bul 4421

What is the most likely result in the lawsuit brought by Barbara against Walter?

Barbara will win because she properly made an offer that was accepted by Walter when she did the hula hooping.

Which of the following would be the correct analysis of the effect of the discovery that Rick has a book that is not appropriate for the class?

Because the parties had a mutual misunderstanding, the parties did not come to a meeting of the minds, and there is no contract.

"Refusal to Pay." Business law teacher Debby needed some yard work done. She told her class that she would give $50 to the first person who mowed her yard. She also entered into an agreement with Betty who agreed to trim some shrubbery for $40. Max went to mow Debby's yard. Unfortunately, just as he finished mowing, a neighborhood dog bit him, and he had to go to the emergency room for a couple of stitches. Debby refused to pay Max because she said that he had angered the neighbors and their dog, and that he was more trouble than he was worth. Secretly, Debby was glad about the dog bite because she felt it gave her an excuse not to pay. Max refused to pay the emergency room because he said that they did not have a binding, bilateral contract. Betty refused to trim the shrubbery because she got a better offer and claimed that she was not bound on the contract until she started to perform. Which of the following is correct regarding Betty's statement that there was no contract?

Betty is incorrect because there was a bilateral, express agreement.

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. While the area is not known for rocks, unfortunately Tina unexpectedly encounters a significant problem with solid rock in the backyard when she starts to dig. She tells Bruce that unless she receives an extra $5,000, 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 be required to pay because unforeseen circumstances are an exception to the preexisting duty rule.

Quasi-contracts are actual contracts.

False - "Implied in law"

Which of the following is correct regarding the final status of the negotiations between Donna and Charles?

Donna did not reject Charles' offer because she merely made an inquiry.

For a court to enforce a promise, ______ must offer consideration.

Each side to the contract

One consideration in determining whether consideration is sufficient to support a contract for the sale of goods under the UCC is whether both parties received a good deal under UCC rules and principles.

FALSE

Which of the following is true regarding whether an accepted offer to pay part of a debt is consideration?

Partial payment is consideration if an unliquidated debt is involved.

Today, courts hold that once an offeree begins performance on a unilateral contract, the offeror must hold the offer open for a reasonable time to allow the offeree to complete the performance.

TRUE

Under the Mailbox Rule, a valid contract has been formed if a rejection is dispatched, but before it is received, the acceptance is communicated to the offeror.

TRUE

How many states still allow a contract without consideration to be enforced if it is under seal?

Ten

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 judge's ruling in Jamil Blackmon v. Allen Iverson, the case in the text in which the plaintiff alleged that the defendant, a professional athlete, wrongfully failed to pay him a percentage of proceeds received from using the nickname "The Answer" in merchandising although the defendant agreed to do so after the plaintiff suggested the use of the nickname?

That the defendant's promise to pay was past consideration insufficient to create a binding contract.

Which of the following refers to the right of an offeror to revoke an offer?

The offeror is the "master of his offer."

What was the result in the Opening Case in which the plaintiff attempted to buy a jet from Pepsi for Pepsi points and some additional funds?

The plaintiff did not prevail because Pepsi reserved the details of the offer to a separate writing, and Pepsi had the authority to reject the plaintiff's offer to purchase.

In order to recover under quasi-contract, there is no requirement that enrichment be unjust.

FALSE

Once an offer is made, an offeror has no right to terminate it before receiving a reply.

FALSE

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."

Which of the following was involved when the government, in attempting to help AIG, agreed with AIG to lend AIG up to $85 billion in exchange for nearly 80 percent of AIG's stock?

A bilateral contract

Which of the following is an offer made by an offeree to an offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer?

A counteroffer

Which of the following is true regarding the effect of a debtor offering to pay a different type of payment, for example, goods instead of money, on a debt for which there is not a dispute over the amount or existence of the debt, and the creditor agrees?

A liquidated debt is involved, and there is an accord and satisfaction.

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 no dispute over the amount or existence of the debt, and the creditor agrees?

A liquidated debt is involved, and there is neither a satisfaction nor an accord.

Which of the following is not an example of consideration?

A promise to buy skis for $300 if you like them.

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

A promise to pay your employees as required by law.

In a bilateral contract, the consideration for each promise is ____.

A return promise

Which of the following is in effect not a contract at all?

A void contract

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

Acceptance may be made by any reasonable means.

Which of the following may represent a lack of genuine assent?

Acceptance secured through fraud, duress, undue influence, or misrepresentation.

When an accord and satisfaction is at issue, the ______ is the new agreement to pay less than the creditor claims is owed.

Accord

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

Action

In the absence of a time condition in an offer, the offer will expire _________.

After a reasonable amount of time

Which of the following consists of an offer by one party and an acceptance of the terms by another party?

Agreement

Set forth the ways in which an offer can be terminated.

An offer can terminate in the following ways: revocation by the offeror; rejection or counteroffer by the offeree; death or incapacity of the offeror; destruction or subsequent illegality of the subject matter of the offer; or lapse of time or failure of other conditions stated in the offer.

Set forth the circumstances under which an offer may not be revoked.

An option contract prevents revocation of an offer. Detrimental reliance on the offer may also form the basis for the court's not allowing the offeror to revoke an offer.

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 true regarding the effect of a debtor offering to pay less money than is owed as full payment on a debt when the debt itself, in its entirety, is in dispute, 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

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.

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.

In which of the following ways may an offeree accept a unilateral contract?

By performance only.

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

Case law and the Uniform Commercial Code.

What effect does the accidental destruction of the personal watercraft have on the deal between Charles and Joan?

Charles is not in breach of contract because of destruction of the subject matter.

"Leaky Tub and Flaming Watercraft." Charles finished college, got a good job, and decided to sell some used toys and buy newer ones. A used hot tub with a leak in it and a personal watercraft were at the top of the list. Charles offered to sell to Constance the hot tub for $500. Constance was interested but not willing to pay $500. She said "I'll give you $400." Charles said that he would think about it. Later, the same day, Charles offered to sell Donna the hot tub for $500. Donna said "Would you consider $450?" Charles said he would think on it. A few minutes later, Everett who had heard that Charles wanted to sell the hot tub accepted Charles' offer to sell for $500, and they agreed that the transfer would be made the next day. A few minutes later, Constance called saying that she accepted Charles' offer to sell the hot tub for $500. A few minutes after that, Donna called and told Charles that she accepted his offer to sell the hot tub for $500. Charles told Constance and Donna that he had already sold it, and they are angry, threatening to sue. Charles offered to sell the personal watercraft to Joan for $800. She said that she would think it over and let him know the next day. Unfortunately, through no fault of anyone, there was a fire at Charles' home that night and the personal watercraft burned. Joan called the next day and accepted before Charles could tell her the watercraft burned. When she found out about the fire, Joan told Charles that he had better come up with another watercraft, or she was going to sue. Which of the following is correct regarding the final status of the negotiations between Charles and Constance?

Charles made an offer which was rejected by Constance when she made a counteroffer for $400.

Which of the following is true regarding the rating the World Bank gives China in relation to the ease of doing business there?

China is rated in the top 10.

What is the likely result in the lawsuit Barry brought against Chris?

Chris will win because he properly revoked his bid before it was accepted.

The law of contracts is primarily _______________ law.

Common

Which of the following is the term representing the $50 to be provided by Rick and the book to be provided by Beverly?

Consideration

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.

A[n] ___________ is a promise or 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.

Contract

Which of the following contracts are usually voidable?

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

The reference to __________________ comes from the days when the contract was literally sealed by a piece of soft wax into which an impression was made.

Contracts under seal

Which of the following is an example of a formal contract?

Contracts under seal letters of credit, but not executory contracts.

Which of the following represents the legal ability to enter into a binding agreement?

Contractual capacity

Which of the following is true regarding the adequacy of consideration?

Courts seldom consider the adequacy of consideration but will do so if fraud is involved.

Garage Sale." Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to sell Denise a used business law book for $50. She asks if she can clean his apartment in return for the book instead of pay cash, and he agrees. Richard also agrees to sell a communications book for $5 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit and offers Richard $45 for the business law book. Richard sells it to him because he decides his apartment is clean enough. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $45 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $45. The next day Denise shows up to clean Richard's apartment and is very angry because Richard did not save the book for her. Denise claims that Richard breached their contract because they had a deal. Richard says that they never had a deal because no consideration was present. He also said that even if cleaning house would be considered consideration, any housekeeping done would have been wholly inadequate to support receipt of the book because his house was already clean. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Richard tells her that he had no obligation to hold the book for her because they had a unilateral contract. Two days after they first talked, Dawn tells Richard that she would like the computer. She tells him that her response bound him and that he should have awaited her action. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding whether Richard breached a contract with Dawn?

Dawn's statement created an illusory promise which cannot be enforced.

Which of the following is the reason the Uniform Commercial Code was drafted?

Different states had different laws governing contracts which did not result in a smooth flow of interstate commerce.

Today's law of contracts originated from judicial decisions in ______.

England

Once all the terms of the contract have been fully performed, the contract is said to be ___________.

Executed

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

Executory

Define an express contract and an implied contract; set forth the three conditions that generally must be met for the courts to find an implied contract, and give an example of an express and implied contract.

Express contracts have all their terms clearly set forth in either written or spoken words. Implied contracts arise not from words, but from the conduct of the parties.

A liquidated debt may be the subject of an accord and satisfaction.

FALSE

A person who is intoxicated when signing a contract may not avoid the contract based on being intoxicated because being intoxicated is a voluntary condition.

FALSE

A promise to do something that you are already obligated to do is generally a valid consideration.

FALSE

An "instructed authorization" occurs if the means by which an acceptance can be communicated to the offeror is expressly stated in the offer.

FALSE

An offer by a retailer to purchase seasonal goods from a wholesaler would not lapse sooner than an offer to purchase goods that could easily be sold all year long.

FALSE

As a general rule, past consideration qualifies as consideration.

FALSE

Congress passed the Uniform Electronic Transactions Act (UETA).

FALSE

If a contract is valid, then it is enforceable.

FALSE

If an acceptance is received after a rejection is received, the acceptance is still valid.

FALSE

If an offeree makes a mistake and sends an acceptance to the wrong address, there is an acceptance upon dispatch.

FALSE

If the subject matter of an offer is destroyed, the offer terminates after 10 days or notice of the death to the offeree, whichever comes first.

FALSE

In a bilateral contract, the consideration for a promise is a completed act.

FALSE

Gretchen offers $100 to anyone who can return her lost dog, Sparky. Haley returns the dog and requests the money. Gretchen says that there is no binding contract. Which of the following is true regarding Gretchen's statement?

Gretchen is incorrect because there is a binding unilateral contract which Haley accepted by performing.

Which of the following is true regarding Max's statement that he did not have to pay the emergency room charges?

He is incorrect because there was a binding implied contract.

Which of the following is true regarding Jackson's assertion that Penny must pay him at this point if the neighbor fails to do so?

He is incorrect unless he can somehow establish that Penny gave him poor directions or was otherwise at fault in informing him which deck to paint, and the contract remains executory.

Which of the following describes Rick's role in the transaction?

He was the offeree.

"Saturday Auction." Barry, an auctioneer, held an auction on a Saturday morning. At the beginning of the auction, Barry announced that the auction was being held without reserve. Helen, Mary, and Chris were all in attendance. Helen saw an old cash register with a stuck drawer that she thought would look great in her den. The auctioneer put the cash register up for sale noting that the drawer was stuck but that it could probably be fixed with little effort. Helen bought it for $20. When she got it home, she discovered that it actually contained $5,000. Unfortunately, Helen had a teenage son named Tad who started bragging to his friends about the family's good fortune. Barry heard about what had happened and sued Helen for return of the $5,000. At the same auction, Mary saw a great deal on a used table. She bid $20 on it. No one else bid anything. Barry announced that $20 was clearly insufficient for the table, that it was worth much more than that, and that he was taking it out of the auction. Chris started bidding on a diamond ring for his girlfriend. He bid $2,000. Just as Barry was getting ready to say "Sold," Chris looked over at his girlfriend, decided that he was not sure about marriage, and leaped up yelling "I revoke." Barry, however, immediately after, yelled "Sold." Barry sues Chris attempting to obtain the money for the engagement ring. Barry also sues Helen seeking to recover the $5,000 contained in the stuck drawer. Mary sues Barry attempting to obtain possession of the table. In the lawsuit in which Barry sues Helen for return of the $5,000, which of the following is the most likely result?

Helen will win because the auction was without reserve, and she properly bid on and bought the cash register with everyone knowing that the cash drawer was stuck.

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 illusory promises?

Illusory promises are NOT consideration.

If the subject matter of an offer becomes illegal, what is the result?

Immediately terminates

If the subject matter of an offer is destroyed, the offer _______.

Immediately terminates

In which of the following does a contract arise not from words but from the conduct of the parties?

Implied contracts

Which of the following is true regarding the type of marriage contract discussed in the text called the muta'a?

It is a temporary type of arrangement called a "pleasure marriage" in which the female is paid for sexual intimacy.

Which of the following is true regarding the Uniform Electronic Transactions Act?

It seems to create an electronic version of the mailbox rule.

Which of the following is true regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her?

Jill is correct.

Which of the following references the requirement that a contract not be either illegal or against public policy?

Legal object

A ________________ is an agreement by the person who issues a letter to pay a sum of money on receipt of an invoice and other documents.

Letter of credit

In a[n] ______ debt, there is no dispute about the fact that money is owed and the amount of money owed.

Liquidated

What is the likely result in the lawsuit brought by Mary against Barry for the table?

Mary will win because the auction was without reserve, and Barry had agreed to accept the highest bid.

The __________ terms of a contract are those terms that would allow a court to determine what the damages would be in the event that one of the parties breaches the contract.

Material

What have most states done with regard to unsolicited merchandise received from a seller?

Most states have passed laws providing that unsolicited merchandise does not have to be returned and the recipient may keep it as a gift, with no contract being formed.

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

Which of the following are written documents signed by a party that makes an unconditional promise to pay a specific sum of money on demand or at a certain time to the holder of the instrument?

Negotiable instruments

Constance asks Kathy if Kathy would consider selling her car for $2,000. What is the status of the negotiation?

No offer has been made.

Danny overhears Frank's offer to sell Greg a boat for $1,000. Greg declines the offer, but Danny immediately says "I accept." Frank does not want to sell the boat to Danny because he is afraid that Danny will not immediately pay him. Also, he thinks Danny is a complainer and will find something to complain about regarding the sale. Is Frank obligated to sell the boat to Danny, and why or why not? Also, discuss what you believe the ethical rule should be on this issue.

No, Frank is not required to sell the boat to Danny. An offer must be communicated to the offeree or to the offeree's agent. Reasoning will vary on the ethics issue. One thought would be that sellers should not be required to deal with potential buyers who are not reliable.

A promise to do something that you are already obligated to do is ____.

Not valid consideration

Contract law is said to be based on a[n] ___________ theory, meaning that the existence and interpretation of the contract is based on the outward manifestations of intent by the parties.

Objective

The person who agrees to the terms of an offer made by the other party is called the _________.

Offeree

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

Offeror

If a person wishes to ensure that an offer will in fact be held open for a set period of time, the person may do so by entering into a[n] ______________ contract with the offeror.

Option

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

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

Which doctrine may courts use to estop, or prevent, an offeror from revoking an offer based on a party's taking steps in reasonable reliance on an offer?

Promissory estoppel

Which of the following is an exception to the rule requiring consideration?

Promissory estoppel

Which of the following occurs when three conditions are met: one party makes a promise knowing the other party will rely on it; the other party does rely on it; the only way to avoid injustice is to enforce the promise?

Promissory estoppel

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

Which of the following is true regarding the termination of an offer based on a rejection?

Regardless of how long an offeror states that an offer will be held open, once the offeree rejects it, the offer is terminated.

Which of the following was the result in the case in the text Adone v. Paletto involving the rejection of a purported acceptance of an offer of compromise because it was not made within the time limit of 10 days specified in the offer?

Rejection of the acceptance was enforceable because the 10 days in which the other party had to accept had expired.

Christen graduates from college, receives a job offer across the country, and moves there giving up her apartment and cancelling all the other job interviews. After she gets there, she is told that there is no job. What may she recover in most states?

Reliance damages

Which of the following is true regarding Richard's claim regarding the inadequacy of house cleaning as consideration?

Richard is incorrect because house cleaning would constitute consideration that would support a contract, and the court would not likely be concerned with the fact that the cleaning duties would be light.

What is the most likely result in Walter's lawsuit against Sally in which he claims that she must pay $3,000 for the car at issue?

Sally will win because she merely expressed interest and did not make an offer.

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.

"Used Car Sales." Walter sells used cars. He is seeking a way to increase sales and profits because he would like to take his girlfriend on a nice diving trip to the Grand Cayman Islands. The first thing that Walter does is say that during the first week of December, he will give a $500 rebate on used cars that are under two years old. To spice things up, he also offers to sell any car on the lot that is over five years old for $1,000 to the first three customers who can hula hoop ten hours straight on December 7th. (Hula hooping was a practice popular some years ago in which a large hoop would be swung around by a person, usually around the waist.) Walter was not very concerned about the hula hooping issue because he thought that no one would be able to hula hoop for ten hours straight. Walter put an advertisement pertaining to the rebate and the hula hoop opportunity in the local newspaper. The promotion went over very well. Although Walter had several cars available, he ran out of cars under two years old within one day. During the rest of the week shoppers were told that no cars of that description were available. Sam was very angry at Walter for not having a car available that was under two years old so that he could get a good deal and a $500 rebate. On December 7th, while Walter was watching the hula hoopers, Sally was shopping for a car. She was in college and did not have much money. She saw one, an older car, a real clunker, that she liked; but she really did not know if it could be repaired sufficiently to be dependable. Walter had not even put a price on it because he planned to have it crushed. Sally was going to talk to her parents about it. Walter eventually approached her, and Sally asked him if he would take $450 for the car. Walter said, "Yes, sold." Sally tried to explain that she needed to talk to her parents first, but Walter would not hear of it. While Walter was still fuming from his encounter with Sally, Zack walked up and started to criticize the nature of Walter's inventory. Walter told him that he had great cars. Zack pointed at an old jalopy that was banged up, had 200,000 miles on it, and a cracked windshield. Zack said, "Sure, I'll pay $100,000 for that car!" Walter said, "Sold." Zack said, "Wait a minute. I was only kidding." Walter said, "No way." Meanwhile all the hula hoopers dropped out well prior to ten hours of hula hooping except for Barbara. She completed the hula hooping and asked for her car for $1,000. Walter refused saying that the offer was revoked. Sam and Barbara sued Walter, and Walter sued Zack and Sally. Under the applicable law in Walter's state, common law will be applied, and there are no state statutes impacting the situation. Which of the following is the most likely result in the lawsuit brought by Sam complaining that Walter ran out of cars available for a rebate?

Sam will lose because a court would interpret the intent of Walter as being to invite readers to make an offer that Walter was free to reject.

When an accord and satisfaction is at issue, the ______ is the payment, by the debtor, of the reduced amount.

Satisfaction

Which of the following is true regarding Beverly's claim that she subjectively believed the book was an appropriate edition and that an enforceable contract, therefore, existed?

She is incorrect because her subjective belief would not be the basis for a determination of whether the contract would be enforced in this case and also because fraud is not necessary in order to find a breach of contract.

Which of the following is correct regarding Penny's assertion that the neighbor will be required to pay Jackson?

She is incorrect. The neighbor will not be required to pay Jackson.

"Book Sale." Beverly offered to sell Rick a used business law book for $50. She told him that he could use it in his upcoming business law class the next semester. In fact, there was a problem with the book; it was several editions old. Rick was not aware of that fact, and neither was Beverly. When Rick took the book to class and realized the problem, he went back to Beverly requesting a refund. Beverly refused to return his money. She claimed that subjectively she thought that the book was correct, that she did not commit fraud, and that a binding contract existed. The book, however, is outdated and cannot be appropriately used in the class. Which of the following would describe Beverly's role in the transaction?

She was the offeror.

Which of the following is true regarding the Uniform Commercial Code?

Some elements of a contract under the common law have been modified under the UCC for contracts for the sale of goods.

Which of the following terms would be considered material terms?

Subject matter, price, parties, quality, and quantity

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

An exception to the rule requiring consideration is promissory estoppel.

TRUE

An illusory promise is not a consideration.

TRUE

Any contract that is not a formal contract is an informal contract, also called a simple contract.

TRUE

Courts interpret contracts using an objective standard.

TRUE

If a quasi-contract is imposed, the amount of damages for a breach is based upon the fair market value of any service provided to the defendant.

TRUE

In some cases, if past consideration was given with expectation of future payment, the court may enforce the promise.

TRUE

In the employer/employee context, the purpose of a covenant not to compete is to restrict what an employee may do after leaving a company.

TRUE

Only the offeree to whom an offer is directed can accept the offer.

TRUE

Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.

TRUE

There are a limited number of circumstances under which silence can be an acceptance.

TRUE

Which of the following was the result in the case in the text Hamer v. Sidway, in which, after performance by his nephew, an uncle reneged on a promise to the nephew to pay him $5,000 if the nephew refrained from drinking liquor, using tobacco, swearing, and playing cards or billiards for money until he was 21 years of age?

That the nephew could recover because he supplied consideration.

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 provides that an acceptance is valid when it is placed in the mailbox?

The Mailbox Rule

Which of the following sets forth the common law rule that the terms of an acceptance must mirror the terms of an offer?

The Mirror Image Rule

Which of the following states that if a writing, or term in question, appears to be plain and unambiguous on its face, its meaning must be determined from the four corners of the instrument without resort to outside evidence, with the words being given their ordinary meaning?

The Plain Meaning Rule

Which of the following was propounded by prominent legal scholars, recruited by the American Law Institute?

The Restatement of the Law Second, Contracts.

Tina tells Barry that she will mow his yard for the summer for $800. Barry thinks about it and drops a note in the mail to Tina telling her that he rejects her offer. He thinks about it, however, and calls her to tell her that he accepts the offer before she receives his rejection. Which of the following is true under the mailbox rule?

The acceptance is valid, and the rejection has no effect.

Sue is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Sue mailed one monthly payment to the lender along with a letter providing that she was making the payment on condition that the lender removes negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Sue sues the bank for breach of contract. Which of the following is the most likely result?

The bank will win because under the preexisting duty rule, Sue was already legally obligated to make the payment, and there was no consideration to support the contract.

Which of the following is a definition for consideration?

The bargained-for exchange.

When acceptance is examined under the common law, how do the basic requirements for a valid acceptance compare with those for a valid offer?

The basic requirements for a valid acceptance parallel those for a valid offer.

Trudy signs a contract with ABC Book Club without reading it. The contract provides that new books will be sent to her eBook reader every month unless she sends notification rejecting the receipt of new books. Which of the following is true regarding whether the contract is binding?

The contract is binding.

Which of the following is true when an offer authorizes a certain mode of acceptance but does not require it, and an offeree attempts to accept the offer through a method other than the authorized means?

The contract is not formed until the acceptance is received by the offeror.

An attorney who says that a contract lacks "the proper form" is typically referencing which of the following?

The contract lacked a writing.

"Wrong Deck." Penny hires Jackson to paint her back deck. She agrees to pay him $200 for the job, and he accepts sight unseen. They enter into the agreement on Tuesday, and he is to paint the deck on Saturday. When Jackson arrives, neither Penny nor her neighbor is at home. He mistakenly paints the neighbor's deck. Penny calls him the next day and asks him why he did not paint her deck. He informs her that he did paint the deck. It is then discovered that he mistakenly painted the neighbor's deck. Penny tells him not to worry because the neighbor will be required to pay him. Jackson says that if the neighbor does not pay, then he expects all of his funds from Penny, because the contract is executed. What was the status of the agreement between Jackson and Penny as of Tuesday when they agreed upon the price for the job?

The contract was executory.

Which of the following was the result in In Re Zappos.com Inc., v. Customer Data Security Breach Litigation, the case in the text in which customers of Zappos claimed that they were not bound to an arbitration agreement contained in a contract with Zappos?

The court ruled for the plaintiffs for the following two reasons: (1) there was no contract because plaintiffs did not assent to it, and (2) even if a contract existed, the contract was illusory and unenforceable because Zappos could avoid promises at any time.

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 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 nugget, Lefkowitz v. Great Minneapolis Surplus Store Inc., involving an advertisement for the sale of fur coats?

The court ruled that the ad was an offer and that the plaintiff properly accepted it.

What was the result in the case in the text Lucy v. Zehmer involving whether allegations of joking prevented the formation of the contract involved?

The court ruled that the agreement would be enforced because under the applicable standard, it was not apparent that joking was involved.

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.

Set forth the elements of an offer under the common law.

The elements of an offer are (1) serious intent by the offeror to be bound to an agreement, (2) reasonably definite terms, and (3) communication to the offeree.

Which of the following is the most likely measure of recovery when a quasi-contract is involved?

The fair market value of the matter involved.

Which of the following was the result in the Case Opener in which Hallmark claimed that an arbitration ruling against a former employee should be upheld?

The former employee could proceed with an action in court because there was no consideration for the arbitration agreement and, therefore, no valid agreement.

Identify and describe the four elements that are necessary for a contract to exist.

The four elements necessary for a contract are agreement, consideration, contractual capacity, and a legal object.

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.

Inez, wishing to sell a used business law book, calls Janice and tells her that if she does not hear from her within twenty-four hours, she will assume that Janice wishes to purchase the book for $50. Which of the following is correct regarding the status of the proposed book sale?

There is no contract because in this situation silence cannot be used to form a contract.

Which of the following is presumed to be a reasonable amount of time 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 an appropriate characterization of the agreement between Debby and Max?

They had a unilateral, express agreement.

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

Unenforceable

Which of the following is true regarding the preexisting duty rule?

Unforeseen circumstances and additional work are exceptions, but past consideration is not an exception.

In a[n] _____________ contract, the offeror wants a performance to form the contract.

Unilateral

All contracts can be categorized as either ___________ or __________.

Unilateral; bilateral

A[n] _____________ contract is one that contains all the legal elements of a contract.

Valid

A contract is ______________ if one or both of the parties, without breaching the contract, have the ability to either withdraw from the contract or enforce it.

Voidable

Which of the following is true regarding an accord and satisfaction?

When amounts agreed upon are paid, the debt is fully discharged.

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.

Which of the following is true regarding distinguishing an offer from an invitation to negotiate?

Whether an offer in fact existed is a question of fact.

If nothing is stated to the contrary in the terms of an auction, an auction is presumed to be ______.

With reserve

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

Without reserve

What is the most likely result in the lawsuit brought by Walter against Zack?

Zack will win because under an objective standard, it appears he was joking.

Consideration is optional in every contract.

false

The term "consideration" in relation to contracts involves parties acting in an ethical manner.

false

The Restatement (Second) of the Law of Contracts is not actually the law itself.

true

Whether a contract is bilateral or unilateral depends upon what response the offeror expects from the offeree.

true

Define a bilateral contract and a unilateral contract, and give an example of each.

unilateral=performance bilateral=exchange of promises

Explain the effect of auctions held with reserve and without reserve, and discuss what happens if nothing is said regarding whether an auction is being held with reserve or without reserve.

with reserve=just intent, auctioneer can withdraw w/o reserve=seller must accept highest bid