Business Law CH. 3

Non-competition

A contract agreement in which an employee agrees not to work for a business competitor for a specific period of time or in a specific region is known as a(n) _________________ clause. Usury Non-competition Exculpatory Capacity

Formal

A contract that requires special forms and/or signatures is known as a(n) _________________ contract. Executory Objective Informal Formal

Revoke an offer

An offeree may do all but which of the following? Revoke an offer Accept an offer Reject an offer Present a counteroffer

Obligee

Dynatron has to recover $2,000 from a client for its services. The recovery period for clients is 90 days, but Dynatron needs the money immediately. It sells the right of collecting money from its client to InstaCollect, a collections agency. In this situation, Dynatron is the _________________. Obligee Obligor Assignee Assignor

Both Molly and Galaxy Pictures can agree that their contract may be assigned.

Molly, a famous actress, signs an agreement to star in a romantic comedy with Galaxy Pictures, a movie studio. Which of the following is true of this contract? Galaxy Pictures can include Molly in another movie as well. Galaxy Pictures can assign the contract to another movie studio. If Molly is injured, she can assign the role to Zoe, another famous actress. Both Molly and Galaxy Pictures can agree that their contract may be assigned.

Force majeure

The _________________ clause discharges contract performance in the event of natural disasters. Non-competition Force majeure Exculpatory No-fault

Main purpose rule

The _________________ states that unless the main purpose of the contract is to benefit the guarantor, the contract must be in writing. One-year rule Statute of Frauds Main purpose rule Parol evidence rule

Firm Offer

Under the _________________ rule, an offer made by one merchant to another may remain open for a set time, during which it cannot be revoked. Main purpose Parol evidence Firm offer Mirror image

All contracts must be in writing to be valid.

Which of the following is not a true statement? All contracts must be in writing to be valid. A writing may include several documents which are integrated into a whole. Contracts that establish an agency relationship for the sake of real estate must be in writing. Contracts involving interest in land must be in writing.

Ann promises to give Mary $10,000 because she helped finish Ann's basement last summer.

Which of the following is not a valid example of consideration? Ann buys Mary's bicycle for $200. Ann promises to give Mary $10,000 because she helped finish Ann's basement last summer. Ann pays Mary $100 for a haircut. Ann pays Mary $50 for babysitting Ann's children.

The central question in a contract is the value of the exchange.

Which of the following is not true of consideration? In a contract, the parties promise to exchange legal value. The central question in a contract is the value of the exchange. A contract must include consideration. The central question in a contract is that something of value is traded.

One party acted in good faith, but the other party acted in bad faith.

Which of the following is not true of contracts discharged with substantial performance? One party acted in good faith, but the other party acted in bad faith. The service rendered has resulted in substantially the same benefit intended. Performance has not varied greatly from what was contemplated. A party has acted in good faith, but was unable to fulfill every aspect of the agreement.

A formal contract may also be an implied contract.

Which of the following is not true of contracts? An informal contract may also be an implied contract. A formal contract may also be an implied contract. A contract is void if it fails in one of its essentials. Sometimes, one or both parties to a contract have power to disavow the contract.

A person harmed by fraud must void the contract.

Which of the following is not true of fraud? If a party is tricked into signing a contract, the law finds fraud in the contract. Fraud is an intentional misrepresentation of a material fact upon which a party reasonably relies to their detriment. A person harmed by fraud must void the contract. Fraud may be found in the inception, inducement, or execution of a contract.

Minors may not enter into contracts under any circumstances.

Which of the following is not true of minors? Minors may enter into contracts. Minors may disaffirm contracts. Minors may not enter into contracts under any circumstances. Minors are under 18 years of age.

Acceptance must always be sent in the same form as the offer.

Which of the following is not true of offers? In order to have a valid agreement, the acceptance must be unequivocal. Acceptance may be communicated to the offeror by any reasonable manner. The silence of an offeree is not acceptance. Acceptance must always be sent in the same form as the offer.

It governs contracts for the sale of property.

Which of the following is not true of the Uniform Commercial Code? When offers and counteroffers are made between merchants, any additional terms provided by the parties are automatically incorporated into the offer terms. It requires no legal consideration for modification of contract terms. If two parties dispute over price, a court is allowed to plug in a reasonable price if the goods are delivered. It governs contracts for the sale of property.

Consequential

_________________ damages are those that are foreseeable to the breaching party. Compensatory Consequential Nominal Punitive

Recission

_________________ refers to the returning of goods or property received from the other party to undo a contract. Retribution Rescission Recession Revocation

Duress

_________________ refers to threat to the defendant or a third party of imminent peril of death or serious injury. Duress Fraud Mistake Undue influence