Business Law Chapter 8

. Laborers working on a building are promised by their contractors that their wages would be paid at the end of every month. The laborers also in return promise to work from the beginning of the subsequent month. When the laborers have worked for the entire duration of the month and are awaiting their wages at the end of the month, the contract is ______. A. void B. executory C. implied D. executed E. unilateral

B

A(n) ______ is one when parties have not performed their agreement. A. executed contract B. executory contract C. express contract D. exculpatory contract E. unenforceable contract

B

Aria asks Jessica if she can borrow an outfit for an office party and Jessica agrees. When Aria picks an outfit, Jessica refuses to give it to her. Which of the following statements is true of this situation? A. Jessica has committed a breach of contract. B. A bargained-for exchange has not occurred, so Jessica does not have to loan the outfit to Aria. C. Jessica has promised Aria something of value, so she must loan her the outfit. D. The contract between Aria and Jessica is terminated as Aria makes a counteroffer. E. Jessica has given a valid consideration, thereby making the agreement between her and Aria a binding contract.

B

Brandie is facing financial difficulties. Warren wants to help Brandie, and tells her that he will loan her $1,000. Later, Warren refuses to loan the promised money to Brandie. In the context of this scenario, which of the following statements is true? A. Warren must loan the money to Brandie because a promise is made and consideration has nothing to do with the agreement. B. Warren need not loan the money to Brandie because Brandie did not promise anything in return. C. Warren must loan the money to Brandie because he has entered into an implied-in-fact contract by promising her the money. D. Warren does not have to loan the money to Brandie because of the mirror image rule. E. Warren must loan the money to Brandie because he has entered into an executory contract by promising her the money.

B

Brett offers to sell his old but functioning cell phone to James for $65. James says he will accept the offer if Brett lowers the price to $60. James has A. made an unequivocal acceptance. B. made a counteroffer. C. demonstrated the exculpatory rule. D. entered into an option contract. E. entered into an executory contract.

B

Dustin, who is 17 years old, purchased a car from Speed Auto Sales Inc. for $1,000. The following year, Dustin's father gifted him a brand new car on his 18th birthday. Dustin returned the car that he had purchased to Speed Auto Sales the next day, and he demanded his money back. At the time of disaffirmance, Dustin was 18—the age at which he was considered an adult in his jurisdiction. Will this disaffirmance be enforceable in the court of law? A. The disaffirmance will not be enforceable since Dustin did not give Speed Auto Sales a signed revocation. B. The disaffirmance will be enforceable since Dustin disaffirmed during the year he attained adulthood. C. The disaffirmance will not be enforceable since the disaffirmance must be written when the price exceeds $500. D. The disaffirmance will be enforceable since courts and laws always rule in the favor of minors. E. The disaffirmance will not be enforceable since Dustin attained adulthood, and disaffirmance can be expressed only by a minor.

B

In contracts that are not between merchants selling goods, a promise to keep an offer open for a certain time period must be supported by the offeree's consideration. Such agreement to not revoke an offer is called a(n) ______. A. firm offer B. option C. promissory estoppel D. novation E. accord

B

In the context of contracts formed by interactions of parties, which of the following arises from the conduct of the parties rather than from words? A. express contracts B. implied-in-fact contracts C. executed contracts D. void contracts E. adhesion contracts

B

In which of the following cases does the legal power of the offeree to bind the offeror end? A. When the offeree accepts the offer B. When the offeror is declared insane before acceptance of the offer by the offeree C. When the subject matter of the contract is destroyed after the acceptance of the offer D. When the offeror accepts the counteroffer E. When the offeror attempts to retract the offer after its acceptance by the offeree

B

Madison promises Grace $10 if Grace collects her dry cleaning for her. This is an example of a(n) ______ contract. A. bilateral B. unilateral C. voidable D. void E. unenforceable

B

. A(n) ______ is one in which the promised terms of the contract are discussed by the parties. A. express contract B. reciprocal contract C. implied contract D. bilateral contract E. unilateral contract

A

. Fred takes Betty to dinner at a very expensive and exclusive restaurant. The menu does not mention the prices. The server takes their order and both Fred and Betty enjoy the meal immensely. When the bill arrives, Fred refuses to pay because the menu had no prices and because he and the server never engaged in language indicating an offer and acceptance. The server said, "Are you ready to order?" and when Fred said "Yes," the server merely asked, "What may I get you tonight?" In the context of this scenario, which of the following statements is true? A. Fred must pay based on an implied-in-fact contract theory. B. Fred must pay based on a promissory estoppel theory. C. Fred must pay based on an express contract theory. D. Fred is correct because no contract was formed. E. Fred is correct because he and the server entered into an agreement without a written document.

A

According to the mirror image rule, ______. A. the acceptance must exactly match the offer B. a contract must be accepted in writing by both the parties involved to make it enforceable in the court of law C. the acceptance of an offer involves changing the terms of the offer or adding new terms D. one of the parties to a contract should be a minor E. there has to be at least two or more counteroffers to bind a contract

A

Contracts are A. legally enforceable promises. B. always required to be written as per the Uniform Commercial Code (UCC) law. C. a form of a circular. D. enforceable in supreme courts but not in lower courts. E. always informal agreements

A

. Harry regularly shipped 100 cartons of electronic goods to Keith on the 15th of every month as per the original agreement. He had been continuing this shipment routine for over a year. On the 20th day of one of the months, Keith refused the goods as he did not want Harry to ship those goods to him and had never accepted any such offer of goods. Harry had not received any prior notification to cancel the shipment of goods. Which of the following statements is true of this situation? A. Keith can sue Harry based on the doctrine of promissory estoppel. B. Keith's prior act of dealing and conduct with Harry confirms acceptance of the offer. C. Harry used duress in controlling the terms of the offer. D. Keith can sue Harry based on the misstatement of the facts of the offer. E. Harry should have ensured only partial delivery of goods as he received no oral confirmation from Keith about the shipment of goods.

B

. Tony's Carpets Inc. wants to charge $9.80 a yard for installing a carpet for Serenity Bookstore but accidentally states $8.90 a yard in the bid. Serenity Bookstore accepts Tony's Carpets' bid. Tony's Carpets made a ______. A. bilateral mistake B. unilateral mistake C. mutual mistake D. rescission mistake E. contractual mistake

B

. Which of the following statements is true of silence as a method of acceptance? A. An offeree's silence implies that the offeree will make a counter offer. B. Silence may well imply acceptance if the parties previously dealt with each other. C. When an offer specifies that silence indicates acceptance, the offeree has to respond. D. Silence alone can be acceptance and the basis of a binding contract. E. Silence leads to acceptance of an offer due to the mirror image rule.

B

8. A(n) ______ is an agreement when one party has the right to withdraw from the promise made without incurring any legal liability. A. executed contract B. voidable contract C. void contract D. implied-in-fact contract E. reciprocal contract

B

The remedy of quasi-contract generally applies only when A. there are more than three parties in a contractual agreement. B. no actual contract exists to cover the dispute. C. the contract is bilateral in nature. D. no more than two parties expressly discuss the terms of their agreement. E. implied warranties are included in a contract.

B

. A(n) ______ contains a specific promise and a specific demand. A. consideration B. revocation C. offer D. capacity E. exculpation

C

. A(n) ______ is one that appears to be an agreement but lacks an essential requirement for validity and enforceability. A. voidable contract B. unenforceable contract C. void contract D. valid contract E. executed contract

C

Miguel offers to sell Nisha 100 laptops at $50 each. Nisha ponders over the offer but mails her acceptance that evening to Miguel. Before her acceptance reaches Miguel, Miguel finds another buyer who is willing to pay $70 each for the laptops. Miguel sends a revocation mail the next day to cancel his initial offer to Nisha, but a storm has hit the city causing the mail services to halt temporarily. Which of the following statements is true about this situation? A. As per the mirror image rule, Nisha cannot sue Miguel for revoking his initial offer. B. Miguel can use the doctrine of the promissory estoppel to defend his right to find and sell his laptops to another buyer. C. As per the mailbox rule, Miguel cannot revoke his initial offer to Nisha as she had accepted his offer. D. Nisha cannot sue Miguel as the deposited acceptance does not create a binding contract despite Miguel's revocation. E. Nisha cannot sue Miguel as the storm prevents Miguel from mailing his revocation.

C

The legal mechanism for evaluating the existence of an incentive for a person's promise to establish a binding contract and acts as a receipt of a legal benefit or the suffering of a legal detriment is ______. A. collusion B. accord and satisfaction C. consideration D. reversion E. novation

C

Which of the following is an exception to the statute-of-frauds requirement that sale-of-goods contracts be in writing? A. a contract involving goods that are worth at least $500 B. a contract involving the sale of land C. a contract for goods for which payment has been made D. a contract for a service that lasts for 5 years E. a collateral promise to pay another's debt

C

Which of the following statements is true about contract laws? A. Their application is confined to formally written documents. B. They must be formal in order to be valid. C. They enable private agreements to be legally enforceable. D. They are applicable to all business dealings that are against public policy too. E. They are invalid in instances that involve implied "promises."

C

Which of the following statements is true about the consideration in a contract? A. Courts usually enforce contractual promises in the absence of consideration. B. The amount of the consideration is the most important and relevant part of a contract for a legal action. C. The consideration must be contemporaneous and a part of both parties' understanding of the contract terms. D. The consideration in any unilateral contract is usually absent. E. Performance made before parties discuss their agreement counts as a consideration.

C

Which of the following types of contracts are beyond the scope of application of the statute of frauds? A. contracts for sale of goods worth $500 or more B. contracts for mortgages, mining rights, and easements C. oral contracts for services that last more than 20 months D. collateral contracts to pay the debt of another person E. contracts involving interest in land

C

. According to the mailbox rule, a contract is formed A. when the offer is mailed. B. when the offer is received. C. when the acceptance is received. D. when the acceptance is mailed. E. when the offer is converted to a written document.

D

. An important exception to the rule requiring consideration to support a promise is the doctrine of ______. This doctrine arises when a promisee justifiably relies on a promisor's promise to his or her economic injury. A. firm offer B. consideration C. termination D. promissory estoppel E. accord and satisfaction

D

. If a minor fails to disaffirm a contract within a reasonable time after reaching majority, the minor is said to ______ the contract. A. transcend B. terminate C. rescind D. ratify E. breach

D

. In the context of legal capacity of parties to a contract, who among the following are also called infants in a contract? A. intoxicated persons B. physically impaired persons C. mentally impaired persons D. minors E. non-merchants

D

In the context of contracts formed by promises, which of the following is an agreement containing mutual promises? A. unilateral contract B. quasi-contract C. express-in-fact contract D. bilateral contract

D

In the context of termination of an offer, ______ occurs when an offeror retracts the offer before the acceptance. A. rejection B. reversion C. novation D. revocation E. rescission

D

Which of the following terms refers to force or threat of force? A. rescission B. misrepresentation C. undue influence D. duress E. revocation

D

. Which of the following statements is true about the acceptance of an offer? A. Bilateral contracts are predominantly accepted by the offeree performing the act. B. Unilateral contracts are accepted by making a promise. C. The language of an offer is optional in determining the nature of contract and its acceptance. D. Counteroffer usually means an acceptance of an offer. E. Acceptance must follow the mirror image rule to create a binding contract.

E

Mayra offers to sell her home to Hanna for "about $100,000 plus closing costs." Hanna accepts Mayra's offer. Later, a dispute arises over the precise dollar amount of the purchase price. How will a court most likely resolve this dispute? A. The court will determine a reasonable price to be paid by Hanna. B. The court will determine that Hanna pay only the figures mentioned in the contract. C. The court will appoint a licensed real estate appraiser to determine the price to be paid by Hanna. D. The court will require Hanna to pay the average of her price and Mayra's price. E. The court will declare the purchase price and terms too indefinite to create a binding contract.

E

The ultimate purpose of a contract is the creation of an agreement that courts will order parties to perform or to pay consequences for the failure of performance. When courts uphold the validity of such promises, the resulting agreement is a(n) ______. A. absolute contract B. differentiated contract C. void contract D. relative contract E. enforceable contract

E

Which of the following statements is true about minors as parties to a contract? A. A contract into which a minor has entered is voidable at the election of the minor. B. A minor can be legally bound to contractual promises involving necessaries of life such as shelter and medical care. C. In a number of states, courts do not hold a minor who has misrepresented his or her age. D. A minor can explicitly ratify a contract and forego disaffirmance even before reaching the age of majority. E. Upon ratification, a minor gains the right to disaffirm.

A

Which of the following statements is true about adhesion contracts? A. They are a common type of unconscionability. B. They exclude any standard form contracts. C. They are generally unenforceable in a court of law. D. They provide substantial opportunity for revision for all parties involved in a contract. E. They are usually drafted by multiple parties in a contract.

A

In the context of implied warranties as defined by the Uniform Commercial Code (UCC), which of the following refers to the merchantability of goods? A. The goods will be of fair average quality and conform to any labeling. B. The goods will be suitable for the buyer's purpose if the seller is aware of it. C. The goods will be delivered within two weeks of order. D. The goods will be worth at least $500 or more. E. The goods will be sold within states and not across states.

A

Smith Inc. sends a letter dated August 1 to Cervaille Stores, offering to sell 20 table lamps to Cervaille Stores at $80 each. Cervaille Stores provides a consideration of $160 to Smith Inc. to keep the offer open for at least two weeks. In the second week of August, Smith Inc. receives an offer from Shine Retailers Inc. to purchase the table lamps at a price of $85 each. Can Smith withdraw its offer made to Cervaille Stores? A. Smith cannot withdraw its offer as the agreement is in the form of an option. B. Smith cannot withdraw its offer since the doctrine of promissory estoppel is applicable. C. Smith can withdraw its offer as the offer was simply an invitation to negotiate. D. Smith cannot withdraw its offer as this is a firm offer. E. Smith can withdraw its offer as the consideration makes it enforceable as a property transfer.

A

Tristam, an insurance agent, wants Philomena to purchase the insurance policy of his choice. Despite Philomena's resistance to accept his offer, Tristam compels her to purchase the policy by exerting his physical force on her and forces her to sign the insurance documents. Which of the following has been most likely used by Tristam to complete the contract arrangements? A. duress B. misrepresentation C. undue influence D. misstatement E. fraud

A

Vincent agrees to sell 10 cartons of footwear to a local retail outlet at $150 for each carton. Each carton is to contain 30 pairs of footwear, but the local retail outlet finds that most of the cartons have only 25 pairs of footwear. The retail outlet decides to sue Vincent, but they decide to settle the matter outside the court in order to reduce the expenses involved in a lawsuit. Both parties finally agree to revise the rate of each carton to $135 with each carton containing 25 pairs of footwear. This settlement is an example of ______. A. accord and satisfaction B. duress C. mutual mistake D. undue influence E. promissory estoppel

A

Which of the following statements is true about a promise to make a gift? A. Upon delivery of the item, a true gift can be enforceable as a property transfer. B. Promissory estoppel prevents a gift from being enforceable. C. A promise to make a gift is binding as a contract as it usually supports the bargain. D. A promise to make a gift becomes an option when it has a clause in the agreement that revokes the gift. E. Insignificant consideration in return for a great one raises concerns that the exchange is actually not a gift.

A

Systek 22 Inc. made a promise to Garrett offering him a job with an annual salary of $150,000 and at least two years of employment. Since Garrett had to move to New York for the new job, Systek 22 also offered to reimburse all of his moving expenses. Based on this promise, Garrett resigned from his job at another firm that offered him an annual salary of $100,000. When Garrett moved to New York, his employment with Systek 22 was terminated, because the company found a candidate who was willing to work for a lesser salary. Which of the following is true of this situation? A. Garrett cannot sue Systek 22 since the promise was oral. B. Garrett can sue Systek 22 under the doctrine of promissory estoppel. C. Garrett cannot file a lawsuit since a promise of employment is always subject to market conditions. D. Garrett can sue Systek 22 only for the moving expenses that Garrett can prove he incurred. E. Garrett cannot sue Systek 22 since the reasons for termination will be accepted in court as a legal detriment.

B

The deposited acceptance rule is also known as the ______. A. mirror image rule B. mailbox rule C. unilateral rule D. bilateral rule E. negotiation rule

B

The doctrine of quasi-contracts is predominantly based on a(n) A. reciprocal contract. B. implied-in-law contract. C. express contract. D. bilateral contract. E. unilateral contract.

B

Valid consideration can include any promise to do something one has no obligation to do, refrain from doing something one has the right to do, or in the case of a unilateral contract, a performance when there is no obligation to do so. This is known as a(n) ______. A. exculpation B. legal detriment C. release D. negotiation E. promissory estoppel

B

Which of the following statements is true about the laws under the Uniform Commercial Code (UCC)? A. The laws of the UCC exclude individuals but include firms and charitable trusts in their scope. B. The laws of the UCC permit sales of goods to have open nonquantity terms to be decided at a future time. C. Section 2-207 of the UCC applies the mirror image rule for contracts involving the sale of goods. D. The laws of the UCC allow the rules of consideration to apply to firm offers.

B

Which of the following terms refers to a person's ability to be bound by a contract? A. legality B. capacity C. usability D. negotiability E. measurability

B

Josh announces a reward of $500 for his dog, Ginger, that ran away from his house. Josh spreads the word only by pinning up posters in his neighborhood. Amanda, Josh's colleague, sees Ginger and brings her back to Josh without ever seeing the poster. After returning the dog, Amanda sees one of the reward posters and returns to claim the money. In the context of this scenario, which of the following statements is true? A. Amanda is not entitled to the money because the offer was not communicated to her. B. Amanda is not entitled to the money because she is Josh's colleague and acted in good faith. C. Amanda is entitled to the money because the poster constituted an offer and is effective for the entire neighborhood. D. Amanda is entitled to the money since performance of the requested act in the poster indicates acceptance. E. Amanda is not entitled to the money since she did not communicate the acceptance of the offer in writing.

D

Robert is about to graduate from his university. His parents tell him that as he is the first member of the family to graduate college, they want to buy him a new but inexpensive car. They have the money to buy the car, and Robert is excited to receive his gift. On graduation day, his parents tell him that they have decided to use the car money for a vacation and that there will be no car. In this situation, can Robert sue his parents? A. Robert can successfully sue based on promissory estoppel. B. Robert can successfully sue based on the promise of a gift. C. Robert cannot sue because the promise was not reasonable and did not follow the mailbox rule. D. Robert cannot sue because he did not suffer any legal detriment in the receipt of the promise. E. Robert can sue since the promise is his legal benefit, and it is an implied-in-fact contract.

D

Which of the following statements is true about intoxicated and mentally incompetent persons in a contract? A. A court of law legally terms mentally incompetent persons as "infants" to a contract. B. A court prevents intoxicated persons from making a contract voidable in any circumstance. C. The capacity to contract is simply lost due to intoxication and mental incompetency even before a court can adjudge a person of such mental incompetency. D. A court measures capacity to contract by whether an adult is capable of understanding the nature and purpose of the contract. E. The complexity of a contractual transaction and the mental capacity of an adult are irrelevant in controlling the right to disaffirm a contract.

D