix. The kind of contract that requires her to pay for the services she received, even though there was no prior negotiation of payment, is known as a(n): _______. half-life contract mandatory contract implied contract express contract
implied contract
An unconditional written promise to pay the holder a specific sum of money on demand or at a certain time is known as a(n) _______. negotiable instrument debtor's contract to pay quasi-contract command instrument
negotiable instrument
In determining whether parties intended to enter into a contract, the courts look at their ______. secret intentions ulterior motives subjective goals objective behavior
objective behavior
Knowing the proper classification is important -- whether the contract is bilateral or unilateral -- because it determines when the: _______. offeror is legally bound to perform contract is illegal contract is voidable offeree is legally bound to perform
offeree is legally bound to perform
A contract for land was under scrutiny in the court. There appeared to be a disagreement as to what the term "corner property" actually meant. If the court only looks at the words and they are clear and unambiguous, and the court will only interpret the terms using the agreement itself, the court is said to use the: _______. plain-meaning rule of interpretation common law language rule contractual dictionary of legal rules parole evidence rule
plain-meaning rule of interpretation
A(n) ______ arises when a person acknowledges in court that he or she will perform some specified act or pay a price upon failure to do so. undertaking simple contract recognizance quasi-contract
recognizance
Bart had to post $500 bond to ensure that he would show up for his trial in two months. This kind of contract is known as a(n): _______. informal contract unenforceable contract quasi-contract recognizance
recognizance
The concept that comes to mind most often when people think about a formal contract is a contract under: _______. seal review negotiation scrutiny
seal
A contract that does not require any formalities in making the contract is known as a(n): _______. formal contract letter of credit simple contract negotiable instrument
simple contract
A rule of contract interpretation is that the judge should interpret an ambiguous contract against the interests of: _______. any third party listed in the contract the seller in the contract the drafter of the contract the party that received the greatest benefit of the contract
the drafter of the contract
Justin had contracted with Acme Construction Company to build a huge chicken coop adjacent to his house. Acme discovered that if they built the chicken coop, they would be violating the local zoning laws. Acme refused to perform the contract. The court also refused to make Acme honor the contract, since to do so would mean they had to order Acme to violate the zoning laws. Such a contract is considered to be: _______. non-voidable unenforceable executed enforceable
unenforceable
Lucy put up a poster advertising a $25 reward for the return of her lost dog. This is an example of a(n): _______. bilateral contract unilateral contract quasi-contract void contract
unilateral contract
Jack and Jill entered into a contract with Farmer Dell to fetch pails of water from his well to the barn. For each pail of water they delivered down the hill and to the barn, they were to be paid $10 per pail. The contract specified that they were to work five days a week for a whole month. During the last week, Farmer Dell failed to pay Jack and Jill. The matter went to court, and the court ordered Farmer Dell to pay Jack and Jill because the contract was: _______. against public policy void valid a quasi-contract
valid
Don put out a contract to a hit man to knock off a business competitor. This kind of contract would be defined as a(n): _______. valid contract express contract void contract implied contract
void contract
Under a(n) ______ contract, one or both parties can withdraw from the contract. oral valid voidable void
voidable
In determining whether parties objectively intended to enter into a contract, at which of the following aspects of parties do the courts look? (Check all that apply.) Their behavior Their intentions Their objective words Their intuitive hunches
Their behavior Their objective words
Martin sold his coffee makers to Edwin, a coffee store owner. The law that would govern this contract for the sale of goods is the: _______. Uniform Contracts Code Uniform Commercial Code Merchant's Restatement of Contracts Restatement (Second) of Contracts
Uniform Commercial Code
Suppose Kathy makes an offer to Sandy to buy his antique clock for $1,000. Sandy accepts Kathy's offer, and the result is known as: _______. a quasi-contract consideration an agreement capacity to contract
an agreement
If a contract is not a formal contract, it is considered to be: _______. an informal contract voidable in need of adding a seal not executory
an informal contract
The type of contract in which the offeror wants a promise from the offeree to form a binding contract is called a(n): _______. unilateral contract quasi-contract bilateral contract trilateral contract
bilateral contract
The most important sources of contract law are the: _______. (Check all that apply.) Multiple select question. case law UCC CISG UCITA
case law UCC CISG
Which of the following covenants is a company likely to use to restrict an employee from working for other companies in the same field after leaving the current company? A covenant not to poach A covenant not to deal A covenant not to compete A covenant not to solicit
A covenant not to compete
Which of the following is true of a contract? (Check all that apply.) A party can defend against the enforcement of a contract even if it has all four elements of a contract. There is no defense against a contract that has all four elements of a contract. A contract that has all four elements of a contract may not be legally binding if it lacks genuine assent. A contract requires any three of the four elements to be legally binding
A party can defend against the enforcement of a contract even if it has all four elements of a contract. A contract that has all four elements of a contract may not be legally binding if it lacks genuine assent.
If a contract is for the sale of goods, the part of the UCC that governs the contract is: _______. Article 2, which governs contracts for the sale of goods the restatement of sales Article 2A of the common law governing sales Article 1 of the common law governing sales
Article 2, which governs contracts for the sale of goods
Which of the following is true of Restatement of the Law Second, Contracts? Multiple choice question. It was compiled by a panel of Supreme Court judges. It is based on the civil law of contracts. It is a law in itself. It contains the principles of the common law of contracts.
It contains the principles of the common law of contracts.
Which of the following statements best describes a negotiable instrument? It is an informal contract that does not require any formality. It is an acceptable medium for exchanging value from one person to another. It is an obligation in which a person acknowledges in court that he or she will perform some specified act or pay a price upon failure to do so. It is a binding document that a buyer obtains from his or her bank to guarantee that payment for goods will be made to the seller.
It is an acceptable medium for exchanging value from one person to another.
Identify a defense to the enforcement of a contract. Lack of consideration of personal circumstances Lack of oral reinforcement Lack of genuine assent Lack of witnesses
Lack of genuine assent
______ is a defense to the enforcement of a contract based on the lack of a written document. Lack of genuine acceptance Lack of intent Lack of witnesses Lack of proper form
Lack of proper form
The authors of the Uniform Commercial Code (UCC) are the: _______. National Commissioners on Model Statutes on Sales and the Academy of Legal Studies in Business National Commissioners on Model State Laws and the United States Law Academy National Commissioners on Sales and Negotiable Instruments National Commissioners on Uniform State Laws and the American Law Institute
National Commissioners on Uniform State Laws and the American Law Institute
Prominent legal scholars, recruited by the American Law Institute, organized the principles of the common law of contracts into the original: _______. Restatement of Offer and Acceptance Restatement of the Law, Contracts Restatement of Consideration Restatement of Contractual Capacity
Restatement of the Law, Contracts
Michael was the head of a construction company. Meghan owned a piece of property, and she offered Michael $500,000 to construct a shopping mall on the property. Michael agreed and went to the zoning commission to purchase the required building permits. He was told that Meghan's property was not zoned for commercial enterprises. Michael went back to Meghan and returned her money, saying he couldn't fulfill the contract because it lacked: _______. an offer a legal object consideration an acceptance
a legal object
A contract was under review because it had multiple interpretations of its terms. According to a general rule of contract interpretation, the judge should recognize the interpretation that makes the contract lawful, operative, definite, reasonable, and capable of: _______. being carried out complying with the Restatement (Second) of Contracts being voided at some time in the future favoring the non-moving party
being carried out
Candy was bidding on a piece of jewelry that was for sale on eBay. At the end of the bidding process, Candy was the highest bidder, so in exchange for her promise to pay, the seller will send her the merchandise. This kind of contract is known as a(n): _______. bidding contract unilateral contract quasi-contract bilateral contract
bilateral contract
The two sources of law governing contracts are the: _______. Uniform Commercial Code and state statutes common law and the Uniform Commercial Code (UCC) Uniform Commercial Code and the Uniform Contracts Compliance Act common law and the Uniform Contracts Compliance Act
common law and the Uniform Commercial Code (UCC)
Generally, today contracts do not require that contracts be under seal. However, ten states still allow a contract without ________ to be enforced if it is under seal. promises consideration defenses compensation
consideration
Liza and Maryann were at a flea market. Liza had an antique vase that caught Maryann's eye. Maryann said to Liza that she would give Liza the antique necklace she had in exchange for the vase. Liza agreed. The antique vase and the antique necklace are called: _______. capacity an agreement acceptance consideration
consideration
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 is known as a(n) _______. tort contract constitution breach of contract
contract
The four types of formal contracts are: _______. contracts under seal, recognizance, letters of introduction and negotiable instruments contracts under seal, recognizance, letters of credit and negotiable instruments contracts under seal, letters of credit, recognizance, contract instruments contracts under seal, restitution, letters of credit and negotiable instruments
contracts under seal, recognizance, letters of credit and negotiable instruments
The legal ability to enter a contract is known as: ________. contractual aptitude contractual capacity contractual willingness contractual need
contractual capacity
An employment contract that restricts what an employee may do after leaving a company is known as a(n): _______. covenant not to sue promissory estoppal arbitration agreement covenant not to compete
covenant not to compete
If multiple interpretations are possible, the court should adopt the interpretation that makes the contract: _______. (Choose all that apply.) definite capable of being defended in court operative reasonable lawful
definite operative reasonable lawful
Stella told Jozsef that if he would pick up her mail when she was on vacation, she would pay him $30. Jozsef did as he promised and was paid $30. Since all of the terms were fully executed, this contract has been fully: _______. executed breached executory voided
executed
A contract that has yet to be performed is known as a(n): _______. anticipatory repudiation contract executed contract executory contract executive contract
executory contract
Sometimes the offeror convinces the offeree to accept the offer using improper means, such as fraud. If any party does not enter freely into the contract it is said to lack agreement. contractual capacity. genuine assent. consideration.
genuine assent.
Article 2 of the Uniform Commercial Code (UCC) governs contracts for the sale of: _______. goods land medical services services
goods
When a court determines that there was a contract between two parties in a situation where there was no opportunity to negotiate payment, the contract between the parties is known as a(n): _______. quantitative contract voided contract implied contract express contract
implied contract
Ed and two of his friends created a lawn service business. All the neighbors knew of the business and several of them had used the service in the past. Ann, a neighbor of Ed's, was aware of the service and knew how much Ed charged for cutting the lawns of the various neighbors. One day, she was complaining to Ed that she was tired of cutting her own grass. Ed asked her if she would like him to cut her grass. Ann did not say a word, but smiled at the suggestion. Ed proceeded to cut Ann's lawn and then asked Ann for payment. Ann refused, saying that she had not formed a contract with Ed. The matter went to court and the court found that there was a contract and Ann must pay Ed. The court said that any reasonable person would have expected payment as Ed had expected. Such a contract is known as a(n) executory contract. express contract. extenuating contract. implied-in-fact contract.
implied-in-fact contract.
Quasi-contracts are sometimes called: _______. voidable contracts performance contracts iron-clad contracts implied-in-law contracts
implied-in-law contracts
A couple of painters came to the door offering to paint the house numbers on the homeowner's curb for $10. Barbara answered the door and the painters made their offer. Barbara did not say anything at all, but watched the painters paint her house number on her curb. When they came to the door for their $10, she refused, telling them that she had never formally agreed to their price. If a court requires Barbara to pay the painters the $10, this would be called recovery: _______. in quasi-contract by renounced contract by express contract by voided contract
in quasi-contract
If recovery can be obtained when (1) a benefit is conferred by the plaintiff upon the defendant, (2) the defendant has knowledge of the benefit that is being bestowed upon her, and (3) the defense retains the benefits under circumstances in which it would be unjust to do so without payment, then that recovery is known as recovery: _______. upon an executory contract in quasi-contract upon acceptance of a contract upon the voidance of a contract
in quasi-contract
Sybil and Mary had drawn up a contract about Sybil selling some dresses to Mary. The original contract was handwritten. It was then copied to a printed form. However, one of the terms was in conflict with the original handwritten contract. A judge would use the rules of interpretation and say that the prevailing term would be in the printed contract. not relevant, since the contract is now void. in the handwritten contract. added to the contract.
in the handwritten contract.
A ______ is a binding document that a buyer obtains from his or her bank to guarantee that payment for goods will be made to the seller. letter of credit recognizance quasi-contract simple contract
letter of credit
An agreement by the issuer to pay another party a sum of money on receipt of an invoice and other documents is called a(n): _______. letter of credit implied contract void contract letter of issue
letter of credit
The fourth element of a binding legal contract is that it should be a legal object. This means that to be enforceable the contract must ______. have either an offer or an acceptance award something to each party in the exchange not be against public policy not discriminate between parties on the basis of contractual capacity
not be against public policy
One of the best known rules of contract interpretation states that if a writing, or a term in question, appears to be plain and unambiguous on its face, we must determine its meaning from just the four corners of the document, without resorting to outside evidence and give the words their ordinary meaning. This rule is known as the ex post facto rule. voidable contract rule. substantial performance rule. plain-meaning rule.
plain-meaning rule.
One defense against the enforcement of a contract is if there is a lack of a writing (if one is required). This defense is known as a lack of: ______. an offer proper form consideration genuine assent
proper form
In order to prevent one party from being unjustly enriched at the expense of another party, the courts impose contractual obligations on one of the parties as if that party had entered into a contract. This is known as a(n): _______. performance contract express contract quasi-contract implied contract
quasi-contract
To find that there is an implied contract or an implied-in-fact contract, the court must deem that (1) the plaintiff provided some property or service to the defendant, (2) the plaintiff expected to be paid for such property or service, and (3) the defendant had an opportunity to perform the contract, but did not. reject the payment, but did not. reject the property or service, but did not. reject the plaintiff, but did not.
reject the property or service, but did not.
If a contract involves the sale of goods, it is governed by the Uniform Commercial Code (UCC). All other contracts are governed by: _______. the common law state statute uniform contracts custom the Constitution
the common law
Basing the existence of a contract on the parties' outward manifestations of intent and basing the interpretation of that intent on how a reasonable person would interpret it is known as: ________. the subjective theory of contracts the Uniform Commercial Code a voluntary agreement the objective theory of contracts
the objective theory of contracts
In the context of the objective theory of contracts, the existence of a contract is based on ______. the subjective intent of the parties the parties' outward manifestations of intent the subjective interpretation of the situation the hidden intent of the parties
the parties' outward manifestations of intent
A contract before the court needed interpretation. The contract contained many technical words. A general rule in interpreting technical terms is that the court should interpret technical words as they are usually understood by persons in the profession. they are usually understood by laypersons who are not in the field. the parties understand the words to mean. they are stated in a dictionary of the English language.
they are usually understood by persons in the profession.
A judge should interpret a contract so as to give effect to the parties' intentions at the time they entered into the contract. True False
true
A contract where the object of the contract is illegal or against public policy is: _______. encouraged by the courts embraced by the courts enforceable by the courts unenforceable by the courts
unenforceable by the courts
When a contract has all of the required elements and is enforceable, it is known as a(n): _______. valid contract implied contract void contract quasi-contract
valid contract
A(n) ______ contract is not a contract at all, and either its object if illegal or it has some defect so serious that it is not a contract. valid objective voidable void
void