Business Law 3rd Exam
What must be included in a contract to satisfy the requirement that it be in writing? Choose 3 answers.
1. All of the parties to the contract must be named in the writing. 2. Consideration to be paid must be defined in the contract. 3. The subject matter of the contract must be identified.
A donee beneficiary is:
A third-party intended beneficiary of a contract who is not a creditor.
Which mistake is likely to be voidable?
Bilateral mistake
What factors are used to judge if consideration is adequate to ensure a fair bargain? Choose 2 answers.
I. Promises must be made with voluntary consent. II. Promises exchanged may not be a preexisting duty.
Which of the following contract rights may be assigned?
Payment of $500
What is an exception to the statute of frauds?
Promissory Estoppel
In an auction, the bidder is:
The offeror
What does the law require for a personal service contract?
The personal service requirement must be stated.
In what situation is a minor most likely to be able to terminate a contract?
When a minor orders books for school
When a contract duty is legally delegated, must the obligee accept performance from the delegatee?
Yes, and the delegatee is obligated to perform as the delegator would have.
If a buyer agrees to purchase "all the widgets I require" and the seller agrees to sell him "all the widgets you require" is there sufficient consideration?
Yes, because this is a requirements contract.
Your partner wants to make sure you are well taken care of financially in the event they die, and so takes out a life insurance policy on themselves with Liberty Life, Co., naming you as beneficiary on the policy. Unfortunately, tragedy strikes and your partner dies. However, the life insurance company refuses to pay you on the policy. Do you have the right to sue them since you were not a party to the contract?
Yes, because you are an intended beneficiary of the contract.
If unforeseen difficulties arise during the performance of a contract, may the parties change the terms of the contract without giving additional consideration?
Yes, if the modification is fair and equitable.
You agree to paint your neighbor's house for a certain price. You get ninety percent of the painting done and then have to leave town for your real job. Your neighbor is pretty mad because you didn't finish the job, and says she is not going to pay you a penny! What do you think will happen when you try to collect payment from your neighbor for painting her house?
You will probably receive the price you agreed on, less the amount it will take for her to have the painting finished.
Which of the following is an intended beneficiary to a contract?
a beneficiary of an insurance contract
Which of the following is a voidable contract?
a contract in which the parties made a mutual mistake about the terms
Forcing a party to agree to the terms of a contract through the use of threats or blackmail is called:
duress.
When party A and B form a contract and both parties fully perform, the contract is considered:
executed.
When a contract has been assigned, what rights does the original contract holder (assignor) still have?
none
If the requirements are met, which of the following will allow parties to enforce a promise that is otherwise not supported by consideration?
promissory estoppel
What is the term for when a party to a contract performs his duties exactly according to the terms of the contract?
strict performance
Usury laws prohibit:
the charging of excessive interest on loans.
Contests, lotteries, and competitions with prizes are common examples of:
unilateral contracts.
A contract for an illegal purpose is:
void.
What type of contract exists when at least one party has the option of canceling it?
voidable
What are the possible remedies for a contract formed under duress? Choose 3 answer choices.
1. Allow duress as a defense for breach of contract. 2. Rescind the contract. 3. Make the contract voidable.
Tyler entered into a contract with Leah to provide supplies for her business. What form can the writing of the contract take? Choose 3 answer choices.
1. An email 2. An invoice 3. A check
What is the evaluation standard for a personal satisfaction contract? Choose 2 answer choices.
1. Subjective personal taste 2. Objective, reasonable person standard
What must a party show to win a substantial performance lawsuit? Choose 2 answer choices.
1. The breach was not intentional. 2. He or she acted in good faith.
What is the result if parties agree to a contract orally, but it is a contract that must be in writing under the statute of frauds? Choose 2 answer choices.
1. The parties can complete the contract. 2. The contract is voidable.
What must a plaintiff prove to show duress in the formation of a contract? Choose 2 answer choices
1. The plaintiff was incapable of voluntarily agreeing to the contract. 2. The defendant committed a wrongful or illegal act.
What is required for a writing to be legally sufficient to form a contract? Choose 2 answer choices.
1. The writing must provide evidence of agreement 2. The UCC requires that the quantity be included
What factors must be present to prove fraudulent misrepresentation in a contract? Choose 3 answers.
1. There has been an intent to deceive. 2. A misrepresentation of a material fact has occurred. 3. The innocent party has justifiably relied on the misrepresentation.
A party normally cannot present any evidence of which of the following if that evidence contradicts or varies the terms of the written contract? Choose 3 answers.
1. oral agreements that happened at the same time as contract formation 2. agreements prior to contract formation 3. negotiations prior to contract formation
Which of these types of contracts must be in writing under the requirements of the Statute of Frauds? Choose 3 answers.
1. promises made in consideration of marriage 2. collateral promises to pay the debt of another person 3. contracts for the sales of land
What remedies are available in the case of a unilateral mistake in making a contract? Choose 2 answers.
1. reformation 2. Correct answer.rescission
The following types of contracts are generally unenforceable: (Choose 2 answers)
1. unconscionable contracts 2. exculpatory clauses for intentional torts
In determining whether a third-party is an intended or incidental beneficiary, a court may consider: (Select two)
1. whether the party is directly named in any part of the contract 2. whether the party is able to control any details of the performance.
Which of the following contracts would be enforceable?
A contract with an unlicensed retail clothing store
Which act or statement is a valid offer?
A detailed advertisement
Which of the following creates a bilateral contract?
A sale of goods with payment at delivery
In general, which of these contract terms is NOT required to meet the requirement of definiteness?
Acceptance
A police officer who finds a missing child as part of his duties may not collect any reward for finding the child. Why?
Because the officer already had a pre-existing duty to do so.
Which of the following is a valid offer?
Eric offers to buy Arun's house for $775,000 with no contingencies because Eric's lease ends in two months. Arun wants to think about it and six days later has not yet responded.
Melissa felt pressured into signing a contract that released her employer from any liability if she is injured on the job. What prohibited behavior under public policy could this be?
Exculpatory Clause
What is the implied duty in every contract that each party will deal fairly with the other?
Good faith
Which of the following statements is an offer?
I will sell you my house for $400,000.
Which of the following words, if added to an offer, will cause the offer to fail for definiteness? (Select two)
I. In the future, as in "I will sell you my boat sometime in the future for $1000" II. Might, as in "I might want to sell you my boat for $1000"
How may a revocable offer effectively be revoked? Choose 2 answers.
I. The offeror may withdraw the offer with a clear expression. II. The offeror may take an action that contradicts the offer and make that known to the offeree.
How can the legal concepts of accord and satisfaction apply to negotiable instruments? Choose 2 answer choices.
I. The parties can agree to discharge the instrument for less than the stated amount. II. The UCC provides debtors a way to prove accord and satisfaction.
Why would parties use accord and satisfaction regarding a negotiable instrument? Choose 2 answer choices.
I. The parties could wish to end the obligation without further conflict. II. The parties might wish to avoid a lawsuit.
What rights does a third-party beneficiary to a contract hold in regard to that contract?
If the third party is an intended beneficiary of the contract, the third party has the right to sue either the promisor or the promisee.
Which of the following distinguishes promissory estoppel cases from quasi-contract cases?
In promissory estoppel cases there is a promise; in quasi-contract cases there is not.
Which is NOT an exception to the parol evidence rule?
Jayden wants to present evidence that Jignesh verbally promised he would include the trailer with the boat he sold to Jayden.
Which type of lack of capacity is easiest to prove?
Minor status
You collect antiques and regularly travel the country looking for good deals. In your wanderings, you find an old fiddle and offer the owner $5. The owner accepts, and you take your treasure home. After you get the fiddle home and do your research on it, you discover the fiddle is actually worth $5,000. What a find! What do you think would happen if the owner tried to cancel the contract and get the fiddle back?
Mistake of value is not a valid defense to a contract, so the owner could not get his fiddle back.
Will a valid delegation relieve the delegator from the contract?
No, an obligee can sue either the delegatee or the delegator for non-performance.
Before surgery a doctor makes a patient sign a contract with an exculpatory clause. Will it be enforceable if the doctor is negligent?
No, because non-negligent medical care is in the public's best interest.
Your friend meets you for coffee one day driving a brand new motor scooter. You immediately fall in love with it and offer them $2,000 for it. Your friend politely declines and states they paid $3,000 but goes on to say "I may sell you my scooter, if you pay $2,700." If your friend later refuses to go through on the deal, can you hold them liable for breach of contract?
No, because there was never any consideration.
Which situation would be considered sufficient consideration for a contract to exist?
Pam agrees to pay Derek $500 if he does not sit next to her in class anymore.
If two parties have an on-going oral agreement that one will ship and the other will accept 50 pounds of produce each week unless the buyer informs the seller one week before not to ship the next order, then the buyer's failure to speak up and tell the shipper not to send the produce:
Qualifies as acceptance of that week's delivery offer.
How is substantial performance involved with the classification of material breaches versus immaterial breaches?
Substantial performance involves an immaterial breach.
In a unilateral contract:
Substantially undertaking performance prevents the offeror from revoking the offer.
Which act provides that no contract, record, or signature may be "denied legal effect" solely because it is in electronic form?
The Electronic Signatures in Global and National Commerce Act (E-SIGN Act)
What is the result of a contract in which both parties are wrong about a material fact of the contract?
The contract is voidable.
What is the test for whether a contract is governed by the Statute of Frauds because of the one-year rule?
The contract must be objectively impossible to perform within one year.
Which of the following elements are required of ALL intended beneficiaries?
The contracting parties were aware of the third-parties existence and position at the time of making the contract
What type of acceptance requires an affirmative action for the offeree to accept that offer?
Unilateral contracts
May a writing consistent of multiple separate documents?
Yes, if they are attached together in some manner.
Nadia needs help running her bakery. Nadia contacts her friend Zoey, who has baking experience but lives in another state, and offers Zoey a job. Nadia orally promises Zoey that she will employ Zoey for at least two years. Zoey quits her job in the other state, moves her family, and begins to work for Nadia. After three months, Nadia terminates Zoey's employment. Zoey sues Nadia, claiming they had a contract for two years. If Nadia defends the lawsuit by claiming the contract could not be enforced because it violates the statute of frauds, the court will likely hold in favor of:
Zoey, under the theory of promissory estoppel.
What type of condition specifies an event that must happen before a person is obligated to perform the duties specified in the contract?
a condition precedent
A partially integrated contract means:
a contract contains only some terms, to which the parties agree but not others.
Which of the following is a void contract?
a contract for prostitution
An agreement will lack consideration if:
a person makes a promise in return for an act which has already taken place.
Maryanne offers to sell her 2015 Mustang convertible to April for $15,000, and April agrees to those terms. April brings the $15,000 to Maryanne, and Maryanne promises to deliver the Mustang to April the next day after she has it detailed. At this point, Maryanne and April have:
an executory contract.
What is the most common way that duties under a contract are discharged?
by performance
Jayden is restoring a house for Jane when Hurricane Emma hits and washes out the foundations of the house. The cost for restoration has just increased by 400%. Under what principle may Jayden's obligations be excused?
commercial impracticality
What is the term for the legal ability to enter into a binding contract?
contractual capacity
Quon and Bert have signed a contract for Bert to mow Quon's grass every week in June, July, and August for a price of $40 per week. They have agreed to all the necessary terms, but Bert has not yet mowed because it is still May. What type of contract do they have?
executory
Don and Kim have entered into a contract for the purchase of a car. Don has paid money for the car, but Kim has not yet delivered it. This is an:
executory contract.
In January, Victor contracted with Delrita to cater a Cinco de Mayo (May 5th raised to the th power) party for 500 of his closest friends. Neither of them anticipated that their entire state would be under stay-at-home orders on May 5 due to a global pandemic. Under what principle may Victor cancel his contract with Delrita?
frustration of purpose
Substantive unconscionability in a contract means the contract:
has terms that are unfairly one-side.
Zayn boards the Big Rock Metro to ride downtown to his job. Zayn gives his money to the driver and takes his seat. Neither the driver nor Zayn says anything. Zayn and the bus driver:
have an implied contract.
A contract for a purpose that causes the parties to violate a law is:
illegal and void.
Sal has ordered 100 pounds of shrimp for his restaurant from Sam every Friday for 5 years and has always paid that week's market price. One Friday, Sal decides to take a vacation, but doesn't tell Sam. Sam claims they have a contract, even though it was never written down. What kind of contract do they have?
implied-in-fact
What is the term for evidence of communication between parties to a contract that is not included in the contract?
parol evidence
An assignment is the transfer of:
rights.
If Ramona changes her will at age 88 to leave the bulk of her fortune to her home health care nurse instead of her children, what factor will the courts consider in judging whether or not her will is valid?
undue influence
What is the term for a contract agreement in which an offeror promises to pay after the occurrence of a specified act, and the offeree is not required to respond in words?
unilateral contract
Brindley has an old shed on her property that needs to be removed. She posts the following ad on Facebook: "Shed needs to be gone. You take down and haul away. (Much of the wood is reusable.) $100 to the first person to show up and haul this away." This is an example of a(n):
unilateral contract.
What is the standard to which most personal satisfaction contracts must adhere? Choose 2 answers.
1. satisfaction of the receiving party (buyer) 2. satisfaction of a reasonable person
What is the difference between a material breach and an immaterial breach?
A material breach results in damages to the non-breaching party, while an immaterial breach is minor.
Which of the following may sue on a contract, to which they are not a party?
Intended beneficiaries
Must all terms of a deal be included in an offer?
No, but the terms required will depend on the type of contract.
Which of these contracts would be enforceable, despite the existence of a mistake? Choose 2 answer choices.
1. Christopher agrees to sell his washer and dryer to Ella in "as is" condition. Ella thinks the set is in excellent condition and is willing to take a chance on buying it. Neither works after a few weeks of use. 2. Christopher agrees to sell his washer and dryer to Ella. Ella thinks the dryer uses gas instead of electricity, but she is incorrect.
Which of the following third-party beneficiaries have the right to enforce a contract? (Select all that apply)
1. Donee beneficiary 2. Creditor beneficiary
What evidence outside of the written contract is a party allowed to present? Choose 2 answer choices.
1. Evidence showing a change to the contract after it is signed 2. Evidence to prove agreement on an essential element of the contract
When might a contract made by a mentally incompetent person be enforceable?
1. The incompetent person was lucid at the time the contract was made.
What are the legal differences between a material breach and an immaterial breach of contract? Choose 2 answer choices.
1. The level of the performance of the contractual obligations 2. Whether the court will discharge the contract
What factors may overturn a minor's right to disaffirm a contract? Choose 3 answers.
1. The minor misrepresented the minor's age while engaging in business as an adult. 2. The minor ratifies the contract after reaching the age of majority. 3. The contract is for necessaries.
Under the Uniform Electronic Transactions Act (UETA) an electronic signature can be used for: (Choose 3 answers.)
1. sales of real estate. 2. obtaining a business license. 3. wholesale purchase of alcoholic beverages for resale.
Which of the following contracts violate public policy?
A contract for the sale of a kidney
Which statement is true about the ability of minors to enter into contracts?
A minor may enter into any contract an adult can, except for contracts that are expressly prohibited for minors.
Carol and Al enter into a contract for the sale of a painting. Carol pays Al the asking price, and Al delivers to Carol the painting. This contract is an:
Executed contract.
What are the elements of consideration? Choose 2 answer choices.
I. An exchange to which the parties agree. II. Something of value from each party
How may an offer be terminated? Choose 3 answers.
I. An offeror may terminate an offer by revocation. II. A reasonable amount of time has passed. III. The offeree may make a counteroffer.
What factors make an agreement enforceable under the principle of quasi-contract? Choose 2 answers.
I. The enriched party knows about the benefit and keeps it. II. One party is being enriched at the expense of the other.
In what situations would a court be likely to award a quasi-contract? Choose 2 answer choices.
I. When the unjust enrichment is a relatively insignificant amount of money II. If the defendant was unjustly enriched and played a part in deceiving the plaintiff
Which of the following is legally sufficient consideration? (Select all that apply)
I. forbearance of a legal act II. a promise to do a legal act
In what situation could a party enforce strict performance?
When the requirement is reasonable
Upon graduating, you interview for several jobs. Although you are currently living in Iowa, you receive an offer from a company in New York. You agree to take the job which is supposed to start in one month. You move all of your belongings to New York and get settled into an apartment, and decline all other job offers you receive. However, three days before the job is supposed to start, the company tells you that they no longer need you. Even though you never signed any contract, do you have any legal recourse against the company?
Yes, because you had costs in moving and gave up other job offers to take their offer.
In a bilateral contract, the consideration which supports the forming of the contract is:
a promise to perform.
If an individual shopping for groceries opens a bottle of water from their cart and drinks it before they have paid for their items:
a quasi-contract has been created.
Jones Construction Company is building a series of new subdivisions in Newtown over the next two years. Jones enters into a verbal agreement with Harley Concrete Inc. to construct all the driveways and sidewalks in the subdivisions that Jones will be building. Jones and Harley agree on a price of $130 per cubic yard and that Jones will pay Harley at the end of each project. Harley completes the first project, which is four sidewalks and sixteen driveways, and bills Jones for the project. Jones decides that the price is too high and refuses to pay, claiming that they have no obligation to pay because the parties did not have a valid contract. If Harley sues Jones for payment, the court would probably:
apply quasi contract theory and award the fair market value of the work that Harley completed.
When may a contract be modified?
at any time, if the parties are in agreement
What type of contract is created by an agreement that is oral when it is required by the Statute of Frauds to be in writing?
voidable
In general, certain terms must be included in contracts to satisfy the requirement of definiteness. What are the exceptions to this rule? Choose 2 answer choices.
I. Courts can complete a contract to supply some missing items. II. Sales contracts under the UCC
Assuming there is no contract language prohibiting delegations, which of the following acts could likely be delegated? (Select two)
1. the mowing of grass in a residential neighborhood to another landscaper 2. painting the exterior of a house to another house painter
If the terms of an agreement seem to be very one-sided, which public policy could it be violating? Choose 2 answer choices
I. Restraint of Trade II. Substantive Unconscionably
What is the term for the action of a party to a contract who notifies the other party that he or she will not perform his or her duty under a contract?
Anticipatory repudiation
Third-party beneficiaries are those who:
Are not party to a contract but benefit from it.
What are the types of situations that may qualify as grounds for discharge due to impossibility? Choose 3 answers.
1. The subject matter of the contract becomes illegal. 2. The specific subject matter of the contract is destroyed. 3. A party to a personal contract dies or becomes incapacitated.
Isabel is 17 years old and wants to stop paying for the use of the local gym, but wishes to continue teaching classes. Her contract with the company includes terms regarding her employment and use of the facility. What must she do to properly disaffirm the contract? Choose 2 answer choices.
1. Isabel must disaffirm both the gym membership obligations and the employment terms in the contract. 2. Isabel must let gym staff know she is terminating the contract.
A creditor on a liquidated debt of $1 million may agree to take which of the following from the debtor in satisfaction of that debt? (Select all that apply)
I. 100 cents on the dollar II. a horse in exchange for the $1 million that is due
What conditions must be met for an offer to be legally accepted? Choose 2 answers.
I. It may only be accepted by the intended offeree or the offeree's agent. II. Acceptance must be unequivocal, with no requests for changes in the offer.
Lilly hired Harris Lawn Service to cut her grass one summer, and paid through automatic charges to her credit card. After taking three months off for winter weather, Harris staff cut Lilly's grass for four weeks in a row before charging the fees on Lilly's credit card. Lilly protested the charges, stating she did not hire the company to cut grass for the second summer. Harris sues Lilly. What law applies? Choose 2 answer choices.
I. Lilly's silence is acceptance because of the parties' past dealings. II. Lilly's silence is acceptance because the offeree accepted the benefit offered.
What elements are required for an offer to be effective under the common law? Choose 3 answers.
I. The offer must be communicated to the offeree. II. The terms of the offer must be reasonably definite so that all parties understand them. III. The offeror must intend to be bound by the offer.
To succeed on a promissory estoppel claim, and plaintiff must show: (Select all that apply)
I. The plaintiff relied on the defendant's promise. II. The defendant knew the plaintiff would rely on the promise. III. The defendant made a promise to the plaintiff
After graduating from college, you are offered what you believe is your dream job. You are working in the field in which you earned your degree and get a fantastic salary. As part of the job offer, you have been asked to sign a non-compete agreement in which you agree to not work for any other competing company for five years after you leave this company (whether voluntarily or involuntarily). You happily sign the agreement and begin work. However, within the first year, you are miserable and begin to look for another job. If you find another position at a competing company, may this company prevent you from taking it under the non-compete agreement you signed?
The agreement is probably invalid due to being overly broad.
What happens when a party with the right to avoid a contract chooses to not avoid it?
The contract is ratified.
What legal limitations are imposed on parties to assignments and delegations? Choose 3 answers.
1. The assignee obtains only the rights that the assignor had under the contract. 2. A contract cannot prevent an assignment of the right to receive funds. 3. Contracts that are for a service that depends on a particular skill or talent may not be delegated.
Samuel has mental competency issues. Samuel entered into a contract with Beth, but now Samuel is petitioning the court to terminate the contract. What options does the court have in ruling in the case? Choose 2 answer choices.
1. The contract is void if Samuel has been previously determined to be mentally incompetent. 2. The contract is voidable if Samuel was incompetent at the time the contract was formed.
Non-compete agreements which limit an employee's right to obtain employment elsewhere upon leaving are only valid if: (Select two)
1. they are limited in time and geographic scope 2. they are reasonably necessary for the protection of the employer
You collect antiques and regularly travel the country looking for good deals. In your wanderings, you find an old fiddle and offer the owner $5. The owner accepts, and you take your treasure home. After you get the fiddle home and do your research on it, you discover the fiddle is actually worth $5,000. What a find! What do you think would happen if the owner tried to cancel the contract and get the fiddle back?
Can not cancel
What elements are required for courts to apply the doctrine of promissory estoppel? Choose 3 answers.
I. The promise must be definite and relied upon. II. There was a detrimental result from reliance on the promise. III. Enforcement of the promise is necessary to avoid injustice to the promisee.
In a contract where the payment is broken down such that 80 percent of the cost is for materials and 20 percent is for installation of those materials, the contract will be governed by:
The UCC.
What is the primary purpose of the Statute of Frauds?
requiring written evidence of agreements concerning important transactions
In order for an accord and satisfaction to be valid, the debt must be:
unliquidated.