business law i

305. Julian Fagan is owed $10,000 by Larry Berry. Julian has insisted that Larry pay this amount for a period in excess of a year. Larry has refused to pay. Julian writes Larry a letter in which he states, "If you do not pay the $10,000 by December 22, 1983, I shall file suit against you and collect interest and court costs." What is the status of such a threat?

a. It is perfectly legal.

314. M, a minor, contracted with A, an adult. The contract has been fully performed by both. M reaches majority plus 3 months.

a. The contract is ratified because of a failure to disaffirm within a reasonable time.

331. Mork is an alien who resides in this country. If Mork makes a contract with a United States citizen, the contract is

a. enforceable.

306. Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within 2 weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the 2-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on

a. unilateral contract.

311. Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms.

b. False

308. Kent, a 16-year-old, purchased a used car from Mint Motors, Inc. Ten months later, the car was stolen and never recovered. Which of the following statements is correct?

b. Kent may disaffirm the purchase because Kent is a minor.

315. Marianne promises to pay Nils $2,500 for one of his original sculptures, if she receives the $3,000 she anticipates receiving from her mother for her birthday.

b. Marianne has made a conditional promise.

320. Mary, a self-employed 16-year-old whose parents are dead, buys a dress on credit for $50. After receiving the dress and discovering that its reasonable value is only $25, Mary tries to disaffirm the deal before paying the $50 (and while she is still 16). In this case:

b. Mary cannot disaffirm, but she is only bound to pay $25

323. May 1, A hands a written offer to B for the sale of A's car. On May 2, A mails B a letter revoking the offer. On May 3, A calls and tells B that he is revoking. On May 4, B learns that A has sold the car to C. On May 5, A's letter finally gets to B. A's offer terminated on:

b. May 3.

313. Lynn offers to sell his house to Dennis for $50,000. Dennis responds, "I will pay you $50,000 if you will paint the second floor." This response could best be described as:

b. a counteroffer.

309. Last year, a series of arsons occurred in the City of Swelter. Early this year, Swelter's City Council adopted this resolution: The City will pay $10,000 for the arrest and conviction of anyone guilty of any of the arsons committed here last year. The resolution was telecast by the city's sole television station once daily for 1 week. Immediately thereafter the local television station ceased operations. The city's offer will terminate

b. if the City Council by resolution repeals its reward offer and causes this resolution to be broadcast once daily for a week over two local radio stations.

332. Natalie's business law instructor offers to sell his Volvo for $100 to the first student to accept his offer. The Business Department's Associate Dean overhears this as she is walking down the hall and sticks her head into the room and says, "I accept." A moment later Natalie jumps up and yells, "I accept." When the court is asked to make a determination, most likely it will find that:

b. there is a contract between the instructor and Natalie since she was the first student to accept.

322. Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay:

c. $60, since the modified agreement is supported by additional consideration.

330. Mix offered to sell a parcel of land to Simon for $90,000. The offer was made by Mix in a signed writing and provided that it would not be revoked for five months if Simon promised to pay Mix $250 within 10 days. Simon agreed to do so. Which of the following is correct?

c. An option contract is formed

328. Mildred saw a vase in an antique shop. A tag on the vase said "Genuine Chinese Vase, $125." Mildred said to the owner of the shop, "I'll buy this vase for $125." Milford, the owner of the shop, refused to sell the vase. In a lawsuit brought by Mildred against Milford,

c. Milford will win because he rejected Mildred's offer

329. Mix entered into a contract with Small that provided for Small to receive $10,000 if he stole trade secrets from Mix's competition. Small performed his part of the contract by delivering the trade secrets to Mix. Mix refuses to pay Small for his services. Under what theory may Small recover?

c. None, because of the illegal nature of the contract

326. Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the-line designer suits for $3.00. Irene sees the ad in the paper and goes to the store to stock up on business suits for her new job. Michelle apologizes for the misprint. Irene has just finished a class in contract law and insists that the store sell her 5 suits for $15.00. Irene threatens to sue Michelle for breach of contract.

c. The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Irene will not be able to successfully sue for breach of contract.

317. Marilyn heard an announcement made at her school offering a thousand dollar swimming scholarship to anyone who could swim 500 laps in the school pool. Marilyn began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way.

c. The advertiser must permit Marilyn the opportunity to finish her attempt to swim the 500 laps.

316. Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following is correct?

c. This is a modification of a pre-existing contract, which under common law must be supported by additional consideration on the part of Bravo Builders.

303. 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:

c. substantive unconscionability.

304. John Q. Public is insane but has not been adjudged so by a court of law. If Mr. Public enters into a contract,

c. the contract may be voidable at the option of the insane person, if he lacked the mental capacity to comprehend the subject matter.

310. Lee has been declared incompetent by the court and is under the care of his sister. Unknown to his sister, Lee rents the 30,000-seat civic center for his birthday party. Lee's contract to rent the civic center is best described as a:

c. void contract.

324. Meed entered into a written agreement to sell a parcel of land to Beel for $80,000. At the time the agreement was executed, Meed had consumed a large amount of alcoholic beverages which significantly impaired Meed's ability to understand the nature and terms of the contract. Beel knew Meed was very intoxicated and that the land had been appraised at $125,000. Meed wishes to avoid the contract. The contract is

c. voidable at Meed's option.

307. Ken promises not to foreclose on a mortgage that he holds on an office complex that Christopher owns. In reliance on this promise, Christopher expends $200,000 to remodel the complex. Which of the following is correct with regard to Ken's promise?

d. All of the above.

312. Lydia promised to pay Lavinia $10,000 if she refrained from smoking for 1 year. Lavinia refrained and brought suit when Lydia failed to pay. Who will win?

d. Lavinia will win because Lydia received a legal benefit.

318. Mark paid off his brother Steve's debt to the loan shark on condition that Steve wouldn't get a pair of cement shoes for Christmas. The loan shark says that he doesn't have to honor that promise because Steve didn't pay. Mark would help his cause by accurately pointing out which of the following to the loan shark?

d. Mark's payment to the shark was a legal detriment to Mark.

319. Martin Stores, Inc., decided to sell a portion of its eight-acre property. Consequently, the president of Martin wrote several prospective buyers the following letter: Dear Sir: We are sending this notice to several prospective buyers because we are interested in selling four acres of our property located in downtown Metropolis. If you are interested, please communicate with me at the above address. Don't bother to reply unless you are thinking in terms of at least $100,000. James Martin, President Under the circumstances, which of the following is correct?

d. Martin's communication did not constitute an offer to sell

327. Mike Minor buys some real estate for investment purposes. The contract obligates Mike to make monthly installment payments for ten years. Mike reaches the age of majority one month after making the contract. After this, Mike makes 25 monthly payments under the contract, but then decides that he wants to disaffirm the deal. Which of the following is MOST true?

d. Mike cannot disaffirm because he has already ratified the contract

321. Mary, age 17, sold Mark, age 22, the briefcase she got for graduation. Mark's father liked it and bought it from him. If Mary decides to disaffirm the contract, will Mark's father have to return the briefcase to her?

d. No, if Mark's father bought it without knowing from whom his purchased it.

325. Melissa mailed an offer to Jerry to sell him 8 ounces of gold at $450 per ounce. The letter arrived on May 1, and that afternoon, Jerry sent a letter of rejection to Melissa. The next morning, Jerry learned that the price of gold had gone to $490 per ounce, so he immediately mailed a letter of acceptance to Melissa and asked her to ignore the letter of rejection. The rejection was received by Melissa on May 3, and the acceptance was received on May 4. A court would find that a contract between Melissa and Jerry:

d. did not come into existence, because the rejection was received by Melissa prior to the receipt of the acceptance.