ACCT 324 Test 2

Sam offers Betty his bicycle for $75. Which of the following is an example of an illusory promise on the part of Betty?

"I'll take it if I decide to do so."

Under the Uniform Commercial Code, contracts for the sale of goods totaling more than ______ must be in writing.

$500

Assuming no exception applies, which of the following is true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt for which there is a dispute over the amount of the debt, and the creditor agrees?

An unliquidated debt is involved, and there is an accord and satisfaction.

Which of the following is the part of the Uniform Commercial code governing contracts for the sale of goods?

Article 2

Sally has a large farm and significant other assets. She agreed to loan her nephew Todd $100,000 with payments of principle and interest to be made yearly. A few years later she and Todd got into a dispute because Sally did not like his new girlfriend, Polly. Soon thereafter Todd got notice that Sally was suing him for not paying interest on the note. Todd defended on the basis that two years after the initial loan agreement was entered into, he and Sally entered into an oral agreement that he would perform services on her farm in lieu of paying interest on the note. If the court follows the reasoning of the court in the Case Opener involving Monroe Bradstad and Jeanne Garland, which of the following is the most likely result of the dispute between Sally and Todd involving whether he owes past interest amounts?

Assuming the court credits Todd's account of events, Todd will not be required to pay the interest amounts because the oral agreement will be considered a separate enforceable agreement.

Which of the following is false regarding international treatment of evidentiary matters?

England has significantly increased the number of contracts falling within the statute of frauds since the original act was passed.

A statement releasing one of the parties to an agreement from all liability, regardless of who is at fault or what the injury suffered is, would be referred to as a[n] ______ agreement.

Exculpatory

As long as some of the duties under a contract have not yet been performed, the contract is considered ________________.

Executory

A[n] ______ is a false representation of a material fact that is consciously false and intended to mislead the other party.

Fraudulent misrepresentation

Which of the following is some sort of mental or physical defect that prevents a person from being able to enter into a legally binding contract?

Incapacity

A[n] ___________ misrepresentation results from a false statement about a false statement about a fact material to an agreement that the person making the statement believed to be true.

Innocent

Which of the following is involved in a situation in which a person refuses to perform according to a contract unless the other person either signs another contract with the one making the threat or pays that person a higher price than was specified in the original agreement?

economic duress

A valid contract may be valid but _____________ when there is some law that prohibits the courts from enforcing it.

Unenforceable

A[n] ______ mistake is the result of an error by one party about a material fact.

Unilateral

Although there are some exceptions, a[n] ______ mistake does not generally void a contract.

Unilateral

When a mistake of fact occurs, ______ is absent.

legal assent

How many states have statutes requiring that people working in certain professions obtain a license before practicing their craft?

50

If a[n] __________ contract exists, the administrator of an offeror's estate must hold the offer open until it expires in accordance with the contract.

Option

Which of the following would not be considered an example of consideration?

A promise to pay your employees as required by law

If a[n] __________ contract exists, the administrator of an offeror's estate must hold the offer open until it expires in accordance with the contract.

Option

Which of the following is a term for laws that limit the types of business activities in which parties may legally engage on Sundays?

Blue laws

In a unilateral contract, the consideration for a promise is a[n] ____.

Action

Which of the following is false regarding written contracts?

All contracts must be in writing in order to be enforceable.

Which of the following is true regarding writings created at the same time as a written agreement?

Although the parol evidence rule applies to writings created at the same time as the written agreement, these writings tend to be treated differently than prior or contemporaneous oral agreements in that the writings are more readily admitted as part of the written agreement than is oral evidence.

Which of the following is true regarding an agreement to commit a crime or a tort?

An agreement to commit a crime is unenforceable, and an agreement to commit a tort is unenforceable.

Yolanda agrees to bathe and groom Wendy's dog, Fluffy Puff, for $30. Yolanda agreed to the price before seeing Fluffy Puff who is a chubby dog with lots of hair. Yolanda tells Wendy that if she is going to groom Fluffy Puff, the price will be $40. Wendy reluctantly agrees but tells Yolanda that she should not have been surprised that a dog named Fluffy Puff would have lots of hair. Yolanda bathes and grooms Fluffy Puff, but Wendy will only pay $30. Which of the following is correct regarding Yolanda's entitlement to the extra $10?

Assuming the unforeseen circumstances rule does not apply, Yolanda is not entitled to the extra $10 because she had a preexisting duty to bathe and groom Fluffy Puff for $30.

Why is it important to distinguish between unilateral and mutual mistakes?

Because it determines which contracts are voidable

When must a disaffirmance of a contract based on minority occur?

Before or within a reasonable time of the minor's reaching the age of majority.

A[n] _____________ contract is commonly defined as a promise in exchange for a promise.

Bilateral

Tina, an experienced pool contractor, and Bruce agree on a price for Tina to build a pool in Bruce's backyard. Tina discovers that she did not initially figure in enough of a charge for labor. She tells Bruce that unless she receives an extra $5,000 with which to hire workers, she cannot complete the job. Bruce agrees thinking to himself that he has a way out. When Tina finishes the pool, Bruce refuses to pay the additional $5,000. Which of the following is the most likely result of their dispute?

Bruce will not be required to pay because he provided no additional consideration, and the preexisting duty rule applies.

The law of contracts is primarily ______________ law.

Common

Which of the following is an element of a legally binding contract?

Capacity

In the U.S., which of the following are the two most important sources of contract law?

Case law and the Uniform Commercial Code.

Which of the following is what a person will receive in return for performing a contract obligation?

Consideration

Sam promises his uncle, Bob, that he will lose 10 pounds and exercise every day during the spring semester in exchange for having his tuition paid for the fall semester. The uncle agrees; but after Sam has lost 10 pounds and exercised all semester, Bob refuses to pay saying that no contract existed. Which of the following is true?

Consideration was present, there was an enforceable contract, and Bob has wrongfully refused to pay

Which of the following contracts are usually voidable?

Contracts entered into as a result of fraud, duress, or undue influence.

Which of the following is found when one party was forced into an agreement by the wrongful act of another?

Duress

Which of the following occurs when a party threatens to file a criminal lawsuit unless consent is given to the terms of a contract?

Duress

Which of the following is involved in a situation in which a person refuses to perform according to a contract unless the other person either signs another contract with the one making the threat or pays that person a higher price than was specified in the original agreement?

Economic duress

If a licensing statute is intended to protect the public's health, safety, and welfare, an agreement with an unlicensed professional is typically deemed _____.

Illegal and unenforceable

Which of the following is true under the UCC regarding checks marked "paid-in-full"?

If a business inadvertently cashes such a check, the business has 90 days from the date it cashed that check to offer repayment in the same amount to the debtor and avoid an accord and satisfaction.

Which of the following is true regarding acceptable means of acceptance if no means of communicating an acceptance is specified in an offer?

If no means of communicating the acceptance is specified, any reasonable means is generally acceptable.

Which of the following is true regarding what is considered an interest in land within the statute of frauds?

Interests in land within the statute of frauds include promises to sell crops annually, agreements between parties for profit sharing from the sale of real property, and boundary disputes that have been settled through the use of land.

A[n] ______ agreement is a clause parties include in a written agreement that states that the written agreement accurately reflects the final, complete version of the agreement.

Merger

A[n] ____________ agreement is a clause parties include in a written agreement that states that the written agreement accurately reflects the final, complete version of the agreement.

Merger

If a[n] _____________ misunderstanding between the parties exists, and as a result of that misunderstanding the parties do not really come to a meeting of the minds, there is no contract.

Mutual

A[n] ______ agreement is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property.

Prenuptial

Which of the following refers to an intentional failure to provide pertinent information about a projected contract?

Nondisclosure

The person who makes an offer is called a[n] ___________.

Offeror

Under ____, if the buyer in an alleged contract for the sale of land has paid any portion of the sale price, has begun to permanently improve the land, or has taken possession of the land, the courts will consider the contract partially performed, and this partial performance will amount to proof of the contract.

Partial performance

In return for his oral promise to pay her $100, Penny promises her uncle that she will not violate laws against speeding for one year. Penny abides by her promise, but her uncle refuses to pay. Which of the following is true regarding whether Penny is entitled to the money?

Penny is not entitled to recover because she had a preexisting duty to obey laws against speeding.

Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?

Persons suffering from a mental illness may have full, limited, or no capacity to enter into a binding contract depending on the nature and extent of their mental deficiency

As discussed in the case of Double AA Builders Ltd., v. Grand State Construction L.L.C., which of the following may be used to necessitate that a subcontractor perform according to the terms of its bid because the contractor has relied on the subcontractor's bid?

Promissory estoppel

As a general rule, the ___________ intent of the parties is not relevant when determining whether a contract exists; rather, what is relevant is how they represented their intent through their actions and words.

Subjective

Which of the following is sometimes referred to as an implied-in-law contract?

Quasi-contracts

A[n] _______________ arises when a person acknowledges in court that he or she will perform some specified act or will pay a price upon failure to do so.

Recognizance

Prudence, a mean business law teacher, offers $50 to any student who will mow her lawn. Sam goes right over and begins mowing. Just before he finishes, Prudence goes over and tells him that she revokes her offer. Which of the following is true regarding Sam's entitlement to payment?

Sam is entitled to recover because a unilateral contract was involved, and he was entitled to a reasonable amount of time to complete the job.

When a person who makes a misrepresentation has no knowledge about the falsity of the claim, it is said that the person lacked ____.

Scienter

Which of the following are contracts that contain multiple parts which can each be performed separately and for which separate consideration is offered?

Severable contracts

Which of the following is true regarding a signature on a document falling within that statute of frauds?

So long as it is meant as a signature, a party required to sign may sign at any place on the document

Which of the following terms would be considered material terms?

Subject matter, price, parties, quality, and quantity

Which of the following involves overly harsh or lopsided substance in an agreement?

Substantive unconscionability

Mary and Jason discuss the fact that a new teacher is being hired for business law at their school. Jason mentions that he does not yet have a book, and Mary agreed to sell Jason a used business law book for $30 for the upcoming semester. When the new semester begins, the new business law teacher announces that a new custom business law text will be used that is only available in the campus bookstore. Jason wants a refund. Which of the following is Mary's best defense?

That Jason knew of the change of change of teacher and bore the risk of mistake.

Which of the following was the result in Alexander v. Lafayette Crime Stoppers Inc., the case in the text in which the plaintiffs sued for collection of reward money offered to catch a serial killer by the defending publications, and the publications defended on the basis that the plaintiffs failed to provide notice as required by the reward offers because the plaintiffs provided relevant information to law enforcement, not the defendants?

That defendants did not receive acceptance of the reward offer and that, therefore, no contract was formed.

Which of the following was the result in the case in the text William Cavanaugh v. Margaret McKenna, the case in which the plaintiff was sued for opening a funeral home after she agreed to refrain from doing so in her divorce as part of a covenant not to compete with her ex-husband?

That the covenant was reasonable and valid and construed liberally because it was most analogous to the sale of a business.

Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer 3 percent of the company's stock?

That the promise was not enforceable because it was a gift

Which of the following is false regarding how the Japanese tend to view contracts?

The Japanese do not desire that any terms be left to be decided later.

Which of the following provides that a revocation is effective only when received by the offeree?

The Mailbox Rule

Which of the following is true on appeal regarding the case of Mary W. Scott v. Mid-Carolina Homes Inc., discussed in the "Case Nugget" in which the plaintiff sued to recover damages after a salesperson allegedly mistakenly agreed to sell a mobile home to her for a price that was too low, later told her the mobile home could not be sold because of a bent frame, and then proceeded to sell it for a higher price to other buyers?

The court refused to find that the defendant had the right to rescind the contract based on the alleged unilateral mistake.

Which of the following was the result on appeal in Thelma Agnes Smith v. David Phillip Riley, the case in the text in which the plaintiff who had lived with the defendant out of wedlock for several years sought after they broke up to enforce two agreements regarding the sale and assignment of property to her?

The court ruled in favor of the plaintiff on the basis that a recitation of nominal consideration of $1 along with consideration of love and affection was adequate consideration to support the agreements.

Which of the following was the result on appeal in Eric Lucier and Karen Haley v. Angela and James Williams, Cambridge Associates LTD., and Al Vasys, the case in the text in which, after finding significant problems with their roof, the plaintiffs claimed that provisions in a home inspection contract illegally limited the liability of the defendants?

The court ruled in favor of the plaintiffs on the basis that the limitation of liability provision in the contract was unconscionable and violated the public policy of the state.

Which of the following was the result on appeal in Reisenfeld & Co. v. The Network Group Inc.; Builders Square Inc.; Kmart Corp., the case in the text involving whether the plaintiff could recover from BSI in the situation in which BSI contracted with Network Group to lease property, and Network Group contracted with the plaintiff agreeing to pay a certain commission for his work but then defaulted on the contract?

The court ruled that because a quasi-contract was involved, BSI was required to pay the plaintiff the reasonable value of the services rendered, not necessarily the contractual amount promised for commissions.

What was the result in the case discussed in the text Andrus v. State Department of Transportation, and City of Olympia in which the plaintiff sued because a job offer was allegedly revoked?

The defendant won because the purported job offer contained insufficient information to be considered reasonably certain in regard to its terms.

Which of the following is an exception as to when a secondary obligation needs to be in writing?

The main-purpose rule

Which of the following is presumed to be a reasonable amount of tie when considering whether an offer has expired?

There is no set amount of time, and what constitutes a reasonable amount of time varies depending upon the subject matter of the offer.

Which of the following is false regarding the parol evidence rule?

The rule is a rule of evidence

Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist and why?

The stylist will win because she did additional work in exchange for the extra payment; and, therefore, Sally's promise was supported by valid consideration.

When may a court rule find parol evidence admissible to further the court's understanding of an agreement?

When a court determines that a written agreement does not represent a complete and final version of the agreement.

As a general rule, when is revocation effective?

When it is received by the offeree

Harry and Frank are in agreement that Harry will pay Frank $2,000 for a used car. At what point is there a binding contract?

When the agreement is made

In an auction _________, the seller is treated as making an offer to accept the highest bid.

Without reserve

In an auction _____________, the seller is treated as making an offer to accept the highest bid.

Without reserve