BL 3305 Exam 3
A collateral promise is an undertaking to be secondarily liable.
T
A condition is an event whose happening or nonhappening affects a duty of performance under a contract.
T
A constructive condition is one imposed by law in order to accomplish a just and fair result.
T
A contract for the sale of goods need not specify the price in order to have an effective contract.
T
A contract induced by an innocent misrepresentation is actionable provided all of the remaining elements of fraud are present and the misrepresentation is material.
T
A contract may condition the performance of a party upon the approval of a third party.
T
A court may grant an equitable remedy, even though the terms of the agreement prohibit such relief, if the court feels an injustice would otherwise occur.
T
A minor has the option of ratifying a contract after reaching majority, which makes the contract binding ab initio.
T
A person may be able to avoid a contractual agreement even though she understands what she is doing but cannot control her behavior, thereby failing to act in a reasonable or rational way.
T
A third party is an intended beneficiary if the promisee's purpose in bargaining for and obtaining the promisor's promise was to make a gift to the beneficiary.
T
Active concealment, or action intended or known to be likely to keep another from learning a fact he otherwise would have learned, can form the basis for fraud.
T
After an effective delegation of duties, both the delegator and the delegatee are liable to the obligee for performance of the contractual duty.
T
Although an offeree is generally under no duty to reply to an offer, by custom, usage, or course of dealing, silence or inaction by the offeree may operate as an acceptance.
T
An action to recover damages for breach of contract may be maintained even though the plaintiff has not sustained any loss from the breach.
T
An assignment of rights is the voluntary transfer to a third party of the rights arising from the contract..
T
An offer is a proposal, expressed either in words or by conduct, by one person to another indicating a willingness to enter into a contract.
T
As a general rule, a contract entered into by a minor is voidable at the minor's option.
T
At common law, a modification of an existing contract must be supported by new consideration in order for the reformed agreement to be enforceable.
T
Before one can avoid a contractual obligation based upon undue influence, there must exist a confidential relationship between the parties involved.
T
Bill Businessman agrees to buy 2,000 widgets from the Widget Corporation of America next year for $60 a widget if he wants to for his business. This is an illusory contract.
T
CPA: To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a: a. novation. b. release. c. rescission. d. revocation.
C
A contract term that sets the amount of damages to be paid in event of a breach of contract is enforceable even if it is not a reasonable forecast of the loss that would result from the breach.
F
A contract under which the parties' obligation to perform arises only on the happening of a stated event lacks the requisite mutuality of obligation if the specified event may never occur.
F
A course of dealing is a practice or method of dealing regularly observed and followed in a place, vocation, or trade.
F
A minor who contracts for a necessary will be liable for the full contract price.
F
A promisor's good faith, personal belief that she lacks the necessary capability or competence to perform her contractual duties will excuse her from liability for nonperformance.
F
A rejection is effective at the moment of its dispatch by the offeree.
F
A revenue licensing statute is one designed to protect the public against unqualified persons.
F
A writing required under the UCC, Article 2 statute of frauds must be signed at the end of the writing with the intent to authenticate the writing.
F
Actionable fraud can usually be based on a statement of opinion as well as a statement of fact.
F
After an effective assignment of rights, both the assignor and the assignee have a right to the obligor's performance.
F
Although no special words or particular form are necessary to create an assignment, an assignment must be supported by consideration to be effective.
F
An exculpatory clause is a contractual clause that exempts a party from liability for his own poor business judgment in entering into a contract.
F
An implied warranty is an explicitly made contractual promise regarding contract rights transferred.
F
An offeror's manifestation of intent to enter into a contract is judged by a subjective standard.
F
An unauthorized change in the terms of a written contract by a person who is not a party to the contract will discharge the contract.
F
At an auction announced to be "without reserve," the auctioneer is free to withdraw the goods from sale at any time prior to a bid's acceptance.
F
Big Bucks, Inc. pays Andrew Attorney to lobby for a law that would increase its annual income. This is an illegal contract.
F
Bill Businessman has a bad day one Monday morning and signs a contract to buy a piece of real property for $250,000. Later he realizes he has been had, because the property is only worth $100,000. Bill can avoid the contract based on inadequacy of consideration.
F
Bill Businessman has decided to buy a copying machine on an installment contract from the Business Supply Store. After looking at machines, Bill is in a hurry, so he signs the agreement without reading it. Later, he discovers that the interest rate is 22% and that there are no guarantees on the machine. Bill can avoid the contract based on mistake.
F
CMC Contracting has a contract with Leonize, Inc., to build a new office complex. The contract provides that CMC must furnish a certificate of occupancy and conformity with the fire code before Leonize has an obligation to pay. The furnishing of the certificate is an implied-in-fact condition subsequent to the construction of the building.
F
Duress in the form of improper threats must be explicit in order to render the resulting contract voidable.
F
Duress in the form of physical force renders the resulting agreement voidable.
F
Even if a contract for interior decorating is expressly made subject to a subjective condition of satisfaction, courts will apply an objective, reasonable person standard to evaluate performance.
F
First Bank issues a consumer loan to Happy Homemaker at an annual rate of interest of 16%. In most states, this would be an illegal contract, because First Bank is in violation of a usury law.
F
A voidable contract is an agreement that does not meet all of the requirements of a binding contract; thus, it is no contract at all and has no legal effect.
False
Bill purchased 500 pairs of shoes from Sam at a contract price of $1,000. Fifty pairs were defective and a dispute arose as to the amount owing under the contract. Finally, Bill sent a check for $800, marked it "paid in full," and sent a letter to Sam explaining his reasons for thinking $800 was fair. Sam didn't respond, but he cashed the check. The debt is discharged.
T
Brian owes Albert $500. Brian, Albert, and Clarence agree that Brian will be discharged from the obligation and that Clarence will pay the debt. This is a novation.
T
The UCC provides that a contract for the sale of goods for the price of $500 or more must satisfy the requirements of the statute of frauds.
T
The courts will not enforce an agreement declared illegal by statute.
T
The parol evidence rule applies to all integrated, written contracts and deals with what terms are part of the contract.
T
The parol evidence rule does not apply to parol evidence which is used to show a subsequent mutual rescission of a contract.
T
The courts will presume that the parties intended to form a bilateral contract when it is unclear whether a unilateral or a bilateral contract has been formed.
True
CPA: Todd is a licensed real estate broker in Ohio. One of Todd's largest clients, Sun Corp., contracted in writing with Todd to find a purchaser for its plant in New York and agreed to pay him a 6% commission if he were successful. Todd located a buyer who purchased the plant. Unknown to Todd, New York has a real estate broker's licensing statute which is regulatory in nature, intended to protect the public against unqualified persons. Todd violated the licensing statute by failing to obtain a New York license. If Sun refuses to pay Todd any commission and Todd brings an action against Sun, he will be entitled to recover: a. nothing. b. a fee based on the actual hours spent. c. the commission agreed upon. d. out of pocket expenses only.
A
A contract assented to by a party acting under improper physical coercion is: a. void. b. voidable at the election of the coerced party. c. binding on both parties. d. none of the above.
A
A contract entered into by a minor is: a. voidable at the election of the minor only. b. voidable at the election of the other party only. c. voidable at the election of either. d. voidable only if it is executory.
A
A contract in which the promisor agrees to render a certain performance to a third person is called: a. a third-party beneficiary contract. b. an assignment of rights. c. a delegation of duties. d. a novation.
A
A delegation of contractual duties will not be permitted if: a. the duties are of a personal nature. b. the contract is silent with respect to the assignment. c. the delegation is for payment of money. d. None of the above will be permitted.
A
A gratuitous assignment is: a. valid even though not supported by consideration. b. not revocable by the assignor. c. not terminated by the assignor's death. d. all of the above.
A
A manifestation of the intention to act or refrain from acting in a specified way is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.
A
A package is delivered to your door and the delivery person asks you to sign a receipt for the package. You actually sign a promissory note promising to pay the delivery person $5,000! The note is: a. void due to fraud in the execution. b. voidable due to fraud in the execution. c. void due to fraud in the inducement. d. voidable due to fraud in the inducement.
A
All of the following are relevant to defining the principles of contract law EXCEPT: a. federal common law. b. state common law. c. Restatements of the Law of Contracts. d. Uniform Commercial Code.
A
An assignee of a contract right: a. acquires all of the rights of the assignor. b. acquires new, additional rights by virtue of the assignment. c. takes the assigned rights free of all of the defenses to which the rights would be subject in an action by the assignor against the obligor. d. all of the above
A
An equitable remedy would be granted in which of the following? a. Where the remedy at law is inadequate b. Where the contract is without consideration c. Where relief would cause the defendant unreasonable hardship d. Where the contract involves undue influence
A
An executed contract is one in which: a. all duties under it have been performed by all parties to the contract. b. at least one party has performed all of its duties under the contract. c. there are one or more unperformed promises by any party to the contract. d. the contract is wholly unperformed by one or more of the parties.
A
Arthur and Bob enter into a contract. Bob later delegates his duty of performance to Clark. Which of the following is true? a. If Clark fails to perform, Bob has a duty to perform. b. Arthur will always have to accept Clark's performance. c. The delegation is valid only if all three parties agree. d. Bob must compensate Clark for accepting the delegation.
A
By an oral agreement entered into on January 1, 2000, A hires B to work for eleven months starting on February 1, 2000. This contract is: a. enforceable because this contract is outside the statute of frauds. b. enforceable because it can be performed within a year of the start of performance. c. unenforceable because it cannot be performed within one year of when it was made. d. (a) and (b) above.
A
CPA: Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on: a. unilateral contract. b. unjust enrichment. c. public policy. d. quasi contract.
A
CPA: Krieg was the owner of an office building encumbered by a mortgage securing Krieg's promissory note to Muni Bank. Park purchased the building that was subject to Muni's mortgage. As a result of the sale to Park: a. Muni is not a third party creditor beneficiary. b. Krieg is a third party creditor beneficiary. c. Park is liable for any deficiency resulting from a default note. d. Krieg was automatically released from any liability on the note.
A
CPA: Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work for two years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting the bonus? a. No, because Frost fully performed in reliance on the oral promise. b. No, because the contract did not involve an interest in real estate. c. Yes, because the contract could not be performed within one year. d. Yes, because the monthly salary was the consideration of the contract.
A
CPA: Wert, an employee of Salam Corp., signed an agreement not to compete with Salam during and after being employed with Salam. Wert is the director of research and has knowledge of many of Salam's trade secrets. If Wert's employment with Salam is terminated and Wert wishes to compete with Salam, which of the following statements is not correct? a. The agreement is only enforceable if Wert voluntarily terminates his employment with Salam. b. The agreement must be necessary to protect Salam's legitimate interests in order to be enforceable. c. The geographic area covered by the agreement must be reasonable in order to be enforceable. d. The court will consider Wert's ability to obtain other employment against Salam's right to protect its business.
A
CPA: Which of the following will be legally binding on all the parties despite the lack of consideration? a. A promise to donate money to a charity which was relied upon by the charity in incurring large expenditures b. An employer's promise to pay an employee an additional $400 per month for the remainder of the employee's agreed-upon year of employment. c. An oral promise by a merchant to keep its offer open for 60 days. d. A material modification signed by the parties to a contract to purchase and sell a parcel of land.
A
Contract law: a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century. c. has remained static throughout the nineteenth and twentieth centuries. d. is governed primarily by the Uniform Commercial Code.
A
Debbie promises to pay Bill $2,000 if Bill paints Debbie's house. Bill doesn't say a word but paints Debbie's house. This is an example of: a. a unilateral contract. b. a bilateral contract. c. a gratuitous contract. d. none of the above.
A
In order for an act or threat to constitute duress, it needs to be at least: a. contrary to public policy. b. tortious, but not necessarily criminal. c. a criminal act or threat. d. none of the above.
A
In which of the following situations would an oral contract that should have been within the statute of frauds no longer have to be written to be enforceable? a. The contract has been fully performed. b. The contract has been partially performed. c. The parties had a previous course of dealing. d. Oral contracts are a common practice in that trade.
A
Lucky Larson runs an illegal gambling business. Every month he pays a local judge $500 for protection. If Lucky is arrested and convicted in a trial before the same judge, and then sues the judge for breach of contract, what will be the likely result? a. The contract will be unenforceable because it is a violation of public policy. b. The contract will be enforced, because both parties are in pari delicto. c. Lucky will be able to have the contract rescinded and get back the payments he made to the judge. d. The judge will be ordered to pay the money to the government as a fine.
A
Which one of the following statements is NOT a correct principle to be applied in determining what constitutes a material breach? a. A failure to timely perform a promise is a material breach even if time is not of the essence. b. Partial performance is a material breach if an essential part of the contract is not performed. c. If quantitatively significant, a breach will be considered material. d. An intentional breach of a contract is generally held to be material.
A
The UCC imposes an obligation of good faith in the performance or enforcement of every contract within its scope.
T
A condition that is understood by the parties to be part of their agreement, but is not included in their express contract, is called: a. an implied-in-law condition. b. an implied-in-fact condition. c. a concurrent condition. d. a condition precedent.
B
A contract in which one party seeks an act in exchange for a promise is a(n): a. quasi contract. b. unilateral contract. c. implied in fact contract. d. bilateral contract.
B
A contract in which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty is called: a. a material alteration of a written contract. b. an accord. c. a substantial performance. d. a novation.
B
A party seeks to introduce evidence of a subsequent oral agreement modifying a written employment contract from 2 to 3 years. The oral agreement is a. admissible under the parol evidence rule and valid under the statute of frauds. b. admissible under the parol evidence rule, but invalid because of the statute of frauds. c. inadmissible under the parol evidence rule, but valid under the statute of frauds. d.inadmissible under the parol evidence rule and invalid under the statute of frauds
B
A regulatory licensing statute is one intended to: a. raise revenue. b. protect the public against unqualified persons. c. prevent gambling. d. prevent excessive rates of interest.
B
All of the following are required of a writing to satisfy the requirements of the general statute of frauds EXCEPT: a. it must be signed by the party to be charged or his agent. b. it must be signed by the party seeking to enforce the contract or his agent. c. it must specify the parties to the contract. d. it must specify with reasonable certainty the subject matter of the unperformed promises as well as their essential terms.
B
An agreement in a contract that attempts to excuse one party from liability for her own negligence is called: a. a clause obstructing the administration of justice. b. an exculpatory clause. c. a restraint of trade. d. an illusory promise.
B
CPA: In general, a clause in a real estate contract entitling the seller to retain the purchaser's down payment as liquidated damages if the purchaser fails to close the transaction is enforceable: a. in all cases, when the parties have signed a contract. b. if the amount of the down payment bears a reasonable relationship to the probable loss. c. as a penalty, if the purchaser intentionally defaults. d. only when the seller cannot compel specific performance.
B
CPA: In order for a purchaser of land to avoid a contract with the seller based on duress, it must be shown that the seller's improper threats: a. constituted a crime or tort. b. actually induced the purchaser to assent to the contract. c. would have induced a reasonably prudent person to assent to the contract. d. were made with the intent that the purchaser be influenced by them.
B
Widget Manufacturing Corporation of America contracts with the Poly Plastic Company of Wisconsin to buy from Poly all of the plastic it will need next year in its manufacturing process. This is an example of a(n): a. illusory contract. b. requirements contract. c. output contract. d. exclusive dealing contract.
B
CPA: On April 1, Fine Corp. faxed Moss an offer to purchase Moss' warehouse for $500,000. The offer stated that it would remain open only until April 4 and that acceptance must be received to be effective. Moss sent an acceptance on April 4 by overnight mail and Fine received it on April 5. Which of the following statements is correct? a. No contract was formed because Moss sent the acceptance by an unauthorized method. b. No contract was formed because Fine received Moss' acceptance after April 4. c. A contract was formed when Moss sent the acceptance. d. A contract was formed when Fine received Moss' acceptance.
B
Carol Customer sees an ad in a newspaper for a clock radio for $8. She goes to the store and wants to buy the item advertised in the newspaper at the price quoted. Carol is: a. making a counteroffer. b. making an offer to buy. c. making an acceptance of the store's offer to sell. d. making an acceptance of the store's firm offer.
B
Central Contracting has a contract to build an office complex for Woodmenn, Inc. A clause in the contract calls for Central to pay $2,000 a day for each day's delay after the date the contract is scheduled for completion. a. This is a compensatory damages clause. b. This is a liquidated damages clause that may be an unenforceable penalty clause. c. Woodmenn will be given the benefit-of-the-bargain in calculating damages. d. Woodmenn will only be allowed to recover nominal damages in the case of a breach.
B
Clara sells her house to Donald. The house has a mortgage which is held by First Bank. As part of the transaction, First Bank agrees to discharge Clara from the mortgage and to allow Donald to assume the obligation. This is a(n): a. assignment of rights. b. novation. c. delegation of duties. d. third-party creditor beneficiary contract.
B
Colleen agrees to pay $10 for David's computer which is worth $300. Colleen's consideration: a. is not legally sufficient. b. appears to be inadequate but is probably legally sufficient. c. is a forbearance. d. is inadequate but the contract will be enforced based on moral obligation.
B
If a minor purchases a car and then continues to use it for one year after obtaining majority, this action constitutes: a. a disaffirmance of the contract. b. a ratification of the contract. c. a breach of the contract. d. none of the above.
B
In the absence of an expressed intention to the contrary, an assignor who receives value makes all of the following implied warranties to the assignee with respect to the assigned right EXCEPT: a. that he will do nothing to defeat or impair the assignment. b. that the obligor will pay the assigned debt. c. that the assigned right actually exists. d. that he has no knowledge of any fact that would impair the value of the assignment.
B
In which of the following situations would silence constitute a misrepresentation? a. The parties are dealing at arm's length in a business transaction. b. A person fails to disclose a fact which she knows would correct a mistake upon which the other party is relying, and the nondisclosure is a failure to act in good faith. c. A buyer knows that a new highway is proposed through the seller's property, making it more valuable than the seller realizes. d. All of the above.
B
Monetary damages are only recoverable for losses that the party in breach had reason to foresee as a probable result of such breach at the time that: a. the parties began negotiations. b. the parties entered into the contract. c. the breach occurred. d. none of the above
B
One does not possess sufficient contractual capacity to enter into a contract if it is shown that he is: a. slightly intoxicated. b. intoxicated and unable to understand the nature and consequences of his acts. c. both of the above. d. none of the above.
B
Pat mails Trish an offer to buy Blackacre. Trish receives the offer on May 1. On May 2, Trish delivers a letter of acceptance to National Express, but due to their error the letter is not sent by the company until May 3. Pat receives the acceptance on May 4. A contract is formed on: a. May 1 b. May 2 c. May 3 d. May 4
B
The Uniform Commercial Code defines goods as: a. tangible and intangible personal property. b. tangible personal property. c. land and anything attached to it. d. none of the above.
B
The courts would not carefully scrutinize a contract between the parties in which of the following relationships? a. Trustee and beneficiary. b. Manufacturer and wholesaler. c. Agent and principal. d. Physician and patient.
B
The law grants relief in a situation involving mistake only where there has been: a. a unilateral mistake by one party as to the nature of the subject matter of the contract. b. a mutual mistake of material fact. c. a unilateral mistake by one party to the contract occasioned by his failure to read the document before assenting to it. d. a unilateral mistake by one party to the contract as to its legal effect.
B
Under the Code, if two parties, at least one of whom is not a merchant, intend to enter into a binding contract but the offeree in her acceptance includes additional terms for the contract, those terms are construed as: a. mere surplus and are ignored. b. proposals for addition to the contract. c. terms of the contract provided they do not materially alter the agreement. d. terms of the contract provided they are not material and are not objected to by the offeror within a reasonable time.
B
Under the statute of frauds provision of the UCC, if a writing that is otherwise sufficient incorrectly states the quantity term agreed upon by the parties, the contract is: a. unenforceable. b. enforceable, but only to the extent of the quantity of goods stated in the writing. c. enforceable to the extent of the quantity term orally agreed upon by the parties. d. enforceable to the extent determined by the court to be fair and reasonable at the time of enforcement of the contract.
B
Which of the following has occurred if, prior to the date that performance is due, a party announces that he will not perform or commits an act that renders him unable to perform? a. An anticipatory novation b. An anticipatory repudiation c. A prevention of performance d. A material alteration of a written contract
B
Which of the following is NOT true with regard to necessary items? a. A car can be a necessary item. b. A contract for medical care can be avoided. c. What is necessary will vary from person to person. d. The liability for necessary items will be the reasonable value of the items, which may differ from the contract amount.
B
CPA: Meed entered into a written agreement to sell a parcel of land to Beel for $80,000. At the time the agreement was executed, Meed had consumed a large amount of alcohol which significantly impaired Meed's ability to understand the nature and terms of the contract. Beel knew Meed was very intoxicated and that the land had been appraised at $125,000. Meed wishes to avoid the contract. The contract is: a. void. b. legally binding on both parties in the absence of fraud or undue influence. c. voidable at Meed's option. d. voidable at Meed's option only if the intoxication was involuntary.
C
CPA: The statute of frauds: a. prevents the use of oral evidence to contradict the terms of a written contract. b. applies to all contracts having consideration valued at $500 or more. c. requires the independent promise to pay the debt of another to be in writing. d. applies to all real estate leases.
C
A contract entered into or induced by undue influence on the part of the dominant party is: a. valid. b. void. c. voidable. d. unenforceable.
C
A contract in which the parties indicate their assent in words is a(n): a. quasi-contract. b. implied contract. c. express contract. d. unlawful contract.
C
A leading manufacturer of electronic equipment writes a letter to its wholesale distributors offering to sell its most popular VCR for $100 and stating that it will accept orders at that price for 30 days. This is a(n): a. option to sell. b. auction without reserve. c. firm offer. d. requirements contract.
C
A life insurance policy naming a spouse as a beneficiary is a common example of a(n): a. assignment. b. delegation of duties. c. third-party donee beneficiary contract. d. third-party incidental beneficiary contract.
C
A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty, is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.
C
A promisor may be excused for failure to perform a contract on grounds of impossibility when: a. she is financially unable to perform. b. she personally lacks the capability or competency to perform. c. no one, including the promisor, is able to perform. d. all of the above.
C
A rejection of an offer by the offeree is effective: a. at the moment that the offeree signs the notice of rejection. b. at the moment that the offeree dispatches the notice of rejection. c. at the moment that the offeror receives the notice of rejection. d. none of the above
C
Acting in reliance on X's intentional misrepresentation as to a drill press's capabilities, Y purchases the press from X for $17,000. Although the value of the press, if it had performed as promised, would be $10,000, its actual delivered value is $4,000. Under the benefit-of-the-bargain rule, Y could recover: a. nothing. b. $3,000. c. $6,000. d. $7,000.
C
Advertisements, circulars, quotation sheets, and other similar business communications usually do not constitute offers because: a. they do not contain a promise. b. they leave unexpressed many terms which would be necessary to the making of a contract. c. both (a) and (b). d. none of the above.
C
An intended creditor beneficiary of a third-party beneficiary contract has rights against: a. the promisee/debtor only. b. the promisor only. c. both the promisee and the promisor. d. neither the promisee nor the promisor.
C
Arthur writes a letter to Bob in which he promises to pay Clark's debts if Clark doesn't pay. a. Arthur's promise is a primary promise. b. Arthur's promise is an original promise. c. Arthur's promise is a collateral promise. d. Arthur's promise falls within the main purpose doctrine.
C
Arthur, a world-famous rock star, has a contract to perform at the Superdome on New Year's Eve. However, he decides he would rather spend the night with his family and friends so he informs the owners of the Superdome. a. The owners of the Superdome are entitled to specific performance, because Arthur's services are unique. b. The owners of the Superdome will have to wait until after January 1 to sue for breach of contract. c. The owners of the Superdome are entitled to damages, but they are not entitled to specific performance. d. Because an adequate remedy at law is available here, a court would be unable to issue an injunction prohibiting Arthur from performing at Madison Square Garden on New Year's Eve if they gave him a better offer.
C
CPA: Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham for damages. Under the circumstances, Long will: a. win, because Long is a third-party beneficiary entitled to enforce the contract. b. win, because the intent of the contract was to confer a benefit on all high school dropouts residing in Harris. c. lose, because Long is merely an incidental beneficiary of the contract. d. lose, because Harris did not assign its contract rights to Long.
C
CPA: In order to satisfy the consideration requirement to form a contract, the consideration exchanged by the parties must: a. have a monetary value. b. conform to the parties' subjective intent. c. be legally sufficient. d. have approximately the same value.
C
Carl Contractor pledges to contribute $500 to the local United Fund for charity. a. This promise lacks consideration and will not be enforced. b. This promise is a firm offer under the Code and will be enforced. c. There is the probability of reliance by the United Fund and the promise will be enforced under the doctrine of promissory estoppel. d. This promise is a preexisting public obligation and will be enforced.
C
Carl Contractor submits a bid that contains a substantial error in addition. a. This is a unilateral mistake. Carl is bound by the error. b. Carl is guilty of fraud in the inducement. c. If the error is an obvious one that the other party knew of when it accepted the contract, Carl can avoid the contract. d. Carl can avoid the contract based upon duress.
C
Crime Stoppers offers a reward of $500 for information leading to the arrest and conviction of a criminal who has committed several recent burglaries. Paul Police Officer has been working on the case and applies for the reward based upon information he has gathered while on duty. Paul cannot collect the reward under the: a. legal detriment rule. b. inadequacy of consideration rule. c. preexisting duty rule. d. promissory estoppel rule.
C
Edward has agreed to buy Donna's CD player. Edward agrees to pay Donna when the CD player is delivered. This transaction involves: a. implied-in-fact conditions subsequent. b. implied-in-law conditions subsequent. c. express concurrent conditions. d. express conditions precedent.
C
If a contract is expressed in a writing that is intended by the parties to be the complete and final expression of their rights and duties under the contract, the parol evidence rule precludes the admission into evidence of all of the following EXCEPT: a. prior oral negotiations or agreements of the parties. b. prior written negotiations of the parties. c. a subsequent oral agreement between the parties to modify the terms of the contract. d. a contemporaneous oral agreement between the parties that varies or changes the written contract.
C
In a contract for necessaries, a minor is liable for: a. the list price of the items furnished. b. the agreed price of the items furnished. c. the reasonable value of the items furnished. d. the wholesale cost of the items furnished.
C
In determining whether an improper threat constitutes duress, it must be shown that: a. the threat would have induced a reasonable person to assent to the contract. b. the threat was intended by the coercing party to coerce assent on the part of the person claiming to be the victim of duress. c. the threat actually coerced assent on the part of the person claiming to be the victim of duress. d. none of the above
C
In general, an agreement not to compete with an employer while employed is enforceable if: a. the purpose of the restraint is to protect the employer's business. b. the restraint is no greater than is reasonably needed to protect the employer's business. c. both (a) and (b). d. neither (a) nor (b).
C
In general, if a promise is illegal: a. only the promisor can sue the promisee for breach and recover any performance rendered. b. only the promisee can sue the promisor for breach and recover any performance rendered. c. neither the promisor nor the promisee can sue the other for breach and recover any performance rendered. d. both the promisor and the promisee can sue the other for breach and recover any performance rendered.
C
Sam Seller contracts to sell 200 tables to Bill Buyer at a price of $50 a table. Bill repudiates the contract, whereupon Sam sells the tables to Paula Purchaser at a price of $45 a table. Sam's action in selling the chairs to another buyer is known as: a. liquidated damages. b. specific performance. c. mitigation of damages. d. restitution.
C
Slick owes Gullible $50. Slick offers to let Gullible have Slick's pocket knife if he will accept $25 and forgive the rest of the debt. Later Gullible sues for the balance of the debt. a. Gullible will win because there was no consideration. b. Gullible will lose because he should have sued as soon as he got the knife. c. Slick will win because the knife constituted legally sufficient consideration. d. Slick will lose because he still owes $25.
C
The delegator remains bound to perform her contractual duties even after a delegation unless the delegation is: a. a gratuitous delegation. b. a delegation for value. c. a novation. d. none of the above.
C
The effect of a party's failure to sue before the statute of limitations expires is: a. to discharge the promisor from liability. b. to act as a mutual rescission. c. to bar the right to bring an action. d. to act as an accord and satisfaction.
C
The following promises or contracts are within the statute of frauds EXCEPT: a. the promise of an executor or administrator that he personally will pay all of the decedent's creditors in full. b. a promise to marry made in consideration for some promise other than a reciprocal promise to marry. c. a promise made by a father to his son by which the father will pay the son's debt in the event of his son's default. d. a promise made by a father to his son's creditor to pay the son's debt in the event of his son's default.
C
The requirement of consideration is satisfied by: a. a promise exchanged for a promise. b. a promise exchanged for an act. c. both (a) and (b). d. neither (a) nor (b).
C
Through a clerical error, an annuity policy that should be paying $500 per month is actually paying $50 per month. Upon proper proof of the error, a court of equity might elect which of the following remedies? a. Specific performance b. An injunction c. Reformation d. Restitution
C
To be legally sufficient, the consideration for a promise must be: a. a legal detriment to the promisee. b. a legal benefit to the promisor. c. either (a) or (b). d. neither (a) nor (b).
C
UCC Article 2 applies to contracts involving which of the following? a. The services of an accountant b. An employment relationship c. The sale of a television set d. The sale of a private residence
C
When can a minor disaffirm a contract? a. Only before reaching the age of majority b. At any time after reaching the age of majority c. At any time either prior to or immediately after reaching the age of majority d. None of the above
C
Whether or not a person's words or conduct constitutes an offer is determined according to: a. the subjective intent of the offeror. b. the subjective intent of the offeree. c. the objective, reasonable person standard. d. none of the above.
C
Which of the following contracts need not be in writing to be enforced? a. Arthur agrees to buy Bob's house for $60,000. b. Clara's Aunt Amanda promises Clara $1,000 if she will marry Brad. c. Bill Buyer agrees to buy $450 in goods from Sam Seller. d. Oscar agrees to work for Big Bucks, Inc., for two years beginning June 1.
C
Which of the following is necessary in order to satisfy the consideration requirement? a. Legal sufficiency b. Bargained-for exchange c. Both (a) and (b) d. Neither (a) nor (b)
C
Which of the following is not a rule of contract interpretation? a. Words and other conduct are interpreted in light of all the circumstances, and if the principal purpose is ascertainable, it is given greater weight. b. Unless a different intention is manifested, technical terms and words of art are given their technical meaning. c. Express terms, usage of trade, course of dealing, and course of performance are weighed in that order. d. Separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.
C
Which of the following would be a statement of fact? a. For the price, this is the best typewriter available. b. This is the one that I would recommend. c. This furniture was refinished last year. d. With a few more lessons, you should be able to compete in the regional dance competition.
C
Which of the following would be an illusory promise? a. Sara agrees to sell her total production to Bill. b. Bill agrees to buy his total widget requirement from Sara. c. Bill agrees to buy all the widgets he wants from Sara. d. Bill agrees to buy Sara's total production of widgets if he inherits enough money from Uncle John to do so.
C
Which of the following would be an offer? a. Will you buy my computer for $1000? b. I sure would like to sell this computer for $1000. c. I'll sell you this computer for $1000. d. None of the above are offers.
C
Which of the following would not be an appropriate measure of monetary damages? a. Compensatory damages b. Consequential damages c. Unforeseeable damages d. Incidental damages
C
Which of the following would not be assignable? a. A owes B $50. B assigns to C the right to collect the money. b. Pedro assigns a contract right to land to Chung. c. Teacher assigns to her best friend her contract right to teach. d. All of the above
C
With respect to agreements for the sale of goods, the Code provides standards by which omitted terms may be ascertained, provided: a. the parties actually agreed upon the open term but negligently failed to include it in the written contract. b. the parties actually discussed the open term but intentionally failed to include it in the written contract. c. the parties intended to enter into a binding contract regardless of whether they actually discussed the open term or not. d. the parties did not intend to enter into a binding contract regardless of whether they actually discussed the open term or not.
C
A contract to provide legal services for a fee is governed by Article 2 of the UCC.
False
A contract in which both parties exchange promises is a(n): a. formal contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.
D
A contract which fails to satisfy the requirements of the statute of frauds is: a. valid. b. void. c. voidable. d. unenforceable.
D
A fiduciary owes which of the following duties? a. Trust b. Loyalty c. Confidence d. All of the above
D
A man and a woman make mutual promises to marry. Unknown to the woman, the man is already married. a. This is an agreement to commit a crime, which renders the agreement void. b. Both parties are in pari delicto. c. If the woman is unaware of the man's other marriage, she could pursue an action for money damages against him. d. Two of the above are correct, (a) and (c).
D
A minor may disaffirm a contract for personal property: a. before attaining majority. b. on the day of attaining majority. c. within a reasonable time after reaching majority. d. all of the above.
D
A misrepresentation is material in which of the following cases: a. Seller believes goods are of less value than buyer believes them to be, but seller remains silent. b. Seller represents a fact knowing it would be likely to induce a reasonable buyer to manifest his assent. c. Seller knows the misrepresentation would be likely to induce the buyer to act. d. (b) or (c), but not (a).
D
A party with a power of avoidance may lose that power if: a. he affirms the contract. b. he delays unreasonably in exercising the power of disaffirmance. c. the rights of third parties intervene. d. all of the above.
D
A person who lacks sufficient mental capacity to enter into a contract is one who is: a. adjudicated incompetent by a court decree. b. incompetent, although not adjudicated as such by a court decree. c. unable to understand the nature and effect of her acts. d. all of the above.
D
A promise by Andrew to pay Barry $1,000 if he refrains from suing Andrew, which is accepted by Barry not suing is: a. supported by consideration. b. enforceable because Barry has incurred a legal detriment by refraining from bringing suit. c. enforceable because Andrew has received a legal benefit. d. all of the above.
D
All of the following situations represent exceptions to the strict rule of unenforceability of illegal agreements except: a. where a party to the illegal agreement withdraws from the transaction prior to the performance. b. where one of the parties to the agreement is a party protected by the statute violated. c. where the parties are not equally at fault. d. where the parties are in pari delicto.
D
An agreement between three parties to substitute a new promisee or promisor in place of an existing promisee or promisor is called: a. a condition subsequent. b. a mutual rescission. c. an accord and satisfaction. d. a novation.
D
An agreement is illegal and unenforceable if its formation or performance is: a. criminal. b. tortious. c. contrary to public policy. d. all of the above.
D
An agreement to refrain from a particular trade, profession, or business is enforceable if: a. the purpose of the restraint is to protect a property interest of the promisee. b. the restraint is no more extensive than is reasonably necessary to protect the interest. c. the secretary of state has approved the agreement. d. (a) and (b), but not (c).
D
An offer can be effectively communicated to an offeree by: a. a writing only. b. spoken words only. c. a writing or by spoken words only. d. a writing, by spoken words, or by conduct from which a reasonable person could infer a promise.
D
An offeree generally may cancel or revoke an offer at any time prior to its acceptance unless the offer: a. is an option contract. b. is a merchant's firm offer under the Code. c. contemplates a unilateral contract and the offeree has begun the invited performance. d. all of the above.
D
An uncured material breach of contract: a. gives rise to a cause of action for damages by the aggrieved party. b. operates as an excuse for nonperformance by the aggrieved party. c. discharges the aggrieved party from any further duty under the contract. d. all of the above.
D
Bill Businessman places an ad in the local newspaper saying, "Reward: $50 for return of my golden retriever named Fido." The ad lists his address and telephone number. If Tim Teenager finds Fido and returns him to Bill, there will be: a. an executed contract requiring that Bill pay Tim $50. b. a bilateral contract, because two people are involved. c. an implied in fact contract requiring that Bill pay Tim $50. d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.
D
CPA: In September 1999, Cobb Company contracted with Thrifty Oil Company for delivery of 100,000 gallons of heating oil at the price of $1.20 per gallon at regular specified intervals during the upcoming winter. Due to an unseasonably warm winter, Cobb took delivery on only 70,000 gallons. In a suit against Cobb for breach of contract, Thrifty will: a. lose, because Cobb acted in good faith. b. lose, because both parties are merchants and the UCC recognizes commercial impracticability. c. win, because this is a requirements contract. d. win, because the change of circumstances could have been contemplated by the parties.
D
CPA: Kaye contracted to sell Hodges a building for $310,000. The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye. To what relief is Hodges entitled? a. Punitive damages and compensatory damages b. Specific performance and compensatory damages c. Consequential damages or punitive damages d. Specific performance
D
CPA: On May 1, 1999, Mint, a 16-year-old, purchased a sailboat from Sly Boats. Mint used the boat for six months, at which time he advertised it for sale. Which of the following statements is correct? a. The sale of the boat to Mint was void, thereby requiring Mint to return the boat and Sly to return the money received. b. The sale of the boat to Mint may be avoided by Sly at its option. c. Mint's use of the boat for six months after the sale on May 1 constituted a ratification of that contract. d. Mint may disaffirm the May 1 contract at any time prior to reaching majority.
D
CPA: Opal offered, in writing, to sell Larkin a parcel of land for $300,000. If Opal dies, the offer will: a. terminate prior to Larkin's acceptance only if Larkin received notice of Opal's death. b. remain open for a reasonable period of time after Opal's death. c. automatically terminate despite Larkin's prior acceptance. d. automatically terminate prior to Larkin's acceptance.
D
Contract remedies are available to protect which of the following interests of the injured party? a. Expectation interest b. Reliance interest c. Restitution interest d. All of the above
D
David and Sharon entered into a written contract involving the performance of some marketing services. A week later, they both changed their minds and agreed in writing to cancel the contract. This is an example of: a. accord and satisfaction. b. novation. c. substituted contract. d. mutual rescission.
D
Each of the following is an essential element of a binding promise EXCEPT: a. mutual assent. b. consideration. c. capacity. d. a writing signed by the parties.
D
In a contract for the sale of goods costing more than $500, the statute of frauds provisions apply except: a. where an admission has been made. b. where the goods have been specially manufactured. c. where there has been a delivery of and payment for the goods. d. all the above are exceptions to statute of frauds provisions.
D
Which of the following would be subject to Article 2 of the UCC? a. An agreement to clean someone's yard for $25 b. An option to buy a vacant lot c. An agreement to perform at a charity fundraiser d. None of the above is subject to the UCC.
D
In considering whether a covenant not to compete included in the sale of a business is reasonable, courts will consider all of the following factors except: a. the geographic area covered. b. the time period for which the restraint is to be in effect. c. the hardship imposed on the promisor. d. the price that the promisee paid for the business.
D
In order for an offer to have legal effect, it must: a. be communicated to the offeree. b. manifest an intent to enter into a contract. c. be sufficiently definite and certain in its terms. d. all of the above.
D
In the case of a gratuitous assignment, which of the following would not be revocable? a. The donee-assignee receives payment of the claim from the obligor. b. The donee-assignee obtains a judgment against the obligor. c. The donee-assignee obtains a new contract with the obligor. d. None of the above would be revocable.
D
In which of the following instances is restitution available as a remedy for breach of contract? a. When one party totally fails to perform its obligations b. When a party may not enforce the contract because of the statute of frauds c. Upon the avoidance of a voidable contract d. All of the above
D
Knowledge of falsity and intention to deceive under fraud in the inducement may be shown by: a. actual knowledge. b. lack of belief of the statement's truthfulness. c. reckless indifference as to its truthfulness. d. all of the above.
D
Martha, who is a minor, contracts with Alice, who is an adult. a. Alice may disaffirm the contract at any time. b. Alice may disaffirm the contract when Martha becomes an adult. c. Alice may ratify the contract when Martha reaches the age of 18. d. Alice may not disaffirm the contract.
D
Michael pays $500 down on a new computer to be used in the office. The salesperson told him the computer has a 100,000 megabyte memory. Michael learns from other sources that this is blatantly untrue and realizes now that the salesperson induced him to enter into the contract based upon fraud in the inducement. The company refuses to return the down payment. If Michael sues, an appropriate remedy would be: a. injunction. b. punitive damages. c. nominal damages. d. rescission and restitution.
D
Sam Seller has a contract to provide 100 widgets to Bill Buyer at a price of $10 a widget. Delivery is to be on October 1. Due to unanticipated delays, Sam is unable to get the widgets to Bill until October 2. Bill is not harmed by the delay but sues anyway, because he is angry with Sam. a. Sam's failure to deliver the goods on October 1 is a violation of the Code's perfect tender rule, even if it is not a material breach. b. Bill cannot sue, because this is not a material breach. c. If Bill cannot establish any incidental or consequential damages as a result of the breach, he will only be able to recover nominal damages. d. Two of the above are correct, (a) and (c).
D
The happening or nonhappening of a condition: a. prevents a party from acquiring a right. b. deprives a party of a right. c. subjects both parties to liability. d. (a) or (b), but not (c).
D
The parol evidence rule will bar the introduction of: a. evidence that one of the parties to the contract was a minor. b. evidence of fraud in the formation of the contract. c. evidence of usage and custom that is not inconsistent with the terms of the written agreement. d. evidence of a letter written prior to the execution of the final contract stating that the price to be charged for the goods was $2.00 each rather than $2.10 as provided in the final contract.
D
The remedies provided for breach of contract include: a. compensatory damages. b. punitive damages. c. reliance damages. d. (a) and (c), but not (b).
D
The requisite elements of fraud in the inducement include: a. a false representation of material fact. b. a representation made with knowledge of its falsity and the intention to deceive. c. a false representation justifiably relied upon. d. All of the elements above are required to be shown.
D
Where one party to an illegal contract is less at fault than the other, she may: a. enforce the entire contract. b. receive no assistance from the court at all. c. recover out-of-pocket expenses only. d. recover payments made or property transferred.
D
Which of the following assignments of contract rights are not assignable? a. Assignments that would materially increase the risk or burden on the obligor b. Assignments which would transfer a personal contract right c. Assignments which are prohibited by law d. All of the above
D
Which of the following contracts are within the statute of frauds and therefore must meet its requirements in order to be enforceable? a. A contract to sell half-acre lots of land in a 60-acre subdivision b. A six-month lease of an apartment c. A deed granting an easement d. (a) and (c) above
D
Which of the following is legally sufficient consideration? a. The performance of a preexisting public obligation b. The performance of a preexisting contractual obligation c. The settlement of an undisputed matured debt of $10,000 arising out of the purchase of land for $8,500 d. The settlement of a debt subject to honest dispute as to its amount
D
Which of the following is not required in order to have a usurious transaction? a. Evidence of a loan b. Evidence of money c. Evidence of repayability in all events d. Interest within allowable legal limits
D
Which of the following is/are liable in quasi-contract for necessaries furnished to them during their incapacity? a. Emancipated minors b. Persons incompetent but not so adjudicated c. Intoxicated persons d. All of the above
D
Which of the following promises must be supported by consideration to be enforceable? a. A promise to pay a debt barred by the statute of limitations b. A promise to pay a debt discharged in bankruptcy c. A promise that has been justifiably relied on by the promisee to his detriment d. A modification of an existing contract under common law
D
Which of the following would be required of a minor who disaffirms her contract? a. She must return any property she has received from the other party, provided it is in her possession. b. She must pay a reasonable amount for the use of the property. c. She must make restitution. d. All of the above are possible depending on the jurisdiction.
D
Which of the following would constitute a discharge of the contract? a. Full performance by all of the parties b. Breach of the contract by either or both parties c. Agreement of the parties to rescind d. All of the above
D
Which of the following would constitute an effective ratification? a. Ratification through express language b. Ratification through conduct c. Ratification through failure to make a timely disaffirmance d. Any of the above
D
Which of the following would lack contractual capacity? a. Bill, who is 16, wants to buy a speedboat. b. Sara, who has been adjudicated mentally incompetent, buys a fur coat. c. Richard, who is seriously intoxicated, agrees to sell his car. d. All of the above.
D
Which of the following would most likely be considered a regulatory licensing law? a. A state statute requiring a license to practice medicine b. A state statute requiring that beauticians pass an examination and pay a yearly licensing fee c. A state statute requiring that public school teachers complete a required course of study and pay a yearly licensing fee d. All of the above
D
Which of the following would not be considered a discharge by agreement? a. A novation b. A mutual rescission c. An accord and satisfaction d. An anticipatory repudiation
D
A contract exists if either party's actions manifest recognition of a contract's existence.
F
Harold Homeowner went to Al's Auto Dealership to look at cars. Harold found a 1980 Plymouth Horizon that he thought would be a good car for his teenagers to drive to school. Al said, "This is the best car in town." Harold buys it for $1,000. Two weeks later, the car breaks down. Al is guilty of fraud in the inducement.
F
Harold sells his used car to Tina and assigns his rights in his auto liability insurance policy to her. This is a valid assignment.
F
If a court finds that a part of a contract is unconscionable, it must deny enforcement of the entire contract.
F
If a tort and a contract are so connected that to enforce the tort action the court must enforce the minor's contract, the court will enforce the contract and the minor will be liable in tort.
F
If successive assignments have taken place, the majority rule is that the first assignee to notify the obligor will prevail in a dispute among the successive assignees.
F
In a unilateral contract, each promise is the consideration for the other, a relationship that has been referred to as mutuality of obligation.
F
In deciding whether a threat is sufficient to constitute duress, the fact that the act or threat would not affect a person of average strength and intelligence is determinative.
F
In order for an offeror's revocation of the offer to be effective, notice of the revocation must be directly communicated to the offeree before acceptance.
F
In order to comply with the requirements of most statutes of frauds, the writing or memorandum must be signed by both parties to the agreement.
F
In order to prove that a person with a mental defect lacks the necessary capacity to enter into a contract, it must be shown that the person is permanently insane.
F
In the absence of a specific statutory provision, an unlicensed person engaged in a business or profession for which a license is required cannot recover for services rendered if the licensing statute was enacted in order to raise revenue.
F
It is optional with the parties, under the statute of frauds, whether to reduce their agreement to writing.
F
Loss of value is the difference between the value of the promised performance of the breaching party and the value of the expected performance to the non-breaching party.
F
Once contractual promises have been made, there is no way for the parties to escape from liability for nonperformance.
F
Sara bets Bill that Hilltop High will win the big game. This is an enforceable agreement.
F
Seventeen-year-old Tim Teenager has just completed a course in business law. He now wants to disaffirm his student loan agreements. Most states allow a minor to avoid contracts for student loans.
F
Specific performance may be ordered in a contract situation calling for personal services.
F
The adequacy of consideration is the same as the legal sufficiency of consideration.
F
The agreement of a seller to sell her entire production to a particular purchaser is an illusory agreement because the purchaser doesn't know the quantity being purchased.
F
The doctrine of consideration requires only that the promise or performance of one party be legally sufficient.
F
The parol evidence rule is a rule of evidence that prohibits the parties from subsequently orally modifying their written contract.
F
The rights of an intended beneficiary vest at the time of the making of the contract or at the time he learns of its making, whichever is later.
F
Under the Code, the modification of a contract for the sale of goods requires the furnishing of additional consideration, just as required under the common law.
F
Under the doctrine of election of remedies, the injured party's choice of one available remedy will bar the choice of an additional, consistent remedy.
F
Under the parol evidence rule, words can be introduced in court which vary or contradict the terms of an integrated contract.
F
Under the perfect performance rule, the Code provides that a deviation in performance by a party in any contract constitutes a material breach.
F
Usury statutes establish the minimum rate of permissible interest that may be contracted for between a lender and a borrower of money.
F
When parties are dealing at arm's length, silence or nondisclosure usually constitutes fraud.
F
William, who just purchased a new computer which won't work properly, screams, "I'll sell this thing for $10," and thereby makes an offer.
F
A bilateral contract results from the exchange of a promise for an act, whereas a unilateral contract results from the exchange of a promise for a return promise.
False
A contract may be formed orally or by a writing, but it may not be inferred merely from the conduct of the parties.
False
As defined by the UCC, goods are movable, tangible and intangible personal property.
False
Thomas says to Steve, "If you will paint my garage, I will pay you $75." Steve replies, "Would you make it $85?" Under these facts, Thomas and Steve are both promisors and promisees.
False
Carol Customer signs a consumer purchase agreement for a VCR in which she agrees to make monthly payments. In fine print on the back, the contract also provides that if she misses a payment, she will confess judgment and pay all costs necessary in enforcing the contract without raising any defenses against the lender. This is an unconscionable contract.
T
Compensatory damages are only recoverable for damages that the party in breach had reason to foresee as a probable result of a breach when the contract was made.
T
Consequential damages include lost profits and property damage resulting from defective performance.
T
Disaffirmance may be either express or implied.
T
Donna is in her last semester of dental school. On weekends she cleans the teeth of her friends and relatives and then sends them a bill for $25. These are illegal contracts, because Donna is not yet licensed.
T
Even if an unforeseeable, extraordinary loss results from a breach of contract, the injured party may still recover for any ordinary loss resulting from the breach.
T
Except in the case of a contract to transfer land, a minor can disaffirm a contract before attaining majority or within a reasonable time thereafter.
T
Fraud in the execution consists of a misrepresentation that deceives the defrauded person as to the very nature of the contract being entered.
T
Fraud in the inducement will result in the contract being voidable.
T
Generally the breaching party will not be liable in damages for a loss that was not foreseeable at the time of entering into the contract.
T
If an offer does not state the time within which the offeree may accept, the offer will terminate upon the expiration of a reasonable time.
T
In a legally challenged contract between a guardian and his ward, the law presumes that the guardian took advantage of the ward.
T
In a novation, the delegator will be discharged and the third party will become directly bound on her promise to the obligee.
T
In an action by the intended beneficiary of a third-party beneficiary contract, the promisor may assert any defense that would have been available to him had the action been brought by the promisee.
T
In cases involving the enforceability of covenants not to compete in employment contracts, courts must carefully balance the public policy favoring the employer's right to protect his business interests against the public policy favoring full opportunity for individuals to gain employment.
T
In determining contractual capacity under the cognitive ability test, individuals who are taking prescribed medication are treated the same as those who are incompetent.
T
In most states, minors who fraudulently misrepresented their age at the time a contract was entered into may nevertheless disaffirm the contract.
T
In most states, the measure of damages for misrepresentation depends upon whether the misrepresentation was fraudulent or nonfraudulent.
T
In order to have the mutual assent requisite to the formation of a contract, the offeror must have communicated the offer and the offeree must have knowledge of the offer.
T
In the absence of an agreement to the contrary, the law assumes that the respective performances under a contract are concurrent conditions.
T
In the absence of legal consideration, a promise may nevertheless be enforceable under the doctrine of promissory estoppel if the promisee has relied on the promise to his detriment.
T
It has generally been held that contracts induced by threats of criminal prosecution are voidable, regardless of whether the coerced party had committed an unlawful act.
T
Justifiable reliance requires that the misrepresentation contribute substantially to the misled party's decision to enter into the contract.
T
Kevin builds a house for Paul and Virginia Demmit. The contract calls for extra grade, stain-resistant carpet. The pattern selected by the Demmits is not available when the carpeting is supposed to be installed, so Kevin substitutes a comparable grade similar carpet. Kevin has substantially performed the contract. Substantial performance plus a small amount of damages will discharge Kevin's contractual obligations, even if the Demmits think the substituted carpet ruins the house.
T
Most contract rights, including rights under an option contract, are assignable.
T
Procedural unconscionability involves scrutiny for the presence of "bargaining naughtiness."
T
Recovery for necessaries furnished to a minor is based upon the reasonable value of the item furnished and not the contract price.
T
Sarah orders a microwave oven from Myriad's Department Store and requests that it be delivered to her sister Theresa. Theresa is a third-party intended beneficiary.
T
Scott has a household insurance policy which requires that he notify the company within two weeks of any loss before he is eligible to receive payment for his loss. The notification requirement is a condition precedent.
T
Subject to a few exceptions, neither party to an illegal contract can sue the other for breach nor recover for any performance rendered.
T
The "marriage provision" of the statute of frauds applies only if a promise to marry is made in consideration for some promise other than a mutual promise to marry.
T
The Restatement provides that punitive damages are not recoverable for a breach of contract unless the breach also gives rise to a tort for which punitive damages are recoverable.
T
The performance of a preexisting contractual obligation that is neither doubtful nor the subject of honest dispute is not legally sufficient consideration, because the doing of what one is legally bound to do is neither a detriment to the promisee nor a benefit to the promisor.
T
The power of avoidance may be lost if the party having the power does not rescind within a reasonable time.
T
The president of Big Bucks, Inc. pays a state official $500 to give the corporation's application for a government contract special consideration. This is an illegal contract.
T
The primary purpose of contract remedies is to compensate the injured party for the loss resulting from the contract breach by attempting to provide an equivalent of the promised performance.
T
The statute of frauds does not relate to the circumstances surrounding the making of a contract or to the validity of a contract.
T
The suretyship provision has been interpreted not to include promises made to a debtor.
T
To avoid a contract, an intoxicated person must act promptly, upon regaining capacity, to disaffirm.
T
To be legally sufficient, the consideration for the promise must be either a legal detriment to the promisee or a legal benefit to the promisor.
T
Under the "main purpose rule," an oral contract which would ordinarily require a writing can be enforced.
T
Under the Code, a merchant's offer to buy or sell goods is not revocable for lack of consideration during the time stated that it is open or if no time is stated, for a reasonable time, but in either event for a period not to exceed three months.
T
Under the Code, a person buying goods from a minor has the power to transfer valid title to the goods to a good faith purchaser for value.
T
Under the Code, any deviation from the promised performance in a sales contract will be considered a material breach.
T
Under the Restatement and Code view of impossibility, commercial impracticability will excuse nonperformance.
T
Under the Restatement and the Code, unless the language or circumstances indicate otherwise, an assignment of "all my rights under the contract" is both an assignment of rights and a delegation of the assignor's duties under the contract.
T
Under the Restatements of Contracts and the Code, unless language in the offer, or the circumstances under which it is made indicate otherwise, an offer shall be construed as inviting acceptance in any reasonable manner.
T
Under the UCC, if both parties are merchants, additional terms contained in the offeree's unconditional acceptance will become part of the contract provided they do not materially alter the agreement and are not objected to either in the offer itself or within a reasonable period of time.
T
Under the common law mirror image rule, an offeree's acceptance will not be effective if it deviates from the exact terms of the offer.
T
Under the traditional cognitive ability test, a person is mentally incompetent if unable to comprehend the subject of the contract, its nature, and its probable consequences.
T
When a breach of contract occurs, the injured party has a duty to take steps to minimize the damages that may be sustained.
T
Where the "main purpose" of the promisor is to obtain an economic benefit for herself that she did not previously have, the promise is outside the statute, and need not be in writing to be enforceable.
T
Where the assignee gives consideration in exchange for an assignment, a contract exists between the assignor and the assignee and the assignor may not revoke the assignment.
T
Words of promise that make the performance of the purported promisor entirely optional result in an illusory contract.
T
A quasi contract is not a contract, but rather is an obligation imposed regardless of the intention of the parties in order to assure a just and equitable result.
True
An executory contract is one in which there are one or more unperformed promises by any party to the contract.
True
As defined by the UCC, a sale is the transfer of title to goods from seller to buyer for a price.
True
In a "quasi-contract" situation, the remedy granted will be similar to a breach of contract remedy.
True
In certain circumstances, noncontractual promises are enforced under the doctrine of promissory estoppel in order to avoid injustice.
True
Most contracts are primarily governed by state common law.
True
Nearly every business transaction is based on contract, and even the most common transactions may involve multiple contracts.
True
Where general contract law has not been specifically modified by the UCC, the common law of contracts continues to apply.
True
