LW270 Test 2

Which of the following is true of a contract with an adjudged insane person? A) The contract is void B) The adjudged insane person is bound by the terms of the contract C) the competent party is legally obliged to uphold the contract D) only the competent party can enforce the contract

A

A _____ is a contract that provides that a seller of a business or an employee will not engage in a similar business or occupation within a specified geographical area for a specified time follow the sale of the business or termination of employment. A) covenant not to compete B) contract in restraint of trade C) contract of adhesion D) quasi-contract

A

A contract is ______ if the offeror's offer can be accepted only by the performance of an act by the offers A) Unilateral B) bilateral C) implied-in-law D) executory

A

Darren is a certified interior designer with a lucrative client list in the city of Kelsa, situated in the state of Touslon. His business affords him a substantial amount of goodwill from his clients. Darren sells his accounting interior designing business to Glenda. When he sells his business to Glenda, Darren agree open another interior designing firm in the city of Kelsa for a 25-year period. What kind of agreement exists between Darren and Glenda in this case? A) Covenant not to compete B) contract in restraint of trade C) quasi-contract D) Unconscionable contract

A

If a minor entered into a contract, and then ratified the contract after reaching the age of majority, which of the following is he or she exempt from? A) infancy doctrine B) duty of restoration C) Duty of restitution D) necessaries of life

A

Kyle goes to a used-car showroom to buy a sedan. He signs an agreement with the store that bears the name of the car, price, and other details. This is an example of a(n) ____ __contract. A) express B) implied-in-law C) implied-in-fact D) unilateral

A

What does the American Rule for successive assignments provide? A) The last assignment in time prevails, regardless of notice. B) The first assignment in time prevails, regardless of notice. C) Only notified assignments prevail. D) The first notified assignment prevails.

A

Which of the following is true of third-party beneficiaries? A) An incidental beneficiary cannot sue under other people's contracts. B) Incidental beneficiary is a third party who is benefitted intentionally. C) A creditor beneficiary is an unintended beneficiary. D) An intended third-party beneficiary cannot enforce the contract against the promisor.

A

Which of the following is true of undue influence in entering contracts? A)A fiduciary or confidential relationship must have existed between the parties for undue influent to be proven. B) Undue influence is not grounds for prosecution, as the innocent party has complete freedom to evaluate the terms of the contract. C) Undue influence need not require the overcoming of the innocent party's free will. D) A contract that is entered into because of undue influence is not voidable.

A

Which of the following statements is true of a revocation? A) It needs to be received by the offeree to be effective. B) It can be applied to an option contract. C) It can be done even after acceptance of the offer D) It can be made by the offeree.

A

is an event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation. A) Fraudulent misrepresentation B) Bilateral mistake C) Erroneous misrepresentation D) Unilateral mistake

A

According to the regulatory licensing statute, ___________ A) unlicensed persons can recover payment for services B) only licensed persons can recover payment for services C) licensed persons have to pay an annual fee to renew their licenses persons breaching a revenue D) raising statute cannot recover payment for services

B

A(n) ______ refers to a contracting party who directs that the benefit be conferred on another person. A) donee beneficiary B) promisee C) assignee D) promisor

B

A(n)_____ is a manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts. A)revocation B)Acceptance C) Proposal D) counteroffer

B

A(n)______ is a contract in which a buyer agrees to purchase all of its requirements for an item from one seller. A) best-efforts contract C) output contract B) requirements contract D) option contract

B

AtlasNow Construction Company, a general contractor, plans to place a bid for building a hospital. It requests bids from subcontractors for plumbing and other construction related services that will be needed for building the hospital". Now Catapipes Plumbing Company, a plumbing subcontractor, submits the lowest bid for the plumbing work, and At as incorporates Catapipes's low bid in its own bid for the general contract. Based on all of the subcontractors' bids, AtlasNow submits the lowest overall bid to build the hospital and is awarded the contract. Which of the following condition is required for the two companies to enter into a legally enforceable contract? A) The considerations must be detrimental to both parties involved. B) The considerations must be bargained-for exchange of a service or product. C) The considerations must be beneficial to both parties involved. D) The considerations must be mentioned in writing in the contract.

B

In a guaranty situation, the original contract is between the A) creditor and the lessee C) creditor and the guarantor B) debtor and the creditor D) debtor and the guarantor

B

In which of the following cases is parol evidence admitted by a court? A) When the plaintiff reduces the value of damages he expects B) When the evidence explains ambiguous language C) When the defendant takes the case to the appellate court D) When the defendant does not wish to appeal

B

James had a Contract with Frasier to fix Frasier's plumbing issue at his home. The contract was made for $3,000. But after the work was completed, Frasier refused to pay anything unless James agreed to accept $2,500. 31) In the above scenario, to avoid legal nuisance, Frasier decides to compromise with James. He asks James to fix a tap in the barn for $250, and modify the current contract to include the tap in the barn. James agrees this, and does as asked while Frasier remakes the contract. Which of the following would this kind of settlement be referred to as? A) duress B) accord C) past consideration D) mirror image rule acceptance

B

Joe buys a trailer from a used-car dealership. On enquiry, the dealer tells him that the trailer is in great condition. However, three days later, the trailer breaks down. Investigation by Joe reveals that the trailer had seven previous owners and that the engine has been replaced thrice. An automobile expert tells Joe that the trailer is dangerous. Which of the following frauds would the dealer be liable for? A) fraud in the inducement B) fraud by concealment C) Fraud in the factum D) misrepresentation of law

B

Peter plans to sell his two houses, numbered Lot 1 and Lot 2, at $800,000 each. David, who was interested in buying Lot 2, could not make up his mind on the final offer and asks Peter to give him a week to decide. Peter accepts, but David takes two weeks to decide the counteroffer. Before he could give David a reply to his counteroffer, Peter is killed in a fire that burned down Lot 1. Which of the following would be true in this case? A) David can still buy the house for Peter's original offer. B) The offer is terminated due to lapse of time. C) The offer is terminated due to destruction of the subject matter. D) The offer is terminated due to death of the offeror.

B

The ______ states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced. A) collateral contract rule B) leading object exception C) merger clause D) Parol evidence rule

B

The term refers to a doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them. A) disaffirmance B) effect of illegality C) exculpatory clause D) emancipation

B

To prove fraud, which of the following elements must be shown? A) The innocent party was the one who detected fraud. B) The wrongdoer intended to deceive the innocent party. C) The wrongdoer assumed a false identity. D) The innocent party knew the wrongdoer.

B

Which of the following is true of output contracts? A)It provides the seller with reduced selling costs. B) It assures the seller of a purchaser for all its outputs. C) It cannot contain the best-efforts clause. D) It assures the purchaser that the seller will use his or her best efforts to achieve the contract's objective.

B

Which of the following statements is true of contracts? A) void contract is the same as a voidable contract. B) Parties to an informal contract can use any words they choose to express their contract. C) A contract under seal is disclosed only to the offeror of the contract. D) A letter of credit is an informal contract.

B

Which of the following terms refers to a nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract? A) tender of performance mitigation of damages B) Mitigation of damages C) disclaimer of consequential damages D) liquidation of damages

B

_____ is a clause in a contract in which the parties specify certain events that will excuse nonperformance. A) Approval clause B) Force majeure C) implied-in-fact condition D) Express condition

B

_____ is an action to undo a contract. A)Recession B) Rescission C) retribution D) Restitution

B

A contract is a(n)_____ if the offeror's promise is answered with the offeree's promise of acceptance. A) executory contract B) unilateral contract C) bilateral contract D) executed contract

C

Jenson and Johnson enter into a contract that involves Johnson paying Jenson $1,000 for shoveling the snow from his driveway throughout winter. Jenson, who was paid before work commenced, breached some of the conditions of the contract on the very first day. He should refund $1,000 to Johnson as A) compensatory damages B) consequential damages C) restitution D) liquidated damages

C

Which of the following statements is true of a breach of contract? A) Substantial performance constitutes a witttertal breach. B) inferior performance constitutes a breach of contract. C) Strict performance by a party discharges that party's duties under the contract. D) The most common remedy for a breach of contract is an award of equitable remedies.

C

Luke offered to sell his farm to Kent at $75,000, an offer which Kent declined. A week later, Luke offered to sell the farm for $65,000, stating it was the final offer that would be valid for one month only. Two days later, Kent offered to pay $60,000 for the farm. Luke received Kent's offer a week later and he declined it. After ten days, Kent agreed to buy the farm for $65,000, but Luke refused to sell the farm. Kent decided to sue Luke for a breach of contract. The judge ruled in favor of Luke. Which one of the following is the reason for the ruling in Luke's favor? A) Kent acted in an incompetent manner toward the offer. B) Kent's acceptance was past the set time period in the offer. C) Kent's counteroffer of $60,000 had rendered the offer for $65,000 invalid. D) Luke's original offer of $75,000 is still valid, even though rejected.

C

The doctrine of _____ allows the court to order an oral contract for the sale of land or transfer of another interest in real property to be specifically performed ff it has been partially performed and performance is necessary to avoid injustice. A) promissory estoppel B) part performance C) equitable performance D) undue performance

C

Which of the following is true for legally claiming a reward? A) Knowledge of the reward before completing the requested act is necessary to claim the reward. B) The claimant can claim the reward even if he or she came to know of the reward subsequent to completing the act. C) A promise of completing the requested act is sufficient for a claimant to claim the reward. D) The offeror cannot withdraw the reward once the offer has been placed in the public domain.

C

Which of the following is true of misrepresentation of a material fact? A) It can occur only by the words of the wrongdoer. B) A misrepresentation is actionable as fraud only if it is the sole factor in inducing the innocent party to enter into the contract. C) It is actionable as fraud if the misrepresentation is of a past or existing material fact. D) Predictions about the future are considered basis for fraud.

C

____ is a rule that states that if a minor has transferred money, property, or other valuables to the competent party before disaffirming the contract, that party must place the minor in status quo. A) Duty of restoration B) Emancipation doctrine C) Duty of restitution D) Infancy doctrine

C

Ellen, who has a good driving record, purchases automobile insurance from an insurance company. Ellen cannot assign her rights lobe insured to another driver for which of the following reasons? A) Claiming insurance is a future right and hence cannot be assigned. B) Insurance is a personal service contract and hence cannot be assigned. C) Personal contracts like insurance are assignable only with the agreement of all parties involved in the contract. D) The assignment would materially alter the risk and duties of the insurance company.

D

Kimlon Informatics has to recover $5000 from a client for its services. The recovery period is 100 days but Kimlon needs the money immediately. It sells the right of collecting money from its client to Quikcollect, a collection agency. Here, Kimlon Informatics is the A) obligor B) assignee C) subassignee D) assignor

D

Which of the following does the one-year rule state? A) Every contract in writing is subject to yearly renewal. B) The terms of a written contract can be modified within a year of its formation. A) Valid contracts cannot be rescinded by either party until a year after their formation. D) A contract that cannot be performed on its own terms within a year should be in writing.

D

Which of the following is an acceptable consideration for a contract? A) penalty B) sentence C) arrest D) money

D

______ damages are awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach. A) Compensatory B) Consequential C) Liquidated D) Nominal

D

______ is an equity doctrine that permits a court to order enforcement of a contract that lacks consideration. A) Option contract B) Gift promise C) Illusory promise D) Promissory estoppel

D

_______says that if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract. A) Main purpose exception B) Promissory estoppel C) Leading object exception D) Parol evidence rule

D