BUSLAW9-19
Which of the underlying contracts, if any, is void?
A contract entered into by a person who has already been adjudged insane by a court of law
A promise to refrain from smoking can not be legal consideration because it does not convey anything of economic value to the other party.
False
A threat to file a civil suit against someone to get that person to contract with you is never duress.
False
Procedural unconscionability exists when a term in a contract is extremely harsh or grossly one-sided in effect.
False
Ratification of a contract made by a minor must be express (in words).
False
Which of the underlying theories, if any, requires proof of a recklessly made promise that causes reliance and produces hardship when broken?
Promissory estoppel
A promises to pay B $100 per week, in exchange for B's promise not to beat A up. There is no consideration for A's promise.
True
A promises to pay B $50 if B will mow A's lawn. B does not promise to mow A's lawn, however later that day B completely and satisfactorily does mow A's lawn. This is an example of a unilateral contract.
True
Ratification ends the right to rescind a contract.
True
Some courts allow promissory estoppel to bind parties to oral contracts that otherwise would be unenforceable under the statute of frauds.
True
Which of the following is true regarding promissory estoppel?
it requires that the promisor should reasonably expect to induce the promisee's action or forbearance.
Which of the following duties is most likely to be delegable?
A duty to deliver goods to a manufacturer.
Ace Construction Company contracts to build a retirement community on land owned by Smith. Jones, an adjoining landowner, expects the value of his land to increase greatly once the retirement community is built. Ace Construction Company then breaches the contract to build the retirement community. In this case:
A) Jones can recover against the construction company as an intended beneficiary of its contract with Smith. B) Jones can recover against Smith because it was a party to the contract with the construction company. C) A and B are both true. ANSWER: D) None of the above is true.
Wanda buys a car on credit from Friendly Motors. Wanda assigns the car and her contract with Friendly to Betty. In this case:
A) Wanda remains liable to Friendly. B) Betty is liable to Friendly. C) Betty is not liable to Friendly because there was no valid delegation of duties here. ANSWER: D) A and B are true.
Lili owns a jewelry store on Melrose Avenue. In order to display her jewelry appropriately, she hires Eric the electrician to install new lighting in her store. While the work is being done, the store will be closed. Lili explains to Eric that she needs the work to be done before the weekend, when she makes the most sales. Lili and Eric agree to include in the contract a liquidated damages provision, which states that, if Eric does not complete the work before the weekend, Lili will be able to recover a specified sum for the loss of sales over the weekend. In order for the liquidated damages provision to be enforceable:
A) the stated amount must be exactly equal to the actual damages suffered. B) the stated amount must be reasonable in relation to the probable loss or injury. C) actual damages would be difficult to determine. ANSWER: D) B and C.
This question concerns the statute of frauds provision for contracts that can't be performed within one year. In most states, which of the following is not covered by this provision of the statute of frauds?
A. A unilateral contract. B. A contract for an indefinite time period. C. A contract to do something for the life of the promisee. ANSWER:All of the above are outside this provision of the statute of frauds.
In which of the following cases is there a material breach of a contract?
A. Al fails to substantially perform on his promise to construct a road for City. B. Bill tells Mike that he will not deliver the goods as promised. C. The Gazette fails to print an advertisement for a New Year's Day sale until January 5. ANSWER:All of the above materially breach a contract.
In which, if any, of the underlying examples would there be no consideration?
A. An agreement in which one of the parties makes a gratuitous promise B. An agreement in which one of the parties makes an illusory promise C. An agreement in which one of the parties bargains for something that has already been received ANSWER: All of the above
Buyer bought computer software in a shrink-wrapped box that did not list the conditions of purchase. When Buyer inserted the CD disc in the drive a document splashed on the computer monitor - setting forth in clear and unambiguous terms - the terms and conditions of purchase. Buyer then clicked on the word I ACCEPT on the bottom of the form. Buyer did not read the form prior to clicking the 'accept' link.
A. Buyer would not be held to the terms he did not read B. Buyer, according to the above facts, had actual knowledge of the terms C. Buyer, according to the above facts, had constructive knowledge of the terms D. A reasonable person would have read and understood the terms ANSWER: Both C & D
Which of the underlying, if any, is a non-contract theory of recovery?
A. Promissory estoppel B. An implied in fact contract C. An implied in law contract D. Quasi contract ANSWER: A,C and D Remember, an implied in law contract is a quasi contract. Implied in fact contracts are valid contracts created by the parties. Non contract theories of recovery are used when fairness requires it and when no valid contract has been formed.
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. ANSWER: All of the above.
Which of the following is not one of the factors that have influenced the character of modern contract law?
A. The emergence of perceived disparities in bargaining power. B. The growing use of standard form contracts. C. Fewer face-to-face transactions. ANSWER: All of the above have influenced the character of modern contract law.
In the case of Meram v. McDonald, the Court denied the defendant's motion to dismiss because
A. The offer was sufficiently definite to support the formation of a contract; B. A reasonable person could conclude that the offer of 1 million dollars to anyone who deposited his business card in the jar and stayed until the end was not a joke; C. None of the above. ANSWER: A and B.
A person who is older than the age of majority may disaffirm a contract if:
A. The other party is a minor who lied about his age. B. The other party is an emancipated minor. C.The contract is for necessaries. ANSWER: None of the above.
In the case of Gottlieb v. Tropicana Hotel and Casino (THC), identify what it was that Gottlieb did, if anything, that amounted to legal detriment to her:
A. Went to the casino to participate in its promotion B. Permitted the casino to gather personal information about her gambling habits C. Actually participated in the game ANSWER: All of the above *Remember, if the evidence shows that THC in fact bargained for the listed activities, it would constitute legal value because Gottlieb was under no duty to do any of them. The defendant's motion for summary judgment was denied and Gottlieb was given the opportunity to prove her case.
Tony is a software developer who was hired by MegaSoft, a large and powerful computer software company. At the time of hiring, Tony signed the following agreement: "For a period of six (6) months commencing upon my termination of employment with MegaSoft, I shall not enter into direct competition with MegaSoft. Further, I shall not disclose any internal communications I received at MegaSoft during my employment, nor solicit MegaSoft customers or MegaSoft employees to engage in business with a MegaSoft competitor." This kind of agreement is a:
A. noncompetition agreement B. nonsolicitation agreement C. confidentiality or nondisclosure agreement ANSWER: all of the above
An important difference between duress and undue influence is that:
A.Duress always makes contracts void, while undue influence makes contracts voidable. B. Duress involves physical compulsion, while undue influence involves economic compulsion. C.The scope of duress has contracted since the 19th century, while the scope of undue influence has expanded since the 19th century. ANSWER: None of the above.
A minor may disaffirm her contract:
A.During the time that she is still a minor B.Within a reasonable period of time after she becomes an adult C.Unless she received a necessity, and, if so, she must pay for its reasonable value ANSWER: All of the above
Which of the following makes a contract voidable?
A.Threatening to kill someone unless he signs a contract. B. Mutual mistake regarding a key fact about a contract. C. Taking advantage of a trusting relative to get her to sign a disadvantageous contract. ANSWER: All of the above
In order to satisfy the Statute of Frauds, the parties' writing must:
Be signed by the "party to be charged."
X sells a house to Y for $300,000. Before selling the house, X forgets to tell Y about a leaky faucet in a little-used sink in the basement (which would cost about $10 to fix). Y inspected the house but just didn't notice the faucet. Later, Y wants to rescind the deal on the basis of fraud or misrepresentation because of the leaky faucet. Which of the following is the best reason why Y cannot rescind?
Because X's failure to disclose the condition of the faucet is not material.
Why does the fraud-misrepresentation distinction matter?
Because materiality is not required in a fraud case.
Smith and Benson make an oral contract for the sale of some land at a price of $500,000. After paying Smith $400,000 of the purchase price, Benson takes possession of the land. One month later, Smith wants to boot Benson off the land. His argument is that the parties' oral agreement is unenforceable under the Statute of Frauds. Which of the following is most correct?
Smith is incorrect, because Benson paid part of the purchase price and took possession.
In violation of a state licensing statute, Jones purports to be an attorney. After making that allegation, he contracts to perform legal service for Smith. Smith then pays Jones a $500 retainer. Later, after discovering that Jones is not licensed and therefore cannot get the job done, Smith sues Jones for the $500. What is the most likely result, and why?
Smith probably wins, because parties for whose protection a regulatory statute has been enacted often can recover amounts paid under a contract declared illegal by the statute.
Chica, a women's fashion retailer, sends catalogs to its customers, who can then order from the catalog via phone or online. Donna decides to order a black dress priced at $99.00. Donna calls to place her order. The sales representative who answers the phone tells Donna that the black dress is no longer in stock. Under these facts: Correct!
Chica is not liable for breach of contract.
Cindy Smith, age 16, buys a 1973 Chevy Camaro from Mike Mason, age 23, for $400. Cindy's indulgent 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 tells 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?
Cindy can still disaffirm.
A and B entered into a completely integrated written contract. Before the written contract was completed, A made an oral statement to B regarding the terms of the contract. This statement was not contained in the written contract. Under the parol evidence rule, evidence of A's oral statement would be admissible if it were used to:
Clarify an ambiguous term in the written contract.
Anti-assignment clauses in contracts generally are:
Enforceable but read narrowly.
A contract of adhesion is one that the courts will always enforce, because the strong public policies underlying the contract make it one to which courts must adhere.
False
A rejection normally is effective at the time it is dispatched by the offeree.
False
A revocation normally is effective at the time it is dispatched by the offeror.
False
A void contract is one that either party can cancel at their option.
False
An assignee must give consideration to the assignor in exchange for the assignment.
False
Behavior that strongly suggests that a party will not perform his obligations under a contract cannot ever be a material breach, because this would unfairly penalize a party who, after all, may later be able to perform.
False
Bill and Wanda are living together without being married. They make an agreement that in the event they split up, Wanda will get the couple's waterbed. In most states, this agreement is unenforceable because it is an agreement between unmarried cohabitors.
False
Construction contracts typically are subject to a strict performance standard.
False
Dr. Wilson, an orthopedic surgeon worked for the Medical Group in Utah. He signed an agreement when hired to not "compete with the Group after leaving it for 2 years and within a radius of 5 miles." After leaving the group, and in violation of the covenant against competition, Dr. Wilson set up an orthopedic practice. The Medical Group did not replace Dr. Wilson with another orthopedic surgeon and none was practicing medicine within 35 miles. If the Medical Group sued to enforce the covenant, a court would rule in its favor.
False
Exculpatory clauses are enforced so long as the parties to the contract had equal bargaining power.
False
In a contract for X to sell Y a steam boiler, Y's obligation to pay is conditioned upon Y's personal satisfaction with the boiler. Even though the boiler meets every mechanical test imaginable, Y refuses to pay because he just doesn't like the boiler for some reason. Y is not obligated to pay, because the contract said that he must be personally satisfied, and a contract is a contract.
False
In his offer, the offeror stipulates that by remaining silent the offeree has accepted the offer. The offeree ignores the offer. The parties have never before done business with one another. According to the general rule, a contract has been formed.
False
In order to satisfy the writing requirement of the statute of frauds, both parties must sign the writing.
False
In sale of goods cases, courts follow either of the two versions of the common law "mirror image rule."
False
Misrepresentations made with scienter make a contract void, while negligent misrepresentations make a contract voidable.
False
Once a party properly delegates a duty to the delegatee (assignee), that party is relieved of any obligation to perform the duty.
False
Once an assignment is complete, the assignee cannot assign the contract rights to another.
False
Parol evidence can be used to contradict the terms of a partially integrated contract.
False
Pat, who owns an appliance store, has a garage sale at his home where he sells old furniture and books. He sells a set of books to his neighbor Judy. Pat is considered a merchant under Article 2 of the UCC in selling the books to Judy.
False
The CISG adopts UCC 2-207's "the battle of the forms."
False
The statute of frauds covers all contracts that are for an indefinite period of time.
False
Though the law regarding minors' contracts is designed to encourage adults to deal with minors, the opposite is true if the subject matter of the contract involves a necessity. In other words, the law regarding minors' contracts for necessities is designed to discourage adults from dealing with minors.
False
Under federal law, electronic transactions transmitted through e-mail will not satisfy the Statute of Frauds.
False
Under the UCC, agreements in which one party promises to supply another party's requirements of some commodity are not contracts because they involve illusory promises.
False
Under the theory that alcohol and drug use should not be rewarded, today most courts say that contracts made by intoxicated people are perfectly binding, no matter how severe the intoxication.
False
Unlike the UCC, the CISG requires new consideration to modify a contract.
False
X contracts with Y to produce an advertisement for a Fourth-of-July fundraising party. Y does not produce the advertisement until July 6. Here, Y's breach of the contract is not a material breach unless the contract explicitly stated that time is of the essence.
False
Today, the "justifiable reliance" requirement in fraud and misrepresentation cases imposes a bigger obstacle to liability than it did in the 19th century. In other words, a greater duty to inspect and investigate (by the party claiming lack of real consent) is required modernly than at common law.
False Just the opposite is true. A lesser duty to inspect and investigate is required modernly.
The offeror's death automatically terminates the offer, but the death of the offeree will not.
False An offer requires a "meeting of the minds;" the death of either the offeror or offeree - prior to acceptance - will automatically terminate the offer. Once death occurs, it is impossible for the minds to meet.
An offer that fails to provide a specific time for acceptance is invalid because it is deemed to be indefinite.
False An offer will not fail because it does not specify the date for termination! It will terminate at the end of a reasonable period of time if no specific date is indicated.
The importance of the terms FOB and FAS in contracts for the sale of goods is that they obligate the buyer to pay immediately upon delivery of the goods.
False If the delivery term of the contract is FOB or FAS the place at which the goods originate, the seller is obligated to deliver to the carrier goods that conform to the contract and are properly prepared for shipment to the buyer, and the seller must make a reasonable contract for transportation of the goods on behalf of the buyer.
Lisa took her computer to ABC Computer Sales and Repair, Inc. ABC mistakenly sold her computer to Rafi. Lisa may successfully sue Rafi for return of the computer.
False Rafi is the good faith purchaser and Lisa cannot sue Rafi for damages.
When determining the risk of loss, it makes no difference whether the goods delivered by the seller conform to the contract or not.
False Risk of loss under the Code depends on the terms of the parties' agreement, on the moment the loss occurs, and on whether one of the parties was in breach of contract when the loss occurred.
Parties to sale contracts should not necessarily act in a commercially reasonable manner and good faith.
False The Code requires that parties to sales contracts act in good faith and in a commercially reasonable manner.
Mei issues purchase order to June for goods which costs $ 25,000. June agrees to provide the same but she doesn't sign the purchase order. Mei can file a suit for the breach of contract.
False The UCC recognizes gaps in agreements dealing with sales of goods. Hence, A cannot file a suit against B for not signing the purchase order.
Individuals who engage in a "common calling" are the most likely to have a covenant against competition enforced against them.
False The opposite is true. See page 125.
Oral contracts are difficult to prove and therefore consume much court time. For this reason, the law specifically requires that all contracts be written to be enforceable.
False There are some circumstances under which the law requires that certain types of contracts written. However, the majority of oral contracts can be enforced if proven.
X and Y contract for X to build Y a house for $150,000. Later, without terminating the first contract, X and Y modify that contract so that Y will pay X $175,000. In return, X promises to build exactly the same house, but one day earlier than in the previous contract. Assume that all the other elements of a contract besides consideration are present; this is a consideration question. This second contract:
Is a binding contract.
D wants to borrow $1000 from C. C, however, wants some additional security. Thus, D gets S to agree to pay D's debt in the event that D first defaults. This agreement:
Is covered by the Statute of Frauds because it is a collateral contract.
A and B have a written contract whereby A agrees to sell B a plot of land for $100,000. Later, without terminating the first contract, the parties modify the deal so that A sells B the same plot of land for $125,000. The second agreement:
Is not a contract because there is no consideration for B's promise.
D owes C a debt the amount of which is subject to a good faith dispute. The parties agree to settle the debt, with D promising to pay C $15,000 and C promising to release D on the $25,000 debt. The settlement agreement:
Is supported by consideration.
A "grumbling acceptance" :
Is valid acceptance if it meets all the other tests for a good acceptance
A contract entered into by a person who was PREVIOUSLY adjudged insane by a court of law:
Is void
Unconscionability
Makes a contract voidable
On May 1, A makes a written offer to B for the sale of A's car. On May 2, A mails B a letter revoking the offer. On May 3, A telephones B to tell him that he is revoking the offer. On May 4, B learns that A has sold the car to C. On May 5, A's letter finally gets to B. A's offer terminated on:
May 3
A clearly illegal provision in an agreement:
May be divisible from the rest of the agreement, which means that the court will enforce the agreement without it
So-called "contracts of adhesion":
May be unconscionable
Mike Minor buys some real estate for investment purposes. The contract obligates Mike to make monthly installment payments for ten years. Mike reaches the age of majority one month after making the contract. After this, Mike makes 25 monthly payments under the contract, but then decides that he wants to rescind (disaffirm) the deal. Which of the following is most true?
Mike cannot disaffirm because he has already ratified the contract.
Joe went to a music store; misrepresenting himself as James to the store attendant. He buys a plasma television on credit, charging it to James's account. He then sells that set to Mike. Mike buys the set in good faith. Which of the following is true in such cases?
Mike will hold a good title; hence no harm can be caused to him. Mike has no knowledge of past events and has made the purchase in good faith. Therefore, he has the right to the goods.
Pam bought Mississippi State Lottery tickets. Several days later, she learned that someone had won the lottery but that the winner had not yet come forward. She searched for her ticket to see if she had selected the winning numbers, but was unable to find it. Although the lottery ticket was gone, Pam still possessed the play slip she had used when she purchased the ticket. She checked the numbers on the play slip and discovered that she had the winning numbers for the lottery. Reasoning that the play slip would satisfy the Lottery office, Pam laid her claim. The Lottery Office took the position that Pam needed to produce the actual winning ticket as per the rules, and it denied her claim. Pam sued the Lottery Office for breach of contract and unjust enrichment. Will she succeed?
No, because the rules of the contract prescribed the ticket must be shown to claim the money. Pam had accepted that rule when she entered into the contract and thus she is now precluded from claiming the prize money.
Olsen's contract with Archer obligated Olsen to pay Archer $10,000. Archer properly assigns the contract to Able. At that time, Able notifies Olsen about the assignment. Olsen, however, forgets and pays the $10,000 to Archer rather than to Able. By this time, Able is screaming for his money. But then Archer goes into bankruptcy. In this case:
Olsen is liable to Able for $10,000.
A promises to mow B's lawn "at such times as I desire," in exchange for B's promise to pay A $20 per mowing. There is no consideration for B's promise.
TRUE
Contracts that affect title to real estate cannot be disaffirmed until the age of majority.
TRUE
The assignee's notification to the obligor that an assignment has occurred is important because:
Otherwise the obligor might perform to the assignor rather than the assignee, in which case the obligor is relieved of all liability to the assignee.
Percy is a rich boy whose parents supply him with every conceivable necessity of life. While still a minor, Percy buys a coat on credit from a men's store for $5000. After wearing the coat for a while, Percy decides that it bores him and that he'd like to disaffirm. Which of the following is most likely to be true? Assume that Percy is still a minor.
Percy can disaffirm the contract, and he must return the coat.
Which of the following generally is least likely to be awarded in a contract suit?
Punitive damages.
Which of the following is true regarding the approach taken by the UCC toward the proper means of acceptance and the implications of using it or not using it?
The UCC does not change the traditional rule that, where the offer stipulates a certain means of acceptance, the acceptance must use that means or there is no contract.
A orders 100 19-inch color television sets from B, and requests prompt shipment of the goods. B promptly ships A 100 21-inch color TVs. B did not tell A that the shipment of nonconforming TVs was an accommodation. In this case:
There is a good acceptance, but B has breached the contract by shipping nonconforming TVs.
Daisy Company, a retail garden supply store, sends a purchase order to Johnson & Parkins, a distributor of rose bushes. The terms of the purchase order state: 500 bushes of American Beauty roses at $2.00 each. Shipping costs payable by Johnson & Parkins. Delivery within 15 days of the date on this purchase order. Payable within 90 days of delivery. Johnson & Parkins receives the purchase order and immediately sends an invoice. The Johnson & Parkins invoice reads, in pertinent part: Total cost of order is $1,000 (500 x $2.00 each). All disputes between merchant and seller arising from this order will be resolved by binding arbitration in Westlake Village, California. Under UCC §2-207, which of the following statements most accurately describes the legal result of the "arbitration clause"?
There is a valid contract between the parties. The arbitration clause becomes part of the contract, unless it is considered to be a "material alteration."
V promises to pay Bully $100 per week, in exchange for Bully's promise not to beat Victim up.
There is legal value to Victim's promise but not to Bully's promise
A makes B an offer for the sale of land. The offer says that B "must accept by registered letter." B accepts the offer with a regular letter. Which of the following is true? Assume that the Restatement (Second) of Contracts does not apply.
There is no acceptance and no contract.
Kyle sent Tara a letter offering to sell Tara his car. Tara left the letter on her desk, where her roommate, Maggie, saw it. After reading the letter, Maggie wrote to Kyle and stated that she (Maggie) wanted to accept Kyle's offer. Which of the following is true?
There is no contract between Kyle and Maggie because Kyle did not communicate the offer to Maggie.
Which of the following is true about the relationship between mutual mistake and unilateral mistake?
To avoid a contract on the basis of unilateral mistake, one must prove the elements needed for mutual mistake, plus something else.
A and B have made a contract with an enforceable liquidated damages provision that states that B's recovery will be $10,000 in the event of A's breach. A breaches the contract, and B loses $50,000 in consequential damages as a result. B's recovery is limited to $10,000.
True
A department store sells a TV set to Wilson, who pays with a bad check. Wilson immediately sells the TV to Davis for $500. Davis knew nothing about how Wilson acquired the TV from the store. Davis has good title to the TV and will prevail against the store if it sues Davis for the TV or its value.
True
A induces B's consent to contract under duress. A later assigns his rights under the contract to C. B may assert the doctrine of duress against C as a ground for avoiding the contract.
True
A makes an offer to B, saying, "You may respond by registered letter." B accepts by registered letter. This acceptance is effective upon dispatch of the registered letter. Do not consider the UCC or the Restatement (Second) of Contracts.
True
A minor's contract for necessaries makes the minor liable for the reasonable value of the necessaries furnished to him.
True
A novation discharges the original obligor and substitutes a new obligor in his place.
True
A offers to mow B's lawn for $100. B says in reply: "This is outrageous! You're taking advantage of me! But I accept." B indeed has accepted A's offer.
True
A party injured by fraud in a contract for the sale of goods can both rescind the contract and sue for damages.
True
A person who at the time of the contract lacked capacity due to mental impairment can ratify the contract once he regains his normal mental faculties.
True
An accountant who substantially performs her duties to her client triggers the client's duty to pay the contract price less any damages resulting from defects in her performance.
True
An advertisement offering a reward for the return of lost property usually is treated as an offer for a unilateral contract.
True
An incidental beneficiary of a contract cannot recover under that contract.
True
Article 2 of the UCC has a number of rules that, in effect, tell the court what term to include in an offer that lacks a key term.
True
At common law, an acceptance that materially differs from the terms of the offer may be a counteroffer. Correct!
True
Bruce and Raj make a bet regarding whether Syracuse University will win the NCAA Men's Basketball Championship this year. Neither has any economic interest in the championship other than that which he has created through the bet. This is a wagering contract, and will be illegal if the state has the normal kind of statute forbidding wagering contracts.
True
D owes a debt to C. S contracts with D to pay D's debt to C. C is a creditor beneficiary of the S-D contract.
True
Dr. Bob offers to sell his bike to Sue for $100, and promises to keep his offer open for five days. Sue thanks him and leaves. At this point, Dr. Bob still has the power to revoke his offer.
True
Exculpatory clauses, regardless of how specifically drafted and clear in content, will not be enforced if the party seeking exculpation owes a duty to the public and the clause, if enforced, will adversely affect the public interest.
True
Generally speaking, advertisements are not offers.
True
Generally speaking, courts do not enforce illegal agreements or compensate parties who have performed under such agreements. Instead, the court leaves the parties where it finds them.
True
Generally speaking, the UCC's rules for the definiteness of an offer make it easier to form a contract than the traditional common law rules.
True
If a construction contract provides that the property owner's duty to pay is conditioned on the satisfaction of an architect or engineer, then the builder cannot recover payments due if the architect or engineer honestly has a good faith reason for withholding a certificate indicating his or her satisfaction.
True
If a promisor fails to ask for anything in return, then the promise is not enforceable.
True
If an offer merely suggests that the offeree accept by registered letter, the offeree can accept within a reasonable time by any reasonable means. (Do not consider the UCC or the Restatement (Second) of Contracts.)
True
If the elements of promissory estoppel are proven, a promise is binding even though there is no consideration for that promise.
True
In some cases, UCC section 2-207, known as the "battle of the forms" allows a contract to be formed even though the offer and the acceptance differ. Correct!
True
Legal value exists when one performs a requested act that involves either doing something the actor had no prior legal duty to do, or refraining from something that the forbearer had a legal right to do.
True
Parol evidence can be used to resolve ambiguities in a completely integrated written contract.
True
Pat promises to install granite countertops in the home at 123 Main Street that Bruce is purchasing "provided that the escrow on the sale of 123 Main Street closes." The close of escrow on the sale of 123 Main Street is a condition precedent to Pat's promise.
True
Sometimes, Article 2 of the UCC holds merchants to different standards than the standards it applies to non-merchants.
True
Sometimes, Article 2 of the UCC holds merchants to standards different from the standards it applies to non-merchants. True
True
Strictly speaking, a contract has nothing to do with the personal intent of the parties. Correct!
True
The UCC says that where an offer is unclear about the form of acceptance it requires, the offer may be accepted in any manner that is reasonable under the circumstances.
True
The assignor impliedly warrants to the assignee that the obligor has capacity to contract.
True
The rules promulgated by the Restatement (Second) of Contracts often resemble the rules created by Article 2 of the UCC.
True
The statute of frauds covers contracts in which marriage is the consideration.
True
The statute of frauds covers real estate mortgages.
True
The threat to institute a criminal prosecution against another party in order to force that party into a contract is almost always duress.
True
Under a unilateral contract, only one party makes a promise.
True
Under the "American Rule" governing successive assignments, the first assignee in time has the superior right.
True
Under the Restatement (Second) of Contracts, intoxication will make a contract voidable if the other party had reason to know that the intoxicated person was so intoxicated that he/she did not understand the transaction.
True
Unless the language or the circumstances indicate the contrary, an assignment of contract rights is also a delegation of duties.
True
X contracts to build a building for Y. Changes in the building code that were made after the contract was signed will increase X's costs in performing his duties. X is not excused from performance under the contract.
True
A material mistake involving a collateral fact will not allow the mistaken party to avoid the contract.
True Mistakes must pertain to material facts intrinsic to the bargain (affecting the consideration bargained for).
An offeree who rejects an offer loses the power to accept it at a later date.
True This is a correct statement. A rejection of an offer cancels the offer out. It thus cannot be subsequently accepted because it no longer exists.
Communication to the offeree is one of the requirements for a valid offer. Moreover, communication means that the offeree must have either actual or constructive knowledge of the offer. Correct!
True This is a true statement. Actual knowledge means that the offeree actually knows of the offer. Constructive knowledge means that - under the circumstances - the offeree, as a reasonable person, should have known of the offer.
A bicycle manufacturer sells 100 bikes to Bill's Bike Shop. The contract says that Bill's may return any bike not sold within six months, and he will be reimbursed for them. Bill's Bike Shop burns down in one week after the delivery of the bikes, which are destroyed in the fire. Bill's bears the risk of loss for the 100 bikes.
True In general, any risk passes on to the buyer on receipt of the goods if the seller is a merchant.
Law of sale of goods codified in the Article-2 of the UCC is modified to accommodate current practices of the merchants.
True While the law of sales is based on the fundamental principles of contract and personal property, the UCC has been modified to accommodate current practices of merchants.
In January 2002, a court with the necessary subject-matter jurisdiction holds Mick mentally incompetent and appoints a guardian for him. In November 2002, Mick escapes his guardian's care and takes off on his own. While eating lunch with Carol, who knows about Mick's condition, Mick signs an agreement to sell a valuable property he owns. When he signs the contract, Mick believes that he is the President of the United States signing an important treaty. The agreement between Mick and Carol is best described as:
Void
Bruce told Adam that he was selling his house in Syracuse, New York. Adam sent Bruce an e-mail containing an offer of $300,000 for the house. Bruce responded via e-mail that he wanted $315,000 for the house. After further e-mails, the parties finally agreed on a sale with a price of $310,000. A series of e-mails contained the terms of the sale, and all included a salutation containing their typewritten names. However, Bruce later decided to sell the house to Marty for $325,000. Adam sued Bruce, claiming that Bruce breached their contract for the sale of the house. Most likely, Adam will:
Win, because the essential terms of the contract were set forth in the signed e-mails.
On Thursday, Trista receives a letter from Charlie in which he offers to sell her a diamond ring. The letter states: "if you choose to accept, you must do so prior to 2:00 p.m. tomorrow." Trista had a telegram of acceptance dispatched before 2:00 p.m. on Friday. The telegram is delivered to Charlie's home at 2:15 p.m. Do Trista and Charlie have a contract?
Yes, because Trista dispatched the telegram prior to 2:00 p.m.
Larson Lexus, a new car dealer, runs the following newspaper ad during the Fall of 1994. "Three '94 Lexus LS-400s must go! $45,500 each! The first three customers who arrive at our dealership on Saturday, October 8 with this ad can buy one of these cars for $45,500!" Knowing that $45,500 is a very good price for an LS-400, Mike is the first customer to appear at the Larson lot on Saturday, October 8. He hands the ad to the Larson salesman and says that he'd like to buy one of the LS-400s for $45,500. Is the dealership contractually bound to sell Mike the car at that price?
Yes, because this ad is an offer and Mike accepted it.
Pip owns Great Expectations, a trendy restaurant in Manhattan. He enters into a contract with Estella, who makes and sells pastries. The contract states that Estella will "supply all of Great Expectation's needs" for pastries for the next year. Is this contract enforceable?
Yes, because this is a requirements contract.
Chica, a women's clothing store, held a "prize drawing" for a $500 shopping spree on Saturday that it had advertised throughout the week. Participation in the drawing required being at the store by noon and completing a form that included personal information and placing it in a box. The information would then be put into a database for marketing purposes. "Fashion consultants" offering merchandise for sale greeted customers arriving at the store on Saturday morning. Joy was the winner of the drawing. Has she given "consideration" for the prize?
Yes: she made an effort to come to the store and give information that was for the store's use.
Jack went to the ABC Casino (ABC) to gamble. ABC offers its customers one free spin of the "Million Dollar Wheel" if they fill out an application form. Jack filled out the form, spun the "Million Dollar Wheel", and won. However, now ABC refuses to pay, claiming that because Jack did not purchase his chance at the "Million Dollar Wheel," Jack gave no consideration therefore no contract was formed.
a contract was formed because merely filling out an application can constitute legal consideration.
Big Bank is a major creditor of Bonwill Department Store. After a major loss in profits due to poor holiday sales, Big Bank decides to help keep Bonwill from bankruptcy by orally promising Mary Tudor, a supplier to Bonwills, that it will guarantee Bonwill's payment for goods that Mary sells to Bonwill. Most likely, Big Bank's oral agreement:
is enforceable under the "main purpose" or "leading object" exception to the statute.
Junior is a senior at State University. Dad, Junior's father, is concerned about Junior's study habits, given that Junior spends most of his evenings at the campus pub instead of the library. Dad promises Junior that he will send him on an expense-paid trip to Europe after his graduation if Junior spends at least five evenings a week studying in the campus library for the remainder of his senior year. After returning home from his graduation, Junior asks Dad about the European trip. Dad replies, "your education was your reward. I do not owe you a trip to Europe." Dad:
is not correct: Dad owes Junior a trip to Europe because Junior's acts are consideration .
A party who has the right to rescind a contract may do so at any time.
False
Which of the following is a true illusory promise?
"I promise to mow your lawn on such occasions as I designate"
Winston contracts to sell a plot of land called Blackacre to Pusey for $500,000. Winston breaches the contract and Pusey sues. Blackacre's reasonable market value at the time of the breach was $525,000. Pusey can recover:
$25,000
Which of the following cannot be disaffirmed until after the age of majority?
A contract that affects title to real estate.
For which of the following contracts is a party's subjective dissatisfaction sufficient to excuse his performance under a "personal satisfaction" clause in a contract?
A contract to paint someone's portrait.
Which of the following is a possible example of procedural unconscionability?
A fine-print price term in a contract.
In the absence of an express condition, which of the following is subject to a "substantial performance" standard?
A promise to build a house.
In general, which of the following is most true regarding duress?
A threat to initiate a frivolous (ill-founded) criminal prosecution is usually duress
Which of the following kinds of third-party beneficiaries normally can enforce a contract?
A) A creditor beneficiary. B) A donee beneficiary. C) An incidental beneficiary. ANSWER: D). A and B. E) A, B, and C.
To which of the following situations has the implied covenant of good faith and fair dealing been applied by the courts?
A.Contracts for the sale of real property. B. Employment contracts. C. Insurance contracts. ANSWER: All of the above.
On June 1, 2003 Tony was offered a position as Regional Sales Director for Acme Company starting on July 1, 2003. Acme Company sent Tony an employment contract for his signature. Tony crossed out "July" and wrote "August," signed and on June 3, 2003 he returned the contract to Acme Company's Human Resources Department. Tony also writes an e-mail to his future boss, Ann, Vice President of Sales, telling her that he looked forward "to working with her starting on August 1, not on July 1, 20003, per the contract." Acme says nothing. On July 30, 2003, Acme telephones Tony to tell him that his position has been given to another individual. Which of the following statements is most accurate?
Acme's silent response to Tony's e-mail may be considered an acceptance of Tony's counteroffer.
X, a manufacturer of pencils, offers to sell Y 1,000,000 pencils for $1 million. The offer, which is signed by X's President, says that it will remain open for six months. The offer does not request that Y pay any consideration for the promise to keep the offer open, and Y does not pay X any consideration. When can X revoke the offer?
After 3 months
Frank, a business law professor who has never sold a car before; sells his 1995 Honda Civic to Wanda. This sale is governed by:
Article 2 of the UCC. The law of sales of goods is codified in Article 2 of the Uniform Commercial Code. It applies to transactions on goods
The distinction between contracts that are covered by Article 2 of the Uniform Commercial Code (UCC) and those that are not is:
Basically dependent upon whether the subject matter of the contract involves the purchase or sale of goods.
Punitive damages are most likely to be awarded in which of the following contract cases?
Big Insurance Company acted in bad faith in denying Pete's claim.
Which of the following terms in a contract for the sale of goods requires the seller to insure the goods?
CIF
A contract made by a mentally impaired person who HAS NOT been adjudged insane by a court of law:
Can only be ratified after the person has regained his mental capacity.
Someone who recovers for breach of contract generally:
Can recover only for those losses that he can prove with reasonable certainty.
Which of the following is most likely to constitute a misstatement that can give rise to fraud or misrepresentation liability?
Concealing a material fact.
The main difference between concealment and nondisclosure is that:
Concealment is always regarded as an assertion of fact, while nondisclosure may or may not amount to such an assertion Nondisclosure can be the result of forgetting to disclose or consciously withholding information. If the latter, it is fraud provided all other elements of fraud are proven. Concealment is always intentional and designed to deceive
Apple assigns the same contract rights to Enzo, and then to Sam. Sam immediately notifies the obligor of the assignment to him; Enzo never notifies the obligor. When Sam notified the obligor, he did not know about the earlier assignment to Enzo. Sam will have the better right under the:
English rule.
Which of the following is not admissible with respect to a partially integrated contract?
Evidence that contradicts the contract's provisions.
Article 2 of the UCC applies to, among other things, contracts for the sale of real estate.
False
Article 2 of the UCC never applies to mixed goods-services contracts; instead it treats them as pure service contracts.
False
Duress usually makes a contract void, while undue influence makes a contract voidable.
False
In most states today, minors have the right to disaffirm medical insurance contracts.
False
In order to prove that there has been undue influence, the injured party must establish that she was mentally incompetent at the time that the contract was formed.
False
The statute of frauds applies to all contracts of $500 or more.
False
Norm Hefty was a door-to-door salesman for Toothrot Candy Company. His duties were to call on customers and make sales in Bedford, Indiana, which is located in the southern part of the state. Toothrot's business territory covers the entire state of Indiana. Hefty and Toothrot had entered into a written employment contract at the time he joined the firm. One of the clauses in the contract stated that if Hefty ceased working for Toothrot, he could not work as a salesman for a competing company anywhere in Indiana for a period of five years. Hefty left his employment with Toothrot and promptly went to work as a salesman for a candy company that competed with Toothrot. His duties with the new employer were confined to the town of Elkhart, which is located in northern Indiana. Toothrot has sued Hefty in an effort to obtain an injunction against further violation of the non-competition clause in the parties' employment contract. Which of the following is most true?
Hefty will win, because the clause restricts him from engaging in a common calling.
Twentieth century contract law is generally characterized by:
Increased government intervention into private contracts
At common law, an offer for a unilateral contract:
Is accepted by full performance of the requested act.
UCC section 2-207 (the "battle of the forms" provision) implicitly distinguishes between different terms in the acceptance and additional terms in the acceptance. The latter refers to a subject not mentioned in the offer, while in the former case the acceptance treats some subject differently than the offer does. Under 2-207, why does this distinction matter?
It matters because, while additional terms can become part of the contract, it isn't clear what terms apply in "different terms" situations.
Which of the following best illustrates duress?
Len has contracted to sell goods to Mel. Knowing that Mel needs the goods to be delivered on a specific date, Len threatens to withhold delivery on that date unless Mel agrees to pay a higher price.
Under Article 2 of the UCC, why does it matter whether a party to a contract is a merchant?
Merchants sometimes are treated differently than other parties. The Code distinguishes between merchants and nonmerchants by holding merchants to a higher standard in some cases.
S and B make an oral contract whereby S agrees to sell B 480 widgets (goods) at a price of $480. Later, the parties want to modify the contract so that the price would become $520. This modification:
Must be in writing.
Which of the following is true of price terms in a contract?
No contract is created if price terms are disputed. A fixed price is not essential to the creation of a binding sales contract. However, if price has been the subject of a dispute between the parties that has never been resolved, no contract is created.
In general, when are offerees bound by "fine-print" terms stated in offers? Focus only on the rules regarding offers and do not consider unconscionability.
Only when they had actual or reasonable notice of the term
Sean goes to Pinnacle Corp., convinces the store manager that he is their loyal online customer Ryan and purchases a DVD credited to Ryan's account. He then sells the DVD to Jason for a higher price. When Ryan finds out, he wants the DVD back from Jason. Which of the following is true of the case?
Sean has voidable title to the DVD. A seller who has a voidable title has the power to pass good title to a good faith purchaser for value. A seller has a voidable title to goods if he has obtained his title through fraudulent representations.
Which of the following is most true regarding non-competition clauses in contracts?
Such clauses are less likely to be enforced when they occur in an employment contract.
Y has breached a contract between X and Y, but has not materially breached it. This means that X can:
Sue only for damages caused by the breach.
Which of the following is not a requirement for avoiding a contract on the basis of mutual mistake?
That the mistake makes it unconscionable to enforce the contract.
Which of the following is not one of the implied warranties that the assignor gives to the assignee?
That the obligor is solvent.
Mitch, an attorney, accepts an offer for an attorney position at The Firm. Grisham, the managing partner of The Firm, sends Mitch an Employment Policy Manual, which contains policies regarding attendance and confidentiality prior to Mitch's first day. Grisham includes a note advising Mitch to carefully review the Manual as he would be expected to adhere to its policies. During his first week at The Firm, Mitch is seen leaving the office at noon with copies of files tucked under his arm and not returning. He is also observed giving the copied files to a man not associated with The Firm. At the end of the week, Mitch is terminated for violating the terms of the Employment Policy Manual. Which of the following is true?
The Employment Policy Manual is part of the implied contract between Mitch and The Firm.
Under the CISG, if an offeree's reply to an offer for the sale of goods changes the price, then:
The reply is considered a rejection of the offer.
A orally offers to sell B 100 premium-grade fountain pens but neglects to state the price. Such pens typically sell for $1 each. B orally accepts. Immediately thereafter, A tries to back out of the deal. At this point in time, which of the following is most likely to be true?
There is a contract, if the parties intended to make a contract and there is a reasonably certain basis for giving an appropriate remedy.
Of the following statements about exculpatory clauses, which is accurate?
They cannot relieve a party from liability for battery
Which of the following is true of the Code's rules on title to goods?
Title passes to a buyer only when the seller performs his duties completely. The general rule on title recognized by the UCC is that title of the goods passes on the buyer only when the seller has completely performed his duties regarding the goods.
A contract made by a person who has been adjudicated to be insane and institutionalized or put under a guardian's care is void rather than voidable.
True
An agreement can be illegal even if no statute specifically states that such an agreement is illegal.
True
If a party excuses the occurrence of a condition, then the party is bound contractually by waiving the condition.
True
In almost all states today, the age of contractual capacity is eighteen.
True
The parol evidence rule does not block evidence of subsequent agreements that modify a completely integrated written contract.
True
Paul is hired by Soprano as a security guard. At the time of hiring, Paul signs an agreement that relieves Soprano from workers' compensation liability. This agreement is most likely:
Unenforceable as a violation of public policy.
Raj went to the Napa Valley Harvest Festival, where he stopped at Tina's booth where she was selling paintings of vineyards. Raj admired a painting of vineyards, which did not appear to be for sale. Raj said to Tina, "I will give you $200 if you give me that painting right now." Tina said nothing in response, but she gave Raj the painting, and Raj gave her $200 in cash. This is an example of a contract that is now:
Unilateral and executed.
Ahmed promises to sell his boat to Mendel, and Mendel promises to buy it from Ahmed. What type of contract is this?
a bilateral contract
The effect of a valid delegation of duties is that it:
appoints the delegatee to perform the delegator's duty to the obligee.
The Electronic Signatures in Global and National Commerce Act (E-Sign):
clarifies that a contract may not be denied legal effect or enforceability solely because an electronic transaction was used in its formation.
In a _____ contract, the goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them.
sale or return In a sale or return contract, the goods are delivered to the buyer primarily for resale with the understanding that the buyer has the right to return them. Unless the parties agreed to the contrary, title and risk of loss rest with the buyer.
Goods are being sold by Anne in Seattle and shipped by ABC Railroad to Brian in Portland, Oregon. In this situation, the term "FOB Seattle" means that the risk of loss passes from the seller to the buyer when:
the goods are delivered to ABC Railroad in Seattle. The term FOB. Seattle clearly indicates that the goods are at the buyer's risk only when they are delivered to the shipper
The common law placed the risk of loss on _____ at the time of the loss.
the party that had technical title The transportation of goods from sellers to buyers can be a risky business and losses may occur without anyone's fault. The common law placed the risk on the party who had technical title at the time of the loss. The Code, however, provides very specific rules to determine the bearer of any losses.
An exception to the general rule is that if goods are entrusted to a merchant who deals in goods of that kind, the merchant has:
the power to transfer all rights of the entruster to a buyer in the ordinary course of business. This is the exception to the rule that a buyer cannot receive better title to goods than the seller had. If the goods are entrusted to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights of the entruster to a buyer in the ordinary course of business.
In a "mixed" contract for the sale of both goods and services, the court will apply the contract rules of the UCC or of the common law, depending on whether:
the predominant purpose of the contract is goods or services. When a contract appears to call for the furnishing of both goods and services, the courts commonly ask whether the sale of goods is the predominant part of the transaction or merely an incidental part.
