Legal and Social Exam 2
Which of the following are objections that a creditor may bring to bankruptcy distribution proceedings? Choose 3 answers.
1. A secured creditor may object to being excluded from the distribution if she had not been notified of the bankruptcy. 2. An unsecured creditor may object to being excluded from the distribution if she had not been notified of the bankruptcy. 3. A creditor may object to a distribution plan if the debtor has been fraudulent.
Which of these contracts would be enforceable, despite the existence of a mistake? Choose 2 answer choices.
1. Christopher agrees to sell his washer and dryer to Ella in "as is" condition. Ella thinks the set is in excellent condition and is willing to take a chance on buying it. Neither works after a few weeks of use.2. Christopher agrees to sell his washer and dryer to Ella. Ella thinks the dryer uses gas instead of electricity, but she is incorrect.
In which of these situations does an express warranty exist? Choose 2 answer choices.
1. Crane Outdoor Shop shows products on the showroom floor as examples of what they sell, but all purchases are made online and another sample of that item is delivered to the customer's home. 2. Crane Outdoor Shop sells only online. The product postings include detailed descriptions of the features, but no pictures.
What evidence outside of the written contract is a party allowed to present? Choose 2 answer choices.
1. Evidence showing a change to the contract after it is signed 2. Evidence to prove agreement on an essential element of the contract
Lilly hired Harris Lawn Service to cut her grass one summer, and paid through automatic charges to her credit card. After taking three months off for winter weather, Harris staff cut Lilly's grass for four weeks in a row before charging the fees on Lilly's credit card. Lilly protested the charges, stating she did not hire the company to cut grass for the second summer. Harris sues Lilly. What law applies? Choose 2 answer choices.
1. Lilly's silence is acceptance because the offeree accepted the benefit offered. 2. Lilly's silence is acceptance because of the parties' past dealings.
What are the differences between legal and equitable remedies? Choose 2 answer choices.
1. One is monetary. 2. One requires actions instead of damages.
In general, certain terms must be included in contracts to satisfy the requirement of definiteness. What are the exceptions to this rule? Choose 2 answer choices.
1. Sales contracts under the UCC. 2. Courts can complete a contract to supply some missing items.
What is the evaluation standard for a personal satisfaction contract? Choose 2 answer choices.
1. Subjective personal taste 2. Objective, reasonable person standard
What must a party show to win a substantial performance lawsuit? Choose 2 answer choices.
1. The breach was not intentional. 2. He or she acted in good faith.
What are the legal differences between a material breach and an immaterial breach of contract? Choose 2 answer choices.
1. The level of the performance of the contractual obligations 2. Whether the court will discharge the contract
What is the result if parties agree to a contract orally, but it is a contract that must be in writing under the statute of frauds? Choose 2 answer choices.
1. The parties can complete the contract. 2. The contract is voidable.
How do parties determine which is the appropriate law for a mixed contract? Choose 2 answer choices.
1. The predominant-factor test dictates the proper choice of law. 2. Common law is appropriate for some mixed contracts.
What rights does the perfect tender rule give buyers of goods? Choose 2 answer choices.
1. The right to reject the seller's goods if the goods are not exactly as described in the contract 2. The right to accept delivery of all of the goods
Which of the following must a plaintiff prove when suing based on an express warranty for a defective product? Choose 3 answers.
1. The seller made a statement of fact to the buyer about the quality or uses of the product. 2. One of the buyer's reasons for the purchase is the product warranty. 3. The seller breached the warranty.
The following are true for Chapter 7 Bankruptcies: (Choose 2 answer choices)
1. They are for individuals. 2. The debtor must pass the means test.
In what situation could a party enforce strict performance?
1. When the requirement is reasonable 2. When the parties specifically agree to it in the contract
What types of contracts violate public policy? Choose 3 answers.
1. conducting trade with a country that is an enemy to the United States 2. employment contracts that forbid membership in a union 3. a candidate for public office paying his competitor to retire
Which of the following are the three basic purposes of bankruptcy laws? Choose 3 answers.
1. fair treatment of creditors 2. allowing a struggling business to become more stable 3. relief of the burden of debt on a debtor
What is the standard to which most personal satisfaction contracts must adhere? Choose 2 answers.
1. satisfaction of the receiving party (buyer) 2. satisfaction of a reasonable person
What factors may cause a person to lack contractual capacity? Choose 3 answers.
1. severe intoxication 2. mental incompetence 3. being under the age of majority (usually 18)
What remedies are available after an anticipatory repudiation? Choose 3 answers.
1. suspending performance 2. requiring assurance 3. cover
A debtor who wishes to file a voluntary petition must: (Choose 3 answer choices)
1. undergo credit counseling. 2. file the petition and required schedules. 3. meet eligibility requirements for the Chapter under which they wish to file.
Which act or statement is a valid offer?
A detailed advertisement.
Which of the following would be considered a merchant under the UCC?
A gun dealer sells a rifle to someone who enters his shop.
Which statement is true about the ability of minors to enter into contracts?
A minor may enter into any contract an adult can, except for contracts that are expressly prohibited for minors.
Which of the following statements concerning a Chapter 11 reorganization plan is true?
A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair.
In general, which of these contract terms is NOT required to meet the requirement of definiteness?
Acceptance.
Which of the following events would have the best chance of excusing performance of a contract based on commercial impracticability?
An unforeseeable trade embargo causes prices to triple
Which mistake is likely to be voidable?
Bilateral mistake
What must a plaintiff prove in an express warranty case?
Buyer reliance on the seller's promises
The type of bankruptcy where an individual who is in debt makes a plan to repay some or all of his creditors is called:
Chapter 13.
The Uniform Commercial Code applies to what types of contract?
Contracts for goods over $500
Iris received a discharge under a Chapter 7 bankruptcy. She cannot receive another discharge under Chapter 7 for at least
Eight years after the prior filing.
Which of the following is a valid offer?
Eric offers to buy Arun's house for $775,000 with no contingencies because Eric's lease ends in two months. Arun wants to think about it and six days later has not yet responded.
Quon and Bert have signed a contract for Bert to mow Quon's grass every week in June, July, and August for a price of $40 per week. They have agreed to all the necessary terms, but Bert has not yet mowed because it is still May. What type of contract do they have?
Executory
Alice signs a contract with Bob to buy Bob's house for $150,000 "if I am able to obtain a mortgage loan for $125,000, at no more than 7% interest, payable over 15 years." Assume that Alice tries but is unable to obtain the described loan, and therefore refuses to proceed with the purchase. Alice is in breach of the contract.
False
Chapter 11 and 13 are liquidation chapters
False
What is the most common way of perfecting a security interest?
Filing a financing statement.
Which of the following is correct concerning termination statements?
For consumer debt, the secured party must complete a termination statement in every place that it filed a financing statement.
What is the implied duty in every contract that each party will deal fairly with the other?
Good faith
The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that "time is of the essence" because of the opening-night deadline. Sound Systems has some financial difficulties and doesn't deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What result?
Grand Hall wins; the contract date was strictly enforceable.
What are the elements of consideration? Choose 2 answer choices.
I. An exchange to which the parties agree. II. Something of value from each party
How may an offer be terminated? Choose 3 answers.
I. An offeror may terminate an offer by revocation. II. A reasonable amount of time has passed. III. The offeree may make a counteroffer.
What conditions must be met for an offer to be legally accepted? Choose 2 answers.
I. It may only be accepted by the intended offeree or the offeree's agent. II. Acceptance must be unequivocal, with no requests for changes in the offer.
What factors are used to judge if consideration is adequate to ensure a fair bargain? Choose 2 answers.
I. Promises must be made with voluntary consent. II. Promises exchanged may not be a preexisting duty.
What factors make an agreement enforceable under the principle of quasi-contract? Choose 2 answers.
I. The enriched party knows about the benefit and keeps it. II. One party is being enriched at the expense of the other.
Which is NOT an exception to the parol evidence rule?
Jayden wants to present evidence that Jignesh verbally promised he would include the trailer with the boat he sold to Jayden.
Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In order to perfect its interest, Country Bank files a financing statement in Indiana. The financing statement provides Chmelik's correct name, his business address, and a reasonable description of the copyright used as collateral. Is the financing statement sufficient?
No, if the debtor is an individual, the secured party must file in the state of the debtor's principal residence, which in this case would be Illinois.
Which situation would be considered sufficient consideration for a contract to exist?
Pam agrees to pay Derek $500 if he does not sit next to her in class anymore.
What is an exception to the statute of frauds?
Promissory Estoppel
A form stating the name of an unsecured creditor and the amount of the claim against the debtor.
Proof of claim
specific performance is always available in
Real estate contracts
Fred and Wilma enter into a contract for horse riding lessons. Fred accidentally types the price for lessons to be $4.00 each instead of $44.00 each. Wilma wishes to enforce the contract at $4.00 per lesson. Which remedy would be most effective?
Reformation
The correct order of payment of claims from the debtor's estate would be
Secured claims, Priority claims, and unsecured claims
Which of the following is the proper order for the payment of bankruptcy claims by class from highest priority to lowest priority?
Secured claims, priority claims, unsecured claims
Christine agrees to marry Barry after he tells her he will buy her a brand-new Rolls Royce within a year of their marriage. After they are wed, Barry refuses to give her the car. What will happen if Christine sues Barry?
She will lose because a promise made in consideration of marriage must be in writing.
In what situations does the UCC overrule common law?
The UCC applies to contracts that sell goods.
In many states, a person must be in what position to have standing to sue for the breach of a product's implied warranty?
The buyer must be in privity of contract with the defendant.
What is the test for whether a contract is governed by the Statute of Frauds because of the one-year rule?
The contract must be objectively impossible to perform within one year.
Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?
The contract will be void as violating a statute. Lenny will not be able to recover anything.
Which of the following has the highest priority in the distribution of assets when two or more creditors have an interest in the same collateral?
The creditor whose interest was perfected first.
Who operates the business and develops a plan of reorganization in chapter 11 bankruptcies?
The debtor in possession
What must a plaintiff show to be awarded a quasi-contract in a lawsuit?
The defendant was unjustly enriched.
Which of the following statements is true about assets in the bankruptcy estate?
The majority of states require debtors to follow state exemption guidelines instead of federal guidelines.
Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true
The offer is terminated by law.
What does the law require for a personal service contract?
The personal service requirement must be stated.
Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation?
This is a material breach. Jackie owes nothing to Charles
A party injured by fraud generally has the choice of suing for damages or rescinding the contract.
True
A wholesaler of coffee notifies a retailer that it cannot fulfill its contractual obligation to deliver 1,000 pounds of coffee at the agreed upon price of $2.00 per pound next month because of recent price increases in coffee. The retailer may treat the wholesaler as having breached the contract and sue for damages even though the wholesaler's performance is not due until next month.
True
Creditor claims are divided into classes, and the highest class must be satisfied in full before going to the next category.
True
For a security interest to attach, there must be an agreement.
True
Implied Warranties are those created by the UCC itself, not by any act or statement of the seller.
True
Mark, a power tool salesman, promises Jill, a customer, that the Turbo Power Hedge Trimmer 1000 will easily cut through bamboo up to 3 inches thick. Mark's statement constitutes an express warranty if Jill purchases the hedge trimmer.
True
Roger parked his car at a garage that has a large sign at the entrance saying, "This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.
True
What is the term for a contract agreement in which an offeror promises to pay after the occurrence of a specified act, and the offeree is not required to respond in words?
Unilateral Contract.
What type of acceptance requires an affirmative action for the offeree to accept that offer?
Unilateral contracts.
A contract for an illegal purpose is:
Void.
Manuel contracts to sell a painting that was painted by his deceased grandmother, then has a change of heart and decides to hang it in his own bedroom. He notifies Nadine, the person who had planned to buy it. Can Nadine have the contract enforced?
Yes, it can be enforced under the equitable remedy of specific performance.
LaVon contracts with Nathan for Nathan to sing at her comedy club every Friday night in July. The first Friday, the crowd loved Nathan. The second Friday, they booed him. The next week, Nathan got a better offer, so he hired his twin brother Ethan to fill in for him at LaVon's club. Can LaVon compel Nathan to perform?
Yes, she can compel him under the equitable remedy of specific performance.
Can the parties to a contract agree to change the time limit for commencing an action for breach of contract under the Uniform Commercial Code (UCC)?
Yes, they may set the time limit to any time between one year and four years.
Which of the following types of property would be goods under the Uniform Commercial Code?
a computer
Which of the following is an equitable remedy for breach of contract?
an order for specific performance
What is the term for the action of a party to a contract who notifies the other party that he or she will not perform his or her duty under a contract?
anticipatory repudiation
Candy, Inc. signed an agreement with Sweet Plantation. Under the contract, Candy, Inc. agreed to purchase all the sugar cane Sweet Plantation grew during the coming season for $0.16 per pound. This contract will be unenforceable due to its vagueness. a. True b. False
b. False
Assuming there are not enough assets to pay the debts of an entire class of creditors, creditors must:
be paid at a pro rata share.
Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes gives Joe's Filling Station $700 to apply to her gas bill. Joe has been so kind to let her charge the gas she needed for her car over the past year. The bankruptcy trustee appointed to the case
can cancel the payment to Joe as a voidable preference
Which of the following debts is non-dischargeable in bankruptcy?
claims for amounts borrowed by the debtor to pay federal taxes
All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons was able to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover
compensatory damages and consequential damages
What is the term for the legal ability to enter into a binding contract?
contractual capacity
What is the time limit for commencing an action for breach of contract under the Uniform Commercial Code (UCC)?
four years
A security interest has attached when the creditor:
has possession or control of the collateral.
A trustee can void any transfer that meets all of the following requirements EXCEPT
if the pre-petition payment was made in the ordinary course
A contract for a purpose that causes the parties to violate a law is:
illegal and void.
Which of the following implied warranties means the warranty arose from practices used in the industry for the product?
implied warranty from prior dealings or trade custom
If a consumer falls when a step on a new ladder breaks, what warranty could apply?
implied warranty of merchantability
Sal has ordered 100 pounds of shrimp for his restaurant from Sam every Friday for 5 years and has always paid that week's market price. One Friday, Sal decides to take a vacation but doesn't tell Sam. Sam claims they have a contract, even though it was never written down. What kind of contract do they have?
implied-in-fact.
The Bankruptcy Code exempts (limited to a certain dollar amount) which type of property?
jewelry
Which of the following is the lowest priority of claims in bankruptcy?
medical debts
If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1000, the agreement is:
not enforceable because Becky does not have a legal right to drink alcohol
Contracts that cannot be performed within __________ are unenforceable unless they are in writing.
one year
An example of unsecured credit is a:
private student loan.
What is the principle that is applied to determine how much compensation a party receives in a quasi-contract settlement?
quantum meruit
In 2005, bankruptcy reform laws:
required debtors to pay more of their debts in bankruptcy.
What is the primary purpose of the Statute of Frauds?
requiring written evidence of agreements concerning important transactions
What is the term for when a party to a contract performs his duties exactly according to the terms of the contract?
strict performance
A business filing for a Chapter 11 Bankruptcy must:
submit a payment plan for approval by creditors and the court.
Noah tells Ivy he is willing to sell his comic book collection to her for $100. Ivy says no, she would rather save her money to buy a new cell phone. What just happened?
termination by rejection
Implied warranties are created by
the UCC itself.
Which of the following statements is NOT TRUE regarding the buyer's right to cover?
the buyer must cover
Parol evidence refers to anything (other than the written contract itself) that was said, done, or written before or as the parties signed the contract.
true
A person who is mentally impaired generally can create only __________ contracts.
voidable
What type of contract is created by an agreement that is oral when it is required by the Statute of Frauds to be in writing?
voidable
Samuel has mental competency issues. Samuel entered into a contract with Beth, but now Samuel is petitioning the court to terminate the contract. What options does the court have in ruling in the case? Choose 2 answer choices.
1. The contract is voidable if Samuel was incompetent at the time the contract was formed. 2. The contract is void if Samuel has been previously determined to be mentally incompetent.
Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance must be in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine?
Elaine sends a letter by USPS next-day service to travel lines stating that she will buy the tickets.
Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit. The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true?
Seth will not prevail, as the advertisement was simply an invitation to negotiate
How is substantial performance involved with the classification of material breaches versus immaterial breaches?
Substantial performance involves an immaterial breach.
Abby hires a contractor to make repairs on her house. Before the repairs are finished, Abby dies. Her good friend, Clay is appointed executor of Abby's estate. Clay orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. If the contractor's bill does not get paid, who can the contractor collect from, if anyone?
The contractor can collect from the estate only.
The type of bankruptcy where a trustee takes the nonexempt property, sells it, and uses the proceeds to pay the debtor's general unsecured creditors is called:
Chapter 7.
In what situations would a court be likely to award a quasi-contract? Choose 2 answer choices.
I. When the unjust enrichment is a relatively insignificant amount of money. II. If the defendant was unjustly enriched and played a part in deceiving the plaintiff.
Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, promises to pay Patty support of $200 per month for the next six months. Although Fred didn't ask her to, she quits her current job in order to devote full time to her studies for the next six months. Fred makes one payment and then stops with no explanation. If Patty sues, what is the likely result?
Patty may win under the doctrine of promissory estoppel.
All of the following parties had a hand in creating the UCC except
The U.S. Senate
Ernest operates an ice cream stand during the months of May, June, July, and August. Ernest's ice cream machine is broken and needs a new part to run. He contracts to have the part shipped to him by special carrier. Ernest emphasizes that the part needs to be delivered by April 25 and the carrier agrees, knowing that Ernest intends to open his stand May 1. If the shipper fails to deliver the part on April 25, Ernest will be able to recover consequential damages caused by the delay.
True
Generally, filing bankruptcy stops the collection activity of creditors.
True
John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100!" John has:
not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.
Specific performance is available when the subject matter of the contract is unique.
true
To be valid, an agreement not to compete must be ancillary to a legitimate bargain.
true
Which of these types of contracts must be in writing under the requirements of the Statute of Frauds? Choose 3 answers.
1. contracts for the sales of land 2. promises made in consideration of marriage 3. collateral promises to pay the debt of another person
Creditors wishing to file an involuntary petition for a debtor may do so under:
Chapter 7 or Chapter 11.
Breeze Manufacturing agrees to purchase goods from Hawkins Inc. In what situation could Breeze reject a shipment of goods from Hawkins under the perfect tender rule?
The goods do not meet the specifications detailed in the contract.
Which of these statements are true about involuntary bankruptcy proceedings? Choose 2 answers.
1. If an involuntary bankruptcy case is filed frivolously, the petitioner may be liable to the debtor for damages to his reputation. 2. If a court dismisses an involuntary bankruptcy case, the filing creditors may be required to pay court and filing costs for the defendant.
What is the difference between legal remedies and equitable remedies for breach of contract?
Legal remedies are monetary while equitable remedies are non-monetary.
If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is:
D. puffery.
Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank. Florence signed a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace. The Financing statement is filed in the appropriate location. If Florence defaults on both loans, which creditor has the superior rights to the necklace?
Fremont, because possession takes priority over filing.
What elements are required for courts to apply the doctrine of promissory estoppel? Choose 3 answers.
I. The promise must be definite and relied upon. II. There was a detrimental result from reliance on the promise. III. Enforcement of the promise is necessary to avoid injustice to the promisee.
Linda wants to buy some equipment and needs computer software to use the equipment. Linda asks the salesperson if the software is Mac-compatible because she owns only one computer and it is a Macbook. The salesperson states that the computer software is Mac-compatible and many of his customers use the software on their Apple computers. The software box offers no information regarding operating system requirements. When Linda arrives home and opens the package, she discovers the software is not Mac-compatible. The store states it will not accept returns of opened software, and the salesperson says he was relying on what other customers told him. What will be the result if Linda files a lawsuit?
Linda wins under implied warranty of fitness for a particular purpose.
Walter enters a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refused to pay and Matt sued:
Matt would win; this is an implied contract.
Which type of lack of capacity is easiest to prove?
Minor status
Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson Company within:
Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson Company within:
What remedies are available to a buyer when a seller refuses to deliver the goods that are the subject of a contract? Choose 3 answers.
1. The buyer may buy other goods and recover damages from the seller.2. The buyer may sue to obtain specific performance if the goods are unique or if damages are an inadequate remedy.3. The buyer may cancel the contract.
What elements are required for an offer to be effective under the common law? Choose 3 answers.
I. The offer must be communicated to the offeree. II. The terms of the offer must be reasonably definite so that all parties understand them. III. The offeror must intend to be bound by the offer.
How may a revocable offer effectively be revoked? Choose 2 answers.
I. The offeror may withdraw the offer with a clear expression. II. The offeror may take an action that contradicts the offer and make that known to the offeree.
