Business Law - Final Exam
In some cases, the courts have held that contracts made by minors who are nearly adults or that deal with a business are: A) enforceable contracts. B) voidable contracts. C) void contracts. D) invalid contracts.
A) enforceable contracts.
With respect to pledges and subscriptions, courts have generally held that these promises are: A) enforceable. B) unenforceable. C) unenforceable if they are not made for a reasonable period of time. D) enforceable only in cases involving amounts greater than $500.
A) enforceable.
A promise to give a gift is a ________ promise. A) gratuitous B) barren C) corporate D) bargained for
A) gratuitous
A person who makes a promise without requiring some benefit in return has made a: A) gratuitous promise. B) barren promise. C) pledge or subscription. D) onerous contract.
A) gratuitous promise.
A person who is heavily intoxicated is considered ________ to enter into a contract by the courts. A) incompetent B) competent C) devoid of consideration D) a valid party
A) incompetent
A competent party is said to have contractual capacity, that is, the ability to: A) make a valid contract. B) disaffirm a contract. C) breach a valid contract. D) impose undue influence.
A) make a valid contract.
A person who has not yet reached the age of majority is considered a: A) minor. B) contractor. C) competent party. D) participant.
A) minor.
Agreements that lack consideration are generally: A) not enforceable. B) enforceable. C) unlawful. D) valid.
A) not enforceable.
A promise to repay someone for a benefit after the benefit has been received is known as: A) past consideration. B) a pre-meditated contract. C) prior consideration. D) future consideration.
A) past consideration.
A party who makes a promise is called a(n) ________. A) promisor. B) promisee. C) incorporator. D) organizer.
A) promisor.
With regard to minors' contracts, silence or inaction is the basis for a voidable contract becoming a valid and enforceable contract through: A) ratification. B) clarification. C) justification. D) ramification.
A) ratification.
If a reasonable period of time passes after a minor reaches legal age and he or she has said nothing about disaffirming the contract, then in the eyes of the law it is considered as: A) ratified. B) incorporated. C) avoided. D) a void contract.
A) ratified
Once the minor reaches the legal age of majority, and if he or she agrees to the terms of the contract, then the contract is said to be: A) ratified. B) disaffirmed. C) attested. D) stamped.
A) ratified.
The status of a contract between a minor and an adult is generally: A) subject to the minor's disaffirmance. B) voidable at the instance of either party. C) voidable at the instance of a third party. D) subject to the adult's ratification.
A) subject to the minor's disaffirmance.
The most common form of valid consideration is: A) the promise of money by one party for the promise of an act by another. B) the promise of an act by one party for the promise of refraining from trade by the other party. C) the promise of money by one party for the promise of restraining oneself from competitive trade by another. D) the promise of an act by one party in exchange for a different act by another.
A) the promise of money by one party for the promise of an act by another.
In most states parents will not be held liable for the ________ committed by minors. A) torts B) contracts C) crimes D) friendships
A) torts
The Uniform Commercial Code dispenses with the requirement for consideration in contracts that involve: A) a merchant's firm written offer of an irrevocable contract. B) an oral discharge of a claim for an alleged breach of contract. C) modifications of future contracts. D) modifications to executed contracts.
A) a merchant's firm written offer of an irrevocable contract.
A person must be competent in both ________ and mentality to enter into a contract. A) age B) wealth C) social status D) class
A) age
Once a minor marries, or voluntarily separates from parents or guardians, he or she assumes adult responsibilities and is considered to have: A) been emancipated. B) committed a crime. C) been appended. D) abated.
A) been emancipated.
In some states the minor may avoid the contract even if he or she falsely represented himself or herself as: A) being of age. B) a minor. C) being under force or duress. D) being bankrupt.
A) being of age.
The promises exchanged by the parties to a contract, either to give up something of value they have a legal right to keep, such as money or property; to do something they are not otherwise legally required to do, such as performing a service; or to refrain from an action is known as: A) consideration. B) offer and acceptance. C) mutual agreement. D) competence of parties.
A) consideration.
If a minor enters into a contract relating to food, shelter, clothing, employment, or medical care, then such a contract is known as a: A) contract for necessaries. B) contract for service. C) contract of service. D) contract of forbearance.
A) contract for necessaries.
Which section of the Uniform Commercial Code (UCC) provides for a written agreement called a general release? A) 2-101. B) 2A-107. C) 4A-105. D) 6-202.
B) 2A-107.
A ________ is a person of legal age and at least normal mentality who is considered by law to be capable of understanding the meaning of a contract and is permitted to enter into a valid contract. A) incorporator B) competent party C) valid participant D) contractor
B) competent party
In most cases, whether the contract has not yet been performed (an executory contract) or has been fully performed (an executed contract), the minor may ________ the contract. A) breach B) disaffirm C) necessitate D) subordinate
B) disaffirm
The promise to refrain from doing something that a party has a legal right to do, or the promise of inaction, is known as: A) incorporation. B) forbearance. C) general release. D) pledge or subscription.
B) forbearance.
The UCC provides that "any claim or right arising out of an alleged breach can be discharged in whole or in part without consideration by a written waiver or renunciation signed and delivered by the aggrieved party." Such a written agreement is called a: A) corporate release. B) general release. C) barren promise. D) preexisting duty.
B) general release.
A promise that consists of an indefinite, open-ended statement purporting to be an agreement is known as a(n): A) gratuitous promise. B) illusory promise. C) preexisting duty. D) barren promise.
B) illusory promise.
The Uniform Commercial Code section 2-209 deals with ________ A) modification of an offer. B) modification of an existing contract. C) rejection of an offer. D) breach of a contract.
B) modification of an existing contract.
If a contract requires a person to do something he or she is already required to do, such as obey all traffic laws, the contract is: A) enforceable. B) not enforceable. C) illegal. D) impossible.
B) not enforceable.
If a party to a contract realizes that their contractual obligation is difficult but not impossible then the party can ________. A) breach the contract legally B) perform the duties that have been agreed to C) send notice to the court and not perform the duties D) demand more payment before performing duties
B) perform the duties that have been agreed to
Once a minor reaches the age of majority, in order to make the contracts entered into by the minor enforceable, it must be: A) avoided. B) ratified. C) disaffirmed. D) judicially noticed.
B) ratified.
A person with a mental illness is liable for the ________ value of necessities that they buy. A) contract B) reasonable C) market D) profit margin
B) reasonable
If a minor has paid more than he or she should have been charged, then he or she can: A) seek specific performance. B) recover the overcharged amount. C) recover punitive damages. D) assign their rights to a third party.
B) recover the overcharged amount.
A minor can be held liable for committing ________. A) a voidable contract B) slander C) an executed contract D) a void contract
B) slander
A promise of an act by one party in exchange for the promise of an act by another is an example of: A) a void contract. B) valid consideration. C) incorporation. D) a voidable contract.
B) valid consideration.
Most contracts made by persons who have not reached the age of majority are: A) enforceable. B) voidable. C) valid. D) void.
B) voidable.
Disaffirmance must be done by the minor: A) before receiving the consideration. B) within a reasonable time after reaching adulthood. C) after receiving the consideration for the contract. D) just prior to the minor reaching the legal age of adulthood.
B) within a reasonable time after reaching adulthood.
A promise to pay an existing debt or to obey the law, or a similar promise, is called a: A) pledge. B) gratuitous promise. C) barren promise. D) covenant.
C) barren promise.
Once a minor reaches the legal age of majority, if he or she disagrees with the terms of a contract and thereafter expresses his or her unwillingness to be bound by the contract within a reasonable time, then the contract is said to be: A) stamped. B) attested. C) disaffirmed. D) approved.
C) disaffirmed.
Jack promised to pay his nineteen year-old nephew $300 on the nephew's twenty-second birthday if the nephew refrained from smoking cigarettes until he graduated from Western State College. This contract is legal and illustrates the promise of: A) pledge or subscription. B) corporate fine. C) forbearance as consideration. D) implied contract.
C) forbearance as consideration.
The three essential characteristics of valid consideration are: A) accuracy, brevity, and clarity. B) fulfillment of social, moral and ethical obligations. C) legality, adequacy, and the possibility of performance. D) intention, practices, and policies.
C) legality, adequacy, and the possibility of performance.
A minor can be held liable if he or she makes damaging statements in writing for the act of: A) conversion. B) slander. C) libel. D) nuisance.
C) libel
A promise to do something that one is already required to do either by law or by contract represents no additional sacrifice and is: A) a general release. B) an illegal act. C) not valid consideration. D) fraudulent.
C) not valid consideration.
A valid contract does not exist if the contract is a promise of/to: A) payment. B) provide services. C) perform an illegal act. D) deliver goods.
C) perform an illegal act.
Charitable organizations frequently raise money by asking for: A) discounts. B) bribes. C) pledges. D) corporate shares.
C) pledges.
In the case of minors' contracts, silence or inaction is the basis for a(n) ________ contract becoming a valid, enforceable contract through ratification. A) void B) illegal C) voidable D) adhesion
C) voidable
Statutes in many states have permitted a person who has a claim against another to give up, or release, his or her claim without an exchange of consideration by making a: A) motion in local court. B) soliloquy to that effect. C) written statement to that effect. D) complaint to that effect.
C) written statement to that effect.
______ is a promise that is generally not valid consideration and is considered a gratuitous promise, except in cases of moral consideration. A) Present consideration B) Future consideration C) A barren promise D) Past consideration
D) Past consideration
Disaffirming a contract would amount to: A) ratifying the contract. B) disapproving a tripartite contract. C) extending the contract. D) avoiding the contract.
D) avoiding the contract.
Minors, insane persons, and mentally impaired persons are usually considered incompetent and lacking in: A) ethics. B) educational qualifications. C) social culture. D) contractual capacity.
D) contractual capacity.
In some cases, the courts have held that contracts made by minors who are nearly adults or that deal with a business are: A) unenforceable contracts. B) adhesion contracts. C) enforceable by the parents or the guardians of the minors. D) enforceable contracts.
D) enforceable contracts.
The law assumes that, as long as no undue pressure is brought to bear, the parties are: A) not allowed to negotiate an offer. B) not allowed to enter into another contract. C) required to accept proposed contract terms. D) free to reject a proposed unfair contract.
D) free to reject a proposed unfair contract.
Contractual forbearance means one party is exchanging a promise for money in exchange for ________. A) a promise for action by a third party B) a promise for money in return C) a promise for an action D) inaction
D) inaction
Being unable to make binding contracts due to having an unsound mind and being unable to safeguard one's own interests is ________. A) indecency B) indifference C) duress D) incompetency
D) incompetency
A legally enforceable contract will not be enforced if it: A) poses unforeseen expenses. B) is inconvenient to fulfill. C) is difficult to fulfill. D) is impossible to fulfill.
D) is impossible to fulfill.
As per the ________, a person attains the age of majority on the anniversary date of his or her birth. A) coming of age rule B) astrology predictions C) incorporation theory D) modern birthday rule
D) modern birthday rule
Courts may justify the enforcement of some contracts, even though there is no consideration, by stating that there was: A) monetary consideration. B) pecuniary consideration. C) fiscal consideration. D) moral consideration.
D) moral consideration.
The obligation to perform acts already required is known as a: A) pious obligation. B) corporate duty. C) social obligation. D) preexisting duty.
D) preexisting duty.
The nature of a contract for necessaries must bear some relationship to a minor's individual needs and to his or her: A) legal understanding. B) moral behavior. C) professional status. D) social and financial status.
D) social and financial status.
A barren promise is one that involves a promise: A) ordered by a court of law. B) to perform an illegal act. C) to perform an act that involves an unreasonable period of time. D) to do something one is already required to do.
D) to do something one is already required to do.
A mentally ill person may never exercise sound judgment.
F
A pledge or a subscription, which is a promise to donate money, is unenforceable.
F
Agreements not to compete do not have valid consideration.
F
Consideration in a contract is just the promises exchanged by the parties.
F
Consideration required in an enforceable contract can take only one form.
F
Contracts based on moral consideration are generally enforceable.
F
Contracts with people who have been declared incompetent by the courts are valid if the competent people who contracted with them do not know that they had been declared insane by the courts.
F
Emancipated minors are not liable for necessaries purchased for themselves.
F
Examples of agreements that violate government statutes and are unenforceable by the courts are contracts for the sale of alcohol by licensed distributers
F
If a person makes a contract for necessities while intoxicated then such person must pay the contract price even if exorbitant.
F
In many states, the usury statutes do not apply to retail installment credit sales and credit card transactions.
F
Incompetent parties to a contract are denied the opportunity to benefit from their legal rights.
F
It is not permitted in the United States for a person who has a claim against another to give up, or release, his or her claim without an exchange of consideration by making a written statement to that effect.
F
Minors are protected against their own wrongdoing but not their own inexperience.
F
Most consumer protection statutes praise and protect unconscionable contracts and contracts of adhesion.
F
The Uniform Commercial Code has a requirement of consideration in contracts and that requirement is never waived, including in instances where there is a merchant's written firm offer that provides that the contract is irrevocable.
F
The law regarding actions on the part of minors that result in emancipation allows them to maintain special protection given to minors under the law.
F
The legal age of majority does not vary from state to state.
F
The promisor may not make a promise to pay a sum of money to the promisee for the performance of a certain act.
F
The responsibility of determining whether a person is competent to contract rests on the individual benefiting from the contract, regardless of whether they are considered incompetent due to being mentally ill or being a minor.
F
With regard to pledges and subscriptions, most courts have held that there is no consideration given by a charitable institution for money that is donated.
F
A competent party is a person of legal age and the appropriate mental state.
T
A minor is liable for the reasonable value of necessaries purchased, not the contract price.
T
A minor may not disaffirm contracts for necessaries, such as food, shelter, clothing, employment, and medical care.
T
A valid contract does not exist if the consideration is a promise to perform an illegal act, or to avoid performing an act that is legally required to be performed.
T
All states have legislation that regulate gambling.
T
An intoxicated person may avoid a contract where, due to the extent of intoxication, he or she was unable to understand the nature and effect of the contract.
T
Contracts in which the parties have unequal bargaining power are known as contracts of adhesion.
T
Disaffirmance may be implied by the acts of the person who has reached legal age and wishes to disaffirm.
T
If a minor injures another person or damages another person's property, he or she may be liable for such injuries or damages and may be prosecuted by the state in a criminal action.
T
If the parties to a contract are legally competent and have reached mutual agreement, the law requires that the purpose of the agreement be legal.
T
Past consideration is a promise to repay someone for a benefit after it has been received.
T
Persons of unsound mind are considered incompetent to make binding contracts.
T
Sometimes the unequal bargaining power of parties to a contract gives one party an unfair advantage when dealing with those who lack the economic power to enter into a contract on an equal footing.
T
The exchange of money is not a mandatory requirement for consideration.
T
The law that protects minors from their contractual commitments does not intend to deny them the opportunity to enter into contracts for necessaries that are not provided by their parents or a guardian.
T
The most common form of valid consideration is the promise of money by one party for the promise of an act by another.
T
Usury laws are not applicable to transactions between corporations in some states.
T
Valid consideration does not have to be either the performance of an act or the payment of money.
T
