Law and Ethics I Midterm

Maya, an elderly lady, wanted to sell her house. She offered the house to Lily, a friend. However, before the house deeds were transferred, Maya passed away. Which of the following scenarios is legally acceptable in such a case?

Lily must consider the offer automatically revoked and void.

Appellate courts include courts of appeals and supreme courts.

True

Each state is part of the federal court system and has a state court system.

True

The U.S. Supreme Court is the highest tribunal in the land, and its decisions are binding on all other courts.

True

The doctrine of strict liability can make the manufacturer of a dangerously defective product liable, even if there's no proof of negligence.

True

The legal term for one party benefiting unfairly at the expense of another is unjust enrichment.

True

The right of ownership of property or evidence of ownership is called title.​

True

The statement of the seller in which the article sold is warranted or guaranteed is known as an _____.​

Express warranty

A lease of real property for less than one year must be in writing in order to be binding.​

False

All agreements are contracts

False

All contracts must be in writing to be enforceable.​

False

As a general rule, one's rights under a contract cannot be transferred freely.​

False

Felonies refer to crimes that are usually punishable by just a fine.

False

Performing or promising to perform what one is already obligated to do is a valid consideration.

False

The "mailbox rule" does not apply in situations where the offeror does not receive the acceptance.

False

Which of the following is true of a valid offer?​

It is seriously intended.

Which of the following is true of undue influence?

It refers to a person in a special relationship causing another's action contrary to free will.

The failure of a party to perform the obligations assumed under a contract is known as a(n):​

breach of contract

An offeree's response that rejects an offer by varying its terms is known as a(n) _____.

counteroffer

A _______ is a court decision that determines the decision in a subsequent, similar case.

precedent

If a minor contracts for necessaries, the minor's liability is quasi-contractual in nature. This means that:

the minor is not required to pay the contract price but will be required to pay a reasonable amount to avoid unjust enrichment.

Which of the following statements best describes specific performance?​

​It refers to the carrying out of the specific terms of a contract.

When one party wrongly threatens to injure another person physically in order to get agreement to a contract, economic duress occurs.

False

​As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.

False

​The law considers everyone under the age of twenty-one to be a minor.

False

Which of the following is true of the doctrine of promissory estoppel?​

It requires the promisor to reasonably expect the promise to induce action by the promisee.

What is the chief function of the courts?

They interpret and apply the law from whatever source to a given situation

A person not party to contract but whom parties intended to benefit is known as a(n) _____.​

Third-party beneficiary

Documents that show ownership are called documents of _____.

Title

If, after an offer has been made, the performance of the contract becomes illegal, the offer is terminated.

True

In an FOB contract, the seller bears the risk of loss until the goods are delivered to the FOB point designated.

True

In order to be the subject of a sale, goods must be existing.

True

Silence constitutes acceptance to an offer if it is reasonable in consideration of previous dealings that the offeree to notify the offeror of non-acceptance.

True

The consideration in a sales contract is known as the price.

True

If an offeror receives something of value in return for a promise to hold the offer open, it is said to be a(n) ________, and this type of offer cannot be revoked.

option

The legal rate of interest is a rate:

that is applied when no rate is specified.

Which of the following statements best describes the term "assignment"? ​

​It is the conveyance of rights in a contract to a person who is not a party.

An executory contract is defined as:

A contract in which the terms have not been fully carried out by all parties

Contracts made by people who were intoxicated to such an extent that they would not have entered into it if they were sober, makes the contract voidable.

False

The Statute of Frauds' requirement of writing applies if the main purpose of the promise is to gain some advantage for the promisor.​

False

An offer to pay money in satisfaction of a debt or claim when one has the ability to pay is a ____.​

Tender of payment

Which of the following is true regarding parties who make mutual mistakes of law?

It will generally not invalidate a contract.

When one party wrongly threatens to injure another person financially in order to get agreement to a contract, economic duress occurs.

True

Which of the following constitutes valid consideration?

A promise to refrain from doing an act can be lawfully done

A breach of contract by one of the parties bound on a contract immediately terminates the contract.​

False

A contract is void if parties to a contract are mutually mistaken about their expectations.

False

Failure to disclose information when there is duty to do so is known as passive fraud.

True

Generally, a part payment of a past-due debt is not consideration to support the creditor's promise to cancel the balance of the debt.

True

One may have rights and obligations imposed by law even when no real contract exists.

True

Ordinarily, for a mistake to invalidate a contract, the mistake must be a mutual one about a material fact.

True

Punitive damages are damages paid to the plaintiff in order to punish the defendant, not to compensate the plaintiff.​

True

The term "movable personal property" as used in the Uniform Commercial Code (UCC), does not apply to real property or intangible property.

True

Unless otherwise agreed, a merchant warrants that goods shall be delivered free of the rightful claim of any third person by way of patent or trademark infringement.

True

When a contract is required to be sealed, a substitute for an actual seal may be used.

True

​A gambling contract is a transaction wherein the parties stand to win or lose based on pure chance.

True

​The promise or obligation of each party to a contract must be supported by consideration in order for the contract to be valid.

True

Which of the following is not a true contract and has been imposed by law in order to prevent one party benefiting unfairly at another's expense?

a quasicontract

The difference between a sale and a contract to sell is that:

a sale involves an immediate transfer of title from one party to another while a contract to sell does not.

The purpose of antitrust laws is to:

promote competition among businesses

Contracts made by people who have become so intoxicated that they cannot understand the meaning of their acts are:

voidable

​What is the Statute of Frauds?

​It is a law requiring certain contracts to be put in writing.

An express warranty applies even if defects are actually known to the buyer, or defects are so apparent that no special skill or ability is required to detect them.

False

An offer made in jest that does not appear to be seriously intended to an offeree is considered a valid offer.

False

The courts will generally still allow a wrongdoer to enforce a contract against an innocent party.

False

The law states that a unilateral contract can be formed when performance is started.

False

The legal system of the United States is based primarily on the French legal system.​

False

The statement of the seller in which the article sold is warranted or guaranteed is known as an implied warranty.

False

To recover damages or an intentional tort, the plaintiff is required to prove that there was a breach of duty by the tortfeasor to the plaintiff

False

When an offeree is not aware of the insanity of the offeror and communicates assent to an offer, it is considered accepted.

False

Which of the following is true of a binding contract?

It is created when an offeree accepts an offer that has been properly communicated.

An offer expresses the willingness of the offeror to enter into a contractual agreement.​

True

Which of the following is an example of a contract contrary to public policy?

A agrees to appoint B as sheriff, provided he helps him win the local elections.

_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.

Duress

A person who sells alcoholic beverages to a minor when such a sale is prohibited can recover on the contract.

False

Implied warranty arises as to fitness of used property for ordinary use from a sale made by a casual seller.

False

In order for a sale to have taken place, the purchased goods need to be delivered to the buyer immediately.

False

Kenneth, aged sixteen, sells his car to Robin, aged 49. Later, Robin sells the car to Sarah, an innocent third party, before Kenneth can disaffirm the contract. In this case, which of the following will hold true?

Sarah can obtain good title to the property

An enforceable contract is made by an adult with a minor. Which of the following is most likely to hold true in this case?

The contract is enforceable against the adult but not against the minor

Which of the following is true of identified goods?

They are a type of existing goods.

When parties to a contract mutually agree to cancel an old contract and replace it with a new one, which of the following is true?

To be enforceable, there must be added features in the new contract benefiting both parties.

A contract for the sale of goods is governed by the Uniform Commercial Code.

True

Generally, people can sell only such interest or title in goods as they possess.

True

If a contract calls for personal services, the death or physical incapacity of the person to perform such services discharges the contract.​

True

Statutes are easier to amend than constitutions.

True

Regulatory agencies can use their licensing power to:

allow a business to enter the field being regulated.

A(n) _____ is one that the seller did not make but that is imposed by the law.

implied warranty

The term delegation describes a transfer of rights.​

False

There is no difference between a void contract and an unenforceable contract.

False

Which of the following is true of the United States Supreme Court?

It has appellate jurisdiction in cases based on the U.S. Constitution

Kenneth was sentenced to six years in prison for forgery. In this case Kenneth has committed a(n) _____.

Felony

How are sales contracts handled when terms are missing?

If the price term is not expressly stated, it will be held to be the reasonable price for the same goods in the market.

A minor, upon reaching the age of majority, must ratify none or all parts of a contract.

True

Which of the following is an example of a contract discharged by impossibility of performance?​

A new law that makes a contract illegal

Which of the following is most likely to be a tort based on negligence?​

Automobile accidents

A state administrative agency affects businesses throughout the country

False

At common law, individuals other than the parties to a contract can sue upon or seek to enforce the contract.​

False

Contracts which are designed to limit competition are acceptable by law.

False

If a decision of an administrative agency conflicts with a statute enacted by a higher legislative body, the agency decision will prevail.

False

If an adult purchases personal property from a minor, the minor has only a voidable title to the property.

False

Land is generally considered as intangible personal property.

False

Mistakes such as duress and undue influence render contracts void.

False

Ratification to a contract can be made any time before reaching majority.

False

Which of the following is true of the Uniform Commercial Code (UCC)?

Individual states may make changes to the portions of the UCC that they have adopted.

An offer that does not specify a particular manner of acceptance may be accepted in any manner reasonable under the circumstances.

True

Consideration distinguishes mere agreements from legally enforceable obligations.​

True

If a contract is voidable due to a mistake such as fraud in the inducement, duress or undue influence, a person might elect to rescind the contract.

True

If an act is legal at the time of entering a contract but is subsequently made illegal, the contract is discharged.​

True

If the intended acceptance varies or qualifies an offer, the counteroffer rejects the original offer under the common law.

True

If the supposed consideration consists merely of a promise to do what one is already legally obligated to do, consideration is invalid.

True

In the event of goods damaged through no fault of either the buyer or the seller, the party with control over the goods bears the risk of loss.

True

​The rescission of a contract releases an aggrieved party from all obligations that are yet to be performed

True

A written request to a court to settle a dispute is called a(n)?

complaint or petition

Ryan, a college student, intends to sell his car. He contacts his friend Luiz and inquires whether he is interested in buying the car. Luiz finds the quoted price reasonable and buys the car from Ryan. In this scenario, Ryan is the _____.

offeror

What precaution can a business person take when contracting with a minor?

A business person can require an adult to join the contract as a cosigner

As per the UCC's definition of sale, in which of the following transactions has a sale taken place?

A buys a spare USB charger for his phone.

A temporary order that is issued by a court with equity powers forbidding activities that would be detrimental to others is known as?

A restraining order

The _____ consists of ten amendments to the U.S. constitution specifically designed to protect the civil rights and liberties of citizens and the states.

Bill of Rights

Which of the following statements is true of common law?

Cases in common law are decided on the basis of precedents

Which of the following best describes the difference between civil law and criminal law?

Civil law deals with the enforcement or protection of private rights, whereas criminal law deals with offenses against society.

What is a contract? What are the five definite requirements that every contract must fulfill?​ (Written answer question)

Five parts: offer, acceptance, consideration, competency and legal intent. Defined as: a written or spoken agreement, this is enforceable by law.

A _______ contract must be in a special form or be created in a certain way.

Formal

​Neither party can delegate the duties under a contract as readily as the rights can be assigned. Explain.

If the contract outlines that neither party can delegate, they cannot. The rights that are assigned means that neither party can delegate any duties beyond what the contract says.

Blake agreed to renovate Jane's house, and they drafted a written contract. However, Blake was unable to complete the renovation due to an accident. Blake's friend, Tom, agreed to complete the job, and Jane agreed to release Blake from the contract. The terms of the old contract remained the same. This process of substitution of a contract is known as a(n) _____. ​

Novation

What constitutes satisfactory performance in a contract?​

Satisfactory Performance means the completion of required works to the standards and specifications outlined in this Agreement, as determined by an inspection or review.

To recover for a tort based on negligence, the plaintiff must show:

The breach of the tortfeasor's duty to the injured party.

Which of the following is true of appeals made to higher courts?

The decision of the appellate court is binding on lower courts.

The term disaffirmation refers to:

The election to avoid a contract or set it aside.

Which of the following is an advantage of a written contract over an oral one?

The existence of a contract cannot be denied if it is in writing.

In a situation where an injured party in an accident is partly to blame for the accident, which of the following is most likely to be true under a contributory negligence system?

The injured party cannot recover any damages because it is partially negligent in the case.

Which of the following is true of state trial courts?

They handle cases that are first instituted in them.

A donnee beneficiary is one to whom the promisee owes no duty but for whom performance is a gift.​

True

A false statement made in the belief that it is true is known as innocent misrepresentation.

True

A warranty is an assurance that the article sold will conform to a certain standard or will operate in a certain manner.​

True

According to the Statute of Frauds, an agreement to sell goods for $500 or more must be in writing.​

True

Administrative agencies primarily set policy through the issuance of rules and regulations.

True

Advertisements and catalogs are examples of general invitations.

True

A seller's warranty that the goods shall be delivered free from any security interest or any other lien of which the buyer at the time of making the sales contract had no knowledge is known as a _______.

Warranty against encumbrances

Which of the following is true of a warranty of merchantability?

Warranty of merchantability relates only to the fitness of the product made or sold.

Which of the following warranties applies to all sellers?

Warranty of title

As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule?

An obligation of record such as a judgement

A bill of sale cannot serve to prove ownership of a good.

False

A debt that has been prohibited from collection by a statute of limitations can never be revived.

False

A promise to steal a valuable piece of art is valid consideration to support a contract.

False

A small piece of molded plastic shown to a car buyer to illustrate the materials and methods used in the construction of cars creates a sale by sample.

False

An antitrust violation occurs when a business firm seeks to have cooperation within its firm to diminish competition.

False

Which of the following statements is true of statutes of limitations?

In the case of running accounts, such as purchases from department stores, the statute starts from the date of the last purchase.

Which of the following is true of quasi-contracts?

It prevents the unjust enrichment of a party

Which of the following statements best describes a difference between rules and laws?

Laws are rules that are enacted by the government

Judy promises to pay Ashley $50 to babysit her children. After Ashley babysits the children, Judy pays Ashley the $50; thus each party has completed performance of each part of the contract. This is an example of a(n):

executed contract

​A contract must be for a lawful purpose, which must be achieved in a lawful manner, otherwise the contract is:

void

What is the difference between an agreement and a contract?

​An agreement results whenever two people's minds meet on a subject, but a contract only exists when the parties intend to be legally obligated by the terms of the agreement.

Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?

​Joe is entitled to keep the car because the contract is valid.

​Which of the following conditions is a prerequisite for any agreement to be legally enforceable?

​The parties entering into the agreement must have the mental capacity to contract.

What is the essential element in determining who bears the risk of loss of goods?

​The party with control over the goods bears the risk of loss.

Which of the following is true of a shipment contract?

​The title and risk of loss pass to the buyer when the goods are delivered to the carrier.

Which of the following is true of administrative agencies?​

​They can become specialists in a particular area of regulation.

A joint contract is one in which:​

​each obligor is bound for the performance of the entire obligation.

An donee beneficiary is best described as a person:​

​who is a third-party beneficiary and for whom performance is a gift.

Activities that are illegal regardless of their effect are known as _____.

per se violations

An agreement between two parties to perform an illegal act is a quasi-contract.

False

Mary contracts to sell Rachel her violin for $10,000, based on an appraisal of the instrument. Their contract provides that even if the appraisal is later found to be mistaken, the sale price will not be altered. One month after the sale, Rachel learns that the violin is only worth $5000. Which of the following is true:

​Because the contract specified what would happen in the case of a mistake, the sale price will not be altered.

Which of the following best describes the term "consideration"?​

​It indicates what the promisor demands and receives as the price for a promise.

Which of the following statements best describes a several contract?​

​It is a contract where two or more people individually agree to perform an obligation.

​Which of the following best describes the term "title"?

​It is the right of ownership of property or evidence of ownership.