Business Law Midterm Longer Questions
188. Sam Seller contracts to sell 200 tables to Bill Buyer at a price of $50 a table. Bill repudiates the contract, whereupon Sam sells the tables to Paula Purchaser at a price of $45 a table. Sam's action in selling the chairs to another buyer is known as: a. Liquidated damages b. Specific Performance c. Mitigation of Damages d. Restitution
C. Mitigation of Damages
97. Fred unloads Gordon's fully loaded, dual trailer, 18-wheel, semi-truck "as a favor." Later, Gordon promises to pay Fred $50 for Fred's "un-selfish effort." Regarding, Gordon's promise, a court would most likely a. Add to it. b. Enforce it as is. c. Not enforce it. d. Order the parties to renegotiate it.
C. Not enforce it Past consideration is not consideration
96. Digital Computers (DC) agrees to sell 100 servers to Eagle Computer Stores. Before they are delivered, DC demands an extra $100 per server to complete delivery. With no other source for DC servers, Eagle agrees to pay. Regarding the agreement to pay more, a court would most likely a. Add to it. b. Enforce it as is. c. Not enforce it d. Order the parties to renegotiate it.
C. Not enforce it.
47. Star Auto Company mails to Tristate Racing Inc., an offer to sell a certain car. Before Tristate responds, Star Auto tells the Tristate that the offer is revoked. Star Auto is a. Liable for breaching a contract with Tristate. b. Liable for revoking the offer before Tristate could respond. c. Not liable, because Star Auto revoked the offer before Tristate accepted it. d. Not liable, because Star Auto's revocation constituted a counteroffer.
C. Not liable, because Star Auto revoked the offer before Tristate accepted it.
68. to sell a certain car. Before Tristate responds, Star tells the firm that the offer is revoked. Star is a. Liable for breaching a contract with Tristate. b. Liable for revoking the offer before Tristate could respond. c. Not liable, because Star revoked the offer before Tristate accepted it. d. Not liable, because Star's revocation constituted a counteroffer.
C. Not liable, because Star revoked the offer before Tristate accepted it.
49. Quality vehicles offers to sell a specific truck to Regional Delivery Company. Before accepting the offer, Regional learns that the truck has been sold to State Trucking. Quality is a. Liable to Regional for breach of contract. b. Liable to State for breach of contract. c. Not liable, because the sale revoked the offer to Regional. d. Not liable, if Quality offers a substitute truck to Regional
C. Not liable, because the sale revoked the offer to Regional.
66. Quality Vehicles offers to sell a specific truck to Regional Delivery Company. Before accepting the offer, Regional learns that the truck has been sold to State Trucking. Quality is a. Liable to Regional for breach of contract. b. Liable to State for breach of contract. c. Not liable, because the sale revoked the offer to Regional. d. Not liable, if Quality offers a substitute truck to Regional.
C. Not liable, because the sale revoked the offer to Regional.
70. Eve tells Frank that she will pay Frank $50 if he unloads truck. Frank's acceptance is complete a. As soon as Frank says he will unload the truck. b. Once Frank starts to unload the truck c. Only after Frank unloads the truck. d. When Frank hears Eve's offer.
C. Only after Frank unloads the truck.
203. Michael pays $500 down on a new computer to be used in the office. The salesperson told him the computer has a 100,000 megabyte memory. Michael learns from other sources that this is blatantly untrue and realizes now that the salesperson induced him to enter into the contract based upon FRAUD. The company refuses to return the down payment. If Michael sues, an appropriate remedy would be: a. Injunction b. Punitive damages c. Nominal Damages d. Rescission and Restitution
C. Punitive Damages
54. A ______________________ is the refusal to accept an offer. a. Revocation b. Counteroffer c. Rejection d. Consideration
C. Rejection
72. First Mining Corporation offers to sell Great Foundries, Inc., seven tons of aluminum. Great Foundries sends an acceptance via First Steel's authorized mode of communication. This acceptance is effective when it is a. In transit. b. Received. c. Sent. d. Written.
C. Sent
143. Darrell owns a parcel of land that is encumbered by a mortgage held by Federal Bank. Darrell agrees to sell the land to Paul fir $50,000. Darrell and Paul together go to the Federal Bank to discuss the sale and purchase with the Bank. Darrell, Paul and the Bank sign an agreement stating that Paul will assume the mortgage and that Darrell will be discharged from all further liability on the mortgage. a. The Bank is an Assignee. b. B. The Bank cannot make an assignment of the contract. c. C. Darrell cannot make an assignment of the contract. d. D. The agreement among the three is a novation.
D. The agreement among the three is a novation.
15. Express contracts and implied contracts a. are both genuine contracts. b. are equally enforceable. c. are not really contracts d. Two of the above, (A) and (B)
D. Two of the above, (A) and (B)
205. In which of the following will a court grant Specific Performance? a. In a case involving breach of contract for the sale of Real Property. b. Where goods are unique or rare c. In contracts for personal services d. Two of the above, (A) and (B)
D. Two of the above, (A) and (B)
46. When does Acceptance of an Offer to enter into a unilateral contract generally occur? a. Upon notice of intent to accept by the Offeree. b. B. Upon full performance by the Offeror. c. C. Upon commencement of performance by the Offeree. d. D. Upon full performance by the Offeree.
D. Upon full performance by the offeree.
107. A court adjudicates Holly mentally incompetent and appoints a guardian. Holly subsequently signs a contract to sell her house. The contract is a. Enforceable if Holly comprehend the consequences. b. Enforceable if Holly knew she was entering into a contract. c. Enforceable if the house was entirely paid for. d. Void.
D. Void
155. Which of the following is true with respect to Substantial Performance? a. It has particular importance in the construction industry. b. Substantial Performance does not defeat the purpose of the contract. c. When one party to a contract has substantially performed, the other party cannot recover damages for the imperfect performance. d. All of the above e. Two of the above, (A) and (B) are correct
E. Two of the above, (A) and (B) are correct.
133. Theresa has a contract to teach 8th grade at Washington Middle School. She decided she could make more money illustrating a book, so she assigns her teaching contract to her friend, Marcy, who is also a licensed teacher. a. This is both an assignment and a delegation. b. The duties, which Theresa has delegated, are personal in nature. c. If the school district agrees to accept Marcy's services, a novation would occur, which would relieve Theresa of her obligation to the school district. d. All of the above are correct.
D. All of the above are correct.
132. Which of the following duties would NOT be delegable? a. John has a contractual duty to pay Ike $50. b. Carl has a contractual duty to deliver 50 bushels of corn to Mike by October 1. c. Jeff has a duty to mow Georgia's lawn at least once a week. d. Arthur has a duty to teach an accounting class at a community college during the fall semester.
D. Arthur has a duty to teach an accounting class at a community college during the fall semester.
39. An offer need not take any particular form to have legal validity. To be effective, however, it must: a. Be spoken directly to the offeree b. Always contain the price of the product or service offered c. Always contain the place of delivery d. Be communicated to the offeree
D. Be communicated to the offeree
140. Adam Owns A House On Which There Is A $50,000 Mortgage Owing To The Bank. Adam, Who Wants To Go To Find His Fortune In California, Sells The House To Ben. Ben Expressly "Assumed" The Mortgage Debt And Takes Over The Payments. In The Event Of A Default On The Mortgage, Which Of The Two Remains Liable To The Bank? a. Adam Only b. Ben Only c. Neither One d. Both Adam And Ben
D. Both Adam and Ben
35. Royal Properties mails a flyer to hundreds of firms, advertising a building for sale. Standard Manufacturing Company responds by saying, "We accept your offer." Between Royal and Standard, there is a. A contract for the sale of the building. b. A contract to consider the offer before any others. c. A contract to negotiate a sale o the building. d. No contract.
D. No Contract
185. A small damage amount fixed without regard to the amount of loss is known as: a. Compensatory Damages b. Consequential Damages c. Substantial Performance d. Nominal Damages
D. Nominal Damages
An obligation imposed by law where there has been NO agreement by word or act on the part of either party involved is a(n): a. Express Contract b. Void Bargain c. Unilateral Contract d. Quasi Contract
D. Quasi Contract
152. Painters Finishes, Inc (PFI) agrees to paint Lynn's house, using a particular brand of "discount" paint. PFI completes the job but uses a different brand of discounted paint. The brand used by PFI is just a shade off the color. This is most likely a. A complete excuse for Lynn's refusal to pay. b. B. A material breach c. C. Complete performance d. D. Substantial performance
D. Substantial Performance
23. George has been declared incompetent by the court and is under the care of his sister. Unknown to his sister, George rents the 15,000 seat civic center (the Aronoff) for his birthday party. George's contract to rent the civic center is best described as: a. A void contract b. A quasi contract c. A voidable contract d. An enforceable contract
A. A Void Contract It is void because both parties of a contract must have the CAPACITY to be bound by it... basically, they must be able to understand the ramifications of the contract for there to even be an offer/contract.
195. A(n) _________________ is a contract between a Promisee and a Promisor by which the Promisee agrees to accept and the Promisor agrees to render a substituted performance in satisfaction of an existing contratual duty. a. Accord b. Condition c. Major Breach d. Novation
A. Accord In an accord, you substitute a performance. In a novation, you substitute a party.
44. The Rodgers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the Thompsons, decided to sell and called Mr. Rodgers. Before he could get back in touch with Mr. Thompson, Mr. Rodgers suffered a heart attack and died. Mr. Rogers' adult daughter, to whom the Thompsons had not spoken, still wants the house. a. She may not accept, since the offer is terminated. b. She may not accept, because she does not have the capacity c. She may accept, since the contract offer is assignable (option). d. She may accept, since the offer cannot be revoked without notice
A. She may not accept, since the offer is terminated.
108. Will makes an offer to Ike, but before Ike can accept, the state legislature passes a law that makes Will's offer illegal. What is the effect of the new statute on the offer? a. The statute automatically terminates the offer. b. The statute has no effect on the offer. c. The statute acts as a condition on the offer. d. The statute acts as a rejection of the offer by the offeree.
A. The statute automatically terminates the offer.
105. A contract entered into by a minor is: a. Voidable at the election of the minor only b. Voidable at the election of the other party only c. Voidable at the election of either party d. None of the above
A. Voidable at the election of the minor only.
63. Wes, who is an art collector, offered to buy a print from the Norwood Gallery. Norwood Gallery 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. Norwood Gallery immediately telephoned Wes to accept his offer. Is there a contract? a. Yes, since the acceptance was received before the rejection. b. No, because the rejection was effective upon dispatch. c. No, because the rejection terminated the offer. d. Yes, because the acceptance is always effective upon dispatch.
A. Yes, since the acceptance was received before the rejection.
173. Loyal Engineers, Inc., needs a drill to continue its operations and orders one for $3000 from Mining Supplies Company. Loyal tells Mining that it must receive the drill by Tuesday or it will lose $10,000. Mining ships the drill late. Loyal can recover a. $13,000 b. $10,000 c. $3,000 d. $0
B. $10,000
51. A contract that binds the Offeree to keep an offer open for a specified period of time as known as: a. An offer b. An option c. A bilateral contract d. A unilateral contract
B. An Option
158. On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is: a. (A) Imposssibility b. (B) Anticipatory Repudiation c. (C) A Non Material Breach d. (D) Quasi -Contract
B. Anticipatory Repudiation
71. Retail Investment Company offers to sell a certain mall to Shopping Stores, Inc., if it accepts before 10 AM Monday. A contract is formed if Shopping Stores' acceptance is received a. Anytime on Monday b. Before 10 AM Monday c. Before 11 AM Monday d. Within twenty-four hours of 10 AM Monday
B. Before 10AM Monday
141. Assume That Before Leaving For California, Adam Introduced Ben To The Bank. Upon During A Credit Check On Ben, The Bank Was Satisfied With His Credit Status. All Three Parties Entered Into An Agreement That Substituted Ben For Adam On The Mortgage. Adam Happily Leaves For Malibu.If Ben Fails And Defaults On The Mortgage, Which Of The Two Remains Liable? a. Adam Only b. Ben Only c. Neither One d. Both Adam And Ben
B. Ben only
4. A contract in which both parties exchange promises (promise in exchange for a promise) is a: a. Voidable Contract b. Bilateral Contract c. Unilateral Contract d. Quasi Contract
B. Bilateral Contract
164. Russ and Joe make a contract for Russ to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other sources. a. (A) Russ must supply the chairs, even if he must buy them elsewhere. b. (B) Russ's duty to deliver the chairs is discharged by the destruction of the factory. c. (C) Russ has materially breached the contract if he fails to deliver the chairs. d. (D) Two of the above, (A) and (B). a. Yes b. No
B. Russ's duty to deliver the chairs is discharged by the destruction of the factory.
24. Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora. a. Bob can keep the money. b. Bob is under a contractual obligation to return the money. c. Bob's obligation to return the money is quasi-contractual. d. Bob's obligation to return the money is implied.
C Bob's obligation to return the money is quasi-contractual. This is because Bob was unjustly enriched.
172. Eagle Corporation contracts to sell to Frosty Malts, Inc., 6 steel mixers for $5000. When Eagle fails to deliver, Frosty buys all 6 mixers from Great Company, for $6500. Frosty's measure of damages is a. A. $6500 b. B. $5000 c. C. $1500 d. D. nothing
C. $1500
Which of the following is NOT always necessary in order for a valid contract to be formed? a. A. Mutual Assent b. B. Legality of Purpose c. C. A Writing d. D. Competent Parties
C. A Writing
20. Which of the following is NOT always necessary in order for a valid contract to be formed? a. Mutual Assent b. Legality of Purpose c. A Writing d. Competent Parties
C. A writing
57. The mirror image rule applies to: a. An Offer b. A Rejection c. An Acceptance d. A Revocation
C. An Acceptance
85. Because Jack is anxious to have the well, he agrees to pay Billy an additional $2000 for the drill and a promise to pay all additional costs to complete the job. However, once the well is finished, Jack changes his mind and now says he will pay only the originally agreed upon amount. a. The parties have agreed to a substitute or new contract which discharges the original contract. b. Billy is in breach of the contract, Jack need not pay any additional money. c. Billy is under a pre-existing moral duty to perform at the originally agreed upon price. d. All of the above
C. Billy is under a pre-existing moral duty to perform at the originally agreed upon price.
131. The transfer of a contract duty to a third party is known as a(n): a. Implied warranty b. Assignment c. Delegation d. novation
C. Delegation
1. Which of the following is NOT generally required in order to have a valid contract? a. Agreement (Mutual Assent) b. A Lawful Purpose c. Fairness of the Bargain d. Parties who have Contractual Capacity
C. Fairness of the Bargain
113. In general, an agreement not to compete with an employer while employed is enforceable if: a. The purpose of the restraint is to protect the employer's business. b. The restraint is no greater than is reasonably needed to protect the employer's business. c. The secretary of state has approved the agreement d. (A) and (B), but not (C)
D. (A) and (B), but not (C)
If there is no time specified for the acceptance of an offer, when does the offer terminate? a. After 24 hours b. After 48 hours c. After two weeks d. After a reasonable period of time
D. After a reasonable period of time
89. Hal promises not to foreclose on a mortgage that he holds on an office complex that Christopher owns. In reliance on this promise, Christopher spends $200,000 to remodel the complex. Which of the following is correct with regard to Hal's promise? a. Hal's promise not to foreclose is unsupported by consideration. b. Hal's promise is non-contractual c. Hal's promise may be enforced against him based upon the doctrine of promissory estoppel. d. All of the above.
D. All of the above
42. To be effective, an offer must: a. To be sufficiently definite and certain. b. To be communicated to the Offeree. c. Manifest (clearly show) an intent to enter into a contract. d. All of the above. e. None of the above.
D. All the above
91. The doctrine of Promissory Estoppel: a. Is a doctrine enforcing non-contractual promises. b. Includes as a requirement within the doctrine that there has been justifiable reliance on the promise. c. A doctrine relying on justice and not contractual rights. d. All of the above
D. All the above
93. The doctrine of promissory estoppel: a. Is a doctrine enforcing noncontractual b. Includes as a requirement within the doctrine that there has been justifiable reliance on the promise c. A doctrine relying on justice and not contractual rights. d. All of the above.
D. All the above
114. In considering whether a covenant not to compete included in the sale of a business is reasonable, courts will consider all of the following factors except: a. The geographic area covered. b. The time period for which the restraint is to in effect. c. The hardship imposed on the promisor (employee) d. The price that was paid for the business
D. The price that was paid for the busienss.
52. James offers to sell four acres of land to Jennifer for $8,000 and further offers to keep the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer pays James $100. Which statement describes the payment of $100? a. An implied contract has been formed. b. A unilateral has been formed. c. This created a formal contract. d. This created an option contract.
D. This created an option contract
175. Compensatory damages are foreseeable damages that arise from a party's breach of a contract. a. T b. F
False Consequential Damages must be foreseeable.
148. Anything less than complete performance is a material breach of contract. a. T b. F
False Ex. Slight or Minor Breach
151. Any breach at all, no matter how slight, allows a nonbreaching party to cancel a contract. a. T b. F
False Ex. Substantial Beginnings
144. A party's duty to perform under a contract is always absolute. a. T b. F
False Ex. Substantial performance
119. The person who makes an assignment is the assignee. a. T b. F
False The person who makes an assignment is the assignor (obligee).
183. A plaintiff who has not sustained any loss resulting from the defendant's breach of contract cannot recover any damages. a. T b. F
False They may still recover nominal damages.
81. Andrew agrees to paint Rosa's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job, unless Rosa agrees to pay him $100 more. What principle applies to this fact situation?
Preexisting Obligation or Duty Plus, there is no new consideration for the increased payment.
Introduction
1-33
Illegality
105-112
Legality
113-120
Assignments
121-137
Delegation
138-151
The Offer
34-44
16. A(n) __________ contract is one in which the terms have been definitely and specifically stated and agreed upon. a. Express b. Implied c. Written d. formal
A. Express
1. The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend. The band cannot assign its rights and delegate its duties under this contract. a. T b. F
True
101. Sally goes away to college at 17, lives on her own and pays her own rent and electric bills. If she makes a contract to buy a television set, she may assert her minority status and set aside the contract. a. T b. F
True
102. Seventeen-year-old Teresa wants to disaffirm her non-governmental contractual agreements. Most states will allow a minor to avoid those contracts. a. T b. F
True
104. As a general rule, a contract entered into by a minor is voidable at the minor's option. a. T b. F
True
115. Contract rights are generally assignable. a. T b. F
True
145. A condition Precedent must be met before a party's performance can be required. a. T b. F
True
146. Brenda has a household insurance policy, which requires that she notify the insurance company within 30 days of any loss before she is eligible to receive payment for her loss. The notification requirement is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss. a. T b. F
True
150. Discharge by performance is the most frequent method of discharging a contractual duty. a. T b. F
True
153. Kevin builds a house for Paul and Virginia Demwit. The contract calls for extra grade, stain-resistant carpet. The pattern selected by the Demwits is not available when the carpeting is supposed to be installed, so Kevin substitutes a comparable grade similar carpet. Kevin has substantially performed the contract. a. T b. F
True
154. In the above question, substantial performance plus a small amount of damages will discharge Kevin's contractual obligations, even if the Demwits think the substituted carpet ruins the house. a. T b. F
True
167. Monetary (money) damages are the most frequently granted remedy for breach of contract. a. T b. F
True
156. Opal contracts with Ajax Constructing Co, to build her a home for $100,000. Ajax starts the job, does about one-half the work, and then refuses to finish the job. Opal is not at fault but angry. Opal hires Fix-It Right Builders to finish the job at a cost to Opal of $75,000. Ajax now sues Opal for the total contract price of $100,000. Opal has paid Ajax nothing. What result? In the above problem, what remedy is Ajax entitled to : a. (A) Recover the contract price. b. (B) Recover the reasonable value of the benefit - Quasi-Contract. c. (C) Recover the contract price minus any damages. d. (D) Recover nothing. e. (A) Since Ajax materially breached the contract, Opal owes Ajax nothing. f. g. (B) Since Ajax performed one-half the work, Opal owes Ajax $50,000. h. i. (C) Since it cost Opal $75,000 to complete the house, Opal owes Ajax $25,000. j. k. (D) Since the house was completed, Opal owes Ajax $100,000 per the contract.
i. Since it cost Opal $75,000 to complete the house, Opal owes Ajax $25,000
170. Bob contracts to work for Central Construction Corp (CCC) during July for $4500. On June 30, CCC cancels the contract. Bob declines a similar job with Design Builders which would have paid $4000. Bob files a lawsuit against CCC. As compensatory damages, Bob can recover a. A. $4500. b. B. $4000. c. C. $500. d. D. $0
C. $500
87. Mary agrees to sew Georgia's prom dress for $50 plus costs. Later, 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: a. A. $50, since that is the original agreement. b. B. $50, since a modification must be writing. c. C. $60, since the modified agreement is supported by additional consideration d. D. $60, since any subsequent agreement is enforceable.
C. $60, since the modified agreement is supported by additional consideration.
128. Which of the following assignments of contracts rights are not assignable? a. Assignments that would materially increase the risk or burden of the obligor. b. Assignments that would transfer a personal contract right c. (A) and (B) d. None of the above
C. (A) and (B)
189. Delta Construction Corp., a general contractor, hires Eagle Electrical Company, a subcontractor, to wire a new office building. As the work progresses, Delta pays Eagle some of the price, but after completing most of the job, Eagle is owed more than $50,000. Eagle stops work to insist on being paid. Delta hires Fine Wiring, Inc., to finish the job. Eagle files a suit against Delta. Eagle's suspension of work is most likely a. A Material Breach b. Complete Performance c. Excused by Delta's failure to pay d. Substantial, but not complete, performance
C. Excused by Delta's failure to pay.
3. Which of the following is NOT generally required in order to have a valid contract? a. Mutual Agreement b. A Lawful Purpose c. Fairness of the Bargain d. Parties who have Contractual Capacity
C. Fairness of the Bargain
36. Albert read Electro-Corp's ad in the local newspaper Advertising a X-Box One for $99. Albert rushed to the store to buy the X-Box only to be told by the salesperson that the ad was a misprint and the price should have been $399. Albert gave the salesperson $99 + sales tax and demanded the X-Box. a. The ad is a contract and the store must abide by terms in the contract. b. The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him. c. Albert is merely making an offer to Electro-Corp to buy the X-Box for $99 plus sales tax. d. None of the Above.
C. Albert is merely making an offer to Electro-Corp to buy the XBOX for $99 plus sales tax.
98. Andrew agrees to paint Rosa's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job, unless Rosa agrees to pay him $100 more. What principle applies to this fact situation? a. Moral Consideration occurs when you make a a promise from obligation. b. A past consideration is sufficient for a new promise. c. Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosa's promise to pay more money. d. Rosa has made a promise in exchange for a detriment.
C. Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosa's promise to pay more money.
99. Barbara, a wealthy widow promises the pastor of her church that she will donate $10,000 to the church to help pay off its mortgage if the Deacon Board can obtain enough pledges for the balance of the $30,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. a. There is no consideration for Barbara's promise to pay $10,000. b. The promise to pay $10,000 is a peomise to give a gift and is therefore not enforceable. c. Barbara's promise is enforceable. d. None of the above
C. Barbara's promise is enforceable.
159. In the above question, what rights, if any, does Roberta have in this situation: a. (A) Paula has anticipatorily repudiated the contract and is liable to Roberta for damages now. b. (B) Roberta may wait until December 31 to see if Paula will perform her contractual duties and, if she does not, there is a material breach c. (D)Both (A) and (B) above are correct. d. (E) None of Above
C. Both (A) and (B) above are correct.
41. To be Effective, an Offer must: a. Manifest an intent to enter into a contract. b. To be communicated to the Offeree c. Be sufficiently definite and certain d. All of the above e. None of the above
D. All the above
67. Topp Properties (TPI), plans to offer to sell its warehouse to U-Store-It Center for a certain price, but neglects to communicate the offer to U-Store-It. This offer is a. Effective if there are no other potential buyers. b. Effective if TPI does not advertise the offer generally. c. Effective if U-Store-It is currently expanding its facilities. d. Not effective.
D. Not effective Only effective when communicated.
58. James offers to sell his fishing boat to Brenda for $3000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed: a. When Brenda tells James she will buy the boat. b. When Brenda gets the money from the credit union. c. When Brenda applies for the loan at the credit union. d. Only when James gets the $3000.
D. Only when James gets the $3000
34. Which Of The Following Would Be A Valid Offer? a. Bob's brand new riding lawn mower will not start, so Bob yells, "I'll sell this thing for a dollar." b. Jane is a real estate agent, and while looking at a house she says, "I think we can get $50,000 for this place." c. Mary goes to a garage sale, sees a dresser she wants, and says, "would you take $25 for this dresser?" d. John tells Rhoda, "I'll give you $100 for your bike." e. Both (C) and (D).
E. Both (C) and (D).
149. Which of the following would be considered a material breach of a contract? a. Partial performance that omits some essential part of the contract. b. Delivery of 50 chairs in a contract that calls for 100 chairs. c. An intentional breach of the contract. d. All of the above would be material breaches. e. Only (A) and (B) above would be material breaches.
E. Only (A) and (B) above would be material breaches.
14. An implied contract is NOT as enforceable as an express contract. a. T b. F
False
193. To fully compensate a Plaintiff for losses suffered for a breach of contract, punitive damages are always awarded. a. T b. F
False
26. A quasi contract is another name for an oral contract. a. T b. F
False
31. Statements made in stress or great excitement are usually held to be offers. a. T b. F
False
10. Charles says to Wes, "If you will mow my lawn, I will give you 25 dollars." Wes says nothing, but he mows the lawn. No contract exists under this fact situation, because Wes did not accept Charles's offer. a. T b. F
False
Conditions
152-216
Termination
45-75
Consideration
76-104
Jill makes an offer to Kurt. Kurt is a. An Offeree. b. An Officer. c. A Promisee. d. A Promisor.
A. An Offeree
121. In an assignment of rights under a contract, the rights are transferred from the: a. Assignee to the Assignee b. Obligor5 to the Assignee c. Assignor to the Obligor d. Assignor to the Assignee
D. Assignor to Assignee
32. The way parties usually show mutual assent is by: a. An offer by words or conduct AND an acceptance by words or conduct b. A proposal in words and an acceptance in words c. An act exchanged for an act d. An offer and a counteroffer
A. An offer by words or conduct and an acceptance by words or conduct.
166. Contract damages that put the injured party in as good a position as if the other party had performed are: a. Compensatory Damages b. Nominal Damages c. Consequential Damages d. Liquidated Damages
A. Compensatory Damages
165. Luke is a farmer. When bad weather destroys Luke's crop, his obligation to deliver that crop under am outstanding contract with Macro Food Corporation is a. discharged. b. Enforced completely. c. Enforced only to the extent of finding an alternative supply. d. Enforced only to the extent of transferring to the next year's crop.
A. Discharged
17. A(n) _____________ contract is one in which the terms have been definitely and specifically stated and agreed upon. a. Express b. Implied c. Written d. Formal
A. Express
134. Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and delegates the duties to the Andrews Company. Andrews does a poor job, and drips paint on Harold's deck and windows. a. Harold can sue both Blake and Andrews. b. Harold can sue Blake, but he cannot sue Andrews. c. Harold can Andrews, but he cannot sue Blake. d. Harold cannot sue, because he accepted the benefits of the assignment.
A. Harold can sue both Blake and Andrews.
50. Maxine offered to sell her video her camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the camera to Cindy. a. Maxine has revoked her offer to Tom. b. Maxine's offer has been rejected. c. Maxine must get the camera back from Cindy if Tom accepts within two weeks. d. An option contract was created, so Maxine is liable to Tom if she sells the camera to someone else within the two-week period.
A. Maxine revoked her offer to Tom.
207. Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." a. Restitution: Yes; Specific Performance: Yes b. Restitution: Yes; Specific Performance: No c. Restitution: No; Specific Performance: Yes d. Restitution: No; Specific Performance: No
A. Restitution: Yes; Specific Performance: Yes
206. Barry signed a contract to coach football for Washington High School for a period of 3 years. After two years, he is offered and accepts an assistant coaching position at State University. Contract law will not allow Washington High to ask for: a. Specific Performance b. Payment of compensatory damages c. Liquidated damages d. None of above
A. Specific Performance
111. Carlos owns a store in Hamilton County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as part of the transaction agrees not to engage in the same business anywhere in River City for a period of four years. a. A. The agreement is reasonable. b. B. The agreement is unreasonable. c. C. The agreement falls under Quasi-Contract. d. D. None of the above.
A. The agreement is reasonable.
Destruction of the subject matter has what effect on the offer? a. The offer is terminated b. B. The offer is delayed until additional subject matter can be located. c. C. The offer is merely delayed. d. D. None of the above
A. The offer is terminated
64. 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? a. There was no contract. b. B. There was a contract since the acceptance was mailed prior to the time the rejection was received. c. There was no contract because the rejection was mailed first. d. There was no contract because the acceptance was mailed more than 3 days after the rejection.
A. There was no contract
162. Alvin contracts with Builder to build her new house on a lot she owns. Builder had almost completed the house when it was struck by lightening and destroyed. Builder sues Alvin for the contract price less cost of completion. Will the builder recover? a. Yes b. No
A. Yes
163. Suppose Alvin had contracted with Builder to remodel the kitchen instead. Before Builder starts to work, Alvin's kitchen is accidentally destroyed by fire. Builder presents himself for performance. Is he excused from performing? a. Yes b. No
A. Yes
171. Chris contracts to work exclusively for Local Company during the month of May for $5000. On April 30, Local cancels the contract. Chris finds another job during May but earns only $3,000. Chris files suit against Local. As compensatory damages, Chris can recover a. A. $3,000 b. B. $2,000 c. C. $1,000 d. D. $0
B. $2,000
190. Kris contracts to work exclusively for Local Company during May for $5000. On April 30, Local cancels the contract. Kris finds another job during May but earns only $3000. Kris files a lawsuit against Local. As compensatory damages, Kris can recover a. $3,000 b. $2,000 c. $1,000 d. $0
B. $2,000
182. Dave contracts with Paul to buy a computer for $1000. Dave tells Paul that if it is not delivered on Monday, he will lose $2000 in business. Paul ships the computer late. Dave can recover a. A. $3000 in compensatory damages b. B. $2000 in consequential damages c. C. $1000 in liquidated damages d. D. nothing
B. $2000 in consequential damages.
55. Lyle offers to sell his house to Dennis for $100,000. Dennis responds, "I will pay you $100,000 for the house if you first paint the second floor." This response could best be described as: a. Acceptance b. A Counteroffer c. A Rejection d. An Invitation
B. A Counteroffer
75. Which of the following constitutes legal consideration? a. A promise to make a gift. b. A promise based upon a change in duties and payments. c. A promise based upon a moral obligation. d. A promise based upon past consideration. e. A promise based upon a preexisting obligation.
B. A Promise based upon a change in duties and payments
168. If no performance is rendered at all under a contract, then the damages will be the loss of value of the promised performance. a. T b. F
True
176. Under the rule in Hadley v. Baxendale, only damages foreseeable at the time of entering into the contract can be recovered. a. T b. F
True
178. Generally the breaching party will not be liable in damages for a loss that was not foreseeable at the time of entering into a contract. a. T b. F
True
179. Consequential damages include lost profits. a. T b. F
True
180. Consequential damages are awarded to cover all of the remote consequences of whatever injury a nonbreaching party suffers. a. T b. F
True
181. Consequential damages include lost profits and injury to person or property a. T b. F
True
184. Nominal damages are those that arise directly out of the breach. a. T b. F
True
186. The duty owed under the mitigation of damages doctrine depends on the situation. a. T b. F
True
187. When a breach of contract occurs, the nonbreaching party is required to take reasonable steps to lessen or mitigate the damages that he may sustain. a. T b. F
True
19. A valid contract is one that meets all of the requirements of a binding contract. a. T b. F
True
192. A Liquidated damages provision sets forth the amount of damages the parties agree in advance to be paid in the event of breach. a. T b. F
True
197. An accord and satisfaction discharges the original debt. a. T b. F
True
204. Miller made a contract to sell his condominium to George for $200,000. Two days later Miller changes his mind after discovering that he could have sold the property to another buyer for an additional $20,000. George sues and asks the court to have the property conveyed to him at the price of $200,000. George is seeking: a. Restitution b. Punitive Damages c. Specific Performance d. Condition
C. Specific Performance
38. An offer is effective as soon as it is dispatched. a. T b. F
F As soon as it is communicated to the offeree/RECIEVED
13. In order to be legally binding, a contract must be in writing. a. T b. F
False
200. Bill recently borrowed $50 from Richard for a couple of weeks. Bill, still short of cash, tells Richard, "I will wash and wax your car in exchange for the $50 I owe you." Richard tells Bill, "OK, that's Great!" Richard's performance of his new duty will be: a. An accord b. A Novation c. A Rescission d. A Satisfaction
A. An accord
191. Pam contracts to buy a XYZ brand computer set-up from Regal Systems for $5000, but Regal fails to deliver. Pam buys the computer elsewhere for $6500. Pam's measure of damages is a. $1500 only b. $1500 plus nominal damages c. nominal damages only d. $0
A. $1500 only Nominal damages are only awarded when there is no loss from breach of the contract. Because there was a monetary loss of $1500, they are consequential damages, which leaves no room for nominal damages.
11. Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. This is best described as: a. A unilateral contract b. A quasi contract c. An implied contract d. A bilateral contract
A. A unilateral contract
56. The _______________ must be the mirror image of the ________________. a. Acceptance, Offer b. B. Offer, Acceptance c. C. Contract, Offer d. D. Contract, Consideration
A. Acceptance, Offer
196. Steve owes Terry $100 for a used computer which he bought last year at Terry's garage sale. The two agree that the debt can be paid by Steve's shoveling Terry's driveway from January through March. The new contract is a(n): a. Accord b. Satisfaction c. Novation d. Rescission
A. Accord
129. Which of the following assignments would probably be prohibited by a court? a. A. Mary is in debt. A credit card company calls and threatens to sue. Mary orally assigns her next bimonthly paycheck to her creditor. b. John is a house painter. He is scheduled to paint Molly's home on Monday. John wakes up Monday morning with a stiff neck. He calls Ed, who is also a painter, to begin the job at Molly's. c. Ron has a contract with Federal Bank to service their coffee machines. He assigns the remainder of his contract with Federal to Michelle, who owns a coffee service. d. All of the above.
A. Mary is in debt. A credit card company calls and threatens to sue. Mary orally assigns her next bimonthly paycheck to her creditor.
27. A _________________ is an obligation imposed by law to avoid injustice. a. Unilateral Contract b. Bilateral Contract c. Quasi Contract d. Consideration
C. Quasi contract
48. Mary reads an ad in the school newspaper offering $1,000 swimming scholarship to anyone who could swim 500 laps in the school pool. Mary called the advertiser and began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way. a. The advertiser may revoke the offer since there has not yet been an acceptance. b. The advertiser may not revoke the offer since Mary has already accepted it. c. The advertiser must permit Mary the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps. d. The advertiser must be pay Mary $920, because she has performed 92% of the offer.
C. The advertiser must permit Mary the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps.
94. Anna is about to buy a house on a hill. Prior to her purchase she obtains a promise from Betty, the owner of adjacent property directly in front of property Anna is considering purchasing, that Betty will not build any structure that would block Anna's view. In reliance of this promise, Anna buys the house. Is Betty's promise binding?
There is no contract, but promissory estoppel may make a contract if the loss of the view depreciates the value of her property.
177. In the case of Hadley v. Baxendale, the plaintiff was seeking damages for: a. Nominal Damages b. Lost Profits c. Substantial Performance d. Major Breach
B. Lost Profits
109. Claudia sells her highly successful hair salon to Mel. In the sales contract, Claudia agrees never to open a hair salon in the entire state. Which of the following best describes this contract clause. a. A. Valid as a reasonable restraint on trade. b. B. Unenforceable as a violation of public policy. c. C. Good contract binding as fair protection. d. D. Quasi-Contract.
B. Unenforceable as a violation of public policy.
25. Able is involved in an automobile accident and is injured. While he is unconscious, he police call an ambulance which takes him to a hospital. Able is treated at the hospital and released a day later. The hospital sends him a bill for $4500, which Able refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious. a. Able has entered into a unilateral contract with the hospital and therefore will have to pay the bill. b. Able will have to pay the bill, because this is a quasi- contractual agreement. c. Able has not entered into a contract of any kind. d. Able and the hospital have entered into a bilateral contract, the terms of which requires that he pay the bill.
B. Able will have to pay the bill, because this is a quasi-contractual agreement.
65. Alan, a representative of Beta Services makes an offer to Carol, the owner of Delta products. The offer is effective even if a. Alan does not communicate it to Carol. b. Alan secretly does not intend to be bound by the offer. c. Carol is not capable of accepting the offer. d. The terms of the offer are not reasonably definite.
B. Alan secretly does not intend to be bound by the offer.
69. Tom offers to sell United Produce Company a boxcar load of tomatoes and requires that the United's response be quick - before the tomatoes spoil. It would be most reasonable for United to accept via a. A fax, a letter, or a phone call to Tom within two weeks. b. An email or fax sent to Tom as soon as the offer is received. c. A letter mailed to Tom two days later. d. A phone call to Tom two weeks later.
B. An email or fax sent to Tom as soon as the offer is received.
77. The concept of consideration in contract law includes: a. That each party to a contract must unintentionally exchange a legal benefit. b. An inducement to each party to make a return exchange. c. That each party takes out an insurance bond if the possibility of damages is above $5000 d. All of the above
B. An inducement to each party to make a return on exchange.
An ad in a newspaper or a circular describing goods and stating prices would generally be considered: a. An offer irrespective of who made the offer. b. An invitation to buyers to make an offer to buy goods. c. Both (A) and (B). d. None of above
B. An invitation to buyers to make an offer to buy goods.
79. Cheryl hired Golden Construction Co. to build a house for her. The plans for the house were complex, and expert workmanship was required. After the house was completed, Cheryl liked it so much that she promised to pay Golden a $4,000 bonus. Later, Golden demanded the money, but Cheryl refused to pay. Golden sues. What is the most probable result? a. Golden wins; the promise was used to entice Golden to do an outstanding job, which is adequate consideration. b. Cheryl wins; the promise is based on past consideration, which is NOT legally sufficient. c. Golden wins, the promise is based on past consideration, which is legally sufficient. d. Golden wins; the promise is based on changed circumstances which makes it enforceable.
B. Cheryl winds; the promise is based on past consideration, which is not legally sufficient.
74. The requirement that each party to a contract must intentionally exchange of value an inducement to the other to make a return exchange is known as: a. Mutual Assent b. Consideration c. Legality d. Contractual Capacity
B. Consideration
76. The requirement that each party to a contract must intentionally exchange something of value as an inducement to the other party to make a return exchange is known as: a. Mutual Assent b. Consideration c. Legality d. Contractual Capacity
B. Consideration
201. If Dan owes Sarah $1000 and the parties agree that Dan will paint Sarah's house in satisfaction of the debt, when Dan paints Sarah's house: a. Dan will still owe Sarah, half the amount owed b. Dan's $1000 debt will be discharged. c. Sarah doesn't have to pay Dan because it is an oral contract over $500 d. None of the above
B. Dan's $1000 debt will be discharged.
160. Eve, who owns and operates Eve's Garden, agrees to sell to The Fresh Fruit Company ten bushels of apples exclusively from her farm, Eve's Garden. Through no fault of Eve, a fire destroys every single apple from Eve's Garden before they are delivered to Fresh Fruit. This circumstance a. (A) Breaches the contract. b. (B) Discharges the contract. c. (C) Has no effect on the contract, obligations continue. d. (D) Suspends the contract.
B. Discharges the contract
82. Digital Computers agrees to sell 100 servers to Eagle Computer stores. Before they are delivered, Digital Computers demands an extra $100 per server to complete delivery. With no other source for Digital Computers servers, Eagle agrees to pay. Regarding the agreement to pay more, a court would most likely a. Add to it. b. Enforce it as is. c. Not enforce it d. Order the parties to renegotiate it.
B. Enforce it as is Their is a preexisting obligation and there is no new consideration.
83. A-Plus Properties, Inc., and Best Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be justified by a. Changes in the market value of the project during the contract. b. Extraordinary difficulties unforeseen at the time of the contract. c. No circumstances. d. Ordinary business risks that occur after the time of the contract.
B. Extraordinary difficulties unforeseen at the time of the contract.
95. A-Plus Properties and Best Construction Company sign a contract that specifies the amount to be paid. Additional compensation may be justified by a. Changes in the market value of the project during the contract. b. Extraordinary difficulties unforeseen at the time of the contract. c. No circumstances d. Ordinary business risks that occur after the time of the contract.
B. Extraordinary difficulties unforeseen at the time of the contract.
92. Marilyn contracted with the Bravo Builders an addition to her house for $25,000. After digging the foundation, Bravo discovers that a portion of ground underneath Marilyn's house is eroding away towards a nearby cliff. To stop the erosion and lay the foundation properly, Bravo Builders needs additional labor hours and concrete. Bravo Builders estimates the work needed to be an additional $20,000. Bravo returns to Marilyn and fully discuss the situation. Bravo tells Marilyn that the situation is "extreme" and that the foundation problems were "undetectable" and totally unknown of at the time of the contract. Assuming Marilyn agrees, which of the following is correct? a. A. This is a pre-existing obligation, Bravo is not entitled to any additional compensation b. Marilyn will have to pay the additional money. This is the exception of Unforeseen Difficulties. c. Quasi-Contract controls this situation due to unjust enrichment by Marilyn if Bravo continues with performance. d. Promissory Estoppel controls due to a promise had to Marilyn which she relied upon Bravo's promise to do the job for $25,000.
B. Marilyn will have to pay the additional money. this is the exception of Unforeseen Difficulties.
73. Jeff offers Kelly $1000 for her three-year-old laptop computer. Kelly accepts. If a dispute arise, a court would likely a. Enforce the deal after questioning the adequacy of consideration. b. Not question the adequacy of the consideration. c. Rewrite the deal after questioning the adequacy of consideration. d. Set aside the deal after questioning the adequacy of consideration.
B. Not question the adequacy of consideration
130. The privilege to play tennis and socialize at the Capital City Country Club (CCCC) is obtained through application, references, resumes, and fees. Steven and Chanel want to assign the remaining 4 years of their 5 year membership to Chuck and Prissy so that Steven and Chanel may join the posh and more exclusive Silver Hawk Tennis and Polo Club. CCCC sues to stop or enjoin Steven and Chanel from assigning their membership. CCCC will most probably: a. Not prevail because all contract rights are always assignable. b. Prevail because the parties intended the contract to be personal and non-assignable. c. Not prevail because the membership contract is a novation. d. None of the above
B. Prevail because the parties intended the contract to be personal and non-assignable.
147. Which of the following is a contract with a condition subsequent? a. Rose enters into a contract to buy a new car conditional upon her getting a loan from her bank. b. Roger bought a DVD player within ten days and get all of his money back. c. Both (A) and (B) are examples of a condition subsequent. d. Neither (A) nor (B) is an example of a condition subsequent.
B. Roger bought a DVD player within ten days and gets all his money back.
100. Shane contracts to build a garage for Bob for the price of $6,000. Because of an increase in the cost of labor and materials, Shane refuses to perform saying that he needs additional $500. Bob wants the garage, so he agrees to pay the additional $500. a. Bob must pay the additional $500. b. Shane has given no additional consideration, and must perform at the agreed-upon original price. c. None of the above. d. Answers (A) & (B).
B. Shane has given no additional consideration, and must perform at the agreed-upon original price.
110. Carlos owns a store in Hamilton County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as part of the transaction agrees not to engage in the same business anywhere within the entire state for a period of four years. a. A. The agreement is reasonable. b. B. The agreement is unreasonable. c. C. The agreement falls under Quasi-Contract. d. D. None of the above.
B. The agreement is unreasonable.
40. Charlie hears about a reward being offered by a local TV station for information leading to the arrest and conviction of a local crook. He supplies the requested information to "crime stoppers", and the suspect is then arrested and convicted. a. Charlie cannot collect the money unless the offer was specifically made to her by the TV station. b. The offer by the TV station was an offer made to the general public to enter into a unilateral contract, which offer Charlie has accepted. c. C. Because Charlie failed to notify the station of her intention to supply the information before actually doing so, she has not accepted their offer. d. Charlie was just doing his duty as a citizen and has no right to the payment of any money.
B. The offer by the TV station was an offer made to the general public to enter into a unilateral contract, which offer Charlie has accepted.
194. Central Contracting has a contract to build an office complex for Auto, Inc. A clause in the contract calls for Central to pay $2000 a day for each day's delay after the date the contract is scheduled for completion a. This is a compensatory damage clause b. This is a liquidated damages clause that may be an unenforceable penalty clause c. Auto Inc. will ne given the benefit-of-the-bargain d. Auto Inc. will only be allowed to recover nominal damages in the case of a breach.
B. This is a liquidated damages clause that may be an unenforceable penalty clause.
86. Farmer Smith hires Joe to drill a new well. Joe looks at the drilling site and quotes Smith a price of $500 for the new well. After drilling a short distance, Joe discovers hard bedrock. To drill through this would take substantially more time and money. Joe says he will continue, but only if Smith pays him $2000. Smith agrees. Smith's promise to pay an increased amount is ENFORCEABLE, because: a. This is a rescission and new contract. b. B. This is an unforeseen circumstances. c. C. This is a preexisting duty. d. D. None of the above.
B. This is an unforeseen circumstance
80. Courts have held that police officers are NOT entitled to recover rewards offered for the capture of criminals. The reason for this ruling is that the promise to pay the reward is NOT supported by consideration because it is based upon: a. A. A moral duty. b. B. Past consideration. c. C. A preexisting duty. d. D. Love and affection. e. E. Unforeseen circumstances.
C. A Preexisting Duty
137. Carl, a contractor, and Lyle, a landowner, have a contract whereby Clark is to perform routine construction services according to the blueprints that Lyle has provided. Carl assigns the contract to Davis, a developer to complete the blueprints. As a result of this assignment a. Lyle can bring a lawsuit based on promissory estoppel. b. Carl has no more rights or responsibilities with regard to the contract c. Carl no longer has any rights under the contract, but remains responsible for the duties he agreed to perform d. Carl has all of the rights under the contract, but he has no responsibility for the performance of the duties.
C. Carl no longer has any rights under the contract, but remains responsible for the duties he agreed to perform.
161. In the contract between Eve and Fresh Fruit, there was no designation of Eve's Garden as the source of the apples. Through no fault of Eve, a fire destroys every single apple from Eve's Garden before they are delivered to Fresh Fruit. This circumstance a. (A) Breaches the contract. b. (B) Discharges the contract. c. (C) Has no effect on the contract, obligations continue. d. (D) Suspends the contract.
C. Has no effect on the contract, obligations continue.
53. If Anna Laura, in return for the payment of $200 to her by Catherine, gives Catherine an option to buy Jesse, a prime Arabian mare, at any time within the net 14 days at a price of $50,000, Anna Laura's offer to Catherine is: a. A. A simple offer b. B. A rejection c. C. Irrevocable option contract. d. D. A counteroffer
C. Irrevocable Option Contract
90. Judy Morris interviewed for a job as plant manager at Northland Corp. and was offered a two year contract if she could relocate and start the new job with a month. Judy Morris agreed. Northland promised to follow up the oral agreement with a written contract setting forth all the agreed terms, but the contract had not arrived within several days. Judy Morris wanted to give 2-weeks' notice to her present employer, so she called Northland to check on the written contract and was told by Northland's CEO that the written contract was ready to be sent to her and assured her the job was hers. Judy Morris gave notice of her intention to quit her present job and moved 2 states away to the Northland location. When Judy Morris arrived for her first day of work, she was told someone else with better qualifications had been found and hired for the position. Judy Morris: a. Has no recourse since she never received a written contract, as required by the law for a contract that cannot be performed within one year of its making b. Has no recourse because promises are not enforceable if they do not meet all the requirements of a contract, and here Judy Morris lacked capacity c. May be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice. d. Cannot enforce the contract since she had not actually started working at Northland.
C. May be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice.
142. Brian owes Albert $500. Brian, Albert and Clarence agree that Brian will be discharged from the obligation and that Clarence will pay the debt. This is a novation. a. T b. F
True Novation = Substitution of one party for another and requires all three parties to meet and come to a mutual agreement.
157. Opal contracts with Ajax Constructing Co, to build her a home for $100,000. Ajax starts the job, does about one-half the work, and then refuses to finish the job. Opal is not at fault but angry. Opal hires Fix-It Right Builders to finish the job at a cost to Opal of $75,000. Ajax now sues Opal for the total contract price of $100,000. Opal has paid Ajax nothing. What result? a. A) Since Ajax materially breached the contract, Opal owes Ajax nothing. b. (B) Since Ajax performed one-half the work, Opal owes Ajax $50,000. c. (C) Since it cost Opal $75,000 to complete the house, Opal owes Ajax $25,000. d. (D) Since the house was completed, Opal owes Ajax $100,000 per the contract.
C. Since it Cost Opal $75,000 to complete the house, Opal owes Ajax $25,000.
169. Great Hardware Store agrees to hire Holly for one year at a salary of $500 per week. When Great cancels the contract, Holly spends $100 to obtain a similar job that pays $450 per week for a year. Holly is entitled to recover a. A. The amount of the wages that Great promised only b. B. the difference between the wages at the two jobs only. c. C. The difference between the wages at the two jobs plus $100. d. D. $100 only.
C. The difference between the wages at the two jobs plus $100.
174. Mona contracts to repair a computer for New Data, Inc. (NDI). Mona knows that without the computer, NDI will lose a sale. Mona does not perform as promised. NDI files a suit against Mona. As consequential damages, NDI can recover a. A. the cost of a new computer. b. B. The difference between Mona's price and the actual cost of repair. c. C. The loss of profit from the lost sale. d. D. Nothing.
C. The loss of profit from the lost sale.
22. Curt promises to buy illegal copies of CDs and DVDs from Dora, who promises to deliver on May 1. These promises are most likely a. Enforceable b. Valid c. Void d. Voidable
C. Void (The contract and its subjects/items must be legal)
106. Chris, a minor, signs a contract to buy alcoholic beverages for the Dine & Drink, his parents' restaurant. The contract is a. Valid but may be disaffirmed. b. Valid but may not be disaffirmed. c. Void as a matter of law. d. Void unless it is also signed by Ed, the manager of the Dine & Drin.
C. Void as a matter of law
103. In general, if a minor lies about her age in order to induce the seller to contract with her, she cannot disaffirm that contract. a. T b. F
False
12. Maria posted several signs in the neighborhood offering $100 for the return of her dog, Fluffy. Apple calls to get a description of the dog and tells Maria, "Ill look for your dog, Fluffy." A contract is formed by Apple's call to Maria. a. T b. F
False
7. "I promise to pay you $100 if you will promise to fix my car next month." This is an offer for unilateral contract. a. T b. F
False
8. "I promise to pay you $100 if you will promise to fix my car next month." This is an offer for a unilateral contract. a. T b. F
False
88. The term "past consideration" is really good consideration. a. T b. F
False
9. Chuck says to Wes, If you will mow my lawn, I will give you $100." Wes says nothing, but he mows the lawn. No contract exists under this fact situation, because Wes did not accept Chuck's offer. a. T b. F
False
202. A party with power to rescind a contract may lose that power if he/she delays unreasonably in exercising the power of disaffirmance. a. T b. F
True Substantial beginnings
61. If no time is stated, an offer will terminate automatically after a reasonable period of time. a. T b. F
True
62. If Bill tells Sara that he will give her 2 days to decide if she wants to buy his car, he cannot sell it to anyone else during that time. a. T b. F
True
78. The term "past Consideration" is not really past consideration at all because the law will not find a contract where there is no bargained-for-exchange. a. T b. F
True
84. A modification of a preexisting contract must be supported by mutual consideration. a. T b. F
True
6. Matt says to Lynn, "If you will mow my lawn, I will give you 25 dollars." Lynn replies, "O.K." Under these facts, each party is a promisor and each party is a promisee. a. T b. F
True (However, if Lynn doesn't reply with ok then it becomes an implicit (or implied) contract)
112. When evaluating the enforceability of covenants not to compete in employment contracts, courts must carefully balance the public policy favoring the employer's right to protect his/her business interest against the public policy favoring full opportunity for individuals to gain employment. a. T b. F
True
116. An Assignment of Rights is the voluntary transfer to a third party of the rights arising from the contract. a. T b. F
True
117. After an assignment, only the assignee has the right to the obligor's performance. a. T b. F
True
118. After an assignment, only the assignee has the right to the obligor's performance. a. T b. F
True
120. The general rule is that an assignee stands in the shoes of the assignor. He or she acquires the rights of the assignor but acquires no new additional rights. a. T b. F
True
122. When the Assignee gives consideration in exchange for an assignment, there is a contract between the Assignor and the Assignee that prevents the Assignor from revoking the assignment. a. T b. F
True
123. An obligor may assert rights of setoff that he might have against the assignor, as long as the matters arose BEFORE he had notice of the assignment. a. T b. F
True
124. In an assignment, only the assignee has a right to the obligor's performance. a. T b. F
True
125. Assignments of future wages are subject to statutes that sometimes prohibit them. a. T b. F
True
126. Marlene owes Bailey $750 due on June 1. Bailey assigns the debt to Greg on May 1, but neither Bailey or Greg informs Marlene. On June 1, Marlene pays Bailey. Marlene is fully discharged from her obligation. a. T b. F
True
127. When The Rights Under A Contract Are Highly Personal, They Are Not Assignable a. T b. F
True
135. A party delegating his duty to a third party is known as a delegator. a. T b. F
True
136. The delegation of a duty still leaves the delegator responsible for the performance of the duty. a. T b. F
True
138. A duty may not be delegated if there is an express provision in a contract against delegation. a. T b. F
True
198. By agreement, parties to a contract may discharge each other from performance under a contract. a. T b. F
True
199. Marie owes Nate $900 and the parties agree that Marie will paint Nate's house in satisfaction of the debt. The debt is not discharged until Marie performs the substituted agreement by painting Nate's house. a. T b. F
True
2. If a person who has been declared insane by the courts enters into an agreement, that agreement is void, because it does not meet all the requirements of a binding contract. a. T b. F
True
21. If a person who has declared incompetent by the courts enters into an agreement, that agreement is void, because it does not meet all the requirements of a binding contract. a. T b. F
True
29. Mike, a plumbing contractor, was hired to correct a stoppage or blockage in the sewer at Sarah's house. During his work, he discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. To meet public regulations, the water pipe had to be replaced either then or later, when the yard would have to be redug. Mike replaced the water pipe and Sarah inspected the work daily and did not object to the extra work. When Mike finished, Sarah refused to pay for the water pipe replacement since that was not what she originally hired Mike to do and she had never specifically agreed to that work. Sarah must pay Mike for his labor and materials costs for both the sewer and water line repair a. T b. F
True
30. The law applies a 'objective standard' in determining whether there was the required intent to enter into a contact. a. T b. F
True
5. An offer to form a bilateral contract is accepted by a promise to perform? a. T b. F
True
59. On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection. a. T b. F
True
60. A contract is invalid if all of the terms are not clearly stated. a. T b. F
True
