Business Law chap. 11, 12, 13

rule of contracts under which a court will not receive into evidence prior or contemporaneous oral statements and agreements that contradict the terms of the parties' written contract

parol evidence rule

agreement made before marriage that defines each partner's ownership rights in the other party's property

prenuptial agreement

The acceptance or confirmation of an act or agreement that gives legal force to an obligation that previously was unenforceable

ratification

court-ordered correction of a written contract so that it reflects the true intentions of the parties

reformation

equitable remedy by which a court alters the terms of a contract to reflect the intentions of the parties

reformation

knowledge by a misrepresenting party that material facts have been falsely represented or omitted with an intent to deceive

scienter

equitable remedy requiring a contract to be performed according to it's precise terms

specific performance

a state statute that requires certain types of contracts to be in writing to be enforceable

statute of frauds

T&F: A material fact is a fact that a reasonable person would consider important when determining his or her course of action

true

T&F: A mistake in value will rarely enable a party to a contract to avoid the contract

true

T&F: An agreement that includes an option to purchase real property must be in writing for the option to be enforced

true

T&F: For a party to a contract to receive relief from either a unilateral or a bilateral mistake, the mistake must involve a material fact

true

T&F: Parol evidence includes testimony about communications between the parties that are not contained in the contract itself

true

T&F: Unconscionbility can involve the lack of an opportunity to read a contract or ask questions about its meaning

true

a contract or clause that is void on the basis of public policy because one party was forced to accepty terms that are unfairly burdensome and that unfairly benefit the stronger party

unconscionable contract or clause

persuasion that is less than actual force but more than advice and that induces a person to act according tot he will or purposes of the dominating party

undue influence

mistake that occurs when one party to a contract is mistaken as to a material fact

unilateral mistake

charging an illegal rate of interest

usury

knowledge of, and genuine assent to, the terms of a contract

voluntary consent

Ophelia has been seriously ill for some time, and wants to plan so that her family will have as little stress as possible at her passing. She calls Homer, who two years ago purchased 4 cemetery plots, and sks him to sell her one. During that telephone call, Homer agrees, and they decide on the price of $1300. Ophelia mails her check for that amount to Homer and checks one more thing off her list. When Ophelia dies what will happen? a. Ophelia will not be buried in the cemetery plot, since the contract was not in writing b. Ophelia will be buried in the cemetery plot c. Homer will be buried in the cemetery plot d. non of these options

a. Ophelia will not be buried in the cemetery plot since the contract was not in writing

Steven, a contractor bids to build a building for University of America. When submitting his bid, he inadvertently made a mistake while adding up his costs. University of America accepts his offer not knowing of the mistake. Steven's best argument against enforceability of the contract is a. a unilateral mathematical mistake may allow for contract rescission b. unilateral mistakes generally allow the contract to become unenforceable c. bilateral mistakes generally allow the contract to become unenforceable d. that the mathematical mistake was not material

a. a unilateral mathematical mistake may allow for contract rescission

When an innocent party is fraudulently induced into entering into a contract: a. all of these are correct b. the innocent party can cancel the contract and be restored to his or her original position c. the innocent party can seek damages for harm resulting from the fraud d. the innocent party can enforce the contract

a. all of these are correct

A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault, is called: a. an exculpatory clause b. reformation c. an adhesion clauase d. a disaffirmance

a. an exculpatory clause

The legal avoidance or setting aside of a contractual obligation is known as: a. disaffirmance b. ratification c. emancipation d. non of these

a. disaffirmance

Jake and John make an illegal contract that unjustly enriches Jake at the expense of John. A court will a. not be concerned with the unjust enrichment of Jake b. force Jake to pay damages to John c. reform the contract to prevent undue burdens d. enforce the contract as it was originally written

a. not be concerned with the unjust enrichment of Jake

Under the parol evidence rule, if a court finds that a written contract represents the complete and final statement of the parties' agreement, then the court: a. will not allow either party to present parol evidence b. will allow either party to present parol evidence c. will grant specific performance d. will not grant specific performance

a. will not allow either party to present parol evidence

In an employment contract, a covenant not to compete prohibits an employee from: a. working for a competitor for a specified period of time after terminating employment b.leaving the company for a specified period of time c. ever starting a competing business after terminating employment d. ever working for a competitor after terminating employment

a. working for a competitor for a specified period of time after terminating employment

standard form contract in which stronger party dictates terms

adhesion contract

when a person is no longer a minor--18 years

age of maturity

In almost all states the age of majority is a. 16 b. 18 c. 21 d. any age at which a person leaves home and supports himself or herself

b. 18

Wild Rides Theme Park owes both RollercoasterRepair, Inc. and Hot Dog Harry money. RollercoasterRepair orally agrees to assume Wild Ride;s debt to Hot Dog Harry to prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable by a. none of these parties b. any party c. Wild Rides only d. RollercoasterRepair only

b. any party

On a written memorandum, to satisfy the writing requirement of the Statute of Frauds the signature of the party against whom enforcement is sought: a. must appear at the end of the document b. can be an electronic signature c. must be the full name, not initials d. is unnecessary

b. can be an electronic signature

A secondary promise to a primary transaction where one person promises to pay the debts of another if the latter fails to perform is known as: a. a unilateral promise b. a collateral promise c. a primary promise d. an obligatory promise

b. collateral promise

In general, if a contract is illegal, the courts will: a. consider both parties equally at fault b. consider the contract void c. deem the contract never to have existed d. all of these choices

b. consider the contract void

The Statute of Frauds a. does not require written contracts when involving interest in land b. invalidates oral promises made in consideration of marriage c. does not invalidate any type of fraud d. does not apply to promises to answer for the duty of another

b. invalidates oral promises made in consideration of marriage

According to the one-year rule, if performance cannot possibly be completed within a year from the date of contract formation, the contract a. does not have to be in writing to be enforceable b. must be in writing to be enforceable c. in unenforceable d. in void

b. must be in writing to be enforceable

An agreement made before marriage that defines each partner's ownership rights in the other partner's property is called a: a. premarital agreement b. prenuptial agreement c. marital agreement d. family agreement

b. prenuptial agreement

written contract that constitutes the final expression of the parties' agreement. Evidence extraneous tot he contract that contradicts or alters the meaning of the contract in any way is inadmissable

integrated contract

Selena buys a cell phone for $350 and an air hockey table for $1,500, and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month. The Statute of Frauds covers a. the employment contract, and the game table and phone purchases b. the employment contract and the game table purchase only c. the employment contract only d. the game table and phone purchases only

b. the employment contract and the game table purchase only

a mistake that occurs when both parties to a contract are mistaken about the same material fact

bilateral mistake

state laws that regulate the offering and sale of securities for the protection of the public

blue sky laws

defects not readily ascertained

latent defects

clearly show

manifest

Hal's True Hardware Stores and Ideal Tools, In., sign a written contract for a sale of goods. To be enforceable, this written contract must include a. a correct title, such as "Purchase Order" or "Sales Invoice b. a date, such as "October 2014" or "10/20/14" c. a quantity term, such as "50 hammers" or "100 boxes of assorted nails" d. the parties' contact information

c. a quantity term, such as "50 hammers" or "100 boxes of assorted nails"

The legal avoidance or setting aside of a contractual obligation is known as: a. ratification b. emancipation c. disaffirmance d. non of these

c. disaffirmance

Forcing a party to enter into a contract because of the fear created by threats is referred to as: a. blackmail b. undue influence c. duress d. extortion

c. duress

A contract entered into by a person who is so intoxicated that he or she could not understand the legal conseuences of the agreement: a. is valid b. is void c. is voidable d. is valid only if the person did not appear intoxicated to the other party

c. is voidable

When a contract is formed, and it is decided that one party did not voluntarily consent to the terms: a. only the party that did consent can decide to rescind the contract b. the contract becomes void c. only the party that did not consent can decide to rescind the contract d. either party can rescind the contract

c. only the party that did not consent can decide to rescind the contract

Odina signs a covenant not to compete with her employer, Penultimate Sales Corporation. A court decides that the covenant is overly restrictive. The court will likely a. enforce is as written so as not to undercut the freedom of contract b. enforce it but evaluate its effects overtime c. reform its terms to prevent any undue burden d. refuse to enforce it unless Penultimate pays additional consideration

c. reform its terms to prevent any undue burden

Brenda induces Carmen to enter into a contract for the sale of a gas station and convenience store. Brenda tells Carmen that she is the sole owner, but their signed, written contract lists Brenda's parents as co-owners. The parol evidence rule governs a. contracts that are induced by fraus b. contracts that must be in writing to be enforceable c. the admissibility in court of oral evidence d. the merging of oral and written statements into one contract

c. the admissibility in court of oral evidence

Veggie Grocers orders by phone twenty cartons of canned beets from Organic Food Packers, Inc. After ten cartons are delivered and accepted, Veggie repudiates the contract. Organic can enforce the contract to a. any extent because the order was placed orally b. no extent because the order was placed orally c. the extent of the ten accepted cartons d. the extent of the twenty ordered cartons

c. the extent of the ten accepted cartons

In a relationship in which one party can greatly influence another party, thus overcoming that party's free will, a contract entered into may become voidable due to: a. bilateral mistake b. fraudulent misrepresentation c. undue influence d. duress

c. undue influence

The highest legal iinterest rate in the state where a finance company resides is 18%. Nevertheless, the finance company charges 22-25% interest on the loans it makes. The finance company has committed: a. procedural unonscionability b. restraint of trade c. usury d. breach of public policy

c. usury

secondary promise to a primary transaction, such as a promise made by one person to pay the debts of another is the latter fails to perform

collateral promise

the capacity required by the law for a party who enters into a contract to be bound by that contract

contractual capacity

contractual promise in which one party agrees not to compete in business with another party for a certain period of time and within a specified geographical area

covenant not to compete

fact to which a reasonable person would attach importance in determining his or her course of action

material fact

necessities required for life, such as food, shelter, clothing, and medical attention

necessaries

Threatening to sue a person if they do not consent to a contract a. generally will not produce grounds for the rescission of the contract b. will not be equated in a court as constituting blackmail c. is not the same as extortion and is not legally defined as duress d. all of these choices

d. all of these choices

Covenants not to compete: a. are always valid b. are never valid c. are only valid if they are reasonable in terms of time duration without regard to geography d. are only valid if they are reasonable in terms of time duration and geographic scope

d. are only valid if they are reasonable in terms of time duration and geographic scope

Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical procedure. This contract is enforceable by a. Jolie b. Jolie's medical insurance company c. Keaton d. no one

d. no one

The Parol Evidence Rule and its exceptions relate to: a. the completion of contracts b. the enforceability of contracts c. the execution of contracts d. the interpretation of contracts

d. the interpretation of contracts

the legal avoidance, or setting aside, of a contractual obligation

disaffirmance

unlawful pressure to bear on a person, overcoming that person's free will and causing him/her to do what he/she otherwise would not have done

duress

in regard to minors, the act of being freed from parental control

emancipation

a clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault

exculpatory clauses

occurs when an individual, on reaching majority, states orally or in writing that he/she intends to be bound by the contract

express ratification

T&F: An innocent part does not need to suffer an injury to collect damages as a result of a misrepresentation

false

T&F: An oral contract for a transfer of land is always enforceable

false

relationship of trust, such as partners, physician and patient, attorney and client

fiduciary relationship

personal property so affixed or so used as to become part of the realty

fixture

intentional failure to perform a duty in reckless disregard for the consequences

gross negligence

takes place when , on reaching age of majority, minor behaves inconsistently with disaffirmance

implied ratification

equally at fault

in pari delicto