Business Law Test 3- Schupp

A minor may disaffirm a conveyance of land prior to reaching majority or within a reasonable time after doing so. a. True b. False

b

A minor's contract is ordinarily a. void. b. voidable. c. unenforceable by either party. d. valid if in writing.

b

1. Statute of Frauds must comply with the requirements of the Statute in order to be enforceable. a. True b. False

a

A moral obligation is generally not deemed to be consideration. a. True b. False

a

As a general rule, disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority. a. True b. False

a

Ratification of a contract, once effected, is final and cannot be withdrawn. a. True b. False

a

Tim, who is a minor, enters into a contract with Violet, who is an adult. Which of the following is correct? a. Violet may not disaffirm the contract. b. Violet may disaffirm the contract at any time. c. Violet may disaffirm the contract when Tim becomes an adult. d. Tim may ratify the contract at any time during his minority.

a

Tom Teen, age 16, purchased a radio from an adult. Tom was not asked how old he was. In order to disaffirm the contract, Tom must a. return the radio if he has it. b. return the radio and pay for the use of the radio. c. return the radio and pay for any damage to the radio. d. return the radio, pay for any damage, and pay for the use of the radio

a

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party enters into a contract with the minor: a. the minor has lost his right to disaffirm the contract because of the misrepresentation. b. the adult party can recover damages from the minor in tort. c. the minor is required to restore the other party to the position occupied before the making of the contract. d. the minor may disaffirm the contract.

a

When a minor ratifies a contract, the minor: a. can ratify the contract only as a whole. b. can retain the benefits and avoid the burdens. c. can escape payment for what he has received. d. two of the above, b and c.

a

When a person who just became an adult ratifies a contract made as a minor, he a. can ratify the contract only as a whole. b. can retain the benefits and avoid the burdens. c. can escape payment for what he received. d. two of the above, b and c.

a

Which of the following cannot be disaffirmed until AFTER the age of majority? a. A contract that affects title to real estate sold by a minor b. A contract for a necessary c. A contract that is fully completed d. A contract for the sale of goods

a

Which of the following is true regarding promissory estoppel? a. It requires that the promisor should reasonably expect to induct the promisee's action or forbearance. b. Damages awarded for promissory estoppel always equal the value of the promise relied upon by the promisee. c. It requires consideration. d. It applies only when one or both parties is a merchant.

a

Which of the following would be an invalid ratification? a. Seventeen year old Tim Teenager ratifies a contract which he signed two months ago. b. Eighteen year old Tim Teenager disaffirms a contract he signed when he was seventeen. He does so two weeks after his eighteenth birthday. c. Two weeks after attaining his eighteenth birthday, Tim calls the bank to assure them that he will continue making payments on the loan agreement he signed a month before his eighteenth birthday. d. Two weeks after his eighteenth birthday, Tim makes a payment on the installment contract he signed a month before.

a

A minor generally is liable for the reasonable value of a. insurance. b. necessaries. c. transportation. d. education.

b

A minor is liable for necessities and for the agreed price. a. True b. False

b

A minor is not liable for his torts. a. True b. False

b

Ann, a minor, disaffirmed her agreement to buy $127 worth of cosmetics from Mary Kay Company. She had used up all the eye shadows, lipsticks and powders. The general rule is that: a. she may disaffirm, but she must pay the asking price of the cosmetics used. b. she may disaffirm but she has to return the makeup that is not used up. c. she may not disaffirm without paying the value of used makeup. d. she may not disaffirm because she has used the property

b

Fay, age 17, ordered a pair of skis on the installment plan. She paid $20 every month until she turned 18, the age of majority. The next day, she sold them to Sharon and disaffirmed the contract. What result? a. Fay is still liable since she had to disaffirm before her 18th birthday. b. Fay is still liable because selling the skis amounts to a ratification. c. Fay is still liable because she used the skis. d. Fay is not liable because skis are not necessaries.

b

Generally speaking, three of the following four kinds of statements are treated as invitations to make an offer rather than as offers. One of the four, however, generally is regarded as an offer. Which of the following is most likely to be regarded as an offer? a. An advertisement for the sale of goods b. An advertisement offering a reward for the return of lost property c. An auctioneer's request for bids at an auction d. An advertisement for bids to do a construction job

b

If a minor enters a contract which is interwoven with a tort, will the minor be held liable in tort? a. yes b. no c. only if the agreement is voidable d. depends on the age of the minor

b

If the obligor desires to be discharged from his duty, he will have to seek which of the following from the obligee? a. payment b. a novation c. another obligee d. none of the above

b

Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable? a. Yes, there is no way for the dealer to get the extra money anyway. b. Yes, there is consideration for the modified amount. c. No, there is no consideration and the dealer can sue for the extra $300. d. No, there is an implied contract to pay the dealer whatever he billed Jack

b

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? a. The car's theft is a de facto ratification of the purchase because it is impossible to return the car. b. Kent may disaffirm the purchase because Kent is a minor. c. Kent effectively ratified the purchase because Kent used the car for an unreasonable period of time. d. Kent may disaffirm the purchase because Mint, a merchant, is subject to the UCC.

b

One of the most frequently occurring applications of the doctrine of promissory estoppel is to charitable subscriptions. a. True b. False

b

Randy, a minor, buys a new four-wheel-drive truck from Jones Ford. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally known Steve or Randy. Which of the following expresses the status of this situation? a. Randy may recover the vehicle from Mr. Smith. b. Randy may not recover the vehicle from Mr. Smith. c. Randy may hold Steve liable in tort. d. Randy may recover the reasonable value of the vehicle from Mr. Smith but not the vehicle itself.

b

Robert Briscoe is 17 years old. He lies to Belk Ford about his age, saying he is 18 in order to induce them to sell him a new pickup. Belk falls for this lie and sells him the pickup. Which of the following is correct? a. Robert may disaffirm and get his money back. b. Robert may not disaffirm since he lied. c. Robert may only receive a portion of his money. d. Robert will receive his money less depreciation.

b

Seventeen-year-old Tim Teenager decides he would like a new car, so he brings his 1972 Ford Maverick to the local Ford dealer as a trade-in on a new Thunderbird. He turns over his Maverick to the dealer and drives away with a new Thunderbird. Two days later, Tim decides he cannot afford the payments for the new car on his salary as a burgermaker, so he returns the car and asks for his Maverick back. The dealer says he will take the Thunderbird and rescind the contract, but that he is unable to return the Maverick because he sold it to another buyer. a. Tim is entitled to the Maverick and can sue the dealer to get it back. b. If the dealer sold the car to a good faith purchaser, then Tim has no right to get his Maverick back. c. Tim cannot avoid the contract until he is eighteen. d. Under the UCC and the majority rule, Tim must make restitution for the difference between the depreciation on the Thunderbird and the market value of the Maverick.

b

The exercise of the power to avoid a contract is known as ____________. a. ratification b. disaffirmance c. ab initio d. restitution

b

Toni Minor purchased an automobile from Majority Motors on September 17. She attained the age of majority on October 5. In the early morning of October 6, she was involved in an accident that destroyed the vehicle, which was not insured. On November 1, she informed Majority Motors that she would make no further payments. If Majority Motors sues, it would a. lose even if defendant had misrepresented her age. b. lose because disaffirmance is permitted even though the property has been destroyed. c. win because defendant attempted to avoid the contract only after reaching her majority. d. win because an effective disaffirmance would have required defendant to return the property or its equivalent.

b

Which of the following contracts is VOID? a. A contract made by an unemancipated minor b. A contract made by a person who has been adjudicated insane and institutionalized or put under a guardian's care c. A contract made by a person under the influence of mind-altering drugs d. A contract made by a minor who receives no support from a parent or guardian

b

Which of the following is correct regarding the contractual liability of incompetent persons? a. An incompetent person's responsibility upon disaffirmance is the same as for a minor. b. The incompetent must restore the competent party to the status quo before the transaction by a return of the consideration received or its equivalent in money. c. The contracts of a person under guardianship by court order are voidable. d. The contracts of a ward are binding without the approval of the guardian.

b

Which of the following is untrue regarding the contracts of incompetent persons? a. An incompetent person is liable for necessaries. b. Unlike a minor, an incompetent person can never ratify a contract. c. To avoid a contract, a person need not be permanently incompetent. d. A person is competent unless he is unable to understand the nature and effect of his act.

b

Which of the following would least likely considered a "necessary" as discussed in class? a. food b. transportation c. medical care d. clothing

b

Which of the following would not be enforceable without consideration? a. A promise to pay a debt barred by the Statute of Limitations b. A promise to pay a debt discharged in bankruptcy where the promise meets the requirements of the Bankruptcy Act c. A promise which falls within the doctrine of promissory estoppel d. The settlement of an undisputed debt

b

A minor, M, has obtained necessaries on credit. It is correct to say that a. he can be made to pay the contract price for them. b. his parents must pay the contract price. c. he is only liable for the reasonable value of the necessaries. d. neither he nor his parents have to pay anything.

c

A raffle is: a. a great way for university clubs to raise money. b. legal as long as the prizes are donated. c. gambling. d. not gambling so long as the word "donation" is on the raffle ticket.

c

A valid contract may be unenforceable for which reason(s)? a. Failure to satisfy the statute of frauds b. Running of the statute of limitations c. Both a and b d. A valid contract is always enforceable

c

A/an ___________ is a measure designed to protect the public from unqualified practitioners. a. license b. revenue license c. regulatory license d. usury statute

c

An oral contract that is covered by the statute of frauds is: a. voidable. b. void. c. unenforceable. d. executory.

c

Gambling is made up of a. capacity, agreement, reward. b. consideration, illegality, capacity. c. risk, reward, consideration. d. capacity, consideration, risk.

c

If a covenant not to compete is found to be against public policy, the courts may do which one of the following? a. Leave the parties as they are b. Enforce the contract as it stands c. Delete the unreasonable parts d. Require the parties to renegotiate

c

If a tort and a contract are so intertwined that to enforce the tort, the court must enforce the contract, the minor is not liable in tort. This is the definition of: a. liability on contracts. b. liability for necessaries. c. liability for tort connected with contract. d. liability for misrepresentation of age.

c

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? a. Quasi-contract, in order to prevent the unjust enrichment of mix. b. Promissory estoppel, because Small has changed his position to his detriment. c. None, because of the illegal nature of the contract. d. Express contract, because both parties bargained for and exchanged promises in forming the contract.

c

Rail, who was 16 years old, purchased an $800 computer from Elco Electronics. Rail was unhappy with the computer. Two days after reaching the age of 18, Rail was still frustrated with the computer's reliability. He returned it to Elco, demanding an $800 refund. Elco refused, claiming that Rail no longer had a right to disaffirm the contract. Elco's refusal is a. correct, because Rail's multiple requests for service acted as a ratification of the contract. b. correct, because Rail could have transferred good title to a good faith purchaser for value. c. incorrect, because Rail disaffirmed the contract within a reasonable period of time after reaching the age of 18. d. incorrect, because Rail could disaffirm the contract at any time.

c

Ratification a. can come about only by express conduct. b. can come about through implied conduct only. c. can only be of the whole and not a part of the contract. d. none is correct.

c

Sam Patten owns a very successful shoe shop known as the Progressive Shoe Store. Arlen Coyle desires a franchise in order to open a similar store. Mr. Coyle contacts Mr. Patten and is told, "If you will buy Lot 21 in Section 18 and build a building according to the specifications and plans that I provide, I will grant you a Progressive Shoe Store franchise." Mr. Coyle performs these tasks and requests his franchise. Patten refuses to grant the franchise and contends there was no consideration and Coyle cannot hold him liable. Which of the following is most correct? a. As there was no consideration, there was no liability. b. Patten will be held liable as there was consideration. c. The doctrine of promissory estoppel applies. d. The agreement is void as promissory estoppel does not apply.

c

When a minor commits a tort while completing a contract and the tort and a contract are so "interwoven" that they cannot be separated, then a. the court will apply the law of torts to the tort and the law of contracts to the contract. b. the law of torts will prevail. c. the law of contracts will prevail. d. the case will be thrown out.

c

When may a person disaffirm a contract for the sale of real property? a. Prior to reaching majority b. Prior to reaching majority or within a reasonable time thereafter c. Upon reaching the age of 18 d. Upon reaching the age of 22

c

When personal property is transferred to a third person who is unaware that it was originally purchased by a minor a. the minor can avoid the sale to the third person under the UCC. b. the third person can avoid the purchase under the UCC. c. the minor cannot get the property back from the third person under the UCC. d. the minor can recover the property from the third person under the UCC upon full restitution.

c

Which of the following is untrue regarding the contracts of intoxicated persons? a. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. b. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. c. Slight intoxication will destroy one's contractual capacity. d. Courts are strict with respect to the requirement of restitution upon disaffirmance.

c

Which of the following would likely be considered a non-necessary item for a minor? a. A used car to drive to school b. A camera for a high school student with a part-time job as a photographer c. A miniature television set to watch the soaps during lunch d. A visit to a dermatologist for skin problems.

c

Why does it matter whether or not a contracting party is an Article 2 merchant? a. Because this is the test for determining whether Article 2 applies. b. Because contracts between merchants are covered by the Restatement (Second) of Contracts rather than by Article 2 of the UCC. c. Because Article 2 sometimes creates different rules for merchants in sale-of-goods cases. d. Actually, the term merchant has little or no practical significance.

c

A minor may NOT disaffirm a contract for a. purchase of food. b. sale of land. c. purchase of land. d. a and b. e. a and c.

d

An item considered a Necessary is a. lodging b. medicine c. food d. all of the above

d

Cindy Smith, age 16, buys a Chevy Camaro from Mike Mason, age 23, for $4,000. Cindy's parents, who give her everything she wants, loaned her the money for the car. The reason for Cindy's purchase is that all her friends have cars and she feels left out without one. One week after buying the car, however, Cindy changes her mind and told Mike that she wants to disaffirm the contract. When Mike comes to pick up the car and give Cindy her money, though, Cindy changes her mind again, telling Mike that "I'll stick by the deal." But when Cindy's parents gave her a new car for her seventeenth birthday, she finally decides to disaffirm once again. Which of the following is true? a. Cindy cannot disaffirm because the car is a necessary. b. Cindy cannot disaffirm because she ratified the contract by saying, "I'll stick by the deal." c. Cindy cannot disaffirm because we have a sale of goods and Article 2 of the UCC says that 16 is the age of contractual capacity. d. Cindy can still disaffirm.

d

Generally, minors are liable for a. libel. b. negligence. c. fraud. d. all of the above.

d

In non-compete agreements the important factors are a. time and amount of money involved. b. area and training required. c. par value and interest rate. d. time and area.

d

In which of the following situations does the first promise serve as valid consideration for the second promise? a. A police officer's promise to catch a thief for a victim's promise to pay a reward b. A builder's promise to complete a contract for a purchaser's promise to extend the time for completion c. A debtor's promise to pay $500 for a creditor's promise to forgive the balance of a $600 liquidated debt d. A debtor's promise to pay $500 for a creditor's promise to forgive the balance of a $600 disputed debt

d

In which of the following situations would a minor be unable to disaffirm a contract which he had made? a. Upon restoring the consideration received in a situation involving a fully executed contract b. Where real property is involved, upon reaching the age of majority c. During the time of his minority or for a reasonable time thereafter d. Where the minor wishes to perform part of a contract and disaffirm another part of the same contract

d

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? a. Ken's promise is not to foreclose is unsupported by consideration. b. Ken's promise is noncontractual. c. Ken's promise will be enforced against him based upon the doctrine of promissory estoppel. d. All of the above.

d

Promissory estoppel is a contractual doctrine that includes the following considerations: a. The courts use the doctrine of promissory estoppel to enforce noncontractual promises. b. Under this doctrine the promisor reasonably expects that the promisee, in reliance on the promise, will be induced by the nature of the promise to take action or refrain from taking action and the promisee does so. c. The courts will not, under any circumstance, enforce promises that do not include all four of the elements of contract. d. Both a and b.

d

Ratification can occur in three ways. They are: a. through express language. b. as implied from contract. c. through failure to make a timely disaffirmance. d. all of the above. e. none of the above.

d

Tom Payne had a toothache and stopped by Quick Fix Dentist during his lunch hour. Although he had never been to Quick Fix before, Fix accepts Payne as a patient and pulls a tooth. On Payne's way out, the receptionist hands him a bill for $500. Payne is outraged and claims that a contract was never formed. a. Payne is not liable because he never made an offer for Quick Fix to accept. b. Payne is not liable because he never accepted any offer. c. Payne is liable for the $500 because he accepted Quick Fix's services. d. Payne is only liable for a reasonable amount

d

West, an Indiana real estate broker, misrepresented to Zimmer that West was licensed in Kansas under the Kansas statute that regulates real estate brokers and requires all brokers to be licensed. Zimmer and West mutually agreed that Zimmer would pay a 5% commission for selling Zimmer's home in Kansas. Zimmer signed a written document reflecting such agreement but West did not sign the document. West sold Zimmer's home. If West sued Zimmer for nonpayment of commission, Zimmer would be a. liable to West only for the value of services rendered based on quasi-contract. b. liable to West for the full commission based on the law of contracts. c. not liable to West for any amount because West did not sign the contract. d. not liable to West for any amount because West violated the Kansas licensing requirements.

d

Which of the following is an exception to the consideration requirement? a. Promissory estoppel b. Promises to pay debts whose enforcement is barred by the statute of limitations c. Charitable subscriptions d. All of the above

d

Which of the following is true about situations where a minor or former minor tries to disaffirm a completed contract in which the consideration furnished to the minor has been lost, stolen, or dissipated? a. The traditional rule here is that the minor cannot disaffirm because the minor has nothing to give back to the other party. b. The traditional rule here is that the minor cannot disaffirm because the contract is completed, and only uncompleted contracts can be disaffirmed. c. Today, the courts all agree that a minor can disaffirm here - without giving anything back to the adult. d. None of the above.

d

Which of the following statements is/are true? a. A business may require, though it may request, a parent to sign a contract between the business and a minor as a precondition for a sale to a minor. b. A parent who cosigns a loan with his or her minor child becomes obligated under the loan contract. c. As a general rule, parents are not liable for contracts made by their minor children. d. All of the above are true.

d

Which of the following would be unenforceable because the subject matter is illegal? a. A contingent fee charged by an attorney to represent a plaintiff in a negligence action b. An arbitration clause in a supply contract c. A restrictive covenant in an employment contract prohibiting a former employee from using the employer's trade secrets d. An employer's promise not to press embezzlement charges against an employee who agrees to make restitution

d