BUS 240 Final

Once all the terms of the contract have been fully performed, the contract has been _________. As long as some of the terms have not yet been performed, the contract is ________.

executed; executory

The terms of __________ contracts are all clearly set forth in either written or spoken words.

express

A(n) _____ occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.

express ratification

The legal principle of _____ means that both parties to a contract are equally responsible for an illegal agreement.

in pari delicto

Which of the following can be considered an offer?

An auction without reserve

_________ is the possession of a mental or physical defect that prevents a natural person from being able to enter into a legally binding contract.

Incapacity

The minor's right to disaffirm is designed to protect the minor from competent parties who might otherwise take advantage of him or her. But most states have determined that the minor should not have the right to disaffirm which of the following types of contracts?

Minors should not have he right to disaffirm all of these types of contracts

Which of the following is an exception to the preexisting duty rule?

Unforeseen circumstances

Which of the following statements accurately brings out the difference between bilateral and unilateral contracts?

Unilateral contracts call for actions, not promises, whereas bilateral contracts involve promises in exchange for promises.

Bobby tells Alyssa (Shelley's agent) to tell Shelley he will sell his used Jeep to Shelley for $5,500 cash. Shelley's brothers, Kyle and Chris, overhear the offer. Who can accept Bobby's offer?

Shelley and Alyssa (on behalf of Shelley)

Which of the following is not considered a material term?

all of these examples are considered material terms

In a(n) ______________ , the seller is treated as making an offer to accept the highest bid and therefore must accept it.

auction without reserve

A person has _________ to enter into a contract if she suffers from a mental illness or deficiency that prevents her from understanding the nature and obligations of the transaction.

limited capacity

In a contract made by a minor, the:

minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority.

Under the UCC, a(n) ____________ is an agreement whereby the buyer agrees to purchase all of his or her goods from one seller.

requirement contract

If an offer merely authorizes certain modes of acceptance but does not condition acceptance on the use of those modes, use of an unauthorized means of acceptance:

results in a contract only after the acceptance is received by the offeror.

The mirror-image rule says that the terms of the acceptance must mirror _________.

the terms of the offer

Felipe, Adam, and Shirley are neighbors. Felipe overhears Adam's offer to sell an antique clock to Shirley for $3,000. Under these circumstances, _____.

Felipe makes a new offer to Adam when he offers to buy the clock for $3k

A bond used as bail in a criminal case is which type of contract?

Formal contract

Which of the following refers to agreements in which parties pay consideration for the chance, or opportunity, to obtain an amount of money or property

Gambling

Suppose Bekah agrees to do bodywork on Fatima's car. In exchange, Fatima agrees to be a poker dealer at Bekah's underground casino. In the state where Bekah and Fatima live, there is a gaming statute that says all games of chance other than slot machines and the state lottery are illegal. Would the agreement between Bekah and Fatima be enforceable?

No, because part of this agreement violates a law and therefore, the agreement calls for crime.

__________ are created by the courts to prevent one party from being unjustly enriched at the expense of another.

Quasi-contracts

A contract is referred to as a(n) _____ when a court can void the illegal part of the contract and enforce the rest as long as they represent the main purpose of the original agreement.

Severable contract

In which of the following situations do the parties to a contract lack contractual capacity?

When one of the parties to the contract is intoxicated.

Brian offers to sell Rachel his computer for $200. Rachel says that she will look at the computer in the morning, and if she likes it she will buy it for $200. At this point, Rachel has not committed to doing anything. This is an example of a(n):

illusory promise

Suppose Markus offers to sell Zara his surfboard for $200. Zara responds, "I'll look at it on the weekend, and if I like it, I'll pay you." At this point, Zara has not committed to doing anything. The law considers this a(n) ________________.

illusory promise

A void contract is:

in effect not a contract at all; either its object is illegal or it has some defect so serious that it is not a contract.

A key feature of a voidable contract is that:

one or both parties have the ability to either withdraw from or enforce the contract.

Tracy offers Liam a job as a store manager at a liquor store, which she plans to open in a small property owned by her husband. The property is located near a school. Before Liam accepts the offer, the state passes a rule that liquor stores cannot be located within a five-mile radius of a school. In this scenario, the employment offer terminates due to:

subsequent illegality of the subject matter.

In some states, courts consider the purpose of the licensing statute when determining the effect of the agreement. If a licensing statute is intended simply to generate revenue, then the contract of an unlicensed person is _________.

valid

A(n) ___________ contract is a contract in which one or both parties has the ability to either withdraw from or enforce the contract.

voidable

Technically, minors can disaffirm contracts for necessaries, but they will still be held liable for the reasonable value of the necessary. Which of the following is generally an example of a necessary?

All of these

_____ as an element of a contract refers to what each party gets in exchange for his or her promise under the contract.

Consideration

_____ is best described as what a person will receive in return for performing a contract obligation.

Consideration

Ronald agrees that he owes a bank $10,000, as claimed by the bank. Ronald explains to the bank that he can only pay the bank $8,000 as full payment toward the money he owes. The bank agrees to accept $8,000 from him. The following month, Ronald receives his new bank statement claiming that he still owes the bank $2,000. Which of the following statements is true of this scenario?

If Ronald does not agree to pay the remaining $2k, the creditor may sue Ronald for the balance it believes is owed.

Which of the following is true of an accord and satisfaction?

If a creditor inadvertently cashes a debtor's "paid in full" check, he can repay the debtor the same amount within 90 days to invalidate an accord and satisfaction.

Which of the following is true of the mailbox rule?

It provides that the acceptance of an offer is valid when the offeree places it in the mailbox.

In employment contracts, what is the purpose of covenants not to compete?

It restrains an employee from competing with her boss for a designated period of time after she quits her current job.

Which of the following can be used as a defense to the enforcement of a contract?

Lack of genuine assent

Todd leaves his babysitter, Zach, a voice mail message saying, "I need someone to watch little Joey and Hilary on Friday night. If you can babysit on such late notice, I'll pay you an extra $40 on top of your usual rate. If I don't hear from you by 5 p.m. tomorrow, I'll assume we have a deal." If Zach does not call back, has a contract been created?

No, because silence under these circumstances will not constitute acceptance.

A store places an advertisement in the newspaper for "Sale on Dell laptops - All Dell laptops for sale for $500 the last week in July!" Is the store making an offer?

No, the store is merely inviting potential customers to come to the store and offer $500 for a computer.

Frank works as a cell phone salesman. He has worked at the same company for the past two years, and one day his boss approaches him with good news. He says because Frank has sold so many phones lately, he is going to give Frank a $500 bonus. Three weeks later, Frank has still not received the bonus. Can Frank sue his boss to enforce the promise?

No, this is an example of past consideration.

The _____ states that we base the existence of a contract on the parties' outward manifestations of intent and we base its interpretation on how a reasonable person would interpret it.

Objective theory of contracts

Which of the following is true of the intent of an offeror to be bound by an agreement?

The courts interpret intent to contract only by the offeror's outward manifestations.

Which of the following is an element of an offer under common law?

The intent to be bound by an acceptance

Covenants not to compete in conjunction with the sale of a business are generally __________ if they are for a reasonable length of time and involve a reasonable location.

enforceable

The mail-box rule is not applicable when there is ______________.

instantaneous communication

When a counteroffer is made by an offeree, the original offer:

is terminated.

If the offer is for a unilateral contract, the offeree can accept only by __________________.

providing the requested performance

If a party to a contract asks for an additional amount of money and agrees to do more work than the contract requires, the result is that the promise:

to do the extra work is valid consideration.

After a football game, Tyler and Austin want to enter into a contract together. Tyler is completely sober, but he knows Austin is very intoxicated and is so impaired that he is unable to understand the terms of the contract. If they enter into a contract, the contract would be ________.

voidable

Under the common law, which of the following qualifies an acceptance as a valid acceptance?

A valid acceptance requires all three of these elements.

If no means of communicating the acceptance is specified, what type of means of accepting is generally not acceptable?

All of these are generally acceptable ways to communicate an acceptance.

For a court to enforce a promise, who must offer consideration?

Both sides

The law of contracts is primarily _________.

Common law

Which of the following conditions must be present for an offer to have a legal effect?

Definite and certain terms

Suppose a 17-year-old, Kendall, enters into an agreement to purchase a Harley Davidson from an ad she saw in the paper. She will pay $1,000/month until the bike is paid off. After making the third payment, Kendall turns 18 and decides to move out of state. She e-mails the seller of the motorcycle and tells him not to worry because even though she is moving, she still intends to make her monthly payments to purchase the bike. The above scenario is an example of what legal concept?

Express ratification

Who can accept an offer? I. Offeree II. Offeree's agent III. Anyone the offeree told about the offer

I & II

A door-to-door hearing aid salesman specifically targets elderly clients. When the clients ask questions about the contract, the salesman is not truthful with them entirely. The answers to their questions are usually found on the tiny, hard-to-read print on the very back of the long contract the clients must sign. The salesman knows that his clients have poor vision and hearing, and uses this to his advantage in his sales techniques and with the small contractual terms. The scenario above is a possible example of which type of agreement?

Procedural unconscionability

_____ are best described as contractual obligations imposed by the courts in order to prevent one party from being unjustly enriched at the expense of another.

Quasi-contracts

A bond used as bail in a criminal case is an example of a _____.

Recognizance

Which of the following is true of authorized means of acceptance of an offer?

The means by which an offeree can communicate acceptance to an offeror can be expressly stated in the offer.

_____ occurs when a party gives a loan at an interest rate exceeding the legal maximum.

Usury

If a person has been adjudicated insane and has a guardian appointed, any contract the person attempts to enter into is:

Void

This type of contract is not a contract because either its object is illegal or it has a serious defect.

Void contract

Section 16 of the Restatement of Contracts provides that contracts of an intoxicated person are _____ if the other party had reason to know that intoxication rendered the person unable to understand the nature and consequences of the transaction.

Voidable

In which of the following situations is a consideration valid?

When past consideration is given with expectation of future payment.

When is a contract deemed void?

When the contract is entered into by an intoxicated person who has been adjudicated a habitual drunkard.

Which of the following types of agreements is not a type of agreement that is generally illegal in many states?

agreements for the sale of a used product

A counteroffer occurs when:

an offer is made by an offeree to his or her offeror relating to the same matter as the original offer made by the offeror.

A(n) __________ releases one of the contracting parties from all liability, regardless of who is at fault or what injury is suffered.

exculpatory clause

In an unliquidated debt, an accord is best described as the:

new agreement to pay less than the creditor claims is owed.

A promise to do something that you are already obligated to do is ________________.

not valid consideration

In a unilateral contract, if one party's consideration is a promise, the:

other party's consideration will be an act.

Kevin is offered a job by a reputed company in a different city. To take up the new job, Kevin quits his previous job and moves to the new city along with his family. When he shows up at work, he is told that there is no job. Kevin can sue the employer under the theory of _____.

promissory estoppel

A debt is unliquidated when:

the parties dispute over the existence or amount of the debt.