CHAPTER 11 & 12 - CONTRACTS AND SALES
Unilateral contract
a contract in which one party issues a promise and the other party simply performs
conditions contemporaneous
a contract scenario where one party performs as the other party does
conditions current
a contract scenario where one party performs as the other party does
substantial performance
a performance that, for practical purposes, is accepted to be nearly equivalent to performance required under the contract terms
minors
a person who has not attained the age of contractual capacity (18 in most states);contractsare voidable; student loans and military service are exceptions
infants
a person who is a minor (below the age of 18)
Impossibility
a scenario where the contract cannot be performed by the parties or anyone else
Bilateral contract
A contract in which both parties make promises to perform
predominant-factor test
A test courts use to determine whether a contract is primarily for the sale of goods or for the sale of services.
conditions
prescribed events that must occur before performance is required
conditions precedent
requirement that must occur before performance is required
recission
setting aside of a contract as a remedy
Compensatory Damages
the amount required to place a party in as good a position as before the breach
capacity
the capacity (age and mental capacity) to make contracts
incidental damages
the costs of collecting compensatory damages
judgement
the court's official document that rules on the issues that were before the court and imposes damages
Restatement (Second) of Contracts
the general summary of the common law of contracts
Usury
the illegal action or practice of lending money at unreasonably high rates of interest.
Offeror
the person who makes the offer
Offeree
the recipient of an offer;offereecanootacceptofferthatneverarrives
Promissory estoppel
the reliance element used to enforce otherwise unenforceable contracts
A contract is a promise of performance that can be enforced by law.
true
A contract to pay a commission to a person who is not licensed as a real estate broker is void.
true
The Restatement (Second) of Contracts addresses common law contracts
true
Which of the following allows bankrupt debtors to keep some of their property? a. Judgments b. Omnibus hearings c. Exemptions d. Injunction
c.
Which of the following describes Section 2-207 of the Uniform Commercial Code (UCC)? a. The mailbox rule b. The section on electronic communications c. The section on additional terms in acceptance d. The mirror image rule
c.
exculpatory clause
clause to hold oneself harmless for one's own conduct
"Performance is contingent upon buyer qualifying for financing" is an example of a:
condition precedent
voidable contract
contract in which one party can choose not to honor (rejects) the contract
Parole evidence
extrinsic evidence that is not admissible to dispute an integrated, final, and unambiguous contract
Puffing is a defense to contract formation.
false
The Fair Credit Billing Act covers collection practices.
false
The United Nations Convention on Contracts for the International Sale of Goods (CISG) is similar to the Restatement (Second) of Contracts.
false
Misrepresentation
incomplete or inaccurate information provided by one party to another prior to contract execution; cannot be based on sales puffing (opinion)
bill of lading
it is a receipt for shipment issued by the carrier to the seller; it also serves as a contract for the shipment of the goods and provides evidence of who has title to the goods
Merchants confirmation memoranda
memos that summarize oral agreements and are signed by only one party; they can be used to satisfy the statute of frauds so long as the memos have been sent to the non-signing party for review and no objection is raised upon its receipt
Under the Equal Credit Opportunity Act (ECOA), it is unlawful to discriminate against an applicant for credit on the basis of:
race, color, religion, national origin, gender, martial status, or age
letter of credit
a pledge by a bank promising the availability of funds for a transaction
Stipulated mean
a required means of acceptance given by offerors
Common law
a set of laws developed historically and by judicial procedent
assignment
a type of contract rights for third parties not ypart of the original contract, but are brought in at a later stage;samerightsasoriginalparty
Merchants firm offer
a written offer signed by a merchant that makes an offer irrevocable, even without the offeree's payment
Uniform commercial code
The set of uniform laws (pertaining to states) that govern commericial transactions
Under the Fair Credit Billing Act, debtors: a. can collect damages if they comply with all the act's procedural requirements. b. are required to pay creditors the questioned amount or any finance charges on that amount. c. can be harassed, oppressed, or abused by collectors. d. are prohibited from engaging in postcard contact as stated in the act.
a.
What is the percentage of net wages a creditor is permitted to garnish? a. 25 percent b. 33.3 percent c. 50 percent d. 75 percent
a.
Which of the following helps debtors for a fee and is regulated by the Consumer Financial Protection Bureau? a. Credit repair organization b. Federal register c. Administrative law judge d. Injunction
a.
Under federal law, three-day rescission periods apply to:
all credit contracts in which the creditor takes a security interest in the debtor's home
Home Ownership and Equity Protection Act (HOEPA)
an act that covers disclosure requirements on payment amounts for home equity loans and cancellation rights
Paddock Pools constructed a swimming pool and deck for the Jensen's home. Paddock installed the wrong trim on the pool. It would cost $2,800 to change the trim—one-fifth the total cost of the pool. The Jensen's refuse to pay anything for the pool. Paddock's best defense is: a. duress. b. substantial performance. c. mistake. d. failure of conditions.
b. *Paddock's best defense is substantial performance, in that the installation of pool and deck was substantially completed as contracted for.*
Which of the following is a situation, term, or event that makes an otherwise valid agreement invalid? a. indictment b. vicarious liability c. contract defense d. arraignment
c.
Cindy had a contract with Mohammed, a minor who is 16 years of age, to repay Cindy $1,000 plus interest on January 1, 2019. The loan was used to buy a computer. It is now August 1, 2020, and Cindy has not received any payment. Cindy wishes to file suit to collect the $2,000. Cindy's contract with Mohammed is: a. unenforceable. b. void. c. voidable. d. valid
c. *A voidable contract is one that can be rescinded at the election of one of the parties. A minor who signs a contract can choose to disaffirm it. Being 16, Mohammed is considered a minor and can rescind the contract.*
In the context of defenses in contract formation, the term "_____" refers to mental and age thresholds for valid contracts.
capacity
Which doctrine applies in construction contracts and means that the constructed building is, for practical purposes, just as good as the one contracted for? a. substantial evidence b. vicarious liability c. due process d. substantial performance
d.
Which of the following debt is discharged in bankruptcy? a. Child support b. Student loan c. Alimony d. Car loan
d.
Which of the following is used to determine whether an individual is eligible for bankruptcy? a. The statute of limitations b. A cost-benefit analysis c. Regulation Z d. A statutory formula
d.
Who among the following would be entitled to see an individual's credit report? a. An ex-employer b. A creditor with an unauthorized credit application c. A spouse d. A debtor who asks for his or her own report
d.
Having someone else take on your contract as a substitute; ______. An agreement between contract parties to accept a sum as all that is due and owing; ______All three parties must agree;_____The original party to the contract is discharged and a new party is substituted;_____Payment of this agreement discharges all the parties;______
novation; accord and satisfaction; novation; novation; accord and satisfaction
undue influence
occurs when one party uses a close personal relationship with another party to gain contractual benefits
third party beneficiary
person or entity that is not a party to a contract but is expressly addressed in the contract or is intended to benefit from the contract
Executed contract
a contract where the parties have performed according to their promises or required actions
United Nations convention on contracts for the international sale of goods
a convention that is designed to provide international contracts the convenience and uniformity that the Uniform Commercial Code provides for contracts across state lines in the United States
In which of the following scenarios is the Fair Debt Collections Practices Act (FDCPA) likely to be applicable? a. A national bank that collects commercial accounts b. A collection agency to which an organization has referred its accounts c. An organization collecting its own debts d. The Internal Revenue Service engaging in debt collection
b.
Kristen took her computer to a shop called A1 Computers to have it repaired. She told the technicians at the shop that her computer seemed to have a virus. She asked them to remove any viruses they found and to install a new virus protection software. The next day she returned and paid $250 for the repairs and the program and left. At home, when she tried to turn on the computer, it would not turn on. She took it back to the repair shop, and the technicians stated that they did not know what had happened. They, however, said that they would refund her $250. She filed a lawsuit and demanded that they not only refund her money but also buy her a new computer comparable to the old one. For what type of damages is Kristen asking? a. Compensatory and incidental damages b. Liquidated and consequential damages c. Consequential and compensatory damages d. Incidental and liquidated damages
a. *Compensatory damages would be the refund of her $250, and incidental damages would be the purchase of a new computer since they damaged and could not repair hers.*
Home Equity Loan Consumer Protection Act
an act that covers the disclosure and advertisement requirements for home equity loans
Fair Credit Reporting Act (FCRA)
an act that covers the rights of debtors with respect to reports of their credit histories held by third parties
fair credit billing act
an act that covers timing and content requirements for credit card bills; it affords debtors the opportunity to challenge the figures on credit card monthly statements
Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA)
an act that imposed stricter standards for filing for bankruptcy
Fair Debt Collection Practices Act (FDCPA)
an act that regulates the conduct of third-party bill collectors and attorneys; enacted to control abuses in the collection process
On Monday, Rosa agreed to buy Joey's car for $8,000 when she gets paid on Friday. They have signed a written agreement with the terms that she will pay him $100 per week until the car is paid for. On Thursday, the car is involved in an auto accident and is totaled. Does Rosa have to pay for the car? a. Yes, because they had a written agreement. b. Yes, because she agreed to buy it without any stipulation on the condition. c. No, because the car is totaled and no longer exists. d. No, because Joey was guilty of fraud
c. *In this case, commercial impracticability would discharge the contract, and Rosa would not have to pay because the car is no longer able to function as a car*
James Krieg has finished law school but has unsuccessfully taken the bar exam twice. Krieg is running low on patience and cash. He has begun writing wills to see him through this time of crisis and is charging $200 per will. Some of his clients have refused to pay him, and he wishes to take them to a small claims court. Which of the following statements is true in the context of this scenario? a. Krieg could recover the fees on a quasi-contract theory. b. Krieg could recover the fees since the licensing after the bar exam is simply to raise funds. c. Krieg's agreements are voidable. d. Krieg's agreements are void.
d. *Krieg's agreements are void because he is not licensed by the state bar and is not authorized by state law to provide legal services to clients.*
In the context of third-party rights in contracts, the transfer of contractual duties and obligations is called:
delegation
A letter of credit is a document of title.
false
A quasi contract is a type of voidable agreement.
false
An option can be revoked any time prior to acceptance.
false
delegation
the transfer of contractual duties and obligations from one party to another contracting party
A creditor has 30 days to respond to a written dispute by a customer.
true
An offer can be revoked any time prior to acceptance.
true
Consideration is what distinguishes gifts from contracts.
true
Contract provisions used to cover interruptions and changes caused by the COVID-19 virus are force majeure issues.
true
In the context of forms of bankruptcy, Chapter 11 bankruptcies are limited to businesses.
true
It is difficult to determine which contracts are UCC contracts and which are common law contracts.
true
The doctrine of promissory estoppel is a substitute for consideration.
true
Which of the following contracts must be evidenced by a record to be enforceable? a. A contract for the sale of two acres of land b. A contract for management consulting for $427 c. A contract for management consulting for three months d. A contract for a bicycle for $225
a
Which of the following contracts must be evidenced by a record? a. A contract for the sale of an easement for $350 b. A contract that is oral but that has been verified by a merchant to another merchant c. A contract for the sale of a cell phone for $250 d. A contract for consulting that runs from April 1, 2021, through December 12, 2021
a
Which of the following is used to protect payment rights in international transactions?
a bill of lading
Options
a contract in which the offeree pays the offeror for the time needed to consider the offer
Implied in fact contract
a contract that arises from factual circumstances, professional circumstances, or custom
Implied contract
a contract that arises from the parties' voluntary conduct and not from express agreements;fictionalcontractcreatedbyacourt
Truth in Lending Act (TILA)
a law that provides the requirements for disclosures in credit contracts and consumer rights when full disclosure is not made
counteroffer
a modification or rejection of a portion of the original offer, resulting in a new counterproposal
contract
a set of agreements between parties that enforces duties and responsibilities, the breach of which require remedies or compensation
Express contract
a spoken or written agreement that specifies the terms and limitations of an employee or an agent's authority
quasi contract
a theory for enforcing a contract, even though there is no formal contract, because the parties behaved as if there were a contract
In the Leonard v PepsiCo case, the court held that: a. Pepsi's advertisement with the Harrier jet was a unilateral offer. b. all advertisements are not offers. c. Pepsi's advertisement did not reflect present intent to contract. d. Pepsi owed Leonard a Harrier jet.
c.
Voidable contract
contract in which one party can choose not to honor (rejects) the contract;contractsofminorsarevoidable
Information about negotiations or promises that are beyond the contract itself is called:
parol evidence
Charitable subscriptions
pledges or enforceable promises to make gifts
force majeure
potential international events that could hamper production or trade (such as wars, economic depression, or embargoes); events beyond the control of the parties to a contract
contract defense
refers to a situation, term, or event that makes an otherwise valid contract invalid
home solicitation sales
sales in which sellers and creditors first approach consumers in the buyers' homes
Consideration
something of value exchanged by the parties that distinguishes gifts from contracts, AKA bargained-for exchange
The _____ is a general term for laws that require certain contracts to be evidenced by a record. The term originated in 1677 when _____ passed the first rule dealing with written contracts.
statute of frauds; England
Executory contracts
the contracts where the promise to perform is made but the actual performance has not been done
fraud
the knowing and INTENTional use of false information or the knowing failure to disclose relevant information
scienter
the knowledge that the information given is false
acceptance
the offeree's positive response to the offeror's proposed contract
Uniform electronic transactions act
the state recognition of the Electronic Signatures in Global and National Commerce Act of 2000 (ESIGN)
Mailbox rule
the timing rule for acceptance that is applied when acceptance is offered by the same or faster means of communication as the offer or when offerees use the stipulated means to communicate acceptance
void contract
an agreement to do something that is illegal or against public policy; a contract that the courts will not honor, and neither party is obligated to perform under that agreement
unenforceable contract
an agreement for which the law affords no remedy
Tanner moved from Cleveland to New Orleans. He drove a rental truck with his belongings, but he needed to get his car to New Orleans too. He told his friend Han, "If you drive my car to New Orleans this weekend, I will pay you $200." Han then drove the car to New Orleans, but Tanner refused to pay and claimed they do not have a contract. Which of the following statements is true of this scenario? a. They do not have a contract. b. They have a bilateral contract. c. They have a unilateral contract. d. They have an executory contract.
c. *his is a unilateral promise, which is a promise for a performance or $200 for driving to New Orleans.*
puffing
an opinion about the subject matter of a contract
Article 2 of the UCC governs contracts for the sale of goods and has been adopted in all states except Louisiana.
The UCC has a section called Article 2A Leases, which applies to leases of goods.
covenants not to compete
a clause under which the employee agrees that he or she will not enter a trade in competition against the employer
Refurbished Inc. sent an offer to The Phone Warehouse. The offer read as follows: "Available for immediate shipment: 1,000 iPhone 4s. Price is $49 each. 30 days, same as cash. All warranties in effect. This offer expires on Tuesday, December 31, 2021." The Phone Warehouse sent the following letter in response on December 30, 2021 via overnight delivery: "Happy to accept your offer on the iPhone 4s. Ship immediately." A huge snowstorm hit the east coast on December 30, 2021, and The Phone Warehouse's letter did not arrive at Refurbished's headquarters until January 3, 2022. By then, Refurbished had sold the iPhones to another company. The Phone Warehouse demanded the 1,000 phones for $49 each, claiming that it had accepted the offer in time. Which of the following statements is true of this scenario? a. The Phone Warehouse is correct; it had valid and timely acceptance and had a contract. b. The Phone Warehouse is incorrect; the acceptance must arrive for it to be effective. c. The Phone Warehouse is incorrect; the offeree assumes the risk of the delivery means chosen. d. The Phone Warehouse is correct, but any damages must be recovered from the overnight shipping company.
a.
The following series of events occurred between two shops named Bull's Meat Market and The Butcher:May 1: The Butcher sends a fax to Bull's offering to buy 200 lbs of T-bone steak at $3.29 per lb.May 2: Bull's sends a fax back saying "Price is okay. Payment prior to delivery."In this scenario, Bull's and The Butcher: a. have a contract on May 2 with the payment term. b. have a contract on May 2 without the payment term. c. do not have a contract. d. have a contact on whatever date payment is made.
a.
Which of the following situations would get the benefit of the mailbox rule? a. An acceptance of a stipulated means offer by the stipulated means b. An acceptance of a stipulated means offer by a faster or unreasonable method of communication c. An acceptance of an offer by a slower or unreasonable method of communication d. An acceptance of an unstipulated means offer by a faster or unreasonable method of communication
a.
Which of the following statements exemplifies the concept of puffing? a. "This is simply the best flashlight you will ever own." b. "You will never need to buy another mower for as long as you own your current house." c. "This toothpaste will prevent cavities." d. "Lose five pounds your first week on this diet or you get your money back."
a.
Which of the following types of contract is described as an agreement to do something that is illegal or against public policy or one that lacks legal elements? a. A void contract b. A voidable contract c. A quasi contract d. An unenforceable contract
a.
Chen has a lawn service. Jennifer asks him to come by and mow her lawn while she is out of town. Jennifer pays him when she gets back into town and asks him to mow the grass "whenever it needs it." So Chen has been mowing her lawn every few weeks all summer. She has been paying him the following day. In late August, Chen mowed the grass again, but this time Jennifer refused to pay him stating that they did not have a contract so he should have asked her first. Which of the following statements is true of this scenario? a. Chen and Jennifer had a quasi contract. b. Chen and Jennifer had an unenforceable contract. c. Chen and Jennifer had an executory contract. d. Chen and Jennifer did not have any type of contract.
a. *A quasi contract exists when the parties have acted "as if" they had a contract. By continuing to pay Chen all summer, and not asking him to stop mowing the grass, they created this type of an implied-in-law contract.*
Jerry is negotiating with Tiana for the purchase of her mountain bike. The following conversation has taken place so far:Jerry: I will buy your mountain bike for $375.00.Tiana: I will sell it to you.Jerry: Good. The tire pump is included.Which of the following statements is true of this scenario? a. Jerry and Tiana have a contract for the bike at $375.00. b. Jerry and Tiana do not have a contract for the bike at $375.00. c. Jerry and Tiana have a contract for the bike at $375.00 with the tire pump. d. Jerry and Tiana do not have a contract without the tire pump being included.
a. *Jerry and Tiana have a contract for the bike at $375.00. Whether the pump is included is a separate issue.*
Imani is going to work as a lifeguard at the Big River Water Park. As a part of her new hire package, she was asked to sign several documents, one of which stated that the water park would not be held responsible for any injuries that happened to her during the course of her work. Which of the following is true? a. This type of clause would not be enforced by the courts. b. This clause is legal and used to protect companies. c. This is a violation of usury laws. d. This is a violation of the covenants clause
a. *This is an exculpatory clause, one that holds a party blameless for any accidents. It is not typically enforced by the courts.
Margaret Jameson has had enough. Last week she saw the drug dealers who live next door selling drugs to a 12-year-old from the neighborhood. Deciding to take things into her own hands, she paid her acquaintance John $100 to set fire to their house while they were gone. This is a(n): a. void contract. b. voidable contract. c. unenforceable contract. d. quasi contract.
a. *A void contract is an agreement to do something that is illegal or against public policy*
The Hoffmans were having their home remodeled by All-Right Contractors. The roof had to be removed in order to build the second story the Hoffmans had contracted and designed to build. After All-Right had removed the roof, but before a covering was placed over the exposed half of the home, All-Right's foreman said the job would cost an additional $12,500. The Hoffmans refused to agree to the additional fee, and All-Right's foreman said, "Suit yourselves. Looks like it's going to rain for the next day or two" and left. The Hoffmans called All-Right and agreed to pay the $12,500 extra and went in to sign the paperwork. Which of the following statements is true of this scenario? a. The contract for the additional $12,500 is valid and binding. b. The contract for the additional $12,500 is invalid because of duress. c. The contract was not valid because of duress, but the Hoffmans signed anyway—so there is a valid and enforceable agreement. d. The contract is valid because there was substantial performance
a. *The contract for the additional $12,500 is valid and binding because the Hoffmans agreed to pay the additional $12,500*
"I am interested in retiring and looking for a franchise to start a business" is an example of:
an invitation for an offer
Choose the TWO requirements for the terms required to form a contract offer under the Uniform Commercial Code (UCC). a. subject matter b. parties c. price d. payment terms e. delivery terms f. performance times
a. b.
In the case, Reed v. King, the issue was: a. the failure to disclose material information about a house prior to selling. b. the act of using fraudulent papers for buying. c. the act of buying under duress. d. the failure to highlight opinion about the subject matter of a contract.
a. the failure to disclose material information about a house prior to selling
consumer financial protection act (CFPA)
an act that increases the disclosure requirements and grants the Consumer Financial Protection Bureau (CFPB) broad authority to enforce extensive new regulation on mortgage and equity loans
liquidated damages
an agreement clause in a contract that pre-establishes and limits the damages
accord and satisfaction
an agreement entered into as settlement of a disputed debt
Void contract
an agreement to do something that is illegal or against public policy;?a contract that the courts will not honor, and neither party is obligated to perform under that agreement
novation
an agreement to release one party to a contract in exchange for the substitution of a new party (for example, when a party under contract to deliver ice is released from the contract as the buyer for the ice agrees to a substitute company)
Jane is negotiating with Carlos to buy his 2009 Honda Accord. The following excerpts from emails have occurred so far:Jane: I would be interested in purchasing your Honda Accord.Carlos: I am thinking of selling my Honda Accord.Jane: I am considering selling my diamond tennis bracelet to buy your Honda Accord.Which of the following statements is true of this scenario? a. Carlos and Jane have a contract. b. Carlos and Jane do not have a contract. c. Carlos and Jane have a conditional agreement based on the sale of his Honda Accord. d. Carlos and Jane have a conditional agreement based on the sale of her tennis bracelet.
b *Carlos and Jane do not have a contract because there has been no offer or acceptance*
"Weekend Rentals is not responsible for the condition of its rental property and is not liable for any injuries that result from renting its property" is an example of: a. a valid disclaimer. b. an exculpatory clause. c. a covenant not to compete. d. an ultra vire.
b.
In the context of forms of bankruptcy, which of the following is the section of bankruptcy law for consumer debt adjustment plans? a. Chapter 11 b. Chapter 13 c. Chapter 7 d. Regulation Z
b.
What must a creditor have before the creditor can garnish a debtor's wages? a. Bankruptcy decree b. A judgment c. Priority as a secured creditor d. A plea bargain
b.
Which of the following statements is true of a subprime loan? a. It is now prohibited under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFCPA). b. It is a loan with higher interest rates and large prepayment penalties. c. It is for borrowers with a FICO (Fair Isaac Co.) score below 720. d. It is for borrowers with a FICO (Fair Isaac Co.) score above 720.
b.
Mr. Anderson sold his car to his daughter Amanda for $1,000 even though the car is valued at $20,000. The next day, her brother Richard claimed the car belonged to him. Richard claimed that their dad had promised to give him the car the previous year. Which of the following statements is true of this scenario? a. Because the car was worth more than the sale price, there is no consideration. b. There is valid consideration despite the price. c. Even though there is minimal consideration, the sale does not constitute a valid contract. d. The car belongs to Richard because it was promised to him first.
b. *Any amount is valid consideration as long as both parties agree. The courts will not rule on the amount of consideration as long as it was passed from one party to another*
The Morrisons plan to purchase their first home in a new town. They do not know much about the area, so they ask the real estate agent to show them homes in a quiet neighborhood. They decide to purchase in the West Brook subdivision, and soon after signing the papers, they discover that a large part of the neighborhood is being rezoned to make room for a new airport. When questioned, the realtor admitted knowing about the rezoning but that it would probably be years before the project started, so the realtor was not obligated to tell them about it. Which of the following is true? a. The realtor was not obligated to tell the Morrisons about the rezoning. b. The realtor is guilty of misrepresentation. c. The realtor is guilty of fraud. d. The realtor is guilty of duress.
b. *Because the buyers would not have purchased the house if they had known about the rezoning and because the realtor did know about it, the realtor is guilty of misrepresenting a material fact that would affect the decision.*
Rodrigo hired Anglin Engineering to produce engineering drawings for the work Rodrigo was doing at a brewery. Anglin said it would charge "street" rates for the work, which meant $35 an hour for regular work, $40 an hour for overtime work, and $45 an hour for its time. Rodrigo gave Anglin a purchase order for the work, but no rate was specified. Anglin sent bi-weekly invoices to Rodrigo, and Rodrigo paid the invoices for two months. Rodrigo continued to insist that the work be done but constantly complained about the rates and did not pay invoices for the next four months. Anglin sued for $98,618, the amount it was due for work at the street rate. Rodrigo claimed there was no contract because there was no meeting of the minds about the rate to be paid. Who should prevail in this case? a. Rodrigo, because there was no meeting of the minds as to the rate of compensation for Anglin's work and because there was no contract, but only a purchase order b. Rodrigo, because there was no contract since the rates identified by Anglin were too vague and indefinite to enforce c. Anglin, because there was an agreement in that Rodrigo accepted the rates when he paid the invoices for two months d. Anglin, because there was a purchase order that outlined all of the terms and conditions between Rodrigo and Anglin
c. *Anglin should prevail because there was an agreement in that Rodrigo accepted the rates when he paid the invoices for two months.*
John is negotiating with Benjamin to buy Benjamin's mountain bike. The following conversation has taken place so far:John: I will buy your mountain bike for $325.00.Benjamin: I couldn't sell it for less than $375.00.John: I'll take it for $375.00.Which of the following statements is true of this scenario? a. Benjamin and John have a contract for the sale of the bike at $375.00. b. Benjamin and John have a contract for the sale of the bike at $325.00. c. Benjamin and John do not have a contract. d. Benjamin and John do not have a contract until the exchange is in writing.
c. *Benjamin and John do not have a contract. Neither has made a formal offer for the purchase or sale of the mountain bike and Benjamin's statement of "I couldn't sell it for less than $375" is not a formal offer.*
Juan: I will pay you $125 to detail my car. This is a(n) ______1 .Tanner: I will do it for $150. This is a(n) ______ 2 .Juan: Okay, but you will need to clean the engine too. This is a(n) ______ 3 .Tanner: Deal. This is a(n) ______ 4 .Juan: Okay, $150 with a clean engine. This is a(n)________
offer; counteroffer;counteroffer;acceptance; acceptance
Ralph Deuschle owns an ice sculpture company. Ralph provides ice sculptures for private weddings, parties, and receptions. The event manager at Canasta Resort likes Ralph's work. The manager approaches Ralph and indicates that Canasta would like to have an ongoing supply contract but that its needs would require Ralph to expand his business, both with additional space and three new employees. Ralph enters into a supply contract with Canasta, and the event manager tells a lending officer at the bank where Ralph is getting his construction mortgage for the business expansion that Canasta would be sending all of its business to Ralph. The management at Canasta, however, begins to rethink its events focus and marketing and decides to cut back on ice sculptures. As a result, Ralph cannot use the additional space, and the three new employees need to be laid off. Which of the following statements is correct in the context of this scenario? a. Canasta has no liability to Ralph for the downturn in amount of ice sculptures ordered if it did not guarantee a minimum amount to be purchased. b. Ralph may be entitled to recover liquidated damages from Canasta due to nonperformance of the contract. c. Canasta may be liable to Ralph under a theory of a lack of good faith and owe him compensatory damages. d. Canasta is liable to Ralph, but a court will likely only award him nominal damages.
c. *Canasta may be liable to Ralph under a theory of a lack of good faith and owe him compensatory damages. The purpose of compensatory damages is to put the nonbreaching party in the same position the party would have been in had no breach occurred.*
Clothing for Accountants is a popular retail store owned by I.M. Material. Material has just sold the business to Phil Forma. Phil has asked that a covenant not to compete be inserted into the agreement. Such covenants are: a. void as against public policy. b. only valid in employment contracts. c. valid if reasonable in time and geographic scope. d. always valid
c. *Covenants not to compete are not only valid in employment contracts, as they are often used in business transactions. This covenant is valid if it is reasonable as to time and geographic scope.*
Jayla purchased a computer from Big Box. Big Box did not disclose to her that the computer was a return item. There was no indication of any price difference between the computer Jayla bought and the unopened computers. Jayla experienced significant difficulties with the computer and returned it to Big Box. Jayla indicated that she would like to have a new computer and that the price is now $150 more. Big Box indicated that it was happy to take the return on the computer and credit Jayla's account but that it has no further liability. Which of the following is correct? a. Big Box's position indicating no further liability is correct. b. Jayla is not entitled to damages since Big Box took back the computer. c. Jayla is entitled to recover the price difference so that she can replace the computer. d. Jayla is entitled to the return but no additional damages.
c. *Jayla is entitled to recover the price difference so that she can replace the computer. Nonbreaching parties are entitled to collect extra damages or incidental damages involved because of a breach*
Salma plans to purchase a new Maserati. She will be borrowing the money from her bank. Salma signs the contract at 8:00 p.m. at the dealership, and her bank will not be open until 10:00 a.m. the following day. Which of the following statements is true of this scenario? a. Salma has a contract regardless of whether the bank approves her loan. b. Salma has made a conditional acceptance and has no contract. c. Salma will be excused from her contract if the bank does not approve her loan. d. Salma will have to pay for the car regardless of the loan.
c. *This is an executory contract, which means the contract has not been fully performed unless the bank approves Salma's loan. If the bank does not approve the loan, she will be released from the contract.*
Statute of frauds applies to:
contracts for paying the debt of another
Bargained for exchange
contractual formation requirement of value exchanged by the offeror and offeree that distinguishes gifts from contracts
Which of the following is true of common law? a. It is synonymous to the Uniform Commercial Code (UCC). b. It does not attract penalties when violated. c. It was the first law of contracts. d. It is not uniform
d.
Which of the following is true of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009? a. It restricts credit card solicitation of those under the age of 18. b. It allows college and university partnering with credit card companies. c. It created the Consumer Financial Protection Bureau (CFPB). d. It limits the frequency of companies changing a card holder's interest rate.
d.
Which of the following statements is true of the mailbox rule? a. It applies only when the offer includes a specific method of acceptance. b. It makes an acceptance effective when it arrives at the offeror's electronic or regular mailbox. c. It only applies under the Uniform Commercial Code (UCC). d. It can apply whether the means are stipulated or not under certain circumstances.
d.
Dakota and Lucia have been life-long friends. When Dakota decided to move, Lucia made her an offer of $350,000 for Dakota's house, and Dakota accepted the offer with a handshake. A few days later, Dakota was killed in a car accident, and her brother informed Lucia that Dakota had left him as the sole beneficiary and he would be selling the house for $500,000 if she still wanted to buy it. Which of the following statements is true of this scenario? a. The house belongs to Lucia because she and Dakota had a valid contract. b. Lucia can still purchase the house for the original $350,000. c. Dakota's brother has to sell the house to Lucia for $350,000. d. There was no valid contract between Lucia and Dakota, so Lucia will have to pay the new price.
d. *There was no valid contract because the statute of frauds requires the sale of real property to be in writing. Lucia will have to pay the new price*
Revocation
offeror cancelation of an offer with notification to the offeree of the termination;offercanberevokedanytimepriortoacceptance
Bentley owes a credit-card company $18,000 and has not made a payment in four months. The account has been turned over to a collection agency that has been trying to contact Bentley to collect the money owed. The agency has tried to contact Bentley at work and at his parent's home. The agency has even resorted to calling Bentley in the middle of the night to get in contact. Which of the following is a true statement in the context of this scenario? a. The agency cannot attempt to contact Bentley. b. The agency can only speak to people at Bentley's workplace if the representative specifically states that the call is about the $18,000 debt. c. The agency can use any methods to contact Bentley because he owes the agency a large amount of money. d. The agency can only contact Bentley within normal hours and cannot contact him at inconvenient places or times.
d. *The Fair Debt Collection Practices Act states that creditors can only contact the debtor between 8 a.m. and 9 p.m. and cannot contact them at inconvenient places such as school meetings, church, or clubs.*
Rosa, a minor, purchased a new car from Sheehan Buick for $5,000. Rosa later, while still a minor, elected to disaffirm the purchase and notified Sheehan of her decision. She also requested a full refund of the purchase price. Sheehan refused, and Rosa brought an action to invalidate the contract and seek a refund of the purchase price. What will be the likely result? a. The contract is valid and enforceable as to Rosa, and she must continue to pay for the vehicle. b. The contract is valid and enforceable as to Rosa, as she ratified the contract when she took possession of the vehicle. c. The contract is void because it is between an auto dealership and a minor. d. The contract is voidable at the option of Rosa because she is a minor.
d. *The contract is voidable at the option of Rosa because she is a minor. She has until her 18th birthday to disaffirm or ratify the contract. As to whether she receives a full refund will be determined based on her jurisdiction and whether the court will allow a full refund or if she must pay for any reasonable wear and tear on the vehicle.*
The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years within a one-mile radius of the sold business. Such an agreement: a. is void as against public policy. b. is void as unconscionable. c. is void as usurious. d. is valid and enforceable
d. *This agreement is valid and enforceable because of the time and geographic limitation.*
A bankruptcy that was declared seven years ago cannot appear on a current credit report.
false
A bill of lading is a credit instrument used to help obtain payment in international transactions.
false
In the context of forms of bankruptcy, Chapter 7 bankruptcies are limited to businesses.
false
The burden of proof for unauthorized use of a credit card is on the card holder.
false
The three-day rescission period does not apply to home equity credit lines because if this three-day rescission right is given to the homeowners, the right of rescission will continue for three years.
false
Transfers of consumer credit balances to new credit cards are a lucrative area for banks and credit card companies.
false
unconscionable
highly unjust terms of a contract, which are in favor of a party with a greater bargaining power;sobadthatyoucannotdobusinessagain
Bill of lading
it is a receipt for shipment issued by the carrier to the seller; it also serves as a contract for the shipment of the goods and provides evidence of who has title to the goods
implied in law contract
legally implied contract to prevent unjust enrichment AKA quasi contract
Some parties agree in their contracts on the amounts they will pay in the case of nonperformance. Such amounts are called:
liquidated damanges
three-day cooling-off period
the 72 hours immediately following execution of certain types of credit contracts during which the buyer has the right to rescind the contract
garnishment
the attachment of a judgment to an account, paycheck, or receivables
Consequential Damages
the damages a party to a contract owes to third parties as a result of the breach of contract
commerical impracticability
the defense to performance of sales contract based on objective impracticability; it excuses performance if the basic assumptions the parties made when they entered into the contract have changed
offer
the first step in the formation of a contract
material fact
the type of information that would affect someone's decision to enter into the contract
Merchants who do not require chip credit cards are unable to seek reimbursement for fraud from credit card companies.
true
Party autonomy is a priority under the United Nations Convention on Contracts for the International Sale of Goods (CISG).
true
confidential relationship
type of relationship in which there is trust, confidence, and reliance
A contract that gives all the benefits to one side and all the burdens to the other is a(n) _____ contract.
unconscionable
If a child who is caring for an elderly parent is getting property signed over to the child by that elderly parent, which contract defense could the child's siblings use to set aside the transfers?
undue influence
duress
when a party is physically forced into a contract or deprived of a meaningful choice when deciding whether to enter into a contract;voidable