Blaw Exam 4

You verbally agree to buy a house for $250,000. When the contract is prepared, the price is accidentally typed as $25,000 rather that $250,000, but no one notices it until after you and the seller sign the document. At that point, you claim you only have to pay $25000 and you claim that was the price you had agreed to originally. The court will say you are: Correct, under the Statute of Frauds, written documents control, not oral statements Correct, under the Statute of Frauds, written documents for real estate control the deal Incorrect, the consideration ($25000) is insufficient given the value of the house Incorrect, $25000 was obviously a mistake and the price goes to $250000 Incorrect, you are guilty of perjury and will go to prison

$25,000 was obviously a mistake and the price goes to $250,000.

_______ of an offer must be unequivocal or definite. Acceptance Rejection Resection Consideration Revelation

Acceptance

____ occurs when someone is "forced" to sign a contract; that is, the contract is made because of a threat that gave more sensible way out. Duress Fraud Discomfort Misrepresentation none of the other choices are correct

Duress

An employer can avoid liability for on-the-job injuries so long as fully informed workers sign exculpatory agreements True False

False

If a minor agrees to join the Army, the minor's agreement to join is voidable True False

False

Injunctions are the most common form of damages granted True False

False

Preliminary negotiations are generally considered to create as binding offers True False

False

The economic loss rules holds that in case of a breach of contract, all loses, including mental distress and punitive damages, shall be calculated in favor of the party who suffered the effects of the breach True False

False

Usually the acceptance of an offer is legally effective when the acceptance is received True False

False

An offer may be revoked before the offeree has a chance to respond to it True False

True

Expectancy damages are a measure of the profits you expected to earn if the other party to a contract had not breached the contract True False

True

If a defendant proves impossibility, the defendant's obligations will be discharged. True False

True

If a limited partner contributes services to the business, she may create an inference of managerial control and may be declared a general partner True False

True

Not all promises are enforceable contracts True False

True

Parent franchise companies may limit the territory in which a franchisee operates true false

True

Shareholders in corporations and limited partners in limited partnerships have liability limited to the sum they invested in the business, even for tort liability True False

True

Some courts use the notion of impracticability or frustration instead of impossibility True False

True

The owners of a limited liability company are called members True False

True

The parol evidence rule holds that oral testimony by one party that contradicts a written contract cannot be accepted as evidence in court True False

True

To terminate a partnership, the partners must go through a deconstruction process True False

True

An effective offer includes which of the following: a clear intent by the offeree to become contractually bound unclear and uncertain basic terms and conditions of the offer a clear intent by the offeror to become contractually bound all of the other specific choices are correct none of the other specific choices are correct

a clear intent by the offeror to become contractually bound

Double taxation on profits is: a disadvantage to the corporate form of organization an advantage to the corporate form of organization an incentive for governments to lower sales taxes for corporations a driving force behind the trend of businesses moving overseas a clever economic strategy

a disadvantage to the corporate form of organization

A franchise is sold by: a franchisor a franchisee a franchisee director the FTA none of the other choices are correct

a franchisor

Unlike a corporation a partnership pay high income taxes on its income a partnership pays no income taxes on its income a partnership cannot lose money in a bankruptcy suit a partnership cannot have more than two partners a partnership has no duty to creditors before investors

a partnership pays no income taxes on its income

The general rule regarding acceptance is: a reasonable acceptance is valid when sent to the offeror all acceptances are valid and binding on offerors acceptances are valid when received by offerors an acceptance will be valid only if mailed to offeror an acceptance is a void unless received by offeror within forty-eight hours of the offer

acceptances are valid when received by offerors

Franchises may be terminated by: the bankruptcy of the franchisee the failure of the franchisor to submit to financial inspection by franchisees the franchisor at any time, at will all of the other choice none of the other choices

all of the other choices

The parol evidence rules prohibits the introduction of oral evidence into a lawsuit where the evidence presented is contrary to the terms of written contract. Parol evidence may be introduced when: it will explain the written instrument through previous trade usage a written contract is incomplete it will prove fraud, mistake or misrepresentation a written contract is unclear all of the other choices

all of the other choices

Limited liability is: a disadvantage to the corporate form of organization an advantage to the corporate form of organization an incentive for governments to lower sales taxes for corporations a driving force behind the trend of businesses moving overseas a clever economic strategy

an advantage to the corporate form of organization

A ___ is one whose shares are held by one shareholder or a small group of shareholders close corporation small corporation limited corporation shared corporation nonprofit corporation

close corporation

The basic elements of a contract include agreement, lawful subject matter, legal capacity, consent, and: offer remedies performance consideration acceptance

consideration

The basic elements of a contract include agreement, lawful subject matter, and: offer, consideration, and legal capacity consideration, legal capacity, and remedies consideration, legal capacity, and performance consideration, legal capacity, and genuine consent offer, acceptance, and legal capacity

consideration, legal capacity, and genuine consent

a business's ___ refers to its ability to continue to operate in the event of the death, retirement, or other incapacity of an owner of the business perpetuity lifetime duration experience continuation

continuation

Army enlistment contracts and marriage contracts are examples of: contracts that minors may not disaffirm contracts that minors can always disaffirm contracts that anyone can disaffirm contracts that minors may not enter into none of the other choices are correct

contracts that minors may not disaffirm

Coca-Cola, Microsoft, and General Motors are all examples of: corporations limited partnerships legal partnerships sole proprietorships none of the other choices

corporations

A proposal by the offeree to change the terms of the original offer is a: final offer proposal of change counteroffer reoffer suboffer

counteroffer

A board of directors' fiduciary duty of loyalty requires that: directors are morally upstanding people in their personal lives directors do whatever is necessary to make a profit directors place the interests of the corporation before their own interests directors place their own interests before the interests of the corporation none of the other choices are correct

directors place the interests of the corporation before their own interests

Recission, novation, and accord and satisfaction are all forms of: performance discharge by agreement contract writing contract enforcement none of the other choices are correct

discharge by agreement

A corporation in recognized under both federal and state law as a "person" and: enjoys all of the same rights and privileges accorded to US citizens in about half the states enjoys some of the rights and privileges accorded US citizens enjoys none of the same rights and privileges accorded to US citizens enjoys all the same rights and privileges accorded to US citizens none of the other choices

enjoys some of the rights and privileges accorded US citizens

The shareholders of a corporation generally have the right to: instruct top management on corporate operations hire managers of the corporation give a third party the right to vote their shares by proxy instruct top management on corporate operations and hire manager of the corporation instruct top management on corporate operations and hire managers of the corporation and give a third party the right to vote their shares by proxy

give a third party the right to vote their shares by proxy

The purpose of a contract is to: make it easy to do international business transactions encourage innovation encourage investment give parties confidence that bargained-for exchanges will be enforceable give parties confidence that they will make a profit

give parties confidence that bargained-for exchanges will be enforceable

A(n) ____ is an order by the court that requires a party to perform or to refrain from performing certain acts. injunction restitution quasi contract remedy specific performance

injunction

An offer that terminates by operation of law through ___ occurs when a court decision or legislation makes an offer illegal after it has been made. mental incapacity court intervention real illegality intervening illegality intervening legality

intervening illegality

A certification of incorporation from the government gives a business monopoly privileges is necessary for a corporation to be recognized legally must be obtained by all limited partnerships is necessary or a corporation to be recognized legally and must be obtained by all limited partnerships none of the other choices

is necessary for a corporation to be recognized legally

unless its articles of incorporation provide otherwise, a corporation: lasts for twenty years lasts for fifty years lasts perpetually lasts as long as state law allows, the life varies among the states lasts as long as the IRS permits

lasts perpetually

In a sole proprietorship, the capital usually: must come from the owner's own resources or be borrowed comes from the government comes from investors comes from the stock market comes from taxes

must come from the owner's own resources or be borrowed

____ is legal ability to create a contract coherent capacity understanding capacity real capacity final capacity none of the other choices are correct

none of the other choices are correct

The ____ controls the terms of the offer when a contract is made. offeree offeror judge contractor unbiased third party

offeror

A partnership can begin with either a(n) _____ or a(n) ____ oral agreement, implied agreement oral agreement, false agreement oral agreement, forced agreement implied agreement, default agreement implied agreement, loan agreement

oral agreement, implied agreement

In general, limited partners lose their limited liability status by: being a limited partner in another partnership denying association with the partnership participating in managerial decisions in the partnership being a partner in another partnership or by participating in managerial decisions in the partnership being a partner in another partnership or by participating in managerial decisions in the partnership or by denying association with the partnership

participating in managerial decisions in the partnership

Jennifer enters into a contract where she is sixteen. When she reaches the age of majority she may manifest her intent to be bound to the contract; that is, to ___ the contract adjudicate exculpate ratify covenant assert

ratify

An accord is an agreement by the parties to offer and accept some performance different from that originally bargained for. The actual performance of the new obligation is: accord satisfaction completion finalization termination

satisfaction

The owners of a corporation are called: partners officers shareholders principals none of the other choices

shareholders

A person doing business for himself or herself is a(n) single proprietor sole proprietor only proprietor partner general proprietor

sole proprietor

A ____ terminates with the death or incapacity of the proprietor sole proprietorship double corporation limited liability corporation corporate corporation partnership

sole proprietorship

When the payments of money damages is inadequate for a breach of contract a court may order the remedy of: specific performance extra performance nominal performance compensatory performance special performance

specific performance

Today a corporation must be created according to: state law common law the Uniform Incorporation Act the U.P.A federal statutory provisions

state law

Acceptance of an offer must be ____ or definite final written unwritten unequivocal equivocal

unequivocal