BUL Exam 3

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Shirley leases Tom a defective piece of machinery that causes $50,000 in property damage and $100,000 in personal injuries. In addition to damages for loss of value and incidental damages, how much can Tom recover as consequential damages? a. $150,000. b. $100,000. c. $50,000. d. None of these answers are correct.

a. $150,000. Tom would be able to receive $150,000 because such damages were the foreseeable result of Shirley's breach.

Who would likely be considered a merchant under the UCC with respect to the goods in question? a. An authorized Apple computer dealer selling accessories for Apple computers and Apple-related products. b. An authorized Apple computer dealer selling the old shelving in the Apple store that was used to display the Apple products before the store was redecorated. c. An authorized Apple computer dealer selling household goods at a yard sale at his home. d. All of these are correct.

a. An authorized Apple computer dealer selling accessories for Apple computers and Apple-related products. A person who deals in a given type of goods is included in the definition of a Merchant.

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Which statement is true? a. Harry has made a counteroffer. Unless Bill accepts the counteroffer, there is no contract. b. Under the UCC, Harry has accepted the offer even though his acceptance was not the mirror image of the offer. c. Harry has made a counteroffer. If Bill does not accept the counteroffer, Harry can still accept Bill's original offer unless Bill revokes it. d. Harry has revoked Bill's offer.

a. Harry has made a counteroffer. Unless Bill accepts the counteroffer, there is no contract. A contract is only in place when both parties agree to the terms.

Raul builds Evelyn a $200,000 home according to Evelyn's specifications. Raul, however, missed two specifications, causing Evelyn to incur $25,000 in damages to fix the missed specifications. If Evelyn files a breach of contract, but the court does not allow her to forgo paying for the house, and only requires her to pay Raul $175,000, what theory will the court use to justify its order? a. substantial performance. b. satisfaction. c. mutual rescission. d. novation.

a. substantial performance. Because Raul substantially performed on the contract and did not defeat the purpose of the contrac, the court will not allow an unjust forfeiture on Raul's part.

Contracts for the sale of goods priced (starting) at _____ or more must ordinarily be in writing under UCC Section 2-201. a. $50 b. $500 c. $1500 d. $1,000

b. $500 A sale of goods at $500 or more must be in writing.

Ch.12: In some situations the courts will enforce new promises to perform an obligation that originally was not enforceable. Which of the following would be that sort of promise? a. An illusory promise. b. A new promise to pay a debt barred by the statute of limitations. c. A promise to supply all of the materials a manufacturer will need for the production of a certain item for a specified period of time. d. In the majority of states, a promise by a father to pay someone who rendered emergency services to his injured son before the father had arrived at the accident scene.

b. A new promise to pay a debt barred by the statute of limitations. The new promise is binding according to its terms, without consideration.

Buyer and Seller have entered into a contract for the sale of several goods worth hundreds of thousands of dollars. In the contract, seller includes an "as is" warranty clause that is in extremely small print and inconspicuous. If the court finds this clause procedural unconscionable, what would be the reason? a. Such a clause is oppressive. b. Seller obscured this warranty clause. c. Such a clause is grossly unfair because it takes away any legal defenses that Buyer has. d. None of these answers are correct.

b. Seller obscured this warranty clause. This is a factor related to procedural unconscionability.

__________ is performance that, though incomplete, does not defeat the purpose of the contract a. Material breach b. Substantial performance c. Perfect tender rule d. Impossibility of performance doctrine

b. Substantial performance A party who in good faith has provided substantial performance of the contract may sue to recover the payment specified in the contract.

The mirror image rule relates to which required element of a contract? a. The offer. b. The acceptance. c. Both the offer and the acceptance. d. Only to acceptances in contracts subject to UCC.

b. The acceptance. The mirror image rules relates to an acceptance. -Under the common law an acceptance must be a mirror image of the offer, it may not change add to, subtract from, or qualify in any way the terms of the offer -Ex. purchase order going out and confirming order coming back with different terms on the back of each form -Code focuses on the intent of the parties to figure out if the offer was accepted without conditions -Are new terms part of the contract?

Angelo borrows $2,000 from Maria. Maria electronically transfers Angelo the $2,000. Angelo promises to pay Maria the full amount in four $500 yearly installments of $500. Is such an agreement enforceable? a. Yes, because Maria has fully performed by making the loan. b. No, because the contract exceeds the one-year provision of the statute of frauds. c. No, because this involves the sale of goods. d. None of these answers are correct.

a. Yes, because Maria has fully performed by making the loan. Where a contract has been fully performed by one party, the promise is enforceable, despite by its terms its full performance is not possible within one year. -Promises are binding of once one person fully performs

On September 15th, Annie and Bertha enter into a contract where both parties are obligated to perform on December 31. On December 1, Annie tells Bertha, "Performing the contract would be impossible for me." This statement is: a. anticipatory repudiation. b. a material alteration. c. an accord. d. a nonmaterial breach since the statement is made before December 31.

a. anticipatory repudiation. An anticipatory repudiation occurs when a party makes it clear they will breach before the time for performance arrives.

Contracts that are implied in law: a. are obligations imposed by law on grounds of justice and equity. b. are really contracts. c. are also called implied in fact contracts d. require the assent of the contracting parties.

a. are obligations imposed by law on grounds of justice and equity. An implied in law contracts are obligations imposed by law on grounds of justice and equity.

Even though all creditors have not been paid in full, a discharge under the __________ eliminates ordinary contract claims against the debtor. a. bankruptcy law b. frustration of purpose doctrine c. perfect tender rule d. impossibility of performance doctrine

a. bankruptcy law Bankruptcy is a discharge of a contractual duty by operation of law.

Ch.10: For purposes of general contract law (common law), an offer must: a. be sufficiently definite and certain. b. be made to only to one person. c. be intended by the offeror to be an offer. d. All of these are correct.

a. be sufficiently definite and certain. This is one of the elements of an offer under general contract law. -Definite (main) -Communication (by offerer to offeree) - to be effective -Intent (did they really mean to do it?) - objective standard test

If both parties exchange promises, the contract is: a. bilateral. b. void. c. implied. d. executed.

a. bilateral. When both parties exchange promises, a contract is called bilateral.

Contracts induced by threats of __________ are not voidable, unlike threats of __________ regardless of whether the coerced party had committed an unlawful act. a. civil prosecution; criminal prosecution b. criminal prosecution; civil prosecution c. tortious conduct; civil prosecution d. None of these are correct.

a. civil prosecution; criminal prosecution One can threaten a civil suit to recover a debt, but not threaten criminal prosecution.

A buyer of a business may negotiate a __________ contract clause to keep the seller from running a competing business. a. covenant not to compete b. good faith c. contract in restraint of trade d. None of these are correct.

a. covenant not to compete Courts will enforce a clause that is limited in scope and duration.

Ch.18: Courts of equity will not grant specific performance of contracts: a. for a personal services contract. b. for the sale of real estate. c. for the sale of the original manuscript of a rare edition book. d. All of these are correct.

a. for a personal services contract. It is against the policy of courts to force one person to serve another.

A resulting contract is void when it is brought about by: a. fraud in the execution. b. fraud in the inducement. c. innocent misrepresentation. d. All of these are correct.

a. fraud in the execution. Fraud in the execution renders a contract void. -Fraud in inducement is a contract but is voidable

When a judge enters a very small order for damages, when the plaintiff has not sustained or cannot prove any injury or loss for a breach of contract action, she has entered an order for: a. nominal damages. b. exemplary damages. c. mitigated damages. d. compensatory damages.

a. nominal damages. Nominal damages are set without regard to the amount of the loss.

A small sum of damages fixed without regard to the amount loss is known as: a. nominal damages. b. out-of-pocket damages. c. inconsequential damages. d. None of these are correct.

a. nominal damages. Such a judgment may also include an award of court costs.

Billy freely agrees to sell Roger a painting for $100. Billy thinks the painting is ugly and a piece of junk. Neither Billy nor Roger are art aficionados or knowledgeable about art. After the sale is made, however, Billy discovers that the painting is worth $10,000. If Billy tries to void his agreement for lack of consideration with Roger and loses, what would be the best reason under these facts? a. Billy was under no duress at the time of the sale. b. The consideration, although disproportionate, is nevertheless adequate because he was done freely. c. Billy made a unilateral mistake. d. None of these are correct.

b. The consideration, although disproportionate, is nevertheless adequate because he was done freely. Billy and Roger freely agreed to exchange consideration and courts are not considered with whether one party received disproportionately more or less than what he gave or promised in exchange. -It would have to specify that they were under the impression that it only cost $100 and that was the basis of the agreement, or one knew and intended to defraud the other

Veronica has not been declared incompetent by a court, but she suffers from delusions that a Martian visits her every evening at 6 p.m. to tell her that the future of the human race depended on her buying a tract of land in Lackawanna County. Today, Veronica entered a contract to purchase a large tract of land in Lackawanna County on the Martian's advice. Which of the following statements is true about the contract? a. The contract to purchase is void, because it was made on a Martian's advice. b. The contract to purchase the land is voidable, because Veronica has not been adjudicated insane, and possible could still have understood the contract. c. None of these answers are correct. d. The contract to purchase the land is valid, because the seller had no knowledge that the Martian suggested the purchase.

b. The contract to purchase the land is voidable, because Veronica has not been adjudicated insane, and possible could still have understood the contract. Although the Martian story is based on mental illness or defect, such a contract is nevertheless voidable because Veronica still could have been able to understand the subject of the contract, its mature and probable consequences.

Which of the following would be material to the sale of a racehorse? a. The horse's coloring is chestnut. b. The horse's running time in the last race was the fastest in the circuit. c. The horse was ridden by Josh Jockey in the last race. d. All of these are correct.

b. The horse's running time in the last race was the fastest in the circuit. The running time for the horse is material.

Ch.9: Which of the following contracts is covered by Article 2 of the Uniform Commercial Code? a. The sale of a building. b. The sale of new furniture. c. An agreement to have the sidewalk shoveled. d. A sale of stock in ABC, Inc.

b. The sale of new furniture. Furniture is considered to be a good, and UCC covers contracts for the sale of goods.

The fact that no time is specified in the contract means that: a. the contract is unenforceable. b. a reasonable time for performance will be implied. c. time shall be of the essence. d. the time for performance will be ignored by the courts.

b. a reasonable time for performance will be implied. A reasonable time is determined by the nature of the subject matter of the contract.

According to general (common) contract law, the __________ must be the __________ of the offer. a. counteroffer; acceptance b. acceptance; mirror image c. acceptance; consideration d. contract; revocation

b. acceptance; mirror image It is generally true that an acceptance must be the mirror image of the offer.

Andrew owes Rachel $200 for a used television which he bought last year at Rachel's yard sale. When Andrew is unable to pay, the two agree that the debt can be paid by Andrew's typing all of Rachel's term papers for the school year. The new contract is a(n): a. satisfaction. b. accord. c. novation. d. civic.

b. accord. An accord is an agreement to substitute for an existing debt some alternative form of discharging that debt.

Examples of an enforceable oral contract is/are: a. an oral promise by an executor to guarantee payment of a decedent's debt. b. an oral agreement to substitute the place of closing a land contract. c. an oral agreement to extend an employee's contract for six months to a total of two years. d. All of these are correct.

b. an oral agreement to substitute the place of closing a land contract. Naming the place of closing a land contract need not be in writing. -Just a detail, doesn't involve real property rights

To be effective, an offer must: a. be in a specified format. b. be communicated to the offeree c. always contain the price of a product or service offered. d. be spoken directly to the offeree.

b. be communicated to the offeree Communication to the offeree(s) is a requirement for an offer.

The type of substance ingestion that could lead a court to find one lacking in capacity is: a. the person is a chronic alcoholic. b. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences. c. the person is a drug addict. d. All of these are correct.

b. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences. The person must understand the consequences of the contract.

A __________ is an event that terminates an existing duty. a. condition precedent b. condition subsequent c. concurrent condition d. None of these are correct.

b. condition subsequent Conditions subsequent occur very infrequently in contract law.

Compensatory damages are designed to place the injured party in a position as good as the one he would have been in had the other party performed, and are known as: a. mitigation damages. b. consequential damages. c. punitive damages. d. All of these are correct.

b. consequential damages. These are damages that occur as a result of the breach.

A given agreement may not violate any statute but may still be so offensive to society that courts feel that enforcing the contract would be: a. fraudulent. b. contrary to public policy. c. illegal lobbying. d. unfair to merchants.

b. contrary to public policy. The courts use this to protect human rights and social institutions.

A minor may avoid or __________ a contract by any expression of an intention to repudiate the contract. a. ratify b. disaffirm c. incapacitate d. restitute

b. disaffirm Any act inconsistent with the continuing validity of the contract is also an avoidance.

The fact that the consideration turns out to be disappointing __________ the binding character of the contract. a. does affect b. does not affect c. sometimes affects d. None of these are correct.

b. does not affect The court will enforce an unsatisfactory deal.

A person should not be held to an agreement he has not entered voluntarily. Accordingly, the law will not enforce any contract induced by: a. puffery. b. duress. c. mistake. d. All of these are correct.

b. duress. Assent to a contract should be voluntary.

Aaron's boss offers to pay him $500 if he will pretend he is sick so that he does not have to show up for jury duty, but will go to work instead. Aaron knows that this is against the law, but he would rather be paid $500 from his boss than the $30 that the court will pay him for jury duty. Aaron calls in sick and is excused from jury duty. This agreement between Aaron and his boss is: a. a bilateral contract. b. not a contract. c. a unilateral contract. d. a quasi contract.

b. not a contract. This agreement is missing the required element oflegality of object.

As an exception to the rule on courts inquiring as to the adequacy of the consideration, a court will take evidence to establish: a. one party clearly has the better of the deal. b. one party claims to have been defrauded. c. one party has more business experience than the other. d. one party shows a much lower price nationally-advertised on television.

b. one party claims to have been defrauded. A court will allow evidence of fraud.

When the parties express their contract in a writing that is intended to be the complete and final expression of their rights and duties, the __________ excludes prior oral or written negotiations or agreements of the parties? a. promissory estoppel rule b. parol evidence rule c. statute of frauds d. the possibility test

b. parol evidence rule A writing will be regarded as the full and complete expression of the parties' intentions. -Negates the "I didn't mean to" because you finalized in writing (fraud, duress, mistake)

A(n) __________ is a measure designed to raise money by requiring the purchase of a license. a. exculpatory clause b. revenue license c. regulatory license d. usury statute

b. revenue license These licenses are not tied to any standards of practice in the field.

Leo owes Nora $1,000 and they both agree that Leo will mow the grass of Nora's 10-acre field in satisfaction of the debt. Leo's performance of mowing the grass is: a. novation. b. satisfaction. c. accord. d. none of these answers are correct.

b. satisfaction. A satisfaction occurs when the accord is performed. -Accord = new agreement -Satisfaction = completion of new agreement

Maxine signs a contract to sell her townhouse to Jackson for $120,000. Two days later Maxine changes her mind after discovering that she could have sold the property to another buyer for an additional $50,000. Jackson sues and asks the court to have the property conveyed to him at the price of $80,000. Jackson is seeking: a. liquidated damages. b. specific performance. c. valid tender. d. punitive damages.

b. specific performance. Jackson can sue for specific performance since real estate is unique.

Fred operates a fledgling remodeling business and is in desperate need of a certain type of drywall. He obtains the material from Megaworks, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of: a. discrimination. b. substantive unconscionability. c. supervening illegality d. restraint of trade.

b. substantive unconscionability. Substantive unconscionability focuses on the actual terms of the contract itself.

Which of the following is not a collateral promise? a. A mother tells the gas station to extend $1,000 worth of credit to her son over the school year and says, "If he doesn't pay, I will." b. Brett promises Denny's bank that if Denny cannot pay his bills, Brett will. c. A father tells Best Computer to deliver a laptop to his son and says, "Send me the bill. I'll pay for it." d. All of these are correct.

c. A father tells Best Computer to deliver a laptop to his son and says, "Send me the bill. I'll pay for it." This is solely the father's obligation.

Which of the following is NOT always necessary in order for a valid contract to be formed? a. Mutual assent b. Legality of purpose c. A writing d. Consideration

c. A writing Most contracts do not have to be in writing to be valid and enforceable.

Which of the following is required in order to recover in quasi contract? a. An implied or express promise b. A valid contract c. Acceptance or retention of a benefit conferred on the defendant by the plaintiff d. A voidable contract

c. Acceptance or retention of a benefit conferred on the defendant by the plaintiff This is one of three requirements for quasi contract. 1. The plaintiff confers a benefit upon the defendant 2. The defendant knows or appreciates the benefit 3. The defendant's retention of the benefit is inequitable -Obligations imposed by law on grounds of justice and equity

All of the following will serve as adequate consideration except? a. Forbearance to do an act. b. Performance of services. c. An illusory promise. d. A promise to perform.

c. An illusory promise. The promisor is not obligated to perform. -A statement that appears to be a promise but in fact upon close examination of the words, the promise does not contain anything real or legally binding, may contain words like "I desire" or "I want to" or "I wish to" making the performance entirely optional

Ryan, a 15-year-old, negligently crashed into Crystal's car and caused extensive damage and severely injured Crystal. Which statement is correct? (p. 7) a. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages because he is a minor. b. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages unless he was intoxicated. c. Ryan cannot disaffirm liability for his negligence. d. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages unless he has automobile liability insurance.

c. Ryan cannot disaffirm liability for his negligence. Ryan is liable for his torts and cannot escape such liability in this fact scenario.

Which of the following will terminate an offer? a. Rejection by the offeror. b. Subsequent illegality of the purpose but not of the subject matter of the offer. c. Destruction of the subject matter of the offer. d. Death of the offeree but not of the offeror.

c. Destruction of the subject matter of the offer. An offer will terminate upon the destruction of the subject matter of the offer.

Bill enters into a contract with Harry. The terms are that Bill will build an addition to Harry's home, replace the roof on Harry's garage, and make repave Harry's driveway in exchange for Bill's payment to Harry of several thousand dollars once all of the projects have been completed. If the driveway repavement has not yet been completed, but the addition and the roof have been completed, which term describes the type of contract in existence? a. Voidable b. Quasi-contract c. Executory d. Implied-in-fact

c. Executory Bill has not fully performed all of his promises and Harry has not performed his promise.

Debra delivers a package to Jackie and requests Jackie to sign a receipt for the package, holds out a simple sheet of paper that says "Receipt," and shows a line where Jackie is supposed to sign. The line, which appears to be at the bottom of the receipt, is actually a promissory note for a $10,000 loan. Jackie signed the line, as indicated by Debra and did not know that she was signing a note. This scenario is an example of: a. Undue Influence. b. Duress. c. Fraud in the execution. d. Fraud in the inducement.

c. Fraud in the execution. This is an example of a misrepresentation that deceives Jackie as to the very nature of the promissory note. -Makes it void

__________ is an unenforceable promise under the law of contract because of a lack of consideration. a. Fraud b. Mutual mistake c. Gift d. Justifiable reliance

c. Gift The promisor is not obligated to perform.

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Bill says he is not interested in fixing the roof. Harry then tells Bill he will still buy the house. Bill tells Harry the house is no longer for sale to Harry. Which statement is true? a. If Bill will not sell the house to Harry for $90,000, he cannot sell the house to anyone for $90.000. b. Bill must sell the house to Harry because Harry accepted his offer to sell the house for $90,000. c. Harry's counteroffer terminated Bill's offer, and Bill's rejection of both Harry's counteroffer ($90,000 plus fix the roof) and offer ($90,000) leave Bill free to make a new offer to sell the house to anyone he chooses, including Harry, and under any terms he chooses as long as the terms are not illegal. d. Harry's counteroffer terminated Bill's offer; however, Bill can still change his mind and accept either Harry's counteroffer or Harry's offer to buy Bill's house for $90,000.

c. Harry's counteroffer terminated Bill's offer, and Bill's rejection of both Harry's counteroffer ($90,000 plus fix the roof) and offer ($90,000) leave Bill free to make a new offer to sell the house to anyone he chooses, including Harry, and under any terms he chooses as long as the terms are not illegal. Bill's rejection of Harry's counteroffer and offer terminated all offers by Harry, leaving Bill to create a new offer.

When might a contract might be unenforceable? a. If the purpose of the contract was to commit a tort. b. If one party has not yet performed, but the other party has fully performed. c. If the statute of limitations has passed. d. If the parties could not reach an agreement.

c. If the statute of limitations has passed. The passing of the statute of limitations is one example of a situation when the law will not provide a remedy for a breach of the contract. Another common situation is when the contract was subject to the Statute of Frauds, but was not written and/or signed by the party against whom the contract is sought to be enforced.

Carl agrees to build a hotel for Jerry by December 1. Both parties agree that if Carl fails to meet his December 1 deadline, he would be obligated to pay $10,000 per day in damages beginning December 2 for each day it takes to finish the hotel past the December 1 deadline. The $10,000 per day damages represent: a. Specific Performance b. Restitution. c. Liquidated Damages. d. Punitive Damages

c. Liquidated Damages. These damages were agreed in advance by Carl and Jerry.

Ned's father orally promises to give him a car for his twenty-first birthday. Using the rule in most states, can Ned legally enforce this promise? a. Yes, Ned can sue his father based on the promise. b. Yes, Ned can sue his promise based on the statute of frauds. c. No, a gratuitous (or gift) promise is unenforceable. d. No, Ned should have gotten the promise in writing.

c. No, a gratuitous (or gift) promise is unenforceable. A gift promise cannot be enforced

Another name for a quasi contract is: a. promissory estoppels. b. an implied in fact contract. c. an implied in law contract. d. an unenforceable contract.

c. an implied in law contract. A quasi contract can also be referred to as an implied in law contract. -A contract implied in fact is where there is no express contract, but the conduct of the parties makes it clear they both understood they had a deal (dentist's office) -A contract implied in law is where there is no contract per se, but at least one party still had a legal duty to perform (emergency room when unconscious)

By operation of law one might be able to discharge their contractual obligations by: a. default. b. mutual rescission. c. bankruptcy. d. satisfaction.

c. bankruptcy. A discharge in bankruptcy eliminates ordinary contract claims against the debtor.

Bertha was an alcoholic, and one weekend while she was extremely intoxicated, her son took her to the store and had her purchase an expensive computer. If Bertha wishes to rethink this contract, Bertha: a. cannot ratify the contract it is void and without meaning. b. may return the computer, but cannot get her money back. c. must sober up and ratify the contract as a whole. d. may at any time keep the computer, but doesn't have to pay for it as the store should have known better than to do business with an intoxicated customer.

c. must sober up and ratify the contract as a whole. Bertha can ratify the contract when she regains her capacity. -Voidable

A contract based on __________ is not enforceable. a. legal detriment b. legal benefit c. past consideration d. unequal consideration

c. past consideration Past consideration is no consideration. -Unless there is a new promise to perform -Ex. promising to pay an old debt after bankruptcy

In most contracts, discharge takes place by: a. material breach. b. mutual rescission. c. performance. d. impossibility.

c. performance. Most contracts are discharged by performance by both parties.

Patrick held a baseball bat to Eric's head to compel him to sign a contract advantageous to Patrick. This contract was entered under: a. false representation. b. improper threats. c. physical duress. d. undue influence.

c. physical duress. Yes, one party is compelling the other to manifest assent to a contract through actual physical force.

Once __________ a minor cannot avoid a contract. a. processed b. signed c. ratified d. voidable

c. ratified The minor's right to disaffirm ends upon ratification.

At time, a written contract does not correctly state the agreement already made by the parties. When this occurs, either party may seek to have the court correct the writing to state the agreement actually made. This rewriting is known as: a. specific performance. b. injunction. c. reformation. d. rescission.

c. reformation. The purpose is not to make a new contract for the parties but to express adequately the contract they have already made for themselves.

When the damages sustained by the plaintiff can be measured in monetary terms, specific performance will be: a. accompany an order for monetary damages. b. ordered. c. refused. d. All of these are correct.

c. refused. Courts only use specific performance when monetary damages cannot be ordered.

For the issue of capacity, a court will examine whether a party to the contract lacked contractual capacity when: a. the time set for performance of the contract. b. the time the value of the bargain becomes clear. c. the time the contract was made. d. the time the plaintiff expresses dissatisfaction with the contract terms.

c. the time the contract was made. The court is concerned about the ability to understand the contract when made.

Sometimes a party makes misrepresentations, which if untrue, could constitute a material misrepresentation. Which of the following fits that description? a. "This is the one that I would buy." b. "This is the best tablet on the market." c. "These tires will wear like iron." d. "This car has a new engine."

d. "This car has a new engine." A new engine is material to the sale of a car. -Sales exaggerations don't count

Bernie promises to build an office complex for Donald for $1 million by February 1. Bernie breaches the agreement by finishing construction by March 1. As a result of the breach, Donald lost $100,000 for the month lost, but saved expenses of $25,000. How much is Bernie liable for? a. $100,000 b. $1 million c. Nominal damages. d. $75,000

d. $75,000 Bernie would only be liable for the reduced amount of Donald's lost because Donald avoided $25,000 as a result of the breach.

Bill faxes Harry an offer at 9 a.m. on Monday and the fax arrives at Harry's office at 9:02 a.m. Monday. Because Harry is taking a vacation day on Monday, he does not read the fax until Tuesday at noon. Harry decides to accept Bill's offer and tells his assistant at 3 p.m. Tuesday to prepare an acceptance for his signature. The acceptance is placed on Harry's desk at 4:45 p.m. Tuesday. Harry signs the acceptance and gives it to his assistant to fax back to Bill at 9 a.m. Wednesday. The assistant does so immediately; however, due to malfunctioning of Bill's fax machine, Bill does not receive Harry's acceptance until Friday morning. The offer is effective at __________ and the acceptance is effective at __________. a. Tuesday noon; Friday morning b. Tuesday noon; 9 a.m. Wednesday c. 9 a.m. Monday; 3 p.m. Tuesday d. 9:02 Monday; approximately 9 a.m. Wednesday

d. 9:02 Monday; approximately 9 a.m. Wednesday The offer became effective when it was received and the acceptance effective when it was received. (dispatched?)

If an offer has no stated time by which it must be accepted, when does the offer terminate? a. Never. b. After one week. c. After one month. d. After a reasonable period of time.

d. After a reasonable period of time. What is a reasonable amount of time will depend upon the nature of the contract involved, the usages of business, and other circumstances of the case.

When the __________ of the promisor's promise to pay the debt of another is to benefit the promisor, the statute of frauds is not applicable. a. promisory estoppel b. probability c. main purpose d. parol evidence

c. main purpose The main purpose doctrine is an exception to the suretyship provision.

Jan and Cindy enter into a contract unquestionably governed by the statute of frauds. The only evidence of the agreement is a letter Jan sent to Cindy confirming the deal. Which of the following may be a sufficient "signature" if Jan denies the enforceability of the contract in court? a. Jan's own, handwritten signature. b. Jan's stamped signature. c. Jan's initials. d. All of the above.

d. All of the above. The "signature" may be initials, or typewritten, or printed signature, as long as the party intended it to authenticate the writing or record.

Which of the following offers cannot be revoked? a. Any offer by a merchant under the UCC. b. Any offer that is in writing that promises to leave the offer open for three months or less. c. Any offer that is in writing, signed, and promises to leave the offer open whether it is made by a merchant or not. d. All of these are incorrect.

d. All of these are incorrect. All of the offers fail to qualify as a firm offer in some respect. Can be revoked at any time before acceptance EXCEPT: -Option Contract: must be for a specified time -Firm Offer: can be open for up to 3 months -Statutory Irrevocability -Irrevocable Unilateral Contracts: reasonable time after performance has begun -Promissory Estoppel: promisor induces promise to take action in reliance

Carlos orally agrees to sell his house to Andy for $50,000. Can Andy enforce this agreement in court? a. Carlos must sell the real estate to Andy because of Andy's right to specific performance applicable to sales of real estate. b. Carlos can enforce the sale of the land against Andy, but Andy cannot enforce the contract. c. Andy can enforce the agreement to sell the house because they did not use a realtor. d. Andy cannot enforce the agreement without a written contract signed by Carlos.

d. Andy cannot enforce the agreement without a written contract signed by Carlos. All contracts to sell real estate must be evidenced by a writing.

Susie told Kelly, "If you wash my car, I promise to pay you $20." Kelly replies, "OK—I promise to wash your car." This exchange is an example of: a. Promissory Estoppel. b. Promisor's Obligation. c. Unilateral Contract. d. Bilateral Contract.

d. Bilateral Contract. Both parties have made a promise.

Salvador and Jose make a contract for Salvador to manufacture five custom saddles of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The saddles are available from other sources. In this case: a. Salvador must supply the saddles, even if he must buy them elsewhere. b. Salvador has materially breached the contract if he fails to deliver the saddles. c. Salvador's duty to deliver the saddles is discharged by the destruction of the factory. d. All of these are correct.

c. Salvador's duty to deliver the saddles is discharged by the destruction of the factory. The fire made Salvador's completion of the saddles impossible.

In order to have a valid contract, in addition to the four basic requirements of a contract, which of the following must also occur? a. The consideration that one party is giving the other must be of the same value as the consideration that is being received. b. There must be the sale of goods from one party to another. c. There must be an absence of invalidating conduct, such as duress. d. Both parties must already have performed (done what they promised to do).

c. There must be an absence of invalidating conduct, such as duress. If invalidating conduct exists, the contract will be void or voidable.

Sam agrees to sell Gina a BMW automobile, both believe to be inoperable, purely for parts. The contract price is $500. Prior to the delivery of the BMW, Sam discovers that the car was simply out of fuel, runs like a dream, and refuses to deliver the automobile to Gina. The value of the operable BMW is now at $3,000. If the court allows Sam to rescind the contract, what would be the reason? a. Sam was under duress. b. This is a case of unilateral mistake on Sam's part. c. This is a case of material mistake by both parties. d. All of these are correct.

c. This is a case of material mistake by both parties. Both Sam and Gina were mistaken as to a material fact.

Juan sold his gas station business in San Antonio, Texas to Fred and promised Fred not to enter the gas station business in Texas for the next twenty-five years. If the court finds this agreement unreasonable and invalid, what grounds would support the court's decision. a. Unreasonable in time only. b. Unreasonable in geography only. c. Unreasonable in both time and geography. d. None of these answers are correct.

c. Unreasonable in both time and geography. This is an unreasonable restraint in time and geography.

__________ is when money is loaned at a higher rate of interest than the law allows. a. Lotteries b. In pari dilecto c. Usury d. Adhesion

c. Usury Consumer interest rates must be lower than this amount.

Daniel owes Amanda $5,000 and they both agree that Daniel will mow the grass of Amanda's 10-acre field to satisfy Daniel's outstanding balance. The agreement to mow the grass represents: a. novation. b. satisfaction. c. accord. d. none of these answers are correct.

c. accord. An accord is an agreement to substitute for an existing debt some alternative form of discharging that debt.

The sole hospital in a city offers a standard patient care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called: a. exculpatory. b. a usurious contract. c. an adhesion contract. d. an illegal restraint of trade.

c. an adhesion contract. An adhesion contract is a standard contract prepared by one party, and subject to greater scrutiny due to the chance for unconscionability.

How do parties usually show mutual assent? a. By one party making an offer and the other party making a counteroffer. b. By one party making an offer in writing and the other party accepting in writing. c. By one party making an oral offer and the other party accepting by performing. d. By one party making an offer in words or by conduct and the other party accepting in words or by conduct.

d. By one party making an offer in words or by conduct and the other party accepting in words or by conduct. Mutual assent is when one party makes an offer in words or conduct and the other party accepts in return.

Which of the following is most likely to be classified as a necessary for which a minor will be held liable on a contract? a. A television. b. School supplies. c. Education. d. Food.

d. Food. Food is one of the most basic forms of necessary.

__________ is an intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance on the misrepresentation. Fraud in the inducement renders the contract __________ by the defrauded party. a. Silence; void b. Fraud by concealment; void c. Fraud in the execution; voidable d. Fraud in the inducement; voidable

d. Fraud in the inducement; voidable There is a contract, but it is voidable.

Juliet has wagered $500, which Lance, as her bookie, is holding, on a prize fight. If, before the race starts, Juliet wants to take back her money and withdraw from the transaction: a. Lance can successfully sue for breach. b. Juliet, by law, cannot withdraw from the transaction. c. Lance, by law, cannot withdraw from the transaction. d. Juliet cannot sue to recover any money because the contract to wager is illegal and unenforceable.

d. Juliet cannot sue to recover any money because the contract to wager is illegal and unenforceable. Gambling contracts are illegal and not enforceable in court.

Which of the following can be consideration for a promise? a. Refraining from assaulting one's roommate. b. Promising to refrain from stealing from the boss. c. Refraining from using a controlled substance. d. Refraining from smoking cigarettes.

d. Refraining from smoking cigarettes. One has a legal right to smoke, so this could be the basis of a bargain.

Madeline, age 17, ordered a pair of diamond earrings on the installment plan. She paid $50 every month until she turned 18, the age of majority. The next day, she sold them to Samantha and disaffirmed the contract. What is the result? a. Samantha is still liable because she used the earrings. b. Samantha is not liable because earrings are not necessaries. c. Samantha is still liable since she had to disaffirm before her 18th birthday. d. Samantha is still liable because selling the earrings amounted to a ratification.

d. Samantha is still liable because selling the earrings amounted to a ratification. Selling the earrings is exercising control over them which amounts to a ratification.

Sean and John are business associates. At dinner, Sean has only one beer over the course of three hours. Sean is a light drinker and normally feels severely intoxicated after three beers. At the end of dinner, Sean and John enter into a multi-year agreement worth potentially millions of dollars. Later, if Sean attempts to void the contract on the basis of intoxication and loses, what would be the reason for it? a. Intoxication is insufficient to void a contract. b. Sean's intoxication was unable to understand the nature and consequences of his actions. c. Sean was without reason or understand when entering into the contract. d. Sean's slight intoxication did not destroy his capacity to contract.

d. Sean's slight intoxication did not destroy his capacity to contract. Slight intoxication does not destroy one's capacity to contract. Sean is normally intoxicated after three beers. Here, he only had one beer over the course of three hours, which would reasonably show only slight intoxication.

Wendy is a worldwide recording artist and agrees to play on New Year's Eve at Roscoe's mansion on the beach. Wendy later discovers that Roscoe is a notorious gangster, and refuses to appear at the party as agreed. If Roscoe sues Wendy, what remedy is absolutely not available to Roscoe? a. Consequential Damages b. Incidental Damages c. Nominal Damages d. Specific Performance.

d. Specific Performance. Wendy's contract is one for personal services, and courts of equity will not grant specific performance when breaches of such contracts exist.

Because of his winning record at another school Albert signed a contract to coach wrestling for Sigma High for a period of five years. After three years he is offered and accepts an assistant coaching position at Crosstown University. If they sue Albert, Sigma High cannot ask for which remedy? a. Payment of compensatory damages. b. Payment of consequential damages. c. Payment of incidental damages. d. Specific performance of his contract.

d. Specific performance of his contract. Specific performance will not be ordered in a matter involving a personal services contract.

Sergio buys an LED television from The Television Superstore in Sacramento, California. What law governs this transaction? a. Common law. b. Both the common law and the UCC. c. None of these answers are correct. d. The Uniform Commercial Code (UCC).

d. The Uniform Commercial Code (UCC). Article 2 of the UCC governs sales of goods in all states except Louisiana.

Nila is working hard on Sam's election campaign for the legislature. She thinks that just a few more votes could win the election, so she promises to pay her friend Daphne $50 if she will register and vote for Sam. Daphne does so, but Sam loses the election, and Nila now refuses to pay. This: a. agreement is enforceable. b. is an unconscionable contract covered by the UCC. c. is an agreement to obstruct the administration of justice. d. agreement is unenforceable and opposed to public policy.

d. agreement is unenforceable and opposed to public policy. Public policy prevents enforcement of "pay for votes" scheme.

The doctrine of promissory estoppel: a. is a doctrine enforcing contractual promises. b. applies even if the promisor should not have expected the promisee to rely on the promise. c. applies even if the promisee does not rely on the promise. d. is a doctrine that relies on justice and not contractual rights.

d. is a doctrine that relies on justice and not contractual rights. Under this doctrine, the court will enforce a promise to the extent necessary to avoid injustice.

A commercial building construction company and Sub Shop, Inc. have a contract, which calls for the construction company to build a building with the completion by May 1. If the building is not completed by that date, the contract calls for the construction company to pay $150 per day in damages. The $150 per day is: a. an illegal penalty. b. nominal damages. c. punitive damages. d. liquidated damages.

d. liquidated damages. The parties agree to these damages before the contract is started.

The amount that could reasonably have been avoided is deducted from the amount that would otherwise be recoverable as damages. This is known as the doctrine of: a. exemplary damages. b. nominal damages. c. damages for consequential loss. d. mitigation of damages.

d. mitigation of damages. The injured party may not recover damages for loss that he could have avoided with reasonable effort.

A(n) __________ is a substituted contract that involved an agreement among three parties to substitute a new promise for the existing promise or to replace the existing promisor with a new one. a. accord b. mutual rescission c. material alteration d. novation

d. novation A novation discharges the old obligation by creating a new contract in which there is either a new promise or a new promisor.

Any property other than an interest in real property, is/are: a. tangible property. b. intangible property. c. goods. d. personal property.

d. personal property. Personal property is any property other than an interest in real property.

__________ is what each party to a contract gives up to the other in making their agreement. a. Contract under seal b. Promissory estoppel c. Consideration d. None of these are correct.

c. Consideration One of the elements needed to make an agreement is consideration.

__________ damages are ordered in excess of actual loss and are imposed for the purpose of punishing the defendant. a. Nominal b. Consequential c. Punitive d. Compensatory

c. Punitive In contract actions, punitive damages are not ordinarily ordered.

Which of the following would generally be considered to be a regulatory licensing law? a. A statute requiring that doctors be licensed after finishing medical school. b. A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. c. A statute requiring plumbers to be licensed, but not establishing any standards of competence. d. A statute that requires flag makers to register with the state before selling flags.

a. A statute requiring that doctors be licensed after finishing medical school. This law would be aimed at protecting the public.

Which of the following is a contract with a condition subsequent? a. Adam bought an iPad but he may return the iPad within one month and get all of his money back. b. Sally enters into a contract to buy a new house conditional upon her getting a loan from her bank. c. All of these are correct. d. None of these are correct.

a. Adam bought an iPad but he may return the iPad within one month and get all of his money back. If Adam returns the iPad the contract is terminated.

Sid makes a material representation of fact regarding his car to Barbara while out driving one day. The next day, Barbara calls Sid and offers to buy his car. Sid accepts Barbara's offer without correcting the misrepresentation of fact that he made the previous day. What is the effect of the material representation on the agreement between Sid and Barbara? a. Barbara may avoid the contract. b. Sid may avoid the contract. c. There is no effect because it was made the day before the offer was made. d. Either Barbara or Sid may avoid the contract.

a. Barbara may avoid the contract. The innocent party may avoid the contract because the misrepresentation is considered to be conduct that invalidates her consent to the agreement. -Misrepresentation (of material fact) = voidable -Misrepresentation (of very nature) = void

Jacqueline entered into an employment contract with The Umbrella Corporation that contained a covenant not to compete, as well as other provisions involving salary, a severance package, holiday compensation, and other employment-related benefits. If the court finds only the covenant not to compete illegal, what effect will such a ruling have on the remainder of the contract? a. Because this is a partially illegal contract, the remainder of the contract may be enforced. b. Because the covenant not to compete is illegal, the entire contract is illegal. c. Because this is a partially illegal contract, Jacqueline is entitled to liquidated damages on the remainder of the contract. d. None of these answers are correct.

a. Because this is a partially illegal contract, the remainder of the contract may be enforced. The remainder of the contract may be enforced because the court did not find anything illegal except the covenant not to compete.

BigOil promises Gasnow as many barrels of oil as they shall chose at $50 per barrel. In this case: a. BigOil has made an illusory promise. b. BigOil's promise is legally sufficient unless BigOil knows they are running out of oil. c. BigOil has made a conditional promise which is not sufficient to form consideration. d. BigOil's promise is legally inadequate and the courts will therefore not enforce it.

a. BigOil has made an illusory promise. Gasnow has the option not to buy any oil, so there is no consideration. -"As they shall choose" -A resulting promise to buy a certain amount would be enforceable

George and Laura make mutual promises to marry, but unknown to Laura, George is already married to Barbara. In the state where George and Laura live, bigamy (marriage to more than one person) is illegal and makes a bigamous marriage void. If Laura sues George for damages and wins, what principle may she use? a. Excusable ignorance. b. Duress. c. Unconscionability. d. None of these answers are correct.

a. Excusable ignorance. Laura is ignorant that her marriage to George was illegal.

Ch.15: Which of the following promises does have to be evidenced by a writing in order to be enforceable? a. Jack's agreement with Steve to sell his condominium for $150,000. b. Sarah's promise to work for Angie for ten months. c. Sam and Alicia decide to get married. d. Karen's agreement with Sandy to buy her sewing machine for $200.

a. Jack's agreement with Steve to sell his condominium for $150,000. A contract for the sale of land should be in writing. -Land -Goods over $500 -Promises in consideration of marriage (not mutual promise to marry) -Contacts over 1 year

Which of the following will be seen as commercial impracticability? a. Performance is rendered unjust by a supervening event not caused by her own fault. b. A shortage of materials necessary for production of goods and/or provision of services called for under the contract c. An unanticipated increase in the cost of performance d. Hardship caused by neglect or oversight.

a. Performance is rendered unjust by a supervening event not caused by her own fault. Neither party assumed the risk that the event would occur.

Mary induces James to enter into a contract. James subsequently discovers that Mary intentionally misrepresented the terms of their contract. Upon this discovery, James tells Mary that he will not perform his promise under the contract. If Mary sues James for breach of contract, will Mary win? a. No, because Mary induced James into the contract by fraudulent misrepresentations, which makes the contract voidable. b. Yes, because Mary and James have a valid agreement. c. No, because the contract was not in writing. d. Yes, so long as consideration exists.

a. No, because Mary induced James into the contract by fraudulent misrepresentations, which makes the contract voidable. Because the contract is voidable, James is excused from performing.

Sherry owns an apartment building. Sherry and Robert orally agree that Robert will rent one of Sybil's apartments, beginning immediately, for a period of one year. After one year, Robert seeks to rescind the rental agreement with Sherry on grounds that it did not comply with the Statute of Frauds. Will Robert be successful? a. No, both parties have fully performed under the oral contract. b. No, unless Robert invoked the proper provision of the statute of frauds. c. Yes, because this contract involved interest in land. d. None of these answers are correct.

a. No, both parties have fully performed under the oral contract. After all promises under an oral contract have been performed by all the parties, neither party may ask the court to rescind on the grounds that the oral contract did not meet the statute of frauds requirement. -"After one year"

Amy is Tina's sister and executor of Tina's will. In administering Tina's estate, Amy recognizes that Tina's estate will not have enough funds to pay all of Tina's debts. Amy orally promises to pay Seth, one of Tina's creditors, that she will personally pay all of Tina's debts in full. Is such a promise enforceable? a. No, such promises of an executor of a decedent's will falls under the statute of frauds. b. None of these answers are correct. c. Yes, because Seth is one of Tina's creditors and deserves to be rightfully paid. d. Yes, unless Tina promised to pay Seth before her death.

a. No, such promises of an executor of a decedent's will falls under the statute of frauds. The statute of frauds makes this promise unenforceable.

Which is NOT a correct about the UCC's "Battle of the Forms" rule? a. The UCC battle of the forms rule is what common law calls the mirror image rule. b. The UCC battle of the forms rule changes the common law's mirror image rule. c. The UCC battle of the forms rule may result in a contract with terms that are not identical to the terms included in the offer. d. What gets included in the final contract terms may depend upon whether the parties are merchants.

a. The UCC battle of the forms rule is what common law calls the mirror image rule. This is a false statement. That is not the definition of the mirror image rule. -In a battle of the forms dispute over a contract for goods, between merchants, the final agreement is to contain the terms and conditions that match both parties' forms -The terms that do not match are eliminated and any terms that are added in the acceptance, but are not material, are also a part of the agreement

Which of the following is true regarding noncompliance with the statute of frauds? a. The basic legal effect under the statute of frauds and the UCC is the same. b. The statute of frauds applies to executed and executory contracts. c. A party to a contract which was unenforceable because of the statute of frauds but who relied upon the contract may not recover in restitution the benefits he conferred on the other party. d. The doctrine of promissory estoppel cannot displace the requirement of a writing under a statute of frauds.

a. The basic legal effect under the statute of frauds and the UCC is the same. A contracting party has a defense to an action by the other party for enforcement of an unenforceable oral contract.

When it is said that a contract made by a minor is voidable, which of the following is true? a. While still a minor, he can disaffirm the contract and return the property. b. At any time before he turns 21, he can disaffirm the contract and return the property. c. Within 72 hours of the contract a minor can disaffirm the contract. d. None of these are correct.

a. While still a minor, he can disaffirm the contract and return the property. A minor can choose to disaffirm a contract or can go along with it.

Maggie owns a valuable show dog, which she knows is suffering from a disease only discoverable by a competent veterinarian. Maggie offers to sell this show dog to Naomi but does not inform her about the dog's condition. Naomi, who is not a veterinarian, makes a reasonable examination of the dog and concludes that the dog is in normal condition and purchases it from Maggie. If Naomi later discovers that the show dog suffers from the disease, can he have the sale set aside? a. Yes, because the dog has a hidden defect that would not be discovered in an ordinary examination and Maggie failed to disclose it. b. No, because Naomi should have conducted a more rigorous examination of the dog. c. None of these answers are correct. d. No, because Maggie and Noami already agreed to the sale.

a. Yes, because the dog has a hidden defect that would not be discovered in an ordinary examination and Maggie failed to disclose it. This is an example of a nondisclosure constituting a misrepresentation because Maggie was aware of it, failed to disclose it, and such disease was only discoverable by a competent veterinarian.

On March 1, Jimmy, a student, received a telephone call from Peterson, Inc. offering him a job for one year beginning on May 15, after completion of the school year. According to the personnel manager, he will have to move to Texas and be ready to start work at 9:00 a.m. on May 15. Should Jimmy ask for a letter confirming the telephone conversation if he accepts the offer immediately? a. Yes, because the job offer is for longer than one year from March 1. b. Yes, because the job offer is a collateral promise. c. No, because the job offer is for one year from May 15. d. Yes, because the job offer is covered by the parol evidence rule.

a. Yes, because the job offer is for longer than one year from March 1. Yes, the total time of the agreement will be more than one year. -One year time Fram begins when contract is made, not when the work begins

Wilma has an insurance policy on the contents of her apartment, which requires that she notify the insurance company within 60 days of any loss before she is eligible to receive payment for her loss. The notification requirement is: a. a condition precedent. b. an implied-in-law condition. c. a condition subsequent. d. a concurrent condition.

a. a condition precedent. It is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss.

Courts allow a minor a certain amount of time to disaffirm a contract when he turns 18 years of age. That time period is: a. a reasonable period of time after reaching the age of majority. b. 30 days from learning of his or her right to disaffirm. c. Ten days from his 18th birthday. d. one year from the date of the agreement.

a. a reasonable period of time after reaching the age of majority. A minor may disaffirm the contract within a reasonable amount of time after the age of majority.

Ch.17: A(n) __________ is a contract by which an obligee promises to accept a stated performance in satisfaction of the obligor's existing contractual duty. a. accord b. satisfaction c. novation d. mutual rescission

a. accord An accord is an altered contract between the same two parties.

Joe takes his car into the repair shop to have his tires realigned. While he is waiting for his car, he sees the repairmen take his car to the area where they change the car's oil. Joe tries to get their attention but cannot because he is not allowed in the repair area and there is too much noise in there for the repairmen to hear him knocking on the window. The car is then taken to the area where the tires are realigned. Joe watches while the tires are realigned. The employees next take Joe's car to be washed. Joe asks another customer in the waiting room if the car wash is complimentary (free). The customer points to the sign above the counter listing prices for services, including the car wash. Joe does not bother trying to get the attention of the repairmen because he was not successful before, but he does approach the cashier who has just returned from break. Joe tells the cashier he did not want the car washed. The cashier tells him it is too late because the car is already being washed. When Joe is presented with the bill, there is a charge for the oil change, the realignment, and the car wash. If challenged in court, the court will most likely require Joe to pay for: a. only the realignment because that is all he contracted for. b. the entire bill (oil change, realignment, and the car wash) because he had a contract with the repair shop for all three items. c. the realignment because that is what he contracted for and the car wash under the doctrine of quasi contract because he spent too much time talking to the customer before he told the cashier he didn't want the car washed. d. the entire bill (oil change, realignment, and the car wash) under the doctrine of quasi contract because Joe saw all of the work being done and was unable to stop it.

a. only the realignment because that is all he contracted for. Joe only contracted to pay for the realignment.

A noncompete agreement may be held invalid, the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest without overly restricting the employee's ability to find another job. a. reasonable and necessary b. unconscionable c. exculpatory d. usurious

a. reasonable and necessary The duration and geographic limitations must be reasonable.

To establish fraud, the misrepresentation must have been known by the one making it to be false and must be made with an intent to deceive. That knowledge is known as: a. scienter. b. negligent misrepresentation. c. sales puffery. d. All of these are correct.

a. scienter. Scienter is making a false statement with an intent to deceive.

Francisco is a concert violinist who is scheduled to perform at the Kennedy Center for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, sold by the dealer who was trying to make quick money. In this case: a. the dealer has committed fraud in the inducement. b. the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation. c. the sale is voidable by the seller for mutual mistake. d. Francisco has made a unilateral mistake and cannot avoid the contract.

a. the dealer has committed fraud in the inducement. The dealer induced Francisco to rely by knowingly making a false representation of a material fact. -The dealer specializes in violins so it was knowingly fraudulent and can be relied upon

Joe takes his car into the repair shop to have his tires realigned. While he is waiting for his car, he sees the repairmen take his car to the area where they change the car's oil. Joe says nothing as he is hoping he can get a free oil change. Joe watches while the oil in his car is changed. The car is then taken to the area where the tires are realigned. Joe watches while the tires are realigned. The employees next take Joe's car to be washed. Joe did not know his car would be washed, but knows that many car repair businesses have a practice of cleaning the cars at no additional cost to the customer after completing the repair work. When Joe is presented with the bill, there is a charge for the oil change, the realignment, and the car wash.If challenged in court, the court is most likely to make Joe pay for: a. the realignment because that is what he contracted for and the oil change under the doctrine of quasi contract. b. the entire bill (oil change, realignment, and the car wash) under the doctrine of quasi contract because Joe saw all of the work being done and did nothing to stop it. c. only the realignment because that is all he contracted for. d. the entire bill (oil change, realignment, and the car wash) because he had a contract with the repair shop for all three items.

a. the realignment because that is what he contracted for and the oil change under the doctrine of quasi contract. Under the doctrine of quasi contract, Joe will be required to pay for both the realignment and the oil change. -Avoids injustice where elements are present -Retention of that benefit by the defendant under circumstances that would make it unfair for the defendant to keep the benefit

Alma enters into a contract while drinking a highly intoxicating beverage that causes memory loss. The resultant contract is: a. voidable if Alma can establish she was so intoxicated she didn't understand the nature and consequences of her actions and/or was unable to act in a reasonable manner. b. always unenforceable. c. always void. d. always enforceable.

a. voidable if Alma can establish she was so intoxicated she didn't understand the nature and consequences of her actions and/or was unable to act in a reasonable manner. If Alma proves either of these two things, she may avoid the contract.

Sally offers to sell her Business Law textbook from last semester to Bob for $50.00. Bob accepts Sally's offer and tells her he will pay her on Friday when he gets his paycheck. A contract is formed: a. when Bob accepts Sally's offer. b. when Bob gets his paycheck. c. when Sally offers to sell her book to Bob. d. when Bob pays Sally.

a. when Bob accepts Sally's offer. A contract is formed when an offer is accepted, assuming the other requirements of a contract are also met.

Annie wants to buy a vehicle that will tow a camper. She gives the specific measurements and weight of the trailer to the salesman. The salesman tells her that the SUV Annie sees on the car lot would be just perfect to tow the trailer. Annie test drives the vehicle and then buys it. In this case: a. the element of scienter is missing. b. Annie was not justified in relying upon the salesman's representation that the car would tow the trailer. c. the salesman is in a confidential relationship with Annie. d. Annie has a valid cause of action for fraud.

b. Annie was not justified in relying upon the salesman's representation that the car would tow the trailer. Annie is not justified in basing her purchase on the opinion of the salesperson. -A salesperson does not specialize in trailer towing and could not knowingly misrepresent its capabilities -They have the right to exaggerate

Which type of condition is more common? a. Conditions subsequent are quite common in contracts. b. Conditions precedent are common in contracts. c. Neither conditions subsequent nor are conditions common in contracts. d. None of these are correct.

b. Conditions precedent are common in contracts. There are more conditions precedent in contracts.

Jamal negligently injures Gayle, for which Gayle may recover damages in a tort action. Jamal promises Gayle $10,000 if Gayle forbears from bring suit against him. Gayle accepts by not suing. What legal detriment, if any, has Gayle incurred in this case? a. Gayle has not incurred a legal detriment. b. Gayle promised to refrain from bring suit against Jamal. c. Gayle's injuries are the legal detriment that she suffered. d. Gayle had no legal right to sue Jamal for the injuries he caused, prior to the $10,000 payment.

b. Gayle promised to refrain from bring suit against Jamal. Gayle's legal detriment is a promise exchanged for a forbearance.

Ch.11: The law very carefully scrutinizes contracts between those in a relationship of trust and confidence that is likely to permit one party to take unfair advantage of the other. Which of the following is not an example of that type of relationship? a. Agent and principal. b. Hair dresser and client. c. Parent and child. d. Doctor and patient.

b. Hair dresser and client. This is not the sort of confidential relationship the law scrutinizes.

__________ means doing that which the promise was under no prior legal obligation to do. a. Bargained-for exchange b. Legal detriment c. Bilateral d. illusory

b. Legal detriment The promisor must incur a detriment. -Either something the promisor does or agrees to do, or something the promisor refrains from doing or agrees not to do (forebearance), as consideration for a promise or performance.

Mike, a 75-year-old mechanic, returned Carrie her car after fixing the brakes. Mike told Carrie: "I put some new brakes on her—she should brake with complete ease!" When Carrie drives away, she cannot stop her car and crashes into a dumpster. It is later discovered that Mike failed to reconnect one of the brake lines. There is no indication that Mike knew that he failed to reconnect the brake line. If Carrie sues Mike for fraud, and the court sides with Mike, what would be the court's reason? a. Mike was puffing. b. Mike lacked scienter because he did not make the statement with the intent to deceive. c. Carrie did not experience duress. d. Mike's statement was not a fact.

b. Mike lacked scienter because he did not make the statement with the intent to deceive. There is no indication that Mike intended to deceive Carrie to establish scienter, so it cannot be fraud.

Moe is Larry's attorney. Larry is a high school dropout with a tenth-grade education and no job. Moe graduated from an elite law school and is a highly-skilled attorney. Larry recently inherited a substantial amount of money from his mother. Rather than continue to utilize his late mother's financial management company (Golden Wealth), Moe successfully persuades Larry--after hours of closed door meetings and very high-level talks about the stock market, tax law, and legal jargon--to move his money from Golden Wealth and enter into a 10-year management agreement with Stooge Wealth Management, which is owned by Moe's best friend Curly. If Larry seeks to later void his agreement with Stooge Wealth Management, what would be his winning argument? a. Moe and Larry experienced mutual mistake. b. Moe exerted undue influence on Larry to switch from Golden Wealth to Stooge Wealth. c. Larry was under duress to enter into an agreement with Stooge Wealth Management. d. Larry experienced unilateral mistake.

b. Moe exerted undue influence on Larry to switch from Golden Wealth to Stooge Wealth. Moe can argue that Larry, in their confidential lawyer-client relationship, unduly influenced Larry to agree to a contract with Stooge Wealth because Moe, a highly-skilled and highly-trained dominated Larry's uneducated mind on the issue of wealth management. -Excessive persuasion that causes another person to act or refrain from acting by overcoming that person's free will and results in inequity -Relationships guardian and ward, spouses and beneficiary, principal and agent, parent and child, attorney and client, physician and patient, clergy and partitioner/pastor

Jose offers to sell George his iPad 3 for $150 and explains that George has five days to accept. After three days, Jose accidentally drops his iPad 3 from his third-floor apartment balcony, shattering it into tiny pieces. On the fourth day, George, who does not know that the iPad was shattered, notifies Jose that he accepts the offer. Do Jose and George have a valid contract? a. No, because the offer and acceptance were not in writing. b. No, the destruction of the iPad terminated Jose's offer. c. Yes, an offer was made and George accepted it. d. Yes, so long as the mirror rule is fulfilled.

b. No, the destruction of the iPad terminated Jose's offer. The destruction of the iPad terminated the offer, thus rendering George's acceptance without effect.

Seller orally agrees to sell land to Buyer for $50,000. Buyer pays three monthly installments of $10,000 to Seller before Seller repudiates the oral contract, and argues that the contract is unenforceable under the statute of frauds. What remedy, if any, is buyer entitled to against Seller? a. None, the statute of frauds controls, and Buyer loses $30,000. b. Restitution. c. Injunction. d. Specific performance of the land.

b. Restitution. Buyer may recover the benefits he directly conferred to seller by the unenforceable contract.

Seller agrees to sell land to Buyer for $50,000. After Buyer makes a payment of $25,000 to Seller, Seller wrongfully refuses to transfer title. If Buyer sues Seller for breach of contract and the court awards buyer $25,000, what does this figure represent? a. Foreseeability. b. Restitution. c. Injunction. d. Specific Performance.

b. Restitution. This is an alternative to damages or specific performance.

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000 and also said that he would give Bob two weeks to accept Sam's offer before he started advertising the Corvette for sale. One week later, Bob learns that Sam has sold his 1970 Corvette to Terry. Which of the following statements about the offer is correct? a. Sam's offer to Bob is a firm offer; and he must get his car back from Terry and sell it to Bob for $7,000 if Bob accepts his offer within the two weeks. b. Sam's action of selling the car to Terry is a revocation of his offer to Bob. c. Sam's offer to Bob is not a firm offer, but he cannot sell the car to Terry until the two weeks are up. d. Terry will not have to sell the car to Bob for $7,000 if Bob wants the car if Terry paid $9,000 for the car.

b. Sam's action of selling the car to Terry is a revocation of his offer to Bob. Only the innocent party can avoid the contract.

On his 17th birthday, David makes a contract to purchase a moped. In a state in which the age of majority is 18, which of the following actions would be a ratification of the contract? a. One week before his 18th birthday, David telephones the seller and says, "I intend to keep my promise to you in our contract." b. Three days after his 18th birthday, David telephones the seller and says, "I intend to keep my promise to you in our contract." c. Before his birthday David behaves as though he intends to be bound by the contract, but two days after his 18th birthday, he calls the seller and says, "The deal's off." d. None of these answers are correct.

b. Three days after his 18th birthday, David telephones the seller and says, "I intend to keep my promise to you in our contract." David's ratification took place after he reached the age of majority.

__________ means contrary to the dictates of the conscience; unscrupulous or unprincipled; exceeding that which is reasonable or customary; inordinate, unjustifiable. a. Usury b. Unconscionable c. Exculpatory d. Illusory

b. Unconscionable This refers to a contract that is grossly unfair to one party because of the superior bargaining powers of the other party.

Marilyn sells her highly successful travel agency to Adelle. In the sales contract, Marilyn agrees never to open a travel agency in the state. Which of the following best describes this contract clause? a. Binding as fair protection. b. Unenforceable as a violation of public policy. c. Valid as a reasonable restraint on trade. d. Void as an illegal violation of a statute.

b. Unenforceable as a violation of public policy. Marcia made a gratuitous promise. -Unreasonable restraints of trade are not enforceable due to violation of public policy

Susie told Kelly, "If you wash my car, I promise to pay you $20." Kelly does not reply. This exchange is an example of: a. Promissory Estoppel. b. Unilateral Contract. c. Bilateral Contract. d. Promisee's Obligation.

b. Unilateral Contract. Only Susie made a promise. -Unilateral contract is a promise made for an act or forbearance -Promissory Estoppel is a doctrine used in response to non-performance by the promisor when act or forbearance has been done in reliance

Sonny promises Maria not to foreclose for a period of six months on a mortgage that Sonny owns on Maria's real property. Relying on this promise, Maria begins to build a home on the land. If Sonny forecloses in two months, can Maria seek to enforce Sonny's promise? a. No, this contract is illegal. b. Yes, Sonny made a non-contractual promise and Maria reasonably relied on such promise and began building a home on the land. c. Yes, Maria can argue that she was under duress by Sonny. d. No, Sonny's promise was illusory.

b. Yes, Sonny made a non-contractual promise and Maria reasonably relied on such promise and began building a home on the land. Maria can invoke the doctrine of promissory estoppel to enforce Sonny's promise.

A court of equity, at its discretion, may grant a(n) __________ to command the other party to refrain from doing a specific act. a. restitution. b. injunction. c. specific performance. d. All of these are correct.

b. injunction. An injunction is a formal court order enjoining a party to refrain from doing a specific act.

Every adult is presumed to have capacity unless: a. they cannot read and write. b. it is proven that capacity is lacking or there is status incapacity. c. they understand the full legal meaning of the contract being made. d. there was a clause of the contract they did not understand.

b. it is proven that capacity is lacking or there is status incapacity. There is a presumption that people have capacity until it proven otherwise.

A person is not entitled to relief from fraud, unless she can show that she: a. was unduly influenced. b. justifiably relied on the misrepresentation. c. was physically forced to comply. d. All of these are correct.

b. justifiably relied on the misrepresentation. The misrepresentation must contribute substantially to the misled party's decision to enter into the contract.

The parties may stipulate in their contract that a certain amount of __________ should be paid in case of a breach. a. nominal damages b. liquidated damages c. mitigated damages d. breach

b. liquidated damages Parties agree to this amount before entering the contract.

An offer for the sale of goods under the UCC: a. must include a price. b. must include the quantity. c. must be made by a merchant. d. must include the time and place of delivery.

b. must include the quantity. The offer for a sale of goods must include the quantity.

Baxter, a plumber, wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Baxter's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000. In this case: a. Baxter must perform for the agreed upon price, because he has made a unilateral mistake. b. the city was aware of Baxter's mistake. When it accepted the bid, with knowledge of Baxter's mistake, the city sought to take an unconscionable advantage of Baxter's error. c. there is a case of mutual mistake. d. All of these are correct.

b. the city was aware of Baxter's mistake. When it accepted the bid, with knowledge of Baxter's mistake, the city sought to take an unconscionable advantage of Baxter's error. The city cannot take advantage of this material mistake. -They were aware of his mistake

Pam and Alexander enter into a contract on January 1 of this year. Pam's friend Callie tells Pam, "There is a statute that restricts the period of time within which an action may be brought." Callie's statement is: a. true because of covenants not to sue. b. true because of statute of limitations. c. false. d. true because of the law of repudiation.

b. true because of statute of limitations. There is a statute of limitations that restricts the period of time the parties have to bring a suit.

When only one party is mistaken as to a fact or facts of the transaction, it is termed: a. negligent misrepresentation. b. unilateral mistake. c. subjective concealment. d. mutual mistake.

b. unilateral mistake. Only one party is mistaken as to the fact.

The customs and __________ or commercial activity to which the contract relates may be used to interpret the terms of a contract. a. course of dealing b. usage of trade c. course of performance d. extrinsic set of evidence

b. usage of trade The usage of trade refers to the practice engaged in by the trade or industry. -Course of dealing = conduct between parties -Usage of trade = practice engaged by industry

Mary is a person who experiences hallucinations and other psychotic episodes. She has been adjudicated incompetent and a guardian has been appointed to care for her. Any contracts from this point forward are: a. valid. b. void. c. voidable. d. enforceable.

b. void. Mary has a guardian under court order.

Which of the following offers cannot be revoked? a. An offer to pay the high school student next door if he takes in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is prior to leaving for vacation. b. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before any mail has been delivered. c. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before your return from vacation but after he has collected your mail for all the days that you have been on vacation up until the revocation. d. None of these are correct.

c. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before your return from vacation but after he has collected your mail for all the days that you have been on vacation up until the revocation. Even though the offer is not accepted until performance has been completed, once the offeree has substantially begun performance, justice requires that the offeror should no longer be able to revoke the offer.

A convenience store robbery has occurred. The merchant's association has offered a $2,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming they are entitled to the money. Which of the following people would not be eligible for the reward? a. A customer of the store. b. An off-duty game warden from a county other than the one where the arrest occurred. c. An on-duty sheriff's deputy in the county where the arrest occurred. d. All of these individuals would be eligible.

c. An on-duty sheriff's deputy in the county where the arrest occurred. An on-duty sheriff's deputy has a public obligation to assist in the investigation and arrest. He or she would not be eligible for a reward for fulfilling this duty.

Chase and Tyler are best friends and fellow police officers. One day, Chase came home with a brand new, top-of-the-line Ford F-150 4x4 pickup valued at $38,000 and showed it to Tyler. Tyler told Chase that he wanted a truck just like his. Jokingly, Chase says, "Sure thing, buddy. I'll sell you my new pickup for $100 and a six-pack of beer!" If Tyler seeks to accept Chase's offer, what is Chase's best defense? a. Chase's terms were open. b. Chase's offer is undervalued. c. Chase intended the offer as a joke and a reasonable person would understand it to be a joke. d. Chase was merely advertising a price to Tyler.

c. Chase intended the offer as a joke and a reasonable person would understand it to be a joke. Chase's offer is intended as a joke, and no reasonable person would believe that Chase would sell a truck valued at $38,000 for $100 and a six pack of beer.

Sherry owns an apartment building. Sherry and Robert agree in writing that Robert will rent one of Sybil's apartments, beginning immediately, for a period of one year. Outside of the written contract, Sherry orally promised Robert that the apartment would have wooden floors and not carpet. Shortly after moving in, Robert discovers that only the front entrance to the apartment has wooden floors, and the remainder of the apartment contains carpet. If Robert seeks to void the rental agreement with Sherry on the grounds that Sherry committed misrepresentation by telling him that the entire apartment had wooden floors. If Sherry invokes the parol evidence rule, will she be successful? a. Yes, the rental agreement was in writing and no parol evidence regarding wooden floors may be admitted. b. Yes, Robert should have requested the wooden floors in writing. c. No, because Robert is alleging misrepresentation. d. None of these answers are correct.

c. No, because Robert is alleging misrepresentation. When utilizing the defense of misrepresentation to nonperformance of a contract, the parol evidence rule does not apply.

Sherry owns an apartment building. Sherry and Robert agree that Robert will rent one of Sherry's apartments, beginning immediately, for a period of six months. Under the statute of frauds rule, does this lease need to be in writing to be enforceable? a. No, because it does not involve an interest in land. b. Yes, because it involves an interest in land. c. No, because it is a short-term lease of less than one year. d. Yes, because it involves a promise to pay the debt of another.

c. No, because it is a short-term lease of less than one year. Although a promise to transfer an interest in land, including leases, requires a contract under the Statute of Frauds, most states have an exception for leases of less than one year.

When a minor's guardian furnishes her with an adequate wardrobe would a new hoodie be a necessary (in the majority of states)? a. Yes, the hoodie is a necessary because it is clothing. b. Yes, it is a necessary if the minor decides she needs it. c. No, necessaries are items not provided by the guardian. d. No, the minor is not stuck with clothing of the guardian's choice.

c. No, necessaries are items not provided by the guardian. Necessaries are items that the minor is lacking.

The Acme Corporation contracts with the ToysandMoretoys Corporation to sell to ToysandMoretoys its entire production. After signing the agreement, if Acme increases its production from one shift to two shifts will ToysandMoretoys have to buy all of the doubled production? a. Yes, they take the risk that Acme will increase production. b. Yes, they are lucky to get the chance to handle the product exclusively. c. No, there are good faith limitations on output contracts. d. No, ToysandMoretoys always has the right to limit how much they buy.

c. No, there are good faith limitations on output contracts. ToysandMoretoys might have to buy a slightly increased output, but not such a drastically increased amount.

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000. Later, Sam finds out 1970 Corvettes which are in excellent condition and have all the original parts sell for closer to $57,000. He changes his mind about selling his Corvette to Sam for $7,000. Which of the following statements about the offer is correct? a. Sam can reject his offer to Bob at any time so long as there is still an offer to reject. b. Sam cannot revoke his offer to Bob if Sam sells cars because then his offer is a firm offer. c. Sam can revoke his offer to Bob at any time so long as there is still an offer to revoke. d. Sam cannot revoke his offer to Bob because he made it via email and email is considered a writing.

c. Sam can revoke his offer to Bob at any time so long as there is still an offer to revoke. None of the exceptions to the general rule that an offeror can revoke its offer apply to this situation.

What is the effect of slight intoxication on the capacity of a person to enter into a contract? a. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. b. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. c. Slight intoxication will not destroy one's contractual capacity. d. To make a contract voidable, a person need not be so drunk that he is totally without reason or understanding.

c. Slight intoxication will not destroy one's contractual capacity. However, a person need not be so drunk that he is totally without reason or understanding.

__________ is a set of oppressive or grossly unfair contract terms or exclusions. a. Procedural unconscionability b. An exculpatory clause c. Substantive unconscionability d. Tortious conduct

c. Substantive unconscionability An example might be a provision involves a buyer in need who obtains an exorbitant price.

Buyer and Seller have entered into a contract for the sale of several goods worth hundreds of thousands of dollars. In the contract, which was prepared by Seller, Seller included a clause that stated conspicuously "If Seller sues Buyer for any and all claims related to this contract, Buyer hereby waives all available defenses in law and equity." If the court finds this clause substantively unconscionable, what would be the reason? a. This was unfair negotiation process. b. Seller obscured this waiver clause. c. Such a clause is grossly unfair because it takes away any legal defenses that Buyer has. d. None of the answers are correct.

c. Such a clause is grossly unfair because it takes away any legal defenses that Buyer has. This is a factor courts consider in determining substantive unconscionability.

__________ is an offer by one party—who is ready, willing, and able to perform—to the other party to perform his obligation according to the terms of the contract. a. Rendering b. Offering c. Tender d. Presentment

c. Tender A party offers to perform.

Betty is looking at the grocery ads in the newspaper and sees that canned tuna is on sale for 6 cents. Because this is an amazingly low price, she rushes off to the grocery store. She loads 10 cans into her cart, goes to the checkout counter and hands the cashier 60 cents. The cashier asks for $6.90 and tells her that the tuna is 69 cents per can and that the ad was a misprint. Betty demands that the tuna be sold to her for 6 cents a can. Which of the following statements about the ad is correct? a. The ad is a contract and the store has a contractual obligation to sell the tuna to Betty for 6 cents a can. b. The ad is an offer and Betty has accepted the grocer's offer; therefore, there now is a contract between the grocer and Betty for the sale of tuna in exchange for 6 cents per can. c. The ad is an invitation for others to make offers. Betty has made an offer to buy the tuna for 6 cents a can and the grocer has rejected Betty's offer, but countered with an offer to sell it to Betty for 69 cents per can. d. The ad is a firm offer made by a merchant and the grocer must sell Betty the tuna for 6 cents a can.

c. The ad is an invitation for others to make offers. Betty has made an offer to buy the tuna for 6 cents a can and the grocer has rejected Betty's offer, but countered with an offer to sell it to Betty for 69 cents per can. The general rule of law is that ads is that they are invitations or solicitations for offers to be made by potential buyers.

What is a requirement of an express contract? a. It is written and signed. b. It is based on the conduct of the parties. c. The terms are stated in words. d. It consists of a promise in exchange for an act.

c. The terms are stated in words. The words may be oral or written.

Jose is a race car driver and contracted with Peter to race Peter's car in an upcoming car race. The night before the race, Peter's car caught fire, was severely charred, and was inoperable. What concept would allow Jose to be excused from performing under the contract? a. satisfaction. b. novation. c. impossibility. d. accord.

c. impossibility. It is objectively impossible for Jose to perform under the contract, because the car has been destroyed by fire.

Alfie enters into a contract to give Ezra the right of first refusal on a tract of land owned by Alfie. Alfie subsequently offers the land to Frank without first offering it to Ezra. An appropriate remedy for Ezra to seek would be: a. reformation. b. punitive damages. c. injunction. d. liquidated damages.

c. injunction. An injunction is a court order prohibiting a party from doing a specific act.

Retail stores typically put advertisements in newspapers describing goods and stating prices. These ads are generally considered to be: a. offers only if they are made by merchants b. offers only if they are not made by merchants. c. invitations to buyers to make an offer to buy the goods described. d. firm offers.

c. invitations to buyers to make an offer to buy the goods described. Ads are generally treated as solicitations for others to make an offer rather than as offers.

Sometimes the law imposes a duty of disclosure. When a fiduciary is silent, silence may constitute fraud. A fiduciary is one who: a. has the same duty of disclosure to the other party to the relationship as one who is not a fiduciary. b. must deal at arm's length with the other party to the relationship. c. is in a confidential relationship who owes a duty of trust and loyalty to another. d. All of these are correct.

c. is in a confidential relationship who owes a duty of trust and loyalty to another. A fiduciary has a duty to be loyal.

Ch.13: A __________ is an essential element for a promise or agreement to binding. An agreement without this is unenforceable and contrary to public policy. a. licensing statute b. past consideration c. legal objective d. All of these are correct.

c. legal objective A legal objective is an essential element for an enforceable contract.

Mabel is 88 years old and under the court ordered legal guardianship of her daughter. One day Mabel receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. The contract is: a. valid. b. voidable. c. void. d. unconscionable.

c. void. Mabel does not have the capacity to enter a contract. -Minors = voidable -Unable to comprehend consequences = voidable -Court ordered incapacitated = void

In a __________, the parties stipulate that one shall win and the other lose depending on the outcome of an event in which their only interest is the possibility of such gain or loss? a. monopoly b. usury c. wager d. All of these are correct.

c. wager Courts wills refuse to recognize the enforceability of a gambling agreement.

Which of the following would meet the signature requirement for a writing to satisfy the statute of frauds? a. Initials of both parties. b. An electronic signature. c. A printed name. d. All of these are correct.

d. All of these are correct. All of the above are ways that a person can sign.

Which of the following, if any, are requisites for fraud in the execution? a. False representation as to the very nature of the contract. b. Signing party does not know the character or essential terms of the contract. c. Renders the transaction void. d. All of these are correct.

d. All of these are correct. All of the factors should be present.

A minor can avoid a contract to purchase a car if: a. the car has been destroyed. b. the car has been damaged. c. he grows tired of it. d. All of these are correct.

d. All of these are correct. All of the options are correct.

General contract provisions of a writing must: a. specify the parties to a contract. b. specify the subject matter and essential terms. c. be signed by the party to be charged or his agent. d. All of these are correct.

d. All of these are correct. All of the options are necessary.

Parol evidence is admissible to show: a. fraud. b. duress. c. mistake. d. All of these are correct.

d. All of these are correct. All of the options are possible.

What is the capacity of a person adjudicated incompetent by a court order? a. A merchant might be able to recover the fair value of any necessaries. b. The person's own contracts are void. c. The guardian may be able to ratify contracts made by the ward. d. All of these are correct.

d. All of these are correct. All of the options are true.

Leo tells Nora "I promise to pay you $5,000 next year." Next year, Leo fails to pay Nora and Nora sues. Is Leo's promise enforceable? a. No, this promise is unsupported by consideration. b. No, because Nora is not undertaking anything to her legal detriment. c. No, because Leo's promise is a gratuitous promise made without consideration. d. All of these are correct.

d. All of these are correct. All of these answers are correct because they lack consideration, Leo's promise is gratuitous, and Nora did not bargain anything in exchange.

The Jones' have always admired a house that sits on the top of a hill owned by the Smiths. Martin is a mutual friend of both the Jones and the Smiths. One day, Martin mentions to the Smiths how much the Jones would love to buy the Smith home. The Smiths say that if they sell the house, they would be happy to sell it to the Jones. Martin relays this conversation to the Jones and the Jones immediately call the Smiths to accept the Smith's offer to sell. Have Smiths made an offer to sell their home to the Jones? a. No. The Smiths did not objectively intend to make an offer because they did not clearly state they were willing to sell the house. b. No. The Smiths did not include a selling price in their conversation with Martin so the offer would fail for lack of specificity and definiteness. c. None of these are correct. d. All of these are correct.

d. All of these are correct. These are both reasons why the Smiths have not made a valid offer. -Real estate contracts must be in writing and have price

Daniel is a self-made millionaire, but he has been medically committed to a mental health facility. A court also ordered Daniel's sister, Michelle, to preside over Daniel's business affairs. Once inside the mental health facility, Daniel befriends his nurse, Amanda. One day, Amanda tells Daniel about her invention to help identify stray dogs and cats. Daniel was so impressed by Amanda's invention that he offers to buy it for $500,000. Amanda accepts Daniel's offer. Did Daniel and Amanda form a contract? a. Yes, because Daniel offered to buy Amanda's invention, and Amanda accepts the offer. b. Yes, because the contract is perfectly legal. c. No, because the agreement lacks consideration. d. No, because Daniel lacks the capacity to contract.

d. No, because Daniel lacks the capacity to contract. Daniel lacks the capacity to contract by virtue of his medical commitment and court-ordered financial manager.

Alan finds Marcia's dog on the side of the road. He then takes the dog home and treats the dog's injuries. When he calls Marcia to tell her he has found the dog, she promises to reimburse Alan for the cost of treating the dog. Is Marcia's promise binding? a. Yes, because she should be grateful to him. b. Yes, because Marcia promised to pay him. c. No, because Alan is not a health care professional. d. No, because there was no bargained-for exchange.

d. No, because there was no bargained-for exchange. Alan rendered aid without any promise of payment. -Past consideration

Andrew received a bill for $500 from Jeff for a tune-up Jeff performed on Andrew's SUV. Andrew called Jeff and told him, "The car runs no better now than before the tune-up. I am sending you $200 and no more." Jeff received the $200 check which was marked "paid in full SUV repair" and cashed it. Is Andrew still liable to Jeff for the remaining $300? a. Yes, Andrew is liable for the full amount of the repair. b. Yes, only a court can order that the amount was unfair. c. No, customers can pay the amount they think is fair. d. No, if the check is marked "paid in full" and references the transaction.

d. No, if the check is marked "paid in full" and references the transaction. The cashing of the check by Jeff discharges the entire debt.

Stephanie induces Wanda to purchase 100 shares in Zazzy Corporation at a price of $100 per share. Stephanie tells Wanda that she paid $ 0 for them the previous month. In fact Stephanie only paid $50. How can this representation of a past event be characterized? a. This is a mutual mistake of fact. b. The representation is a misrepresentation of law. c. The fact that was misrepresented was not material. d. The representation of a past event is a misrepresentation of fact.

d. The representation of a past event is a misrepresentation of fact. Stephanie knowingly misrepresented the facts.

Sam agrees to sell Gina a BMW automobile, both believe to be inoperable, purely for parts. The contract price is $500. Prior to the delivery of the BMW, Sam discovers that the car was simply out of fuel, runs like a dream, and refuses to deliver the automobile to Gina. The value of the operable BMW is now at $3,000. if the court allows Sam to rescind the contract, what would be the reason? a. Sam was under duress. b. All of these are correct. c. This is a case of unilateral mistake on Sam's part. d. This is a case of material mistake by both parties.

d. This is a case of material mistake by both parties. Both Sam and Gina were mistaken as to a material fact.

Darryl contracted with Right Builders to build an addition to his house for $25,000. After digging the foundation, Darryl decides he wants to have the house done earlier than was originally agreed. Right Builders agree, but say that it will need to charge an additional $5,000 for the job. Assuming Darryl agrees, which of the following is correct? a. Darryl will only have to pay $20,000. b. This is a contract under seal which is enforceable. c. This is the settlement of a disputed debt that requires no additional consideration on the part of Right Builders. d. This is a modification of a preexisting contract, but Right Builders has provided additional consideration since they are expediting the completion of the project.

d. This is a modification of a preexisting contract, but Right Builders has provided additional consideration since they are expediting the completion of the project. If the promise is to do something that is not part of the first contract, then the promise of the other party is binding.

When is there an effective acceptance of an offer to enter into a unilateral contract? a. When the offeree says he probably will do what was asked of him in the offer. b. When the offeree begins to do what was asked of him in the offer. c. When the offeree has substantially but not fully performed what was asked of him in the offer. d. When the offeree has fully performed what was asked of him in the offer.

d. When the offeree has fully performed what was asked of him in the offer. A unilateral contract starts when the offeree has fully performed what was asked of him in the offer.

Jayden, a U.S. citizen, contracts with a Canadian life insurance company for $100,000 dollars of coverage. The insurance company sends Jayden an e-mail, which Jayden signs, scans, and returns. Will a court entertain parol evidence on whether the parties intended for the policy to be valued in Canadian dollars or U.S. dollars? a. No, because the parties should have been more specific about the currency issue and are stuck with what they have signed. b. No, the court will look to the document to determine the parties' intent. c. Yes, because of the Foreign Corrupt Practices Act. d. Yes, because the intent of the parties is uncertain.

d. Yes, because the intent of the parties is uncertain. The background from which the contract and dispute arose may help in determining the intent of the parties.

Ordinarily, courts do not consider the __________ of the consideration given for a promise. a. legality b. assumption of the risk c. modification d. adequacy

d. adequacy The court will not second-guess the value a person attaches to a good or service.

Furniture Store runs an ad in the local Sunday newspaper announcing a special sale on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. Joe goes to the store to purchase the table but sees another very similar table that is not on sale ("the regularly priced table"). He offers to buy the regularly priced table from the store for the sale price of the Brandname table. The store says that it cannot sell it at the sale price, but it can sell it for 10% off the listed price. Joe says that is too much money to spend for the regularly priced table. Joe continues to shop around. Seeing nothing he likes, he decides to buy the regularly priced table for 10% off. When he goes to pay for the table, the store charges him full price. If challenged in court, the court is most likely to: a. find that the store effectively revoked its offer when it charged Joe full price. b. find that by going into the store to look at the advertised table, Joe accepted the store's offer to sell the Brandname table to Joe for the sale price and, therefore, Joe is contractually obligated to pay for and accept the Brandname table. c. find that the store is contractually obligated to sell the table to Joe at 10% off the regular price because the store made that offer to Joe and Joe accepted the store's offer. d. find that the Joe's initial rejection of the store's offer to sell the regularly price table for 10% off effectively terminated that offer; that Joe is now making an offer to purchase the regularly priced table for 10% less than the asking price; and the store is free to accept or reject Joe's offer.

d. find that the Joe's initial rejection of the store's offer to sell the regularly price table for 10% off effectively terminated that offer; that Joe is now making an offer to purchase the regularly priced table for 10% less than the asking price; and the store is free to accept or reject Joe's offer. Joe's decision to shop around effectively terminated the offer and is now required to receive a new offer from the store.

The breaching party is not liable for loss that was not __________ at the time of entering into the contract. a. mitigated b. out-of-pocket c. liquidated d. foreseeable

d. foreseeable Loss may be deemed foreseeable as a probable result of a breach.

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event whose nonoccurrence was a basic assumption on which the contract was made, his remaining duties can be discharged by: a. commercial impracticability. b. commercial impossibility. c. economic frustration. d. frustration of purpose.

d. frustration of purpose. The purpose of the contract may have no value to the party entitled to receive performance.

Vince has lost his job and is having difficulty making ends meet. Last week, the bank repossessed Vince's car. He is telling his neighbor Paul about his bad luck and Paul says he wishes he could help Vince. Paul suggests that maybe Vince could have the old car sitting in Paul's garage if Vince could get it to run. He ends the conversation by saying "Let me think about it." The next day while Paul is at work, Vince goes into Paul's garage and begins working on the old car. He gets it running and drives it out of Paul's garage and into Vince's driveway. When Paul gets home from work, Vince shows Paul the car and asks him for the title to the car. Paul tells Vince he had not made up his mind about whether or not he would give Vince the car. Vince: a. can collect reasonable value for the work he did on Paul's car under the doctrine of quasi-contract. b. has no claim to the car because Vince's financial problems made him incapacitated. c. has no claim to the car because he did not have a written agreement with Paul. d. has no claim to the car because Paul did not make a promise.

d. has no claim to the car because Paul did not make a promise. There is no contract and there is no promissory estoppel because Paul never made a promise to Vince to give him his car.

In determining the meaning of an ambiguous contract the court will: a. ignore the issue of who drafted the contract. b. treat the parties equally in terms of strict interpretation. c. interpret the contract strictly against the person who failed to draft it. d. interpret the contract strictly against the person who drafted it.

d. interpret the contract strictly against the person who drafted it. The drafter of the contract is perceived as having an advantage.

On July 8, 2015, Mural, Inc. entered into a contract with Walls-R-Us Company. Under the contract, Mural, Inc. will provide technical support to Walls-R-Us from August 1, 2015 until August 31, 2018. Under the statute of frauds, this contract: a. does not require a writing because the agreement is for services, not goods. b. does not require a writing because the term of the contract is one year. c. requires a writing because the contract cannot be performed within one year from August 1, 2015. d. requires a writing because the contract cannot be performed within one year from July 8, 2015.

d. requires a writing because the contract cannot be performed within one year from July 8, 2015. The total time for performance of the agreement is more than one year from the time the contract was made.

An injured party who rescinds a contract after having performed services may recover the reasonable value of the performance rendered as: a. foreseeability. b. certainty. c. mitigation. d. restitution.

d. restitution. Money paid by the injured party may also be recovered.

Molly signs a contract with a publishing company to edit text manuscripts. This contract is governed by a. the law of quasi contract. b. Article 2 of the UCC. c. federal statute. d. state common law.

d. state common law. Most contracts are governed by state common law.

Cinnful Buns, Inc. entered into a contract with Darius under the terms of which Darius would receive $10,000 if he stole the trade secret recipe from the leading competitor of Cinnful Buns. Darius performed his end of the agreement by delivering the recipe. Cinnful Bunns now refuses to pay Darius for his services. Darius has this option, he: a. may recover based upon the express contract of the parties. b. may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of Cinnful. c. will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by Cinnful. d. will be unable to recover, because this is an illegal contract.

d. will be unable to recover, because this is an illegal contract. This activity is against the law.

Wendy is taking a prescribed medication which makes her drowsy and inattentive. If she enters into a contract when she is in that condition, the contract: a. would be unaffected as long as she took the medication exactly as prescribed by her doctor. b. would be void. c. would be void only if the medication impaired her ability to act in a reasonable and rational way. d. would be voidable if, when she makes them, she is unable to comprehend the subject, nature, and consequences of the contracts.

d. would be voidable if, when she makes them, she is unable to comprehend the subject, nature, and consequences of the contracts. The contract would be voidable if she could prove she was unable to understand the consequences.


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