Business Law Exam #1

Arnold has offered to take Bob into his accounting firm as a partner upon payment of $5,000 cash. In response, Bob says, "I'll give you $3,000 cash now and I will pay you the remainder in two month after I see whether things are working out as a partnership"

Bob has made a counter offer and hence there is no contract

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000. A unilateral contract exists.

False

Court will never limit freedom of contract

False

In the case of Denney V. Reppert the court allowed the employees of a bank collect a reward, because they supplied information that led to the arrest and conviction of a bank robber

False

In the case of Lefokwitz v. Great Minneapolis Surplus Store, the court decided that the store's advertisement was not valid to enter into a contract but was merely an invitation to make an offer

False

Laws passed by Congress are the supreme law of the land in the United States and take precedence over other sources of law

False

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

False

Once a court has decided a case, the principle of stare decisis precludes correction of erroneous decisions.

False

Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

False

Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable?

False

Silence can never be an acceptance.

False

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

False

Assume an offeree mails a rejection to the offeror on November 1. This rejection arrives at the offeror's place of business on November 5. In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6. Which of the following statements correctly describes the situation?

Find answer

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract?

Find answer

Albert read ElectoCorp's ad in the local newspaper advertising a music system for $89. Albert rushed to the store to buy the system only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the sales person $89 sales tax and demanded the music system.

The ad is a firm offer by the merchant, and the music system must be sold for $89

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. He has been offered a two-year graduate fellowship, but he will not be able to pay the loan back if he accepts the fellowship. The bank manager tells Sam that if he pays $3,000 now, they will forgive the loan. Should Sam accept the offer?

Yes, because the early payment of the loan is consideration that makes the bank's promise binding.

Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see if another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract?

Yes, it is likely to be enforceable during employment

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sales contract:

a valid contract that should be enforced by the law, because neither party knew the exact nature of the of the stone at the time of the sale

The concept of consideration in contract law includes:

an inducement to each party to make a return exchange ???

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling.

can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open.

An ethical decision-making approach that relies on a central authority or set of rules, such as the Koran or the Bible is:

ethical fundamentalism

Which of the following is not generally required in order to have a valid contract?

fairness of the bargain ???

Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. This contract is:

find answer

Carl owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits.He sells his store to Virginia and as a part of the transaction, agrees not to engage in the same business anywhere in the River City for a period of four years. The agreement:

find answer

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. If Edward agrees:

find answer

Donald, a minor, makes a contract to sell a motorcycle to Albert, an adult. One week later, Donald has his eighteenth birthday and shortly thereafter Albert he will pick up the motorcycle next week. In this case:

find answer

Joanne, a minor, sold her laptop computer to Bruce, an adult. Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor. Under the Uniform Commercial Code, Joanne may:

find answer

Ratification can occur in which of the following ways?

find answer

Scienter is a legal term which means

find answer

Which of the following results in a void, rather than voidable agreement?

find answer

the case In re The score Board, Inc. involved the issue of;

find answer

which of the following is least likely to be classified as a necessary item for which a minor will be held liable on a contract

find answer

The doctrine of the promissory estoppel

is a doctrine enforcing noncontractual promises. includes as a requirement within the doctrine that there has been justifiable reliance on the promise. a doctrine relying on justice and not contractual rights. -all of the above

An obligation imposed by law where there has been no agreement or expression of assent by word or act on the part of either party involved is a(n):

quasi contract

A _______ is the refusal to accept an offer

rejection

John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, 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:

substantive unconscionability

The three distinct and independent branches of the United States government are:

the federal judiciary, the Congress, and the executive branch

Carl owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as a part of the transaction, agrees not to engage in the same business anywhere in the River City for a period of two years. In this case:

the geographic restraint is reasonable

Charlene hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information and the suspect is then arrested and convicted. In this case:

the offer by the television station was an offer made to the general public to enter into unilateral contract, which offer Charlene has accepted

A factor demanding the ethical and social responsibility of business is:

the sheer size and power of individual corporations

A ______ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract

usury statute

James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed:

when Brenda applies for the loan at the credit Union ???

A contract that requires a person to commit a tort will be enforced by the courts

False

Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and wants to get out of the contract. This contract is voidable at Alice's option

False

American courts generally will enforce a gambling agreement

False

An acceptance that contains terms different from additional to those in the offer receives the same treatment under the common law and under the UCC

False

An agreement to pay a public officer something extra for performing his official duty is enforceable.

False

An illusory promise is a consideration for a return promise

False

An output contract is a special form of an illusory contract

False

Article 2 of the UCC lacks relevance in modern society because it, including its amendments, does not provide rules related to electronic commerce

False

Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine's advice would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick's mind or emotions.

False

A disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.

True

A modification of a preexisting contract occurs when the parties agree to change or more of its terms

True

Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and wants to get out of the contract. This contract is voidable at Betty's option.

True

An acceptance is generally effective upon dispatch

True

An adhesion contract is offered on a "take-it-or-leave-it" basis.

True

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

True

An implied in fact contract is formed by conduct

True

Andria, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Wood who agrees to testify on behalf of Andria's client at the trial. In return for Dr. Wood's testimony, Andria agrees to pay Dr. Wood $10,000 if they win the case, and $5,000 if they lose. Dr. Wood agrees. The agreement between Andria and Dr. Wood is unenforceable.

True

Article 2 of the Uniform Commercial Code (UCC) does not apply to the sale of services

True

B& B, Inc. pays an attorney to draft and lobby for a bill which will greatly lessen B & B's tax liability to the state and federal governments. B&B gives the attorney $20,000 in cash to pay legislators for taking the time to listen to him. This is an agreement which is a violation of public policy.

True

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

True

Ethical issues in business settings include corporate governance, whistle-blowing, shareholder-voting, and management duties to shareholders

True

Ethics can be defined as the study of what is good or right for human beings

True

Hal holds a gun to Irving's head and tells him to sign the contract. Irving signs the contract, because he fears for his personal safety. The contract is void, because it was entered into under duress.

True

In a bilateral Contract, if one party is not bound, neither party is bound

True

James promises to pay Brooke $2,500 if she does not sue him for negligently injuring her in a bicycle accident. If Brooke does not sue, James's promise to pay is binding because it is supported by consideration

True

The constitution provides that federal statutes are, paramount to the state constitutions and statutes

True

The final arbiter as to the constitutionality of laws passed by Congress or by the legislature of a state is the Supreme Court of the United States

True

The legal effect of a usurious loan varies from state to state

True

a judge deciding a common law case must look for guidance to similar cases previously decided by that court or superior courts

True

For an offer to be valid

-find answer

If anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora:

-find answer

Quasi contracts are used to provide a remedy when the parties enter into an

-find answer

Sarah offers to pay Alison $150 if Alison will paint her apartment while she is out of town on vacation for two weeks. Alison makes no promises but tells Sarah that she will think about it. While Sarah is out of town. Allison paints the apartment. Which choice does not describe the situation?

-find answer

Which of following would generally be considered to be a revenue-raising licensing law?

A statute requiring that salespeople be licensed, but not establishing any educational or training requirements

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 100-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. In this case:

Al is in violation of the sale agreement, which contained restrictions that would probably bee held to be valid

William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. What is the result?

The parties have agreed to substitute contract which discharges the orignal contract. John is obligated to pay the additional $1,000

At age 17, Wanda purchased an expensive sound system from Lectronic City. If Wanda wishes to ratify this contract, Wanda:

must reach the age if majority and ratify the contract as a whole