Business Law Midterm

Which of the following is true of the "Cooling-Off" Rule?

It gives consumers an opportunity to change their minds after signing contracts with people who come to their homes for product sales.

According to general contract law, a contract for the sale of goods comes into existence when any reasonable means under the circumstances is used to communicate the acceptance.

false

According to the FTC's "Cooling-Off" rule, consumers have 48 hours (two days) to cancel an order amounting to over $50.

false

According to the UCC Article 2, the seller must tender conforming goods at the buyer's disposition within 24 hours of arrival at the destination, unless it is perishable goods, in which case within 12 hours.

false

Alan orally promises to pay a debt that was discharged in bankruptcy. Under federal law Alan's promise is enforceable.

false

An FTC order, under which a company agrees to stop a disputed practice without necessarily admitting that it violated the law, is called a dunning letter.

false

An auction with reserve is a contract in which one party consents to sell to a second party all of the goods that party makes in a given period of time.

false

An e-contract must have additional consideration to be as valid as a paper contract.

false

An exculpatory clause in a contract for the sale of a business will be enforced if it is reasonable in time and geographical area.

false

By signing a nondisclosure agreement, an employee can be deprived of future employment within a 50 mile radius of where he currently works.

false

Equitable remedies are monetary damages that are imposed by the courts on innocent parties to prevent them from taking advantage of the breach by deliberately raising the amount of damages that the other party has to pay.

false

Even though emancipated, Jason who was a minor when he signed a contract at the age of 17, still has the unqualified right to disaffirm a contract when he turns 21.

false

Generally, parents are liable for a contract executed by a minor unless they cosign the agreements.

false

If the legal part of a contract can be removed from the illegal part, without changing the essential nature of the contract, the court will enforce both parts.

false

If the terms of a contract make it unlikely that the contract can be completed within one year, the contract must be in writing to be enforceable under the Statute of Frauds.

false

Illusory promises provide mutuality of benefit required in establishing consideration, but only if they involve promissory estoppel.

false

In a release, only one of the parties must make a legally enforceable promise.

false

In a shipment contract, proper tender of delivery is placing them on the loading dock to be picked up by a shipper.

false

In all jurisdictions, minors who become emancipated are not responsible for their own contracts, unless a statutory period of reaffirmation has elapsed.

false

In his book Law and Society: Critical Approaches, author Gerald Turkel states that public policy is the equivalent of Max Weber's social consensus in that it "refers to the idea that certain activities affect the entire social structure and must be regulated by the government."

false

In one case, a court held that funeral expenses were necessaries and the parents were responsible for those costs.

false

In the case Newsome v Tibbs, Newsome had to sign an exculpatory agreement that would hold Tibbs 'blameless during the actual tear down' of the high rise buildings, and up to 30 days afterwards.

false

In the case of Sidco Paper Co v. Eugene Aaron, Aaron was a minor who was hired as an apprentice by a binding written contract.

false

In the case of an implied-in-fact contract, the court will apply reasons of justice and fairness and may obligate one who has unfairly benefited at the innocent expense of another.

false

In the case of an open offer, there must be merely reasonable intent, clear and reasonably definite terms, and communication to the offeree.

false

Jeff visits Long's Hardware store and describes a problem he is having with ice in his gutters during the cold winters in Idaho. Stan, the salesman, recommends the new XT-104 Ice Melter for Jeff. Stan has created an implied warranty of merchantability.

false

Judson Law Firm agrees to hire Francisco after he passes the Texas bar exam. The offer has a concurrent condition. The "as is" offer is an enforceable contract.

false

Juliana is a minor who misrepresents her age when signing a contract. In most states, Juliana waives her legal right to disaffirm her contract with JoseLuis, the other party.

false

Law mercantilism is a complex, adaptive system of overlapping economic agents that operates on the basis of competition and a regulated market that responds to the movement of supply and demand.

false

Legal detriment involves the legal ability to make a contract.

false

Maria's daughter is seriously ill. Desperate, Maria deeds her $250,000 house to a physician for $2,500 of medical treatment. This contract has a valid bargained-for-exchange and is most likely not legally enforceable.

false

Modern courts are willing to enforce charitable pledges as enforceable contractual obligations.

false

Pumping gas into a car at a self-service gas station would be an example of a bilateral contract.

false

Sonia's warehouse is holding Joe's goods. Joe is selling the goods to Monique. Even though the goods are not properly identified, if Sonia calls Monique and informs her she may pick up the goods anytime, a tender by the seller (Joe) has occurred

false

Special laws, called "local option" statutes, allow small loan companies, pawn shops, and other lending agencies that accept high-risk applicants for credit to charge a higher rate of interest.

false

Tender of payment requires the buyer of goods to offer legal tender only.

false

The APR is calculated by consumers with tables provided by the Federal Trade Commission.

false

The EU Data Protection Directive created a new crime, called aggravated identity theft.

false

The FTC's "Cooling-Off" Rule applies to sales that are entered completely by phone or by mail.

false

The Federal Trade Commission requires used car dealers in most states to display statements that the cars are sold "as is" if the cars are sold with limited warranties.

false

The UCC requires the use of the seal in all sale-of-goods contracts.

false

The law will enforce an agreement that has not been bargained for.

false

The main purpose construction rule is the most fundamental guideline for the interpretation of written contracts.

false

The purpose of a negative option rule is to switch customers from buying the advertised merchandise to buying something else that is usually more expensive.

false

The quasi-contract concept involves the mutual assent of the parties.

false

To be in a position to bring suit on a sales contract, the seller of goods must make tender of payment.

false

To be legally enforceable, an express warranty must be in writing.

false

Uncle Joe promises Mary a new car on her birthday. Uncle Joe's promise constitutes legally sufficient consideration.

false

Under contract law, facsimile signatures are always as valid as original signatures.

false

Under the best evidence rule, evidence of oral statements made before signing a written agreement is admissible in court to change the terms of a written agreement.

false

Under the general law of contracts, a signed, written offer made by a merchant that allows acceptance at any time within a 90-day time period is not binding unless the offeree signs the offer.

false

Under the general law of contracts, an option contract holds an offer open for an agreed period of time, regardless of whether there is sufficient legal consideration.

false

Under the law, capacity is considered a voidable presumption.

false

Void contracts, such as those contracts entered into with a minor, may be avoided or canceled by either of the parties.

false

____________ occurs when one party does not say something about certain facts that he is under an obligation to reveal.

passive fraud

The Fair and Accurate Credit Transactions Act: ____________________________.

prohibits merchants from using credit card receipts that show anything other than the last five credit card numbers

State laws known as ____________ limit the time within which a party is allowed to bring suit to collect a debt.

statutes of limitation

Under the doctrine of ____________, the principal consideration is the safety of a product, not the conduct of the manufacturer or supplier of the goods.

strict liability

A lease option permits a party to lease real property while at the same time holding an option to purchase that property.

true

A merchant in a sale of goods contract under Article can agree to an option that exceeds one month in duration.

true

A notary is not required to read the document when providing acknowledgment of a signature.

true

An unenforceable contract may have all the elements of a complete contract and still be unenforceable.

true

Assume the CEO of CarolCo Enterprises tenders a $80,000 check to ABC Bank as "Payment in full" of CarolCo's note of $100,000. If ABC cashes the check, this is most likely an accord and satisfaction.

true

Consideration requires that the benefits and sacrifices promised between the parties be legal.

true

Contracts created by promissory estoppel are generally considered agreements without consideration.

true

Courts have held that terms hidden behind a blue "hyperlink" are roughly analogous to the pages of a long and drawn-out multipage paper contract.

true

In the Opening Case Round 1, Sole Survivor claimed it could vacate Eastland Mall because it had been constructively evicted.

true

Jane (seller) and Joe (buyer) enter into an oral contract for the sale of land. Joe begins to add significant improvements to the land and house and outbuildings. Jane changes her mind and revokes the sales contract. According to the Statute of Frauds, the contract between Jane and Joe is enforceable because of equitable estoppel.

true

Teri sends an offer to Morris to sell her car for its Blue Book value. Morris is the offeree.

true

The Equal Credit Opportunity Act makes it illegal for businesses to discriminate against credit applicants receiving public assistance income.

true

The Fair and Accurate Credit Transactions Act (FACT Act) attempts to address the identity theft epidemic.

true

The Uniform Computer Information Transactions Act (UCITA) covers diverse areas, such as database contracts and software licensing agreements.

true

The administrator of an estate is a person named by the court, if none is named in a will.

true

The legal term used to describe the sacrifice that each party must experience is that party's legal detriment.

true

The provisions of Article 2 of the Uniform Commercial Code apply when a cyber-agreement deals with the sale of goods.

true

The standard construction rule directs the court to determine the principal objective of the parties in the making of the contract.

true

When there is a breach of contract, the injured party has the right to ask a court to somehow remedy the situation.

true

Which of the following is true about the legality of an agreement?

An agreement can sometimes be partly legal and partly illegal.

The ____________ is an attempt by the federal government to reduce the use of unsolicited commercial e-mails on the Internet.

Can Spam Act

When contracting parties accept mutual obligations through oral discussion, they have created a quasi-contract.

False

The ____________ outlaws the unauthorized transfer, possession, or use of a means of identifying another person to violate federal law.

Identity Theft Penalty Enhancement Act

Which of the following is true of a nondisclosure agreement?

It requires employees to promise not to reveal any confidential trade secrets, should they leave their present employment.

____________ outlines the historical laws and the procedures that were followed by merchants in commercial transactions.

Lex mercatoria

Under the ____________, sellers must ship orders within the time promised in their advertisements. If no time period is promised, sellers must either ship the order within 30 days or send the consumer an option notice.

Mail and Telephone Order Rule

Mercedes receives a box of unordered office supplies in the mail. What is her legal obligation?

She may consider it a gift.

Which of the following is not a requirement for strict product liability?

The defective condition of the goods must have been changed from the time the product was sold to the time the injury occurred.

In a locality that restricts business on Sunday, which of the following is usually true regarding these restrictive laws?

They validate agreements made on Sunday for delivery of goods on a business day.

Congress passed the ____________ which requires lenders to disclose the finance charge and the annual percentage rate.

Truth-in-Lending Act

When forming online contracts, ____________ is a cyber-technique that preserves electronic data of offer and acceptance without using local hard drives and flash drives.

cloud computing

Fair courts, established in 11th century England, were:

courts in which juries were composed of merchants who were empowered to hear cases involving commercial disputes.

The prime target of the ____________ has been handguns.

dangerous per se rule

The legal term used to describe the sacrifice that each party must experience in a mutual exchange is that party's legal:

detriment

In some jurisdictions, minors who become ____________ cannot void a contract, despite their apparent minority.

emancipated

Clickwrap contracts have been generally held to be unenforceable.

false

Ratification is an emancipated minor's willingness to deny contractual obligation.

false

Under the doctrine of strict liability, when a product is unavoidably dangerous, a manufacturer has a duty to warn consumers of potential injuries.

false

Under the equal dignities rule, oral evidence cannot be used to clarify terms that are obscure in a written contract.

false

Even though Spice gives her four-year-old car to Homeless Helpers Charity, she:

must provide an odometer statement.

____________ exists when an offeror communicates a valid offer with clear and unambiguous terms to the offeree, and the offer has been accepted properly by the offeree.

mutual assent

In terms of disputed amounts, satisfaction is the:

performance of the accord.

A written promise not to sue is commonly called a:

release

A(n) ____________ is an acceptance of an agreement not to sue supported by consideration, which terminates one's right to continue any lawsuit, presently or in the future, on grounds described in the agreement.

release

An option contract:

removes the possibility of revocation through death or insanity of the offeror.

The Statute of Frauds: ______________________.

states that certain types of contracts have to be in writing to be enforceable

Generally, the words "as is" on an item for sale exclude implied warranties.

true

If the seller of an automobile believes that the mileage reading on the odometer is incorrect, the disclosure statement must indicate that the actual mileage is unknown.

true

In Law and Revolution, Harold J. Berman tells us that some rulers agreed to incorporate the law merchant into their national documents such as the Magna Carta in 1215, which contains a clause that specifically grants safe passage to foreign merchants in England.

true

The Federal Trade Commission defines a "dealer" as anyone who sells more than five (5) used cars in a 12-month period. The law covers the sale of automobiles, light-duty vans, and light-duty trucks.

true

The Uniform Commercial Code (or UCC) is a model code designed to unify statutes governing almost all commercial transactions.

true

Which of the following is true of "click" fraud?

A problem that arises in this area is verifying the identity of the "clicker."

Which of the following is true of rejection of goods by the buyer?

A rejection must be done within a reasonable time after delivery or tender to the buyer.

Which of the following contracts should be in writing to be enforceable in courts under the Statute of Frauds?

Contracts to pay the debt of another.

____________ that have not been fully performed by both parties, may be repudiated by a minor at any time.

Executory contracts

Kayla creates a unilateral contract when she promises Sam to give up her right to sue him in exchange for a cash payment.

False

Which of the following statements holds true of the FTC's Telemarketing Sales Rules?

Telemarketers must state the total cost of the products or services offered and that the sale is final or nonrefundable.

Which of the following is true of a shipment contract?

The seller must put the goods in the possession of the carrier.

Article 2 of the ____________ is a model set of laws designed to govern the sale of goods in commercial transactions in the United States.

Uniform Commercial Code

The ____________ has unified, streamlined, and refined the legal principles regarding such diverse areas as reverse engineering, consumer protection, shrinkwrap licenses, fair use, and consumer warranties.

Uniform Computer Information Transactions Act

A person who makes an offer is called an offeree.

false

A unilateral mistake offers each party the right to rescind the contract.

false

In a case where both parties are guilty of premeditation of a crime, in pari delicto may be applied when one party is not aware that a law is being broken and there is no intent to do a wrong.

false

Most of the time, printed and electronic advertisements are bait-and-switch confidence games.

false

Noncompete agreements are usually needed to protect trade secrets.

false

Persons who receive unordered merchandise in the mail may have a private cause of action and may ask for a consent order from the FTC.

false

When a personal gain to the guarantor is involved, the primary objective test requires that promise to be in writing for the contract to be enforceable.

false

When dealing with a text offer which requests a text back to accept, the acceptance is complete when the text acceptance is received by the offeror.

false

A(n) ____________ contract does not exist, but is imposed by the court as an equitable remedy in the interests of fairness and justice.

idk, but it isn't informal

To which type of transaction does the negative option rule apply?

idk, but probably Subscription to CD or DVD clubs that sends products on a regular basis and require the consumer to opt out of the next shipment

A(n) ____________ contract is implied by the direct or indirect acts of the parties.

implied-in-fact

________ damages are reasonable expenses that indirectly result from the breach, such as expenses incurred in stopping delivery of goods, transporting goods, and caring for goods after the buyer's breach.

incidental

Local business activity carried on within state boundaries is known as:

intrastate commerce

A(n) ____________ is any written warranty that does not meet all of the requirements for a full warranty.

limited warranty

In a(n) ____________ contract, one party consents to sell to a second party all of the goods that party makes in a given period of time.

output

The doctrine of ____________ restricts a party from denying that a promise was made under certain conditions, even though consideration has not been exchanged to bind an agreement.

promissory estoppel

An informal contract is also known as a(n):

simple contract

According to the ___________________, whenever an ambiguous term, clause, or line is found in a prewritten contract, that ambiguity is interpreted against the party who wrote the contract.

standard construction rule

The first rule of contract interpretation, under the ____________, tells judges that their primary objective in the interpretation of a written contract is to uncover the goals that the parties had when they entered into the contract in the first place.

standard construction rule

A contract consists of mutual promises between two parties that can be enforced in a court of law.

true

Oral contracts for the sale of goods of $500 or more will be enforced in situations involving admissions in court.

true

Sanyon and Sue agree to the purchase and sale of Sanyon's car. When Sanyon (seller) offers to give the keys to the car to Sue (buyer) who offers to pay for the car with a cashier's check, a tender of performance has occurred.

true

When a consideration is so ridiculously inadequate that it shocks the court's conscience, it is considered:

unconscionable.

____________ occurs when the dominant party in a special relationship uses excessive pressure to convince the weaker party to enter into a contract that greatly benefits the dominant party.

undue influence

A(n) ____________ contract cannot be upheld by a court of law, although it may have all of the elements of complete contract.

unenforceable

A mistake by only one of the parties is called a ____________ and ____________ offer sufficient grounds for rescission or renegotiation.

unilateral mistake; does not

The illegal practice of charging more than the amount of interest allowed by law is called:

usury

Some parties, when entered into a(n) ____________ contract, may choose to cancel the contract.

voidable

To be enforceable under the Statute of Frauds, a:

written contract can be a notation or a memorandum.

A bankrupt individual is required by law to repay all of her debts to creditors with an irrevocable offer of reaffirmation.

false

A breach of contract occurs when both parties fail to keep their respective promises.

false

A commercial unit is a single whole for the purpose of sale, the division of which generally does not impair its value on the market.

false

A condition precedent is one in which the parties agree that the contract will be terminated when a prescribed event occurs or does not occur.

false

A restrictive employment covenant limits a worker's employment options during her employment at her present job.

false

A successful plaintiff in a product liability suit can only recover punitive damages if the manufacturer disregarded federal statutory regulation.

false

____________ is the mutual agreement of less than what has been billed to the debtor.

Accord

_________ contracts for the sale of goods of $500 or more are ________________ if the contract _________________________.

Oral, enforceable, involves specially manufactured goods that cannot be resold easily

Which of the following is true of public interest and public policy?

Public interest is the consensus and public policy is the coercive social engineering strategy by which that consensus is implemented.

Which of the following legal detriments is known as forbearance?

Refraining from doing something one has a legal right to do

When a buyer has a right to inspect the goods, the right usually must be exercised:

before accepting the goods.

Under the ____________ rule, the courts generally accept into evidence only the original of a writing, not a copy.

best evidence

In a tender of payment, the:

buyer offers to turn the money over to the seller.

A 900 telephone number bills the vendor for the telephone charge.

false

In contract law, the non-breaching party is compensated by the payment of ____________ damages to make up for their real financial losses.

compensatory

A non-breaching party in a breach of contract case has a ____________ and cannot take advantage of the breach that increases the amount of damages the breaching party must pay.

duty to mitigate damages

According to the E-SIGN Act,:

e-contracts that are entered into over the Internet will be valid, provided that the parties to the e-contract have agreed that electronic signatures will be used.

Today, promises under seal are:

enforceable in some states for contracts not involving goods.

"Slamming" is the illegal practice of adding channels to a consumer's cable service without permission.

false