CONTRACTS TEST

Match the terms related to offer/acceptance to a proper description of that term: Terminates the original offer. Is effective when received.

rejection

Although an offeree is generally under no duty to reply to an offer, by custom, usage, or course of dealing, silence or inaction by the offeree may operate as an acceptance.

true

An action to recover damages for breach of contract may be maintained even though the plaintiff has not sustained any loss from the breach.

true

Match the description of a third party with the property type of third party beneficiary: The doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.

Incidental Beneficiary

Match the following situations with the most accurate description of whether an offer and/or acceptance exists: George offers to sell his personal car to Catherine for $20,000. Catherine says , "I accept and will you include a luggage rack.

Offer, then an acceptance. Terms of contract limited to terms contained in original Offer.

An agreement is illegal and unenforceable if its formation or performance is: a. criminal. b. tortious. c. contrary to public policy. d. all of the above.

d. all of the above.

The courts would not carefully scrutinize a contract between the parties in which of the following relationships? a. Trustee and beneficiary. b. Manufacturer and wholesaler. c. Agent and principal. d. Physician and patient.

b. Manufacturer and wholesaler.

A contract entered into or induced by undue influence on the part of the dominant party is: a. valid. b. void. c. voidable. d. unenforceable.

c. voidable.

A fiduciary owes which of the following duties? a. Trust b. Loyalty c. Confidence d. All of the above

d. All of the above

Match the terms related to offer/acceptance to a proper description of that term: Can only be effective prior to a valid acceptance. Effective when received.

revocation

Most contracts are primarily governed by state common law.

true

Under the common law mirror image rule, an offeree's acceptance will not be effective if it deviates from the exact terms of the offer.

true

Jonathan and ABC Inc. enter into an employment contract whereby Jonathan agrees to work at ABC for 2 years for $100,000 a year. Match each party's new legal detriment or benefit with a description of such detriment or benefit: ABC's New Legal Detriment

ABC must pay Jonathan for his services

Jonathan and ABC Inc. enter into an employment contract whereby Jonathan agrees to work at ABC for 2 years for $100,000 a year. Match each party's new legal detriment or benefit with a description of such detriment or benefit: ABC's New Legal Benefit

ABC receives the services related to Jonathan's employment

Jonathan and ABC Inc. enter into an employment contract whereby Jonathan agrees to work at ABC for 2 years for $100,000 a year. Match each party's new legal detriment or benefit with a description of such detriment or benefit: Jonathan's New Legal Detriment

Jonathan must work for ABC for 2 years

Jonathan and ABC Inc. enter into an employment contract whereby Jonathan agrees to work at ABC for 2 years for $100,000 a year. Match each party's new legal detriment or benefit with a description of such detriment or benefit: Jonathan's New Legal Benefit

Jonathan will be paid $100,000 each year during the term of the contract

Which of the following statements is TRUE regarding contractual capacity? a. A binding promise or agreement that is enforceable by all parties, requires that all the parties to the agreement have contractual capacity b. If two individuals enter into a contract and one party lacks capacity, either party has the option to void the contract. c. If two individuals enter into a contract and one party lacks capacity, the party that has capacity has the option to void the contract. d. A binding promise or agreement that is enforceable by all parties, requires that only one party to the agreement have contractual capacity.

a. A binding promise or agreement that is enforceable by all parties, requires that all the parties to the agreement have contractual capacity

Which one of the following statements is NOT a correct principle to be applied in determining what constitutes a material breach? a. A failure to timely perform a promise is a material breach even if time is not of the essence. b. Partial performance is a material breach if an essential part of the contract is not performed. c. If quantitatively significant, a breach will be considered material. d. An intentional breach of a contract is generally held to be material.

a. A failure to timely perform a promise is a material breach even if time is not of the essence.

CPA: Which of the following will be legally binding on all the parties despite the lack of consideration? a. A promise to donate money to a charity which was relied upon by the charity in incurring large expenditures b. An employer's promise to pay an employee an additional $400 per month for the remainder of the employee's agreed-upon year of employment. c. An oral promise by a merchant to keep its offer open for 60 days. d. A material modification signed by the parties to a contract to purchase and sell a parcel of land.

a. A promise to donate money to a charity which was relied upon by the charity in incurring large expenditures

Which of the following promises is an illusory promise? a. Alice says to Brian, "If I decide to buy a digital camera next year, I will buy it from you." b. Bill agrees to buy his total helium requirement from Joan. c. Bill agrees to buy Sara's car if he inherits enough money from his Uncle John. d. Ford promises to give Allen Samuels exclusive rights to sell Ford cars in the Waco area. e. The promise of a seller to sell her entire output to a particular purchaser.

a. Alice says to Brian, "If I decide to buy a digital camera next year, I will buy it from you."

JoJo decided to buy a restaurant building but the interior of the facility was not to her liking. She hired Discount Floors to install commercial quality carpet. In a separate contract, JoJo also hired a talented local artist, Amy, to paint a detailed, custom mural on the lobby wall. Finally, she made another agreement with Fashion Fabrics to re-upholster all the cloth-covered chairs. Regarding these contracts, which is FALSE? a. All three of these contracts would be governed by the UCC so JoJo could demand perfection in their performance. b. JoJo could NOT obtain specific performance to force Amy to complete the mural if Amy quits when she is half-way done painting. c. Of the three contracts described in the problem, the painting of the mural would be most likely to be subject to the subjective satisfaction of JoJo. d. Under the contract between JoJo and Discount Floors, Discount Floors could delegate the installation of the carpet but would still be responsible if the work was not done properl

a. All three of these contracts would be governed by the UCC so JoJo could demand perfection in their performance.

In which of the following situations can Bob disaffirm the contract with Adrian and obtain the return of the item sold under the contract to Adrian? a. Bob, a minor, sells 40 acres to Adrian, an adult. Adrian sells the 40 acres to Susan. Susan does not not know Bob or Adrian. Then Bob disaffirms the contract with Adrian on Bob's 18th birthday. b. Bob, a minor, sold his laptop computer to Adrian, an adult. Adrian then sold the laptop to Colton, also an adult, who had no knowledge of the fact that the Bob was and is a minor. Then, Bob who is still a minor, disaffirms the contract with Adrian. c. Bob, a minor, sells 40 acres of land to Adrian, an adult. Adrian sells the 40 acres of land to Susan. Susan does not not know Bob or Adrian. Bob, who is still a minor, disaffirms the contract with Adrian. d. Bob, a minor, buys a new four-wheel drive truck from the Jones Dealership. Bob, still a minor, sells this truck to his cousin, Adrian, who is an adult. Adrian then conveys this vehicle to Arthur Smith. Arthur does not personally know Bob or Adrian. Bob, on his 18th birthday, disaffirms the contract with Adrian. e. If Bob disaffirms a sales contract either before or after he is 18, Bob would never have the right to obtain the property that he had sold.

a. Bob, a minor, sells 40 acres to Adrian, an adult. Adrian sells the 40 acres to Susan. Susan does not not know Bob or Adrian. Then Bob disaffirms the contract with Adrian on Bob's 18th birthday.

Culler Construction Company agreed with the City of Orange Key to build a road. The project was to begin on June 1. One week after work began, a hurricane struck the site, washing away so much land that the construction would be twice as expensive. As a result, Culler refused to continue the job unless Orange Key paid a large sum in addition to the initial contract price. A promise by Orange Key to pay more than the initial contract price is: a. Enforceable because Culler encountered unforeseeable difficulties, the contract is governed by the common law and the contract is executory. b. Enforceable because Culler encountered unforeseeable difficulties, the contract is governed by the UCC and the contract is executed. c. Unenforceable, because Orange Key received no new legal benefit when it entered into the modification increasing the price. d. Unenforceable, because Culler incurred no new legal detriment when it entered into the modification increasing the price.

a. Enforceable because Culler encountered unforeseeable difficulties, the contract is governed by the common law and the contract is executory.

Arthur and Bob enter into a contract. Bob later delegates his duty of performance to Clark. Which of the following is true? a. If Clark fails to perform, Bob has a duty to perform. b. Arthur will always have to accept Clark's performance. c. The delegation is valid only if all three parties agree. d. Bob must compensate Clark for accepting the delegation.

a. If Clark fails to perform, Bob has a duty to perform

Which of the following statements is TRUE? a. If the buyer accepts the goods sold to the buyer under an oral contract, even if the amount of the contract is greater than or equal to $500, the contract will be enforceable by both the buyer and seller. b. Under the Code an oral contract for specially manufactured goods costing $500 is enforceable even if the seller has not begun their manufacture of the good. c. The UCC requires that all contracts for the sale of goods must be in writing or in proper electronic form d. A contract to pay for lawn care services costing $1,500 would have to be in writing or in proper electronic form to be enforceable. e. The UCC statute of frauds requires that the writing include all terms related to the sale of goods which would include the agreement concerning delivery.

a. If the buyer accepts the goods sold to the buyer under an oral contract, even if the amount of the contract is greater than or equal to $500, the contract will be enforceable by both the buyer and seller.

Natalie runs a salon where she performs manicures and pedicures. When a customer books their appointment online, Natalie requires the customer to accept her terms and conditions which include a release by the customer of Natalie's negligence. Natalie will not perform services unless the customer accepts and agrees to the release. If Natalie is negligent, what is the most likely outcome? a. If the court finds that the services performed by Natalie are voluntary for her customers, it will be more likely that the court will enforce the release. b. If the court finds that the services performed by Natalie are voluntary for her customers, it will be more likely that the court will NOT enforce the release. c. Since the customer agreed to the release, it will be always be enforceable by the courts. d. If the court finds that the public needs protection related to the services performed by Natalie, it will be more likely that the court will enforce the release.

a. If the court finds that the services performed by Natalie are voluntary for her customers, it will be more likely that the court will enforce the release.

Which of the following statements is TRUE regarding usury? a. In some states, a lender who charges a usurious interest rate forfeits both the principal and interest on the loan. b. A lender and borrower agree that a loan will bear interest at 5% per annum and that a late payment fee of $250 will be charged for any late payments made under the loan. If a court finds that a portion of the late payment fee constitutes interest, the lender WILL NOT be found to have charged a usurious interest rate. c. Maximum rates of interest that are permitted under usury statutes are uniform from state to state. d. Usury statutes establish the minimum rate of permissible interest that may be contracted for between a lender and a borrower of money.

a. In some states, a lender who charges a usurious interest rate forfeits both the principal and interest on the loan.

CPA: Krieg was the owner of an office building encumbered by a mortgage securing Krieg's promissory note to Muni Bank. Park purchased the building that was subject to Muni's mortgage. As a result of the sale to Park: a. Muni is not a third party creditor beneficiary. b. Krieg is a third party creditor beneficiary. c. Park is liable for any deficiency resulting from a default note. d. Krieg was automatically released from any liability on the note.

a. Muni is not a third party creditor beneficiary.

The below set of facts will be used for Bonus Questions 3, 4 & 5. ABC Corporation wants to sell its downtown corporate headquarters building. The building has issues with flooding in the parking garage and while ABC has tried to repair this issue, ABC has been unsuccessful and wants to move its headquarters to the suburbs. ABC places the building on the market using a professional marketing campaign with beautiful pictures of the inside and outside of the building and using words such as "Best Location in Downtown" and "Class A Commercial Building for Sale". The marketing campaign attracts Buyer Corp. as a potential buyer. Buyer is scheduled to perform its due diligence regarding the physical condition of the property during the month of July, when the area receives very little rain. During July, ABC watches the weather reports and sees that a large rain storm is due early in the morning on July 22, but that the rain storm is only going to last until 4 am. According to standard procedure (which existed both before and after entering into the contract of sale with Buyer) ABC personnel head down to the parking garage with pumps and pump out the water overnight, before Buyer's inspectors come the next morning. The Executive Vice President of Buyer in charge of the transaction to purchase the building has visited ABC's headquarters in the past and noticed the flooding issue, but felt it was manageable. Buyer purchases the building on an "AS-IS" basis paying ABC $25 million. In October, the rainy season for the area begins with rain totaling twenty (20) extra inches over the area's average falls in three (3) days causing excessive flooding in the parking garage which could not have been anticipated or handled by pumps causing great damage to the structure of the building. Buyer wants to avoid the contract based on fraud in the inducement. For this question can Buyer satisfy (1) any materiality requirement and (2) any intent requirement for fraud in the inducement? a. No, because (1) at the time that Buyer entered into the contract, Buyer would have bought the building even had the Buyer known about the regular level of flooding, which makes the actions by ABC not "material" and (2) ABC did not knowingly or recklessly intend to conceal the excessive level of flooding from the Buyer. b. Yes, because (1) at the time that Buyer entered into the contract, had Buyer known of the excessive flooding, the Buyer would NOT have bought the building making the actions of ABC not "material" and (2) ABC did not knowingly or recklessly intend to conceal the excessive level of flooding from the Buyer. Y c. No, because (1) at the time that Buyer entered into the contract, Buyer would have still bought the building even had they known about the regular level of flooding, which makes the actions by ABC not "material" and (2) ABC did knowingly intend to defraud the Buyer by active concealment of the regular level of flooding. d. Yes, because (1) at the time that Buyer entered into the contract, had Buyer known of the excessive flooding, the Buyer would not have bought the building making the actions of ABC not "material" and (2) ABC did knowingly or recklessly intend to conceal the excessive level of flooding from the Buyer.

a. No, because (1) at the time that Buyer entered into the contract, Buyer would have bought the building even had the Buyer known about the regular level of flooding, which makes the actions by ABC not "material" and (2) ABC did not knowingly or recklessly intend to conceal the excessive level of flooding from the Buyer.

CPA: Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work for two years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting the bonus? a. No, because Frost fully performed in reliance on the oral promise. b. No, because the contract did not involve an interest in real estate. c. Yes, because the contract could not be performed within one year. d. Yes, because the monthly salary was the consideration of the contract.

a. No, because Frost fully performed in reliance on the oral promise.

The below set of facts will be used for Bonus Questions 3, 4 & 5. ABC Corporation wants to sell its downtown corporate headquarters building. The building has issues with flooding in the parking garage and while ABC has tried to repair this issue, ABC has been unsuccessful and wants to move its headquarters to the suburbs. ABC places the building on the market using a professional marketing campaign with beautiful pictures of the inside and outside of the building and using words such as "Best Location in Downtown" and "Class A Commercial Building for Sale". The marketing campaign attracts Buyer Corp. as a potential buyer. Buyer is scheduled to perform its due diligence regarding the physical condition of the property during the month of July, when the area receives very little rain. During July, ABC watches the weather reports and sees that a large rain storm is due early in the morning on July 22, but that the rain storm is only going to last until 4 am. According to standard procedure (which existed both before and after entering into the contract of sale with Buyer) ABC maintenance personnel head down to the parking garage with pumps and pump out the water overnight, before Buyer's inspectors come the next morning. The maintenance personnel do not know that the building is being sold. The Executive Vice President of Buyer in charge of the transaction to purchase the building has visited ABC's headquarters in the past and noticed the flooding issue, but felt it was manageable. Buyer purchases the building on an "AS-IS" basis paying ABC $25 million. In October, the rainy season for the area begins with rain totaling twenty (20) extra inches over the area's average falls in three (3) days causing excessive flooding in the parking garage which could not have been anticipated or handled by pumps causing great damage to the structure of the building. Buyer wants to avoid the contract based on fraud in the inducement, transfer the building back to ABC and get back their $25 million. For this question can Buyer satisfy the "justifiable reliance" requirement for fraud in the inducement? a. No, because, Buyer did not justifiably rely on the "appearance" that the parking garage did not flood. The Executive Vice President of Buyer knew that the parking garage flooded prior to Buyer's purchase and had the Buyer done proper due diligence or asked to look at maintenance logs, it would have found that the parking garage flooded with a regular amount of rain. The excessive amount of rain and subsequent excessive flooding could not have been anticipated by ABC. b. No, because, Buyer did not rely on the "appearance" that the parking garage did not flood. The Executive Vice President of Buyer knew that the parking garage flooded prior to Buyer's purchase, but the Buyer had NO duty to investigate the extent of the flooding during their due diligence. c. Yes, because the ABC, as Seller, will always be liable to the Buyer. d. Yes, because, Buyer did justifiably rely on the "appearance" that the parking garage did not flood, even if the Executive Vice President of Buyer knew that the parking garage flooded prior to Buyer's purchase.

a. No, because, Buyer did not justifiably rely on the "appearance" that the parking garage did not flood. The Executive Vice President of Buyer knew that the parking garage flooded prior to Buyer's purchase and had the Buyer done proper due diligence or asked to look at maintenance logs, it would have found that the parking garage flooded with a regular amount of rain. The excessive amount of rain and subsequent excessive flooding could not have been anticipated by ABC.

In which of the following situations is Consideration present or is Consideration not a requirement for a binding contract? a. On June 1, Ford orders 100,000 semiconductor chips from Intel to be received by December 1. On June 5, Intel accepts Ford's order. On September 1, Intel contacts Ford to tell them that there is a shortage of supplies for semiconductor chips and that Ford cannot deliver until April 1 of the next year. Ford accepts this change in the delivery date. Is Ford's acceptance of the extended delivery date supported by Consideration and if not is Consideration required for a binding contract to form? Choose this answer if the answer is No to both questions. b. Jordan signs an employment agreement with XYZ Corp. to start work on January 1 at a salary of $100,000 for a period of 1 year. Prior to January 1, Jordan decides he wants more money to come to work, so he contacts XYZ Corp. and informs them that he will not come to work on January 1 unless XYZ pays him $120,000 a year. XYZ agrees. Does Consideration exist to support the increase in Jordan's salary? Choose this answer if the answer is Yes. c. I promise my oldest son that I will give him my Kim Mulkey bobblehead. Is my promise supported by Consideration? Choose this answer if the answer is Yes. d. Jack has been hired as an analyst at a private equity firm. As part of Jack's duties he is to analyze and give recommendations concerning the price the firm should offer to purchase companies the firm has targeted for acquisition. During his analysis, Jack learns that the target company can be bought for a much lower price than the company is actually worth, so Jack recommends a price based on this knowledge. The private equity firm, buys the target company and makes a 40% return on their investment. According to Jack's compensation agreement, Jack is entitled to a 3% bonus on the profits generated by the deals on which he worked, no matter how much those deals make. Jack's boss tells Jack that since Jack did such a good job, that Jack will get a 10% bonus. Before the bonus is paid, Jack's boss is fired. Does Consideration exist to support Jack's boss's promise to pay the 10% bonus? Choose this answer if the answer is Yes.

a. On June 1, Ford orders 100,000 semiconductor chips from Intel to be received by December 1. On June 5, Intel accepts Ford's order. On September 1, Intel contacts Ford to tell them that there is a shortage of supplies for semiconductor chips and that Ford cannot deliver until April 1 of the next year. Ford accepts this change in the delivery date. Is Ford's acceptance of the extended delivery date supported by Consideration and if not is Consideration required for a binding contract to form? Choose this answer if the answer is No to both questions.

Which of the following statements is FALSE regarding undue influence? ALERT: THIS QUESTION IS ASKING WHICH ANSWER IS FALSE? a. Relationships that may lead to a court's careful scrutiny of contracts between the parties to make sure undue influence was not present include the relationship between manufacturer and wholesaler. b. Relationships that may lead to a court's careful scrutiny of contracts between the parties to make sure undue influence was not present include the relationship between agent and principal. c. Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a fiduciary/confidential relationship. d. Relationships that may lead to a court's careful scrutiny of contracts between the parties to make sure undue influence was not present include the relationship between parent and child. e. Relationships that may lead to a court's careful scrutiny of contracts between the parties to make sure undue influence was not present include the relationship between attorney and client.

a. Relationships that may lead to a court's careful scrutiny of contracts between the parties to make sure undue influence was not present include the relationship between manufacturer and wholesaler.

CPA: Wert, an employee of Salam Corp., signed an agreement not to compete with Salam during and after being employed with Salam. Wert is the director of research and has knowledge of many of Salam's trade secrets. If Wert's employment with Salam is terminated and Wert wishes to compete with Salam, which of the following statements is not correct? a. The agreement is only enforceable if Wert voluntarily terminates his employment with Salam. b. The agreement must be necessary to protect Salam's legitimate interests in order to be enforceable. c. The geographic area covered by the agreement must be reasonable in order to be enforceable. d. The court will consider Wert's ability to obtain other employment against Salam's right to protect its business.

a. The agreement is only enforceable if Wert voluntarily terminates his employment with Salam.

The UCC provides missing contract terms in which of the following instances? a. The contract fails to specify the price and/or place of delivery. b. The contract fails to specify the quantity of items ordered. c. The UCC cannot provide missing contract terms; only the parties can provide terms.

a. The contract fails to specify the price and/or place of delivery.

In which of the following situations would an oral contract that should have been within the statute of frauds no longer have to be written to be enforceable? a. The contract has been fully performed. b. The contract has been partially performed. c. The parties had a previous course of dealing. d. Oral contracts are a common practice in that trade.

a. The contract has been fully performed.

Lucky Larson runs an illegal gambling business. Every month he pays a local judge $500 for protection. If Lucky is arrested and convicted in a trial before the same judge, and then sues the judge for breach of contract, what will be the likely result? a. The contract will be unenforceable because it is a violation of public policy. b. The contract will be enforced, because both parties are in pari delicto. c. Lucky will be able to have the contract rescinded and get back the payments he made to the judge. d. The judge will be ordered to pay the money to the government as a fine.

a. The contract will be unenforceable because it is a violation of public policy.

Which of the following contracts is covered by Article 2 of the Uniform Commercial Code? a. The sale of a new car. b. an employment agreement c. a sale of automobile insurance d. the sale of a house

a. The sale of a new car.

Which of the following statements is TRUE regarding a Time is of the Essence Clause? a. Under the Common Law, if a Time is of the Essence Clause is included in the Contract and one party does not meet a deadline subject to such clause, that failure to meet a deadline will be considered a material breach discharging the performance of the other party and entitling the non-breaching party to sue for damages. b. Under the Common Law, if a Time is of the Essence Clause is included in the Contract and one party does not meet a deadline subject to such clause, that failure to meet a deadline will result only breach of contract entitling the other party to sue for damages. c. Under the UCC, if a Time is of the Essence Clause is NOT included in the contract, one party's failure to meet a deadline, will not constitute a material breach. d. Under the Common Law, if a Time is of the Essence Clause is included in the Contract and one party does not meet a deadline subject to such clause, that failure to meet a deadline will be considered a material breach discharging the performance of the other party, but the non-breaching party cannot sue for damages..

a. Under the Common Law, if a Time is of the Essence Clause is included in the Contract and one party does not meet a deadline subject to such clause, that failure to meet a deadline will be considered a material breach discharging the performance of the other party and entitling the non-breaching party to sue for damages.

Which of the following statements is CORRECT regarding breach of contract? a. When a breach of contract occurs, the non-breaching party is required to take reasonable steps to lessen or mitigate the damages that he/she may sustain. b. If a contract party tenders full performance, but does not actually fully perform, that party will be held to be in breach of the contract. c. To fully compensate a plaintiff for losses suffered for a breach of contract, punitive damages are always awarded. d. If Smith and Jones designated in their contract an amount to be paid in the event of a breach and the amount is found to be so high it is considered a penalty, the injured party will be left with no legal remedy. e. If a manufacturer of plain white copy paper fails to perform a contract, the buyer would typically be entitled to the remedy of specific performance.

a. When a breach of contract occurs, the non-breaching party is required to take reasonable steps to lessen or mitigate the damages that he/she may sustain.

An equitable remedy would be granted in which of the following? a. Where the remedy at law is inadequate b. Where the contract is without consideration c. Where relief would cause the defendant unreasonable hardship d. Where the contract involves undue influence

a. Where the remedy at law is inadequate

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. Sam & the bank both agree that Sam owes the $5,000. Sam has been offered a two-year graduate fellowship, but Sam will not be able to pay the loan back if he accepts the fellowship. On November 1 of the current year Sam approaches the bank about a solution to his problem and the bank manager tells Sam that if he pays $3,000 now, the bank will forgive the loan. If Sam accepts, will the bank's offer be enforceable? a. Yes, because the early payment of the loan is consideration that makes the bank's promise binding. b. No, because the promise to pay the debt early is not a new legal detriment for Sam c. No, because the bank can still sue for the remaining $2,000 because the bank's promise is NOT supported by consideration as the bank did not receive a new legal benefit. d. Yes, because this is a disputed debt and the modification does not have to be supported by consideration, which does not exist in this situation.

a. Yes, because the early payment of the loan is consideration that makes the bank's promise binding.

You are really hungry and just want a large pepperoni pizza to share with your dog for supper. You call up your favorite restaurant, Pizza Café and tell them your order. They respond with "Got it! Should be ready in 30 minutes. " Which statement is NOT correct? a. You did not make a valid contract since you did not discuss price, payment or delivery terms. b. If no discussion is made about payment, you will have to pay for the pizza when you receive it. c. You have made a valid UCC contract although you did not discuss the price or delivery terms. d. If they did not agree to deliver the pizza, then the UCC specifies you will pick it up at the restaurant.

a. You did not make a valid contract since you did not discuss price, payment or delivery terms.

A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty, is best described as: a. a contract b. a promise c. a gift d. none of these answers are correct

a. a contract

A manifestation of the intention to act or refrain from acting in a specified way is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

a. a promise.

A contract in which the promisor agrees to render a certain performance to a third person is called: a. a third-party beneficiary contract. b. an assignment of rights. c. a delegation of duties. d. a novation.

a. a third-party beneficiary contract.

Debbie promises to pay Bill $2,000 if Bill paints Debbie's house. Bill doesn't say a word but paints Debbie's house. This is an example of: a. a unilateral contract. b. a bilateral contract. c. a gratuitous contract. d. none of the above.

a. a unilateral contract.

An assignee of a contract right: a. acquires all of the rights of the assignor. b. acquires new, additional rights by virtue of the assignment. c. takes the assigned rights free of all of the defenses to which the rights would be subject in an action by the assignor against the obligor. d. all of the above

a. acquires all of the rights of the assignor.

A party seeks to introduce evidence of a subsequent oral agreement entered into 1 week after and modifying a written employment contract from 2 to 3 years. The oral agreement is: a. admissible under the parol evidence rule, but unenforceable because of the statute of frauds. b. admissible under the parol evidence rule and enforceable under the statute of frauds. c. inadmissible under the parol evidence rule and unenforceable under the statute of frauds. d. inadmissible under the parol evidence rule, but enforceable under the statute of frauds.

a. admissible under the parol evidence rule, but unenforceable because of the statute of frauds.

An executed contract is one in which: a. all duties under it have been performed by all parties to the contract. b. at least one party has performed all of its duties under the contract. c. there are one or more unperformed promises by any party to the contract. d. the contract is wholly unperformed by one or more of the parties.

a. all duties under it have been performed by all parties to the contract.

In order for an act or threat to constitute duress, it needs to be at least: a. contrary to public policy. b. tortious, but not necessarily criminal. c. a criminal act or threat. d. none of the above.

a. contrary to public policy.

By an oral agreement entered into on January 1, 2000, A hires B to work for eleven months starting on February 1, 2000. This contract is: a. enforceable because this contract is outside the statute of frauds. b. enforceable because it can be performed within a year of the start of performance. c. unenforceable because it cannot be performed within one year of when it was made. d. (a) and (b) above.

a. enforceable because this contract is outside the statute of frauds.

Susan Teague enters into a contract with Bob Jones under the terms of which Jones is to pay Teague $10,000 and Teague is to build a garage, repair a boat, and build a doghouse. If the doghouse has not yet been built, which term describes the type of contract in existence? a. executory contract b. quasi contract c. executed contract d. none of these answers are correct

a. executory contract

All of the following are relevant to defining the principles of contract law EXCEPT: a. federal common law. b. state common law. c. Restatements of the Law of Contracts. d. Uniform Commercial Code.

a. federal common law.

Contract law: a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century. c. has remained static throughout the nineteenth and twentieth centuries. d. is governed primarily by the Uniform Commercial Code.

a. has more relaxed requirements today than in the nineteenth century.

Morris interviewed for a job as plant manager at Northland Bearings and was offered a two-year contract if she could relocate and start the new job within three weeks. Morris agreed. Northland promised to follow up the oral agreement with a written contract setting forth all the agreed terms, but the contract had not arrived within several days. Morris wanted to give two-weeks' notice to her present employer, so she called Northland to check on the written contract and was told it was ready to be sent to her and assured her the job was hers. She gave notice of her intention to quit her present job and moved two states away to the Northland location. When Morris arrived for her first day of work, she was told someone else with better qualifications had been found and hired for the position. Morris: a. may be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice. b. cannot enforce the contract since she had not actually started working at Northland. c. has no recourse since she never received a written contract, as required by the statute of frauds for a contract that cannot be performed within one year of its making. d. has no recourse because promises are not enforceable if they do not meet all the requirements of a contract, and here Morris lacked capacity.

a. may be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice.

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Mumbai, India. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Mumbai. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. The court found: a. no contract existed due to mutual mistake in meaning of terms. b. the seller was in breach and must pay damages. c. none of the other answers are correct. d. the seller was guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods.

a. no contract existed due to mutual mistake in meaning of terms.

What is the result if consideration is missing from an agreement between two parties? a. no contract forms b. the contract forms, but it is void c. the contract forms, but it is unenforceable d. the contract forms, but it is voidable

a. no contract forms

CPA: Todd is a licensed real estate broker in Ohio. One of Todd's largest clients, Sun Corp., contracted in writing with Todd to find a purchaser for its plant in New York and agreed to pay him a 6% commission if he were successful. Todd located a buyer who purchased the plant. Unknown to Todd, New York has a real estate broker's licensing statute which is regulatory in nature, intended to protect the public against unqualified persons. Todd violated the licensing statute by failing to obtain a New York license. If Sun refuses to pay Todd any commission and Todd brings an action against Sun, he will be entitled to recover: a. nothing. b. a fee based on the actual hours spent. c. the commission agreed upon. d. out of pocket expenses only.

a. nothing.

Todd is a licensed real estate broker in Ohio. One of Todd's largest clients, Sun Corp., contracted in writing with Todd to find a purchaser for its plant in New York and agreed to pay him a 6% commission if Todd was successful. Todd located a buyer who purchased the plant. Unknown to Todd, New York has a real estate broker's licensing statute which is regulatory in nature, intended to protect the public against unqualified persons. Todd violated the licensing statute by failing to obtain a New York license. If Sun refuses to pay Todd any commission and Todd brings an action against Sun, Todd will be entitled to recover: a. nothing b. a fee based on the actual hours Todd spent finding a purchaser for the plant. c. only the out of pocket expenses incurred by Todd in finding a purchaser for the plant. d. the commission agreed upon in the contract with Sun Corp.

a. nothing.

A delegation of contractual duties will not be permitted if: a. the duties are of a personal nature. b. the contract is silent with respect to the assignment. c. the delegation is for payment of money. d. None of the above will be permitted.

a. the duties are of a personal nature.

An arm's-length transaction is one in which: a. the parties owe each other no special duties and each is acting in their own self-interest. b. the parties have a duty to disclose, even if the other party does not ask. c. the parties owe each other a fiduciary duty. d. the parties have a duty to disclose, but only if the other party asks.

a. the parties owe each other no special duties and each is acting in their own self-interest.

Adonia and Merv enter a contract for the sale of a computer. If Merv breaches the contract and Adonia waits until the time specified in the statute of limitations has passed, the contract is now: a. unenforceable b. voidable c. void d. executory and enforceable

a. unenforceable

CPA: Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on: a. unilateral contract. b. unjust enrichment. c. public policy. d. quasi contract.

a. unilateral contract.

A gratuitous assignment is: a. valid even though not supported by consideration. b. not revocable by the assignor. c. not terminated by the assignor's death. d. all of the above.

a. valid even though not supported by consideration.

A package is delivered to your door and the delivery person asks you to sign a receipt for the package. You actually sign a promissory note promising to pay the delivery person $5,000! The note is: a. void due to fraud in the execution. b. voidable due to fraud in the execution. c. void due to fraud in the inducement. d. voidable due to fraud in the inducement.

a. void due to fraud in the execution.

A contract assented to by a party acting under improper physical coercion is: a. void. b. voidable at the election of the coerced party. c. binding on both parties. d. none of the above.

a. void.

A contract entered into by a minor is: a. voidable at the election of the minor only. b. voidable at the election of the other party only. c. voidable at the election of either. d. voidable only if it is executory.

a. voidable at the election of the minor only.

Match the terms related to offer/acceptance to a proper description of that term: Must be communicated to Offeror prior to an effective revocation. Effective when sent.

acceptance

Match the terms related to offer/acceptance to a proper description of that term: Is effective when received.

acceptance after prior rejection

Which of the following is NOT true with regard to necessary items? a. A car can be a necessary item. b. A contract for medical care can be avoided. c. What is necessary will vary from person to person. d. The liability for necessary items will be the reasonable value of the items, which may differ from the contract amount.

b. A contract for medical care can be avoided.

In which of the following situations would silence constitute a misrepresentation? a. The parties are dealing at arm's length in a business transaction. b. A person fails to disclose a fact which she knows would correct a mistake upon which the other party is relying, and the nondisclosure is a failure to act in good faith. c. A buyer knows that a new highway is proposed through the seller's property, making it more valuable than the seller realizes. d. All of the above.

b. A person fails to disclose a fact which she knows would correct a mistake upon which the other party is relying, and the nondisclosure is a failure to act in good faith.

Which of the following statements is FALSE? ALERT: THIS QUESTION IS ASKING WHICH ANSWER IS FALSE!! a. An assignment that is without consideration is revocable by the assignor. b. After an effective assignment of rights, both the assignor and the assignee have a right to the obligor's performance. c. After an effective assignment of rights, only the assignee may enforce those rights against the obligor. d. contract rights are generally assignable

b. After an effective assignment of rights, both the assignor and the assignee have a right to the obligor's performance.

Which of the following has occurred if, prior to the date that performance is due, a party announces that he will not perform or commits an act that renders him unable to perform? a. An anticipatory novation b. An anticipatory repudiation c. A prevention of performance d. A material alteration of a written contract

b. An anticipatory repudiation

In which of the following circumstances is the modification required to be in writing to be enforceable? a. Barry's Sport Shop and Champion Tee Shirt Company enter into a written contract for 300 designer tee shirts at $2 per shirt. The next day, Barry decides he can't sell 300 tee shirts and Barry calls Champion to change the order to 200 tee shirts. Champion orally accepts this modification, but still sends 300 designer tee shirts and requires Barry to pay for all 300. b. Barry's Sport Shop calls Champion Tee Shirt Company to order 200 designer tee shirts at $2 per shirt. The next day, Barry decides he can easily sell 100 more. Before the order is filled, Barry calls Champion to change the order to 300 tee shirts. Champion orally accepts the modification, but then Champion sends only 200 and refuses to send the additional 100 tee shirts. c. Bob leases an apartment to Nancy for 18 months under a written lease. One month later, Bob and Nancy subsequently agree to shorten the total lease term to 9 months. d. All of these modifications must be in writing to be enforceable.

b. Barry's Sport Shop calls Champion Tee Shirt Company to order 200 designer tee shirts at $2 per shirt. The next day, Barry decides he can easily sell 100 more. Before the order is filled, Barry calls Champion to change the order to 300 tee shirts. Champion orally accepts the modification, but then Champion sends only 200 and refuses to send the additional 100 tee shirts.

Chris (a non-merchant) receives a printed and signed form in the mail from Wyandott Heating & Air (a merchant) indicating that Chris has placed a telephone order for a $600 heater and confirming the heater will be delivered within the month. Chris does not recall placing the order but the price of $600 is a good deal and Chris needs a heater. Prior to the delivery of the heater, if Chris accepts the offer orally, which of the following is correct? a. Wyandott can enforce the contract against Chris and make Chris take delivery of and pay for the heater. b. Chris can enforce the contract against Wyandott to require Wyandott to deliver the heater, but Chris will be required to pay for the heater. c. Unless Chris objected in writing to Wyandott within ten (10) days after receiving the form from Wyandott, Wyandott can enforce the contract against Chris. d. The contract is not enforceable against either Wyandott or Chris, because there is no signed writing.

b. Chris can enforce the contract against Wyandott to require Wyandott to deliver the heater, but Chris will be required to pay for the heater.

Which of the following answers is TRUE regarding licensing statutes? a. A revenue licensing statute is one designed to protect the public against unqualified persons. b. Donna is in her last semester of dental school. On weekends she cleans the teeth of her friends and relatives and then sends them a bill for $25. These contracts are unenforceable, because Donna is not yet licensed. c. Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license (a license governed by a revenue licensing statute), they refuse to pay him. The agreement is unenforceable because Sam does not have the required fishing license. d. Bill is currently enrolled in law school. He must graduate and pass the bar exam in order to obtain his license to practice law. Before Bill becomes graduates and passes the bar exam, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill may enforce the agreement with Tom, even if Bill is not licensed to practice law.

b. Donna is in her last semester of dental school. On weekends she cleans the teeth of her friends and relatives and then sends them a bill for $25. These contracts are unenforceable, because Donna is not yet licensed.

Which of the following statements is TRUE regarding an acceptance? a. Acceptance of a unilateral contract occurs upon commencement of performance by the offeree. b. If Bob makes an offer to Terri to sell his truck for $20,000, but also states that the offer must be accepted by June 1. If Terri sends an email to Bob accepting the offer on June 2. There will be no contract as Terri's email is a defective acceptance. c. ABC Corp and Downhill Corp. entered into a lease with a renewal option. To exercise the renewal option, Downhill had to accept the renewal option by giving written notice to ABC by overnight courier to be received by ABC on or before May 31. Downhill sent, by overnight courier, the acceptance to ABC on May 31. The acceptance was received by ABC on June 1. A valid contract exists for the renewal option. d. Under the UCC whether an acceptance is effective and results in the formation of a contract is governed by the mirror image rule.

b. If Bob makes an offer to Terri to sell his truck for $20,000, but also states that the offer must be accepted by June 1. If Terri sends an email to Bob accepting the offer on June 2. There will be no contract as Terri's email is a defective acceptance.

Which of the following statements concerning the revocation of an offer is TRUE? a. Marge, a sports collector, puts an advertisement in her company's newsletter saying she would pay $400 for a specific Kobe Bryant rookie basketball trading card. In the advertisement, Marge said she would pay the first person who accepted her offer by bringing her the card. Marge then decides she would rather buy some new shoes,and changes her mind about investing in the card. Marge posts a sign at her office's executive break room saying the offer is no longer valid. A foreman from a branch plant read the newsletter ad and drove two hours to the Chicago main office to see Marge. When he walked in her office and said "I've brought your card". Marge states, "I revoked the offer yesterday". Marge does not owe him any money to pay for the trading card. b. If no expiration time is stated, an offer will terminate automatically after a reasonable period of time. c. If Coy tells Sari that he will give Sari two (2) days to decide if she wants to buy Coy's motorcycle, Coy cannot sell the motorcycle to anyone else during that two (2) day period. d. Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce Pete into keeping his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer early without fear of a lawsuit being filed against him.

b. If no expiration time is stated, an offer will terminate automatically after a reasonable period of time.

Which of the following statements related to liquidated damages clauses is TRUE? a. If the court finds the liquidated damages clause to be a penalty, the court will not enforce the clause and the non-breaching party may not recover any damages. b. If the court finds the liquidated damages clause is a penalty, the court will not enforce the clause, but the non-breaching party may recover other types of monetary damages. c. A liquidated damages clause is appropriate when the actual amount of damages related to a breach would be easy to prove. d. A court will uphold a liquidated damage clause even if it is an unreasonable approximation of damages (a penalty) related to a future breach because the parties agreed to the clause.

b. If the court finds the liquidated damages clause is a penalty, the court will not enforce the clause, but the non-breaching party may recover other types of monetary damages.

On January 1, Year 1, Bob, 16 years old, enters into a contract with Jones Chevrolet to purchase a truck. The contract provides that Bob must pay monthly payments of $500 each for 4 years. Bob makes all the payments for Year 1, but on January 1, Year 2, Bob stops making payments, but keeps the truck. Bob turns 18 on January 1 of Year 3 and continues to use the truck, but still does not make payments. On January 1 of Year 5, Jones Chevrolet sues Bob for the payments he has not made. How much can Jones Chevrolet collect from Bob, if anything? a. Jones Chevrolet can collect nothing, since Bob was a minor when he entered into the contract to buy the truck. b. Jones Chevrolet can collect all the payments due for each month of Year 2, Year 3 and Year 4. c. Jones Chevrolet can collect the payments due for Year 3 and Year 4 since Bob was over 18 during those years. d. Jones Chevrolet can only collect for the payment due during Year 4.

b. Jones Chevrolet can collect all the payments due for each month of Year 2, Year 3 and Year 4.

Pat mails Trish an offer to buy Blackacre. Trish receives the offer on May 1. On May 2, Trish delivers a letter of acceptance to National Express, but due to their error the letter is not sent by the company until May 3. Pat receives the acceptance on May 4. A contract is formed on: a. May 1 b. May 2 c. May 3 d. May 4

b. May 2

Bob and Nancy enter into an oral contract under which Bob will sell his family farm to Nancy. Nancy pays Bob 10% down and will continue to pay Bob over the next ten years. Nancy starts making improvements and repairs to the old farmhouse. Bob changes his mind and wants the family farm back. What is the most likely outcome? a. Nancy can enforce the oral contract because contracts selling real property fall outside the statute of frauds. b. Nancy can enforce the contract, even if it is not in writing, because she has paid Bob a portion of the purchase price and has started making improvements to the real property. c. Since Bob did not sign a written contract, Nancy cannot enforce the contract against Bob. d. Since Nancy did not sign a written contract, Nancy cannot enforce the contract against Bob.

b. Nancy can enforce the contract, even if it is not in writing, because she has paid Bob a portion of the purchase price and has started making improvements to the real property.

CPA: On April 1, Fine Corp. faxed Moss an offer to purchase Moss' warehouse for $500,000. The offer stated that it would remain open only until April 4 and that acceptance must be received to be effective. Moss sent an acceptance on April 4 by overnight mail and Fine received it on April 5. Which of the following statements is correct? a. No contract was formed because Moss sent the acceptance by an unauthorized method. b. No contract was formed because Fine received Moss' acceptance after April 4. c. A contract was formed when Moss sent the acceptance. d. A contract was formed when Fine received Moss' acceptance.

b. No contract was formed because Fine received Moss' acceptance after April 4.

Sand orally promised Frost a $10,000 bonus, in addition to a monthly salary, if Frost would work for two years for Sand. If Frost works for the two years, will the statute of frauds prevent Frost from collecting the bonus? a. Yes, because the monthly salary was the consideration of the contract. b. No, because Frost fully performed in reliance on the oral promise. c. Yes, because the contract could not be performed within one year d. No, because the contract did not involve an interest in real estate.

b. No, because Frost fully performed in reliance on the oral promise.

John and Andrea enter into a written agreement whereby John agrees to sell an office building to Andrea for $1 million. Andrea pays John $25,000 in earnest money. The agreement provides that if Andrea is not satisfied with the condition of the office building for ANY reason, Andrea can terminate the agreement by giving written notice to John and Andrea will receive all of the earnest money back. The agreement does not provide for any type of termination option fee. One week after signing the contract, John receives an offer from Natalie to buy the office building for $2 million. What are John's options? a. Prior to the closing of the sale, the agreement is NOT supported by consideration so John can notify Andrea that a contract between them does not exist and John may enter into a contract with Natalie. b. Prior to the expiration of the due diligence period, the agreement is NOT supported by consideration so John can notify Andrea that a contract between them does not exist and John may enter into a contract with Natalie. c. Prior to the expiration of the due diligence period, the agreement is supported by consideration, so John is required to sell the office building to Andrea or John will have breached their contract. d. Although there is a condition under the agreement to Andrea's obligation to purchase the office building that is completely within Andrea's control, consideration still exists and John is required to sell the office building to Andrea or John will have breached their contract.

b. Prior to the expiration of the due diligence period, the agreement is NOT supported by consideration so John can notify Andrea that a contract between them does not exist and John may enter into a contract with Natalie.

Olson, as buyer, entered into a real estate purchase contract with Sam, as seller. The real estate purchase contract contained the following clause, "No party to this contract may assign this contract and/or their rights arising hereunder, without the prior written consent of the other party." Olson assigns the contract to Nancy. What is the most likely outcome? a. Sam will not have to sell the property to Nancy or Olson. b. Sam will have to sell the property to Nancy, but Sam may sue Olson for breach of contract. c. Sam will have to sell the property to only Olson, since assignment was prohibited. d. Sam will have to sell the property to Nancy and cannot file a breach of contract claim against Olson.

b. Sam will have to sell the property to Nancy, but Sam may sue Olson for breach of contract.

Paul receives a box enclosing a set of knives in the mail accompanied by a letter including the statement, "This set of knives can be purchased for the special price of $199.95. If the knives are not returned within two weeks they will be deemed accepted and the payment is due within 30 days of your receipt of the knives." Paul did not request or order the set of knives. What is the most likely outcome? a. When Paul received the knives, his acceptance was automatically given to the Offeror. b. Since Paul did not agree that silence would be acceptance, he is under no obligation to either return the set of knives or to pay for them; he may use them or give or throw them away. c. If Paul does not want the knives, Paul will have to return the knives and also pay the shipping. d. If Paul does not return the knives within the 2 weeks, Paul's silence will be construed as acceptance and Paul will have to pay for the knives.

b. Since Paul did not agree that silence would be acceptance, he is under no obligation to either return the set of knives or to pay for them; he may use them or give or throw them away.

Which one of the following assignments would probably be prohibited by a court? a. A owes B $50. B assigns to C the right to collect the money. b. Stanley and Bob have entered into an agreement whereby Bob agrees to provide Stanley will all of Stanley's requirements for cleaning materials. Stanley's business has one location and is only 3,000 square feet. Stanley assigns this contract to Susan, who has five locations, each over 10,000 square feet. c. Paul assigns a real estate purchase agreement to Connie. d. Jeremy assigns the leases from his apartment complex to the bank.

b. Stanley and Bob have entered into an agreement whereby Bob agrees to provide Stanley will all of Stanley's requirements for cleaning materials. Stanley's business has one location and is only 3,000 square feet. Stanley assigns this contract to Susan, who has five locations, each over 10,000 square feet.

Jack has been in the business of selling carpeting for 20 years. He calls Bob, who is opening another branch of his furniture stores, and offers to sell him 100 square yards of carpet at $20 per square yard. Bob agrees and sends back the following letter confirming the deal:Dear Jack:As we discussed on the phone January 3, we accept your offer of 100 square yards of Saxony "heather blue" carpeting at the rate of $20 per square yard. We also reserve the right to purchase any additional yardage we need to carpet our other showroom facilities at the same rate for one year from that date.Very truly yours,BobWhich of the following is TRUE? a. There is no contract since Bob made a counteroffer. b. There is a contract for only 100 square yards of carpeting. c. There is a contract for 100 square yards PLUS the additional yardage. d. There is no contract because the additional term is too uncertain to become a contract term.

b. There is a contract for only 100 square yards of carpeting.

Which of the following would be a statement of fact? a. With a few more lessons, you should be able to compete in the regional dance competition. b. This furniture was repainted last year. c. This is the car that I would recommend. d. For the price, this is the best computer available

b. This furniture was repainted last year.

Central Contracting has a contract to build an office complex for Woodmenn, Inc. A clause in the contract calls for Central to pay $2,000 a day for each day's delay after the date the contract is scheduled for completion. a. This is a compensatory damages clause. b. This is a liquidated damages clause that may be an unenforceable penalty clause. c. Woodmenn will be given the benefit-of-the-bargain in calculating damages. d. Woodmenn will only be allowed to recover nominal damages in the case of a breach.

b. This is a liquidated damages clause that may be an unenforceable penalty clause.

Don has an employment contract with the dairy company Dunkirk Ice Cream. He sells ice cream and novelty ice cream products for Dunkirk. He has nine children and doesn't make enough money, so he decides to see if another dairy that makes ice cream will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract with Dunkirk prohibits Don from competing. If Don sells for another dairy in addition to working for Dunkirk, will he be in trouble under his contract with Dunkirk? a. No, the prohibition against Don's competing is enforceable only after Don quits Dunkirk. b. Yes, Don's covenant not to compete is likely to be enforceable during Don's employment with Dunkirk. c. Yes, because all covenants not to compete are enforceable no matter what the terms. d. No, Don's covenant not to compete is unenforceable as it is automatically against public policy.

b. Yes, Don's covenant not to compete is likely to be enforceable during Don's employment with Dunkirk.

Sam and George are the only two members in a limited liability company. Sam personally owns a piece of real property worth only $1,000 because there is an easement running right through the middle of the property making the property almost useless. George thinks that the LLC should buy the property from Sam, thinks the property should be worth $100,000 and has no knowledge concerning the easement . Does Sam have an obligation to tell George about the existence of the easement? a. No, even if Sam and George are members in the LLC, the transaction is arm's length and Sam may remain silent concerning the easement. b. Yes, because members have a fiduciary duty to each other, making this transaction NOT arm's length. Sam cannot remain silent about the easement, even if George does not ask. c. Yes, because this transaction is arm's length. It would constitute fraud in the inducement if Sam does not disclose the easement to George. d. No, even if Sam and George are members in the LLC, the rule "let the buyer beware" allows Sam to remain silent concerning the easement.

b. Yes, because members have a fiduciary duty to each other, making this transaction NOT arm's length. Sam cannot remain silent about the easement, even if George does not ask.

Grant buys $30,000 worth of shoes from Eric with payment to be due on September 30. September 30 comes and goes without Grant paying Eric. On November 30, Eric emails Grant to collect the $30,000. Grant knows that he owes the entire $30,000 but Grant responds by email to Eric that the shoes were defective, which is a false statement, to try to get Eric to accept less money as full payment. Eric, who needs cash to make payroll next week, sends an email agreeing to take the lower sum of $20,000 as full payment. Grant sends back an email accepting Eric's offer of $20,000. Is Eric's and Grant's agreement to reduce the amount owed to $20,000 enforceable? Choose the correct answer for the correct reason. a. Yes, because: Grant's and Eric's contract is governed by the Common Law. Under the Common Law for either a disputed or undisputed debt, a modification/settlement of that debt does NOT require consideration for the modification/settlement to be enforceable. But, if consideration is missing, the modification/settlement must have been made in good faith. Because Grant did not act in good faith because he lied to Eric, good faith is missing. If, good faith and consideration are missing, then to be enforceable the modification/settlement must have been in writing. The modification/settlement between Grant and Eric was in writing so it is enforceable. Fred has made a unilateral mistake and cannot void the contract. b. Yes, because: Grant's and Eric's contract is governed by the UCC. Under the UCC for either a disputed or undisputed debt, a modification/settlement of that debt does NOT require consideration for the modification/settlement to be enforceable. But, if consideration is missing, the modification/settlement must have been made in good faith. Because Grant did not act in good faith because he lied to Eric, good faith is missing. If, good faith and consideration are missing, then to be enforceable the modification/settlement must have been in writing. The modification/settlement between Grant and Eric was in writing so it is enforceable. c. No, because Grant exercised duress over Eric because Eric was under economic pressure to accept the lower amount. d. Yes, because: Grant's and Eric's contract is governed by the UCC. Under the UCC for either a disputed or undisputed debt, a modification/settlement of that debt does require consideration for the modification/settlement to be enforceable. Consideration exists for Grant's and Eric's contract because the amount owed under the original contract was a disputed debt. The modification/settlement between Grant and Eric was supported by consideration so it is enforceable.

b. Yes, because: Grant's and Eric's contract is governed by the UCC. Under the UCC for either a disputed or undisputed debt, a modification/settlement of that debt does NOT require consideration for the modification/settlement to be enforceable. But, if consideration is missing, the modification/settlement must have been made in good faith. Because Grant did not act in good faith because he lied to Eric, good faith is missing. If, good faith and consideration are missing, then to be enforceable the modification/settlement must have been in writing. The modification/settlement between Grant and Eric was in writing so it is enforceable.

The law grants relief in a situation involving mistake only where there has been: a. a unilateral mistake by one party as to the nature of the subject matter of the contract. b. a mutual mistake of material fact. c. a unilateral mistake by one party to the contract occasioned by his failure to read the document before assenting to it. d. a unilateral mistake by one party to the contract as to its legal effect.

b. a mutual mistake of material fact.

If a minor purchases a car and then continues to use it for one year after obtaining majority, this action constitutes: a. a disaffirmance of the contract. b. a ratification of the contract. c. a breach of the contract. d. none of the above.

b. a ratification of the contract.

CPA: In order for a purchaser of land to avoid a contract with the seller based on duress, it must be shown that the seller's improper threats: a. constituted a crime or tort. b. actually induced the purchaser to assent to the contract. c. would have induced a reasonably prudent person to assent to the contract. d. were made with the intent that the purchaser be influenced by them.

b. actually induced the purchaser to assent to the contract.

A party seeks to introduce evidence of a subsequent oral agreement modifying a written employment contract from 2 to 3 years. The oral agreement is a. admissible under the parol evidence rule and valid under the statute of frauds. b. admissible under the parol evidence rule, but invalid because of the statute of frauds. c. inadmissible under the parol evidence rule, but valid under the statute of frauds. d. inadmissible under the parol evidence rule and invalid under the statute of frauds.

b. admissible under the parol evidence rule, but invalid because of the statute of frauds.

A contract in which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty is called: a. a material alteration of a written contract. b. an accord. c. a substantial performance. d. a novation.

b. an accord.

An agreement in a contract that attempts to excuse one party from liability for her own negligence is called: a. a clause obstructing the administration of justice. b. an exculpatory clause. c. a restraint of trade. d. an illusory promise.

b. an exculpatory clause.

A condition that is understood by the parties to be part of their agreement, but is not included in their express contract, is called: a. an implied-in-law condition. b. an implied-in-fact condition. c. a concurrent condition. d. a condition precedent.

b. an implied-in-fact condition.

Colleen agrees to pay $10 for David's computer which is worth $300. Colleen's consideration: a. is not legally sufficient. b. appears to be inadequate but is probably legally sufficient. c. is a forbearance. d. is inadequate but the contract will be enforced based on moral obligation.

b. appears to be inadequate but is probably legally sufficient.

Ben and Kate had been negotiating Ben's employment contract in conversations over the phone for a couple of weeks. Finally, they agreed on the main terms that would be included in the final agreement. Kate offered to draft the contract for Ben to read over. On the next day, Ben was fired from his job and receives the contract from Kate. Kate has already signed the contract. Afraid he would be unemployed, Ben signed the contract sent by Kate without reading it. There were several terms in the resulting contract that Ben does not like at all and that were not discussed in their prior conversations. In this example Ben: a. can avoid the contract because of "mistake" because he made a mistake by failing to read the contract. b. cannot avoid the contract because of economic duress or mistake (failure to read). c. may avoid the contract because of unilateral mistake. d. can avoid the contract because he was the victim of "economic duress".

b. cannot avoid the contract because of economic duress or mistake (failure to read).

Will wants to buy a new car. He goes to the bank to get a loan for the purchase, and signs an agreement to pay $10 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid. The bank is a(n): a. incidental beneficiary b. creditor beneficiary c. assignee d. donee beneficiary

b. creditor beneficiary

Under the statute of frauds provision of the UCC, if a writing that is otherwise sufficient incorrectly states the quantity term agreed upon by the parties, the contract is: a. unenforceable. b. enforceable, but only to the extent of the quantity of goods stated in the writing. c. enforceable to the extent of the quantity term orally agreed upon by the parties. d. enforceable to the extent determined by the court to be fair and reasonable at the time of enforcement of the contract.

b. enforceable, but only to the extent of the quantity of goods stated in the writing.

CPA: In general, a clause in a real estate contract entitling the seller to retain the purchaser's down payment as liquidated damages if the purchaser fails to close the transaction is enforceable: a. in all cases, when the parties have signed a contract. b. if the amount of the down payment bears a reasonable relationship to the probable loss. c. as a penalty, if the purchaser intentionally defaults. d. only when the seller cannot compel specific performance.

b. if the amount of the down payment bears a reasonable relationship to the probable loss.

One does not possess sufficient contractual capacity to enter into a contract if it is shown that he is: a. slightly intoxicated. b. intoxicated and unable to understand the nature and consequences of his acts. c. both of the above. d. none of the above.

b. intoxicated and unable to understand the nature and consequences of his acts.

All of the following are required of a writing to satisfy the requirements of the general statute of frauds EXCEPT: a. it must be signed by the party to be charged or his agent. b. it must be signed by the party seeking to enforce the contract or his agent. c. it must specify the parties to the contract. d. it must specify with reasonable certainty the subject matter of the unperformed promises as well as their essential terms.

b. it must be signed by the party seeking to enforce the contract or his agent.

Carol Customer sees an ad in a newspaper for a clock radio for $8. She goes to the store and wants to buy the item advertised in the newspaper at the price quoted. Carol is: a. making a counteroffer. b. making an offer to buy. c. making an acceptance of the store's offer to sell. d. making an acceptance of the store's firm offer.

b. making an offer to buy.

Clara sells her house to Donald. The house has a mortgage which is held by First Bank. As part of the transaction, First Bank agrees to discharge Clara from the mortgage and to allow Donald to assume the obligation. This is a(n): a. assignment of rights. b. novation. c. delegation of duties. d. third-party creditor beneficiary contract.

b. novation.

Under the Code, if two parties, at least one of whom is not a merchant, intend to enter into a binding contract but the offeree in her acceptance includes additional terms for the contract, those terms are construed as: a. mere surplus and are ignored. b. proposals for addition to the contract. c. terms of the contract provided they do not materially alter the agreement. d. terms of the contract provided they are not material and are not objected to by the offeror within a reasonable time.

b. proposals for addition to the contract.

A regulatory licensing statute is one intended to: a. raise revenue. b. protect the public against unqualified persons. c. prevent gambling. d. prevent excessive rates of interest.

b. protect the public against unqualified persons.

Widget Manufacturing Corporation of America contracts with the Poly Plastic Company of Wisconsin to buy from Poly all of the plastic it will need next year in its manufacturing process. This is an example of a(n): a. illusory contract. b. requirements contract. c. output contract. d. exclusive dealing contract.

b. requirements contract.

Addison is approached by Archer Enterprises to work as a consultant for a period of two years, and he signs a two year agreement. This contract is governed by: a. federal statute b. state common law c. Article 2 of the UCC d. the law of quasi contract

b. state common law

The Uniform Commercial Code defines goods as: a. tangible and intangible personal property. b. tangible personal property. c. land and anything attached to it. d. none of the above.

b. tangible personal property.

In the absence of an expressed intention to the contrary, an assignor who receives value makes all of the following implied warranties to the assignee with respect to the assigned right EXCEPT: a. that he will do nothing to defeat or impair the assignment. b. that the obligor will pay the assigned debt. c. that the assigned right actually exists. d. that he has no knowledge of any fact that would impair the value of the assignment.

b. that the obligor will pay the assigned debt.

Monetary damages are only recoverable for losses that the party in breach had reason to foresee as a probable result of such breach at the time that: a. the parties began negotiations. b. the parties entered into the contract. c. the breach occurred. d. none of the above

b. the parties entered into the contract.

A contract in which one party seeks an act in exchange for a promise is a(n): a. quasi contract. b. unilateral contract. c. implied in fact contract. d. bilateral contract.

b. unilateral contract.

Match the description of a purported contract with the proper type of contract. Do not assume either party to the contract has done something unless I tell you: "I promise to pay you $100 if you will promise to fix my car next month." You say "OK". No repairs have been made yet.

bilateral and executory

Acting in reliance on X's intentional misrepresentation as to a drill press's capabilities, Y purchases the press from X for $17,000. Although the value of the press, if it had performed as promised, would be $10,000, its actual delivered value is $4,000. Under the benefit-of-the-bargain rule, Y could recover: a. nothing. b. $3,000. c. $6,000. d. $7,000.

c. $6,000.

Which of the following statements is TRUE regarding fraud in the inducement? a. Actionable fraud in the inducement can usually be based on a statement of opinion as well as a statement of fact. b. If the misrepresenting party only has an intent level of negligence, but the false statement of fact is NOT material, the innocent party may still void the contract. c. Active concealment, or action intended or known to be likely to keep another from learning a fact he otherwise would have learned, can form the basis for fraud in the inducement. d. A false statement of fact must be material even if the misrepresenting party knew that the statement of fact was false and had intent to deceive.

c. Active concealment, or action intended or known to be likely to keep another from learning a fact he otherwise would have learned, can form the basis for fraud in the inducement.

Arthur writes a letter to Bob in which he promises to pay Clark's debts if Clark doesn't pay. a. Arthur's promise is a primary promise. b. Arthur's promise is an original promise. c. Arthur's promise is a collateral promise. d. Arthur's promise falls within the main purpose doctrine.

c. Arthur's promise is a collateral promise.

When can a minor disaffirm a contract? a. Only before reaching the age of majority b. At any time after reaching the age of majority c. At any time either prior to or immediately after reaching the age of majority d. None of the above

c. At any time either prior to or immediately after reaching the age of majority

Which of the following contracts need not be in writing to be enforced? a. Arthur agrees to buy Bob's house for $60,000. b. Clara's Aunt Amanda promises Clara $1,000 if she will marry Brad. c. Bill Buyer agrees to buy $450 in goods from Sam Seller. d. Oscar agrees to work for Big Bucks, Inc., for two years beginning June 1.

c. Bill Buyer agrees to buy $450 in goods from Sam Seller.

Which of the following would be an illusory promise? a. Sara agrees to sell her total production to Bill. b. Bill agrees to buy his total widget requirement from Sara. c. Bill agrees to buy all the widgets he wants from Sara. d. Bill agrees to buy Sara's total production of widgets if he inherits enough money from Uncle John to do so.

c. Bill agrees to buy all the widgets he wants from Sara.

Which release set forth below is most likely to be enforced by a court? a. Bob runs a scooter rental business. Bob has been negligent in his maintenance of the brakes on the scooters. Bob has each customer sign a release prior to their renting the scooter. One of Bob's customers is injured because the brakes did not work. b. Bob runs a scooter tour guide business. Bob has each customer sign a release prior to their beginning the tour. One of Bob's customers is injured because one of Bob's tour guides negligently takes the tour group the wrong way down a one way street. c. Bob and Sue are in a car wreck. Sue is injured and the wreck is determined to be Bob's fault. Bob and Sue sign an agreement whereby Sue accepts $25,000 from Bob and Sue releases Bob of all liability related to the wreck. d. Bob runs a horseback camping tour guide service. Prior to leaving on the camping trip on horseback, each customer must sign a release. One of Bob's tour guides gets frustrated with an especially irritating camper and slaps the back of the horse, causing the horse to buck and injure the camper.

c. Bob and Sue are in a car wreck. Sue is injured and the wreck is determined to be Bob's fault. Bob and Sue sign an agreement whereby Sue accepts $25,000 from Bob and Sue releases Bob of all liability related to the wreck.

Bob bought a car from Sally for $25,000. Sally had misrepresented to Bob that the car only had 50,000 miles on it. Sally knew the actual mileage was 200,000 miles. Bob is in possession of the car and Sally has his $25,000. If Bob avoids the contract due to fraud in the inducement, what will happen? a. Sally will get to keep the $25,000 and Bob will have to give Sally the car back. b. Bob will have to keep the car and Sally will have to pay him back $20,000 which is the difference between the value of a car with 50,000 miles and a car with 200,000 miles. c. Bob will have to give the car back to Sally and Sally will have to give the $25,000 back to Bob. d. Bob will get the $25,000 back from Sally and will also get to keep the car.

c. Bob will have to give the car back to Sally and Sally will have to give the $25,000 back to Bob.

Which of the following is necessary in order to satisfy the consideration requirement? a. Legal sufficiency b. Bargained-for exchange c. Both (a) and (b) d. Neither (a) nor (b)

c. Both (a) and (b)

Which of the following is not a rule of contract interpretation? a. Words and other conduct are interpreted in light of all the circumstances, and if the principal purpose is ascertainable, it is given greater weight. b. Unless a different intention is manifested, technical terms and words of art are given their technical meaning. c. Express terms, usage of trade, course of dealing, and course of performance are weighed in that order. d. Separately negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated.

c. Express terms, usage of trade, course of dealing, and course of performance are weighed in that order.

In which of the following situations did the Offeror legally revoke his/her offer? a. John tells Bob, "If you will paint my house, I will pay you $3,000." Bob says nothing. The next day, Bob rents scaffolding, buys paint and starts painting. John runs out of his house saying, "Bob, stop! David said he would paint the house for less". b. Brooks offers to sell four acres of land to Jennifer for $8,000 and further offers to keep the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer pays Brooks $100. Ten (10) days after Jennifer paid Brooks, Brooks sends a letter to Jennifer revoking the offer. c. Ezekiel wrote a letter to his friend Fernando offering to sell Fernando an 75-acre farm for $150,000. After mailing the letter, Ezekiel learns that the farm is actually worth $200,000 and changes his mind about selling. Ezekial, emails Fernando a revocation of the offer, which Fernando opens and views. d. Yamaha sells boats to retailers. Yamaha sends the following email out to its retailer customers: "Model 1500 C boats are on sale for $15,000 each. Have 30 boats available. Will hold the 30 boats for 30 days." A day later, Yamaha decides this email was not such a good idea and sends an email revoking the offer.

c. Ezekiel wrote a letter to his friend Fernando offering to sell Fernando an 75-acre farm for $150,000. After mailing the letter, Ezekiel learns that the farm is actually worth $200,000 and changes his mind about selling. Ezekial, emails Fernando a revocation of the offer, which Fernando opens and views.

Which of the following would be an offer? a. Will you buy my computer for $1000? b. I sure would like to sell this computer for $1000. c. I'll sell you this computer for $1000. d. None of the above are offers.

c. I'll sell you this computer for $1000.

Which of the following statements is TRUE regarding ratification? a. Fay, age 17, ordered a pair of skis on the installment plan from Slope Skis Inc.. She paid $20 every month until she turned 18, the age of majority. The day after she turned 18, Fay sold the skis to Sharon. Fay's sale of the skis is NOT a ratification of the contract between Fay and Slope Skis and Fay can get her money back from Slope Skis. b. Oswald, a minor, makes a contract with Albert, an adult, to buy a motorcycle. One week later, Oswald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the motorcycle next week. In this case Oswald can still disaffirm the contract. c. If a minor wishes to ratify a contract, the minor must wait until they turn 18 to ratify and must ratify the entire contract, not just the portions that are in the minor's favor. d. If a minor wishes to ratify a contract, the minor must wait until they turn 18 to ratify and can only ratify the portions of the contract that are in the minor's favor.

c. If a minor wishes to ratify a contract, the minor must wait until they turn 18 to ratify and must ratify the entire contract, not just the portions that are in the minor's favor.

Carl Contractor submits a bid that contains a substantial error in addition. a. This is a unilateral mistake. Carl is bound by the error. b. Carl is guilty of fraud in the inducement. c. If the error is an obvious one that the other party knew of when it accepted the contract, Carl can avoid the contract. d. Carl can avoid the contract based upon duress.

c. If the error is an obvious one that the other party knew of when it accepted the contract, Carl can avoid the contract.

Which of the following statements is TRUE? a. Restitution allows a court to rewrite or correct a contract to conform to the true agreement. b. Specific Performance requires a contract party to stop doing something. c. In a voidable contract, rescission puts both parties to a contract back in the place they were before they entered into the contract. d. Injunction requires a breaching party to a contract to perform.

c. In a voidable contract, rescission puts both parties to a contract back in the place they were before they entered into the contract.

Which of the following situations require the promise to pay to be in writing for that promise to pay to be enforceable under the Statute of Frauds? a. Tom's bank is threatening to repossess his car. Tom's mother tells Tom that she will pay the bank if Tom defaults on the loan. b. Natalie's daughter, Kat, lives in a condo near Baylor. The condo is owned by Natalie. Kat needs to hire a repairman to repair the air conditioning in the condo. The AC repairperson is worried that Kat will not pay. Natalie calls the repairperson and says "If Kat does not pay, I will." The repairperson agrees to repair the air conditioning and does so. c. In order to induce a car dealer to sell Mary's son a car on credit, Mary orally promises the dealership that she will pay for the son's car if the son does not pay the dealership. d. The doctors come into Tom and Bob's father's hospital room. The doctors inform Tom and Bob that their father requires major surgery. Tom and Bob tell the doctors that they will pay for their father's surgery.

c. In order to induce a car dealer to sell Mary's son a car on credit, Mary orally promises the dealership that she will pay for the son's car if the son does not pay the dealership.

In which of the following situations would the assignment by the Assignor to an Assignee be effective? a. John assigns a contract to Natalie. The contract contains the following provision: "This contract and the rights that arise hereunder shall not be assigned without the prior written consent of the other party and any attempted assignment shall be void." b. Little Bear Corp. enters into a contract to buy all of their requirements for water from Bluebonnet Water Supply for a 1 year period. Bear is a manufacturer and uses around 10,000 gallons a month in their manufacturing process. Two months after entering into the contract with Bluebonnet, Bear goes out of business and assigns Bear's rights under the Bluebonnet contract to Big Bear Corp. who uses around 50,000 gallons a month. c. John assigns a contract to Natalie. The contract contains the following provision: "This contract shall not be assigned without the prior written consent of the other party." d. Marigold Corp. receives a loyalty discount on Marigold's purchases of flowers from Bruiser Inc. under a contract that expires in 6 months. Marigold buys in bulk and has been a loyal and paying customer of Bruiser for 10 years. Marigold no longer needs to buy flowers, but wants to take advantage of the pricing under the Bruiser contract. Marigold assigns the contract with Bruiser to Daisy Inc. who has never done business with Bruiser.

c. John assigns a contract to Natalie. The contract contains the following provision: "This contract shall not be assigned without the prior written consent of the other party."

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise. at no cost" Nancy bought the lot and built the building as instructed only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement best describes the situation? a. McHenry is liable to Nancy since adequate consideration was given by both parties. b. McHenry is not liable to Nancy since there was past consideration. c. McHenry may be liable to Nancy based on the concept of promissory estoppel.

c. McHenry may be liable to Nancy based on the concept of promissory estoppel.

Which of the following debts is an Undisputed Debt? a. Jorge hires James to build his manufacturing facility for $2.5 million. On final inspection, Jorge finds that James did not build the facility to the required specifications. James sues Jorge for the entire $2.5 million contract price. b. Sam and George both run a red light and are involved in the resulting car wreck. Sam believes that George is at fault and George believes Sam is at fault. c. Nancy hires Jake to clean her office building for $5,000 a month. Jake does an excellent job for the entire month and Nancy has no complaints. d. Katy borrowed $50,000 from Baylor Bank under a loan under which the interest rate is adjusted periodically. After making several years of payments, Katy thinks that she owes only $30,000, but Baylor Bank believes that Katy still owes $35,000. The $5,000 difference is caused by Baylor Bank charging a higher interest rate than Katy believes is required.

c. Nancy hires Jake to clean her office building for $5,000 a month. Jake does an excellent job for the entire month and Nancy has no complaints.

Through a clerical error, an annuity policy that should be paying $500 per month is actually paying $50 per month. Upon proper proof of the error, a court of equity might elect which of the following remedies? a. Specific performance b. An injunction c. Reformation d. Restitution

c. Reformation

Slick owes Gullible $50. Slick offers to let Gullible have Slick's pocket knife if he will accept $25 and forgive the rest of the debt. Later Gullible sues for the balance of the debt. a. Gullible will win because there was no consideration. b. Gullible will lose because he should have sued as soon as he got the knife. c. Slick will win because the knife constituted legally sufficient consideration. d. Slick will lose because he still owes $25.

c. Slick will win because the knife constituted legally sufficient consideration.

Which of the following would not be assignable? a. A owes B $50. B assigns to C the right to collect the money. b. Pedro assigns a contract right to land to Chung. c. Teacher assigns to her best friend her contract right to teach. d. All of the above

c. Teacher assigns to her best friend her contract right to teach.

In which of the following situations has the communication requirement been met related to the offer and/or acceptance described in the situation? a. I send an offer to Nancy by regular mail, but the letter is lost in the mail and Nancy never receives it. b. I have drafted an email to Nancy offering to sell my home to Nancy for $400,000. Nancy is a co-worker and comes into my office and sees the email on my screen. I have not yet sent the email. Nancy then sees me in the hallway and tells me that she accepts my offer. c. The Regional Manager of Union Pacific made an offer to me to build a gravel road to give access to my property. I accepted. The Regional Manager did NOT have actual authority to make that offer. d. I send an email to Nancy offering to sell my home for $400,000. Nancy tells Bob about the offer. Bob sends an email to me accepting the offer.

c. The Regional Manager of Union Pacific made an offer to me to build a gravel road to give access to my property. I accepted. The Regional Manager did NOT have actual authority to make that offer.

Wert, an employee of Salam Corp., signed an agreement not to compete with Salam during and after being employed with Salam. Wert is the director of research and has knowledge of many of Salam's trade secrets. If Wert's employment with Salam is terminated and Wert wishes to compete with Salam, which of the following statements is FALSE? ALERT: This question is asking which statement is FALSE! a. The geographic area covered by the agreement not to compete must be reasonable in order to be enforceable. b. The court will consider Wert's ability to obtain other employment and weigh that against Salam's right to protect its business and trade secrets. c. The agreement not to compete is only enforceable for the period after Wert's employment is terminated, if Wert voluntarily terminates his employment with Salam. d. Salam may be able to enforce the agreement not to compete for the period after Wert's employment with Salam is terminated, if the agreement not to compete is necessary to protect Salam's trade secrets.

c. The agreement not to compete is only enforceable for the period after Wert's employment is terminated, if Wert voluntarily terminates his employment with Salam.

Miss Merry owns a Waco pet food and supply store called "Chow Down". Miss Merry agrees to sell Chow Down to Mr. Jones for $200,000. Under their agreement, Mr. Jones will acquire the building, inventory, and all assets. The agreement also includes a non-compete clause prohibiting Miss Merry from opening a similar pet food and supply store anywhere in Texas for the next ten (10) years. Both Miss Merry and Mr. Jones sign the contract. If, five (5) years after signing the contract, Miss Merry wants to open a new pet food and supply store in Waco, what would be the most likely result? a. The ten (10) year non-compete clause was overly broad, and as a result, the courts will most likely invalidate the entire sales contract including the non-compete clause. Miss Merry can open her pet food and supply store in Waco at any time after she signed the contract. b. Miss Merry signed the contract and since she was aware of the non-compete clause, she will be bound by that clause for the full ten (10) year period and prohibited from opening a pet food and supply store in the state of Texas for that period. c. The court will most likely NOT enforce the covenant not to compete for the full ten (10) years as the time period is too long and also NOT for the entire state of Texas as the prohibited geographic area is too large. Since five (5) years have passed since Miss Merry has signed the contract, she will most likely be able to open her pet food and supply store in Waco. d. The courts do NOT care if you make a good deal or a bad deal, so this contract is fully enforceable, including the non-compete clause, whether Miss Merry read the contract or not.

c. The court will most likely NOT enforce the covenant not to compete for the full ten (10) years as the time period is too long and also NOT for the entire state of Texas as the prohibited geographic area is too large. Since five (5) years have passed since Miss Merry has signed the contract, she will most likely be able to open her pet food and supply store in Waco.

Arthur, a world-famous rock star, has a contract to perform at the Superdome on New Year's Eve. However, he decides he would rather spend the night with his family and friends so he informs the owners of the Superdome. a. The owners of the Superdome are entitled to specific performance, because Arthur's services are unique. b. The owners of the Superdome will have to wait until after January 1 to sue for breach of contract. c. The owners of the Superdome are entitled to damages, but they are not entitled to specific performance. d. Because an adequate remedy at law is available here, a court would be unable to issue an injunction prohibiting Arthur from performing at Madison Square Garden on New Year's Eve if they gave him a better offer.

c. The owners of the Superdome are entitled to damages, but they are not entitled to specific performance.

When a contract party sues the other party for breach of contract, that plaintiff will incur attorneys' fees and court costs to pursue that lawsuit. Which of the following is CORRECT regarding the ability to obtain reimbursement for attorneys' fees and court costs spent by the prevailing party to a lawsuit? a. The prevailing party in a breach of contract suit will always be reimbursed attorneys' fees and court costs from the losing party. b. Punitive damages have to also be awarded in a breach of contract suit for the prevailing party to be awarded reimbursement of their attorneys' fees and court costs. c. The prevailing party will have a better chance to recover attorneys' fees and court costs If the contract allows the prevailing party to recover such fees and costs. d. All of these answers are CORRECT.

c. The prevailing party will have a better chance to recover attorneys' fees and court costs If the contract allows the prevailing party to recover such fees and costs.

UCC Article 2 applies to contracts involving which of the following? a. The services of an accountant b. An employment relationship c. The sale of a television set d. The sale of a private residence

c. The sale of a television set

Action Play Equipment ordered 200 feet of chain, 400 clasps, and 50 swing seats from Brace Company for $1,600 to be delivered within three weeks of the order. Brace sent back an acceptance form which stated payment was due within 30 days of delivery or a finance charge of 2% per month would be added to the balance. What is the status of the interaction between Action and Brace? a. There is no contract, because the method of transportation has not been decided. b. There is a valid contract for the goods, but the payment terms will not become part of the contract. c. There is a valid contract under the UCC, and the additional payment terms become part of the contract unless Action objects within a reasonable period of time. d. There is no contract, because Brace has made a counteroffer by adding payment terms.

c. There is a valid contract under the UCC, and the additional payment terms become part of the contract unless Action objects within a reasonable period of time.

Carl Contractor pledges to contribute $500 to the local United Fund for charity. a. This promise lacks consideration and will not be enforced. b. This promise is a firm offer under the Code and will be enforced. c. There is the probability of reliance by the United Fund and the promise will be enforced under the doctrine of promissory estoppel. d. This promise is a preexisting public obligation and will be enforced.

c. There is the probability of reliance by the United Fund and the promise will be enforced under the doctrine of promissory estoppel.

On January 1st, Mask Manufacturing Inc. makes an agreement with Helping Hands Hospital to sell all of the protective masks that Helping Hands requires for a period of 3 months beginning February 1. Helping Hands normally uses about 1,000 masks each month although the number varies a little. In February, Helping Hands orders 1020 masks and Mask promptly ships the masks to Helping Hands. On March 1st, Helping submitted an order for 5,000 masks. Mask Manufacturing only provides 1,000 masks. Which statement is TRUE regarding this situation? a. This agreement is an unenforceable common law contract because the quantity of masks to be provided is not definite. b. The agreement is an "output" contract and Mask is in breach of contract since they are not providing the number (5,000) of masks requested. c. This a "requirements" contract and Mask is not in breach of contract for failing to provide 5,000 masks. d. This agreement is an unenforceable UCC contract since the exact quantity is not specified.

c. This a "requirements" contract and Mask is not in breach of contract for failing to provide 5,000 masks.

Which of the following would be a statement of fact? a. For the price, this is the best typewriter available. b. This is the one that I would recommend. c. This furniture was refinished last year. d. With a few more lessons, you should be able to compete in the regional dance competition.

c. This furniture was refinished last year.

Which of the following would not be an appropriate measure of monetary damages? a. Compensatory damages b. Consequential damages c. Unforeseeable damages d. Incidental damages

c. Unforeseeable damages

Which of the following would requires additional consideration for a modification of the original contract to be enforceable? a. A promise to pay a debt barred by the statute of limitations. b. A promise to pay a debt discharged in bankruptcy where the promise meets the requirements of the Bankruptcy Code. c. When an undisputed debt related to services is settled for a lower amount. d. Greg and Blake orally agree that Blake will work for Greg for 2 years. A month later, realizing their mistake, Greg and Blake exchange emails documenting their original agreement.

c. When an undisputed debt related to services is settled for a lower amount.

Dillon agreed to design a website for Sigma Kitty Kat and gave them a 20% discount because they were a non-profit organization. Dillon did not fully perform; however, his failure to complete the work was a minor deviation from the contract. Sigma Kitty Kat can get the remaining work done for $200. As a remedy, Sigma Kitty Kat will: a. NOT be required to pay anything to Dillon, since Sigma Kitty Kat was not completely satisfied with the work. b. NOT be required to pay anything since Dillon breached the contract. c. Will owe Dillon the discounted contract price less the $200 needed to complete the work. d. be required to pay the full agreed contract price since the value of the work received was greater than the full agreed contract price, due to the discount.

c. Will owe Dillon the discounted contract price less the $200 needed to complete the work.

Under the parol evidence rule, which of the following types of evidence may be used to vary or change the written agreement? A. Oral agreements between the parties modifying the resulting written agreement made contemporaneously with the written agreement. b. Written agreements between the parties modifying the subsequent written agreement made BEFORE the original written agreement. c. Written agreements between the parties modifying the original written agreement made AFTER the original written agreement. d. None of these may be used to vary or contradict the written agreement.

c. Written agreements between the parties modifying the original written agreement made AFTER the original written agreement.

On March 1, Tamera, a senior at Baylor, received a telephone call from XYX Inc. offering Tamera a consulting job. The job is for one year beginning on June 15 which is after Tamera's graduation. According to XYZ, Tamera will be required to move to Oklahoma and be ready to start work at 9:00 am on June 15. Should Tamera ask for a letter confirming the telephone conversation if she accepts the offer orally during the telephone call? a. No, because the job offer is for a period of one year or less, with the one year period being measured starting on June 15. b. No, because the job offer was a UCC firm offer. c. Yes, because the job offer is for a period longer than one year, with the one year period being measured starting on March 1. d. Yes, because the job offer is covered by the parol evidence rule.

c. Yes, because the job offer is for a period longer than one year, with the one year period being measured starting on March 1.

The below set of facts will be used for Bonus Questions 3, 4 & 5. ABC Corporation wants to sell its downtown corporate headquarters building. The building has issues with flooding in the parking garage and while ABC has tried to repair this issue, ABC has been unsuccessful and wants to move its headquarters to the suburbs. ABC places the building on the market using a professional marketing campaign with beautiful pictures of the inside and outside of the building and using words such as "Best Location in Downtown" and "Class A Commercial Building for Sale". The marketing campaign attracts Buyer Corp. as a potential buyer. Buyer is scheduled to perform its due diligence regarding the physical condition of the property during the month of July, when the area receives very little rain. During July, ABC watches the weather reports and sees that a large rain storm is due early in the morning on July 22, but that the rain storm is only going to last until 4 am. According to standard procedure (which existed both before and after entering into the contract of sale with Buyer) ABC personnel head down to the parking garage with pumps and pump out the water overnight, before Buyer's inspectors come the next morning. The Executive Vice President of Buyer in charge of the transaction to purchase the building has visited ABC's headquarters in the past and noticed the flooding issue, but felt it was manageable. Buyer purchases the building on an "AS-IS" basis paying ABC $25 million. In October, the rainy season for the area begins with rain totaling twenty (20) extra inches over the area's average falls in three (3) days causing excessive flooding in the parking garage which could not have been anticipated or handled by pumps causing great damage to the structure of the building. Buyer wants to avoid the contract based on fraud in the inducement. For this question can Buyer satisfy the first 2 requirements of fraud in the inducement? (1) False statement/active concealment & (2) of a fact. a. No, because: (1) ABC's pumping the water out on July 22 was NOT a false statement and (2) the flooding condition of the parking garage is a "opinion". b. No, because: ABC had NO duty to disclose the flooding in the parking garage to Buyer. c. Yes, because: (1) ABC's pumping the water out on July 22 was active concealment and (2) the flooding condition of the parking garage is a "fact". d. Yes, because: (1) ABC's pumping the water out on July 22 was a false statement and (2) the flooding condition of the parking garage is a "fact".

c. Yes, because: (1) ABC's pumping the water out on July 22 was active concealment and (2) the flooding condition of the parking garage is a "fact".

Nancy mails an offer to Cole on June 10. Cole receives the offer on June 11. Nancy mails a revocation of the offer on June 12. Cole mails a letter of acceptance on June 13. Cole receives the revocation on June 14. Nancy receives the letter of acceptance on June 15. Was a contract formed? a. Yes, on June 11. b. No, the offer was revoked before acceptance c. Yes, on June 13. d. Yes, on June 15.

c. Yes, on June 13.

A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty, is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

c. a contract.

The delegator remains bound to perform her contractual duties even after a delegation unless the delegation is: a. a gratuitous delegation. b. a delegation for value. c. a novation. d. none of the above.

c. a novation.

The following promises or contracts are within the statute of frauds EXCEPT: a. the promise of an executor or administrator that he personally will pay all of the decedent's creditors in full. b. a promise to marry made in consideration for some promise other than a reciprocal promise to marry. c. a promise made by a father to his son by which the father will pay the son's debt in the event of his son's default. d. a promise made by a father to his son's creditor to pay the son's debt in the event of his son's default.

c. a promise made by a father to his son by which the father will pay the son's debt in the event of his son's default.

If a contract is expressed in a writing that is intended by the parties to be the complete and final expression of their rights and duties under the contract, the parol evidence rule precludes the admission into evidence of all of the following EXCEPT: a. prior oral negotiations or agreements of the parties. b. prior written negotiations of the parties. c. a subsequent oral agreement between the parties to modify the terms of the contract. d. a contemporaneous oral agreement between the parties that varies or changes the written contract.

c. a subsequent oral agreement between the parties to modify the terms of the contract.

Simone offers to pay Andrea $150 if Andrea will paint her apartment while she (Simone) is out of town on vacation for two weeks. Andrea makes no promise but tells Simone that she will think about it. While Simone is out of town, Andrea paints the apartment. This is best described as: a. an implied in fact contract b. a quasi contract c. a unilateral contract d. a bilateral contract

c. a unilateral contract

A rejection of an offer by the offeree is effective: a. at the moment that the offeree signs the notice of rejection. b. at the moment that the offeree dispatches the notice of rejection. c. at the moment that the offeror receives the notice of rejection. d. none of the above

c. at the moment that the offeror receives the notice of rejection.

CPA: In order to satisfy the consideration requirement to form a contract, the consideration exchanged by the parties must: a. have a monetary value. b. conform to the parties' subjective intent. c. be legally sufficient. d. have approximately the same value.

c. be legally sufficient.

Advertisements, circulars, quotation sheets, and other similar business communications usually do not constitute offers because: a. they do not contain a promise. b. they leave unexpressed many terms which would be necessary to the making of a contract. c. both (a) and (b). d. none of the above.

c. both (a) and (b).

In general, an agreement not to compete with an employer while employed is enforceable if: a. the purpose of the restraint is to protect the employer's business. b. the restraint is no greater than is reasonably needed to protect the employer's business. c. both (a) and (b). d. neither (a) nor (b).

c. both (a) and (b).

The requirement of consideration is satisfied by: a. a promise exchanged for a promise. b. a promise exchanged for an act. c. both (a) and (b). d. neither (a) nor (b).

c. both (a) and (b).

An intended creditor beneficiary of a third-party beneficiary contract has rights against: a. the promisee/debtor only. b. the promisor only. c. both the promisee and the promisor. d. neither the promisee nor the promisor.

c. both the promisee and the promisor.

To be legally sufficient, the consideration for a promise must be: a. a legal detriment to the promisee. b. a legal benefit to the promisor. c. either (a) or (b). d. neither (a) nor (b).

c. either (a) or (b).

Edward has agreed to buy Donna's CD player. Edward agrees to pay Donna when the CD player is delivered. This transaction involves: a. implied-in-fact conditions subsequent. b. implied-in-law conditions subsequent. c. express concurrent conditions. d. express conditions precedent.

c. express concurrent conditions.

A contract in which the parties indicate their assent in words is a(n): a. quasi-contract. b. implied contract. c. express contract. d. unlawful contract.

c. express contract.

A leading manufacturer of electronic equipment writes a letter to its wholesale distributors offering to sell its most popular VCR for $100 and stating that it will accept orders at that price for 30 days. This is a(n): a. option to sell. b. auction without reserve. c. firm offer. d. requirements contract.

c. firm offer.

CPA: Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, a resident of Harris and a high school dropout, sued Graham for damages. Under the circumstances, Long will: a. win, because Long is a third-party beneficiary entitled to enforce the contract. b. win, because the intent of the contract was to confer a benefit on all high school dropouts residing in Harris. c. lose, because Long is merely an incidental beneficiary of the contract. d. lose, because Harris did not assign its contract rights to Long.

c. lose, because Long is merely an incidental beneficiary of the contract.

Cornelio purchases an SUV from Barron Auto Sales. Cornelio is only 17 years of age. He wrecks the vehicle while off-roading and attempts to disaffirm the contract and have Barron repay him all that he has paid. In the majority of jurisdictions, Cornelio _______________________________________: a. must have the SUV repaired before Cornelio can return the SUV and disaffirm the contract. b. would be out of luck. c. may simply return the vehicle in its wrecked condition and get all his money back that he paid to Barron. d. will receive his money less the depreciation in value of the vehicle caused by the wreck.

c. may simply return the vehicle in its wrecked condition and get all his money back that he paid to Barron.

Sam Seller contracts to sell 200 tables to Bill Buyer at a price of $50 a table. Bill repudiates the contract, whereupon Sam sells the tables to Paula Purchaser at a price of $45 a table. Sam's action in selling the chairs to another buyer is known as: a. liquidated damages. b. specific performance. c. mitigation of damages. d. restitution.

c. mitigation of damages.

In general, if a promise is illegal: a. only the promisor can sue the promisee for breach and recover any performance rendered. b. only the promisee can sue the promisor for breach and recover any performance rendered. c. neither the promisor nor the promisee can sue the other for breach and recover any performance rendered. d. both the promisor and the promisee can sue the other for breach and recover any performance rendered.

c. neither the promisor nor the promisee can sue the other for breach and recover any performance rendered.

A promisor may be excused for failure to perform a contract on grounds of impossibility when: a. she is financially unable to perform. b. she personally lacks the capability or competency to perform. c. no one, including the promisor, is able to perform. d. all of the above.

c. no one, including the promisor, is able to perform.

Crime Stoppers offers a reward of $500 for information leading to the arrest and conviction of a criminal who has committed several recent burglaries. Paul Police Officer has been working on the case and applies for the reward based upon information he has gathered while on duty. Paul cannot collect the reward under the: a. legal detriment rule. b. inadequacy of consideration rule. c. preexisting duty rule. d. promissory estoppel rule.

c. preexisting duty rule.

The Uniform Commercial Code a. Only applies to contracts for goods when the price is over $500 b. Requires that all contract terms be clear and specific c. presumes the parties are acting in good faith and in a commercially reasonable manner d. Only applies to commercial contracts made by merchants

c. presumes the parties are acting in good faith and in a commercially reasonable manner

CPA: The statute of frauds: a. prevents the use of oral evidence to contradict the terms of a written contract. b. applies to all contracts having consideration valued at $500 or more. c. requires the independent promise to pay the debt of another to be in writing. d. applies to all real estate leases.

c. requires the independent promise to pay the debt of another to be in writing.

CPA: To cancel a contract and to restore the parties to their original positions before the contract, the parties should execute a: a. novation. b. release. c. rescission. d. revocation.

c. rescission.

Whether or not a person's words or conduct constitutes an offer is determined according to: a. the subjective intent of the offeror. b. the subjective intent of the offeree. c. the objective, reasonable person standard. d. none of the above.

c. the objective, reasonable person standard.

With respect to agreements for the sale of goods, the Code provides standards by which omitted terms may be ascertained, provided: a. the parties actually agreed upon the open term but negligently failed to include it in the written contract. b. the parties actually discussed the open term but intentionally failed to include it in the written contract. c. the parties intended to enter into a binding contract regardless of whether they actually discussed the open term or not. d. the parties did not intend to enter into a binding contract regardless of whether they actually discussed the open term or not.

c. the parties intended to enter into a binding contract regardless of whether they actually discussed the open term or not.

In a contract for necessaries, a minor is liable for: a. the list price of the items furnished. b. the agreed price of the items furnished. c. the reasonable value of the items furnished. d. the wholesale cost of the items furnished.

c. the reasonable value of the items furnished.

In determining whether an improper threat constitutes duress, it must be shown that: a. the threat would have induced a reasonable person to assent to the contract. b. the threat was intended by the coercing party to coerce assent on the part of the person claiming to be the victim of duress. c. the threat actually coerced assent on the part of the person claiming to be the victim of duress. d. none of the above

c. the threat actually coerced assent on the part of the person claiming to be the victim of duress.

A life insurance policy naming a spouse as a beneficiary is a common example of a(n): a. assignment. b. delegation of duties. c. third-party donee beneficiary contract. d. third-party incidental beneficiary contract.

c. third-party donee beneficiary contract.

The effect of a party's failure to sue before the statute of limitations expires is: a. to discharge the promisor from liability. b. to act as a mutual rescission. c. to bar the right to bring an action. d. to act as an accord and satisfaction.

c. to bar the right to bring an action.

CPA: Meed entered into a written agreement to sell a parcel of land to Beel for $80,000. At the time the agreement was executed, Meed had consumed a large amount of alcohol which significantly impaired Meed's ability to understand the nature and terms of the contract. Beel knew Meed was very intoxicated and that the land had been appraised at $125,000. Meed wishes to avoid the contract. The contract is: a. void. b. legally binding on both parties in the absence of fraud or undue influence. c. voidable at Meed's option. d. voidable at Meed's option only if the intoxication was involuntary.

c. voidable at Meed's option.

Match the terms related to offer/acceptance to a proper description of that term: Acts as a rejection of the original offer and constitutes a new offer.

counteroffer

Match the description of a third party with the property type of third party beneficiary: Buster owns a company and obtains a loan from Bank. Buster sells his company to David and David agrees to assume the debt the company owes to the Bank. The Bank is a

creditor beneficiary

Match the type of third party beneficiary with who, if anyone, the third party beneficiary can the contract against: can enforce contract against both parties to the original contract

creditor beneficiary

An agreement to refrain from a particular trade, profession, or business is enforceable if: a. the purpose of the restraint is to protect a property interest of the promisee. b. the restraint is no more extensive than is reasonably necessary to protect the interest. c. the secretary of state has approved the agreement. d. (a) and (b), but not (c).

d. (a) and (b), but not (c).

Which of the following contracts are within the statute of frauds and therefore must meet its requirements in order to be enforceable? a. A contract to sell half-acre lots of land in a 60-acre subdivision b. A six-month lease of an apartment c. A deed granting an easement d. (a) and (c) above

d. (a) and (c) above

The remedies provided for breach of contract include: a. compensatory damages. b. punitive damages. c. reliance damages. d. (a) and (c), but not (b).

d. (a) and (c), but not (b).

The happening or nonhappening of a condition: a. prevents a party from acquiring a right. b. deprives a party of a right. c. subjects both parties to liability. d. (a) or (b), but not (c).

d. (a) or (b), but not (c).

A misrepresentation is material in which of the following cases: a. Seller believes goods are of less value than buyer believes them to be, but seller remains silent. b. Seller represents a fact knowing it would be likely to induce a reasonable buyer to manifest his assent. c. Seller knows the misrepresentation would be likely to induce the buyer to act. d. (b) or (c), but not (a).

d. (b) or (c), but not (a).

Which of the following promises must be supported by consideration to be enforceable? a. A promise to pay a debt barred by the statute of limitations b. A promise to pay a debt discharged in bankruptcy c. A promise that has been justifiably relied on by the promisee to his detriment d. A modification of an existing contract under common law

d. A modification of an existing contract under common law

Which of the following would be considered a material breach of a contract? a. A. Partial performance that omits some essential part of the contract. b. B. Delivery of only 50 chairs under a contract that requires 100 chairs. c. A pointer has been hired under a contract to paint an entire house. The painter only paints the back half of the house and refuses to finish painting the house. d. A, B and C would all be considered a material breach.

d. A, B and C would all be considered a material breach.

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, Al agrees that he will refrain from practicing accounting anywhere within a 60-mile radius of Redwood City for a period of two years. During the first year after the sale, on weekends Al returns to a restaurant located in Redwood City to meet with Redwood City clients. In this case: a. the covenant not to compete is unenforceable, because it is an illegal restraint on trade. b. the covenant not to compete is illegal, because it is a violation of public policy. c. the two-year provision is likely to be held invalid, because it is too long a period of time. d. Al is in violation of the sale agreement, which contained a covenant not to compete that would probably be held to be enforceable.

d. Al is in violation of the sale agreement, which contained a covenant not to compete that would probably be held to be enforceable.

Martha, who is a minor, contracts with Alice, who is an adult. a. Alice may disaffirm the contract at any time. b. Alice may disaffirm the contract when Martha becomes an adult. c. Alice may ratify the contract when Martha reaches the age of 18. d. Alice may not disaffirm the contract.

d. Alice may not disaffirm the contract.

Contract remedies are available to protect which of the following interests of the injured party? a. Expectation interest b. Reliance interest c. Restitution interest d. All of the above

d. All of the above

In which of the following instances is restitution available as a remedy for breach of contract? a. When one party totally fails to perform its obligations b. When a party may not enforce the contract because of the statute of frauds c. Upon the avoidance of a voidable contract d. All of the above

d. All of the above

Which of the following assignments of contract rights are not assignable? a. Assignments that would materially increase the risk or burden on the obligor b. Assignments which would transfer a personal contract right c. Assignments which are prohibited by law d. All of the above

d. All of the above

Which of the following is/are liable in quasi-contract for necessaries furnished to them during their incapacity? a. Emancipated minors b. Persons incompetent but not so adjudicated c. Intoxicated persons d. All of the above

d. All of the above

Which of the following would constitute a discharge of the contract? a. Full performance by all of the parties b. Material breach of the contract by either or both parties c. Agreement of the parties to rescind d. All of the above

d. All of the above

Which of the following would most likely be considered a regulatory licensing law? a. A state statute requiring a license to practice medicine b. A state statute requiring that beauticians pass an examination and pay a yearly licensing fee c. A state statute requiring that public school teachers complete a required course of study and pay a yearly licensing fee d. All of the above

d. All of the above

Which of the following would be required of a minor who disaffirms her contract? a. She must return any property she has received from the other party, provided it is in her possession. b. She must pay a reasonable amount for the use of the property. c. She must make restitution. d. All of the above are possible depending on the jurisdiction.

d. All of the above are possible depending on the jurisdiction.

Which of the following would lack contractual capacity? a. Bill, who is 16, wants to buy a speedboat. b. Sara, who has been adjudicated mentally incompetent, buys a fur coat. c. Richard, who is seriously intoxicated, agrees to sell his car. d. All of the above.

d. All of the above.

The requisite elements of fraud in the inducement include: a. a false representation of material fact. b. a representation made with knowledge of its falsity and the intention to deceive. c. a false representation justifiably relied upon. d. All of the elements above are required to be shown.

d. All of the elements above are required to be shown.

You have entered into an oral contract with "Disinfect R Us", a local medical cleaning company to deep clean and sanitize your retail store once a month for the next two years. Since cleaning and sanitizing during a pandemic is a risky venture, you are worried Disinfect might breach the contract prior to the end of the two year period and you want to make sure that you have something in writing that would satisfy the Statute of Frauds. To satisfy the writing requirement under the Statute of Frauds, the writing must: a. Specify the subject matter and essential terms b. Specify the parties to the contract. c. be signed by the party to be charged d. All of these items are required by the writing requirement under the Statute of Frauds.

d. All of these items are required by the writing requirement under the Statute of Frauds.

Presume Elon Musk entered into a contract to speak at Harvard's graduation ceremony for a fee of $100,000. Elon's intent is to donate the fee to a non-profit for the beneift of young children. Which statements is/are FALSE? ALERT: THIS QUESTION IS ASKING WHICH STATEMENTS IS/ARE FALSE! a. The non-profit would be a donee beneficiary and could sue Mr. Musk for breach of contract if he did not speak as agreed. b. Mr. Musk could assign the entire contract to another speaker if he had a scheduling conflict and NOT be in breach of his contract with Harvard. c. If the contract did not specifically prohibit assignment, then Mr. Mush could assign the right to receive payment and delegate the duty to speak without being in breach of the contract. d. All of these statements are FALSE.

d. All of these statements are FALSE.

Which of the following would not be considered a discharge by agreement? a. A novation b. A mutual rescission c. An accord and satisfaction d. An anticipatory repudiation

d. An anticipatory repudiation

Which of the following would constitute an effective ratification? a. Ratification through express language b. Ratification through conduct c. Ratification through failure to make a timely disaffirmance d. Any of the above

d. Any of the above

Which of the following duties would be most likely to not be delegable? a. Jeffrey has a duty to mow Georgia's lawn at least once a week. b. John has a contractual duty to pay Isaac $50. c. Karl has a contractual duty to deliver 50 bushels of corn to Michael by October 1. d. Arthur has a duty to teach an accounting class at a community college during the fall semester.

d. Arthur has a duty to teach an accounting class at a community college during the fall semester.

Owen was the owner of a shopping mall encumbered by a mortgage securing Owen's promissory note to BigBank. Paul purchased the building that was subject to BigBank's mortgage. As a result of the sale to Paul: a. BigBank is a third party creditor beneficiary. b. Paul is liable to BigBank for any deficiency resulting from a default note. c. Owen was automatically released from any liability on the note. d. BigBank is not a third party creditor beneficiary.

d. BigBank is not a third party creditor beneficiary.

Carl, a contractor, and Lyle, a landowner, have a contract whereby Carl is to perform routine construction services according to the blueprints that Lyle has provided. Carl assigns the contract including, Carl's rights and duties under the contract, to David, a developer. As a result of this assignment: Assume that Carl's services are NOT personal to Carl. a. Carl has all of his rights under the contract and he is still responsible for the performance of the duties. b. Carl has all of his rights under the contract, but he has no responsibility for the performance of the duties. c. Carl has no more rights or duties with regard to the contract. d. Carl no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform.

d. Carl no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform.

Which of the following statements is TRUE? a. The UCC statute of frauds requires that the writing include all agreed-upon terms. b. In order to be sufficient, an agreement required to be written under the statute of frauds must be signed at the bottom and notarized. c. The statute of frauds always requires that both parties sign the writing or that writing will not be enforceable. d. Clara types a letter to Fraser setting forth the terms of their contract that falls within the statute of frauds. At the end of the letter, Clara types her name but does not sign her signature to it. If Fraser wants to use the letter to satisfy the writing requirement, he may do so. Assume all other requirements other than signature of party to be charged are met. e. Gardner sends Everet a letter offering to sell Everet his car for $2,500. Everet writes back that he'll take it. They now must get together and sign the same document for this contract to be enforceable under the Statute of Frauds.

d. Clara types a letter to Fraser setting forth the terms of their contract that falls within the statute of frauds. At the end of the letter, Clara types her name but does not sign her signature to it. If Fraser wants to use the letter to satisfy the writing requirement, he may do so. Assume all other requirements other than signature of party to be charged are met.

Carl Contractor submits a bid that contains a substantial error in addition. Barb, the owner of the home to be built signs the contract along with Carl. a. Carl can avoid the contract based upon mutual mistake. b. Carl is guilty of fraud in the inducement and Barb can avoid the contract. c. This is a unilateral mistake. Carl will always be bound by the error. d. If the error is an obvious one that Barb knew of when she accepted the contract, Carl can avoid the contract.

d. If the error is an obvious one that Barb knew of when she accepted the contract, Carl can avoid the contract.

Which of the following is not required in order to have a usurious transaction? a. Evidence of a loan b. Evidence of money c. Evidence of repayability in all events d. Interest within allowable legal limits

d. Interest within allowable legal limits

Choose the correct answer below. Below you will be instructed to pick a certain answer if consideration is required for the described promise or agreement. a. On October 1, Olivia, a dress manufacturer, sends the following email to all of her customers: "Dress model #6754 is on sale! I will sell each dress for the low, low price of $10. This offer is good through November 30 or until I sell all 1,000 units currently in inventory". Pick this answer if Olivia's promise to keep her offer open until November 30 or until she sells all 1,000 units requires consideration for that promise to be enforceable? b. Griffin, who is 16 1/2 years old, enters into a contract to buy a car and agrees to pay for the car over 2 years. When Griffin turns 18 he goes to the car dealership and signs a written contract ratifying his obligation to pay for the car. Pick this answer if Griffin's agreement to ratify when he turns 18 requires additional consideration. c. Michael is a boat manufacturer and enters into a written agreement with Marineland to sell them 1,000 bass boats, with Michael delivering the bass boats to Marineland's store by May 1. Due to a shortage of truck drivers, Michael emails Marineland and asks them if they can come pick up 300 of the boats. Marineland agrees to travel to Michael's facility and pick up the boats. Pick this answer if Marineland's promise to pick up the boats must be supported by consideration to be enforceable. d. Jessica has agreed to tutor Jared once a week in Business Law at a price of $25 per hour. Jared also wants Jessica to tutor him on an additional night on the subject of Intermediate Accounting. Jessica agrees to the additional night. Pick this answer if Jessica's promise to tutor Jared on the additional night requires additional consideration for that promise to be enforceable.

d. Jessica has agreed to tutor Jared once a week in Business Law at a price of $25 per hour. Jared also wants Jessica to tutor him on an additional night on the subject of Intermediate Accounting. Jessica agrees to the additional night. Pick this answer if Jessica's promise to tutor Jared on the additional night requires additional consideration for that promise to be enforceable.

Stephanie is an attorney representing ABC Bank. Joseph legally owes ABC Bank $10,000 which is now due and payable since the maturity date has passed. Stephanie writes a demand letter to Joseph demanding he pay the $10,000 owed to ABC Bank or ABC Bank will file suit against him to collect the $10,000. Joseph immediately goes to the bank to pay the $10,000. Which of the following statements is TRUE regarding this situation? a. Joseph's payment of the $10,000 is voidable because the reasonable person would have felt threatened by Stephanie's threat to file suit and because of the threat/duress would have made the payment to the bank. Joseph may require the bank to return the $10,000. b. Joseph's payment of the $10,000 is void, because Stephanie's threat of filing suit constituted physical duress against Joseph to convince Joseph to make the payment to the bank. Joseph may require the bank to return the $10,000. c. Joseph's payment of the $10,000 is voidable because Stephanie's threat of filing suit was an improper threat that convinced Joseph by duress to make the payment to the bank. Joseph may require the bank to return the $10,000. d. Joseph will NOT be able to get the $10,000 back from the bank. Stephanie's threat to file suit against Joseph was NOT an improper threat and therefore did not constitute duress.

d. Joseph will NOT be able to get the $10,000 back from the bank. Stephanie's threat to file suit against Joseph was NOT an improper threat and therefore did not constitute duress.

In which of the following situations has the requirement of Mutual Assent been met to form a contract? a. Jason's business needs a cleaning service, so Jason contacts Happy Cleaning Service telling them, in an email, that he would like to hire them to clean his offices twice a week for 1 year at a price of $1,000 a month. Jason indicates that he needs the restrooms cleaned, the floors vacuumed or mopped, all windows cleaned and that all surfaces need dusting. Happy Cleaning sends back an email stating that they accept, but that they do not clean windows. b. Natalie asks Jordan if Jordan wants to buy Natalie's car for $25,000. Jordan answers "Yes". c. Kevin wants to buy Nancy's business. Kevin sends an email to Nancy indicating that he wants Nancy and Kevin to agree on the material terms of the purchase prior to involving the attorneys to draft the final purchase agreement. Kevin indicates in the email that the terms included in the email are NOT final but are only going to be used when drafting the final agreement. Nancy accepts the terms set forth in Kevin's email. d. Longhorn Furniture manufactures couches. They over produced orange couches and need to sell their inventory of 100 orange couches to make room for green couches. Longhorn Furniture sends an email out to its customers stating the following: "Will sell orange couches for $250 each. Offer stays open for 3 months." After 1 month, Bevo Furniture sends back an email saying: "We want 400 couches". Longhorn Furniture replies to Bevo by email: "Hey, we only have 100 couches, take it or leave it."

d. Longhorn Furniture manufactures couches. They over produced orange couches and need to sell their inventory of 100 orange couches to make room for green couches. Longhorn Furniture sends an email out to its customers stating the following: "Will sell orange couches for $250 each. Offer stays open for 3 months." After 1 month, Bevo Furniture sends back an email saying: "We want 400 couches". Longhorn Furniture replies to Bevo by email: "Hey, we only have 100 couches, take it or leave it."

Which one of the following assignments would probably be prohibited by a court? a. All of these. b. John is a house painter. He is scheduled to paint Molly's home on Monday. John wakes up Monday morning with a stiff neck. He calls Ed, who is also a painter, to begin the job at Molly's. c. Ron has a contract with Bonett Bank to service their coffee machines. He assigns the remainder of his contract with Bonett to Michelle, who also owns a coffee service. d. Mary has been a loyal customer of Best Buy for 20 years. In exchange for her loyalty, Best Buy gives Mary free shipping and a 20% discount for life. Mary assigns these loyalty rights to John for $50.

d. Mary has been a loyal customer of Best Buy for 20 years. In exchange for her loyalty, Best Buy gives Mary free shipping and a 20% discount for life. Mary assigns these loyalty rights to John for $50.

CPA: On May 1, 1999, Mint, a 16-year-old, purchased a sailboat from Sly Boats. Mint used the boat for six months, at which time he advertised it for sale. Which of the following statements is correct? a. The sale of the boat to Mint was void, thereby requiring Mint to return the boat and Sly to return the money received. b. The sale of the boat to Mint may be avoided by Sly at its option. c. Mint's use of the boat for six months after the sale on May 1 constituted a ratification of that contract. d. Mint may disaffirm the May 1 contract at any time prior to reaching majority.

d. Mint may disaffirm the May 1 contract at any time prior to reaching majority.

Which of the following statements is/are TRUE regarding Mutual Assent? a. Mutual Assent requires only either an offer or an acceptance, but NOT both. b. Mutual Assent requires both an offer and an acceptance, but the contract does NOT form at the time of Mutual Assent. c. Mutual Assent is only required for some contracts, it is not a requirement for all contacts. d. Mutual Assent requires both an offer and an acceptance and represents the time that the contract forms.

d. Mutual Assent requires both an offer and an acceptance and represents the time that the contract forms.

1. March 1 - Jason emails an offer to Natalie to buy Natalie's business for $1,000,000. 2. March 2 - Natalie opens and reads Jason's email. 3. March 3 - Natalie sends an email to Jason saying that she is considering the offer, but also inquires whether Jason is interested in hiring all of Natalie's current employees. 4. March 4 - Jason reads Natalie's email and responds to Natalie that he does not want to hire any of Natalie's current employees. 5. March 5 - Natalie responds to Jason by email that she wants $1,500,000 for her business. 6. March 6 - Natalie then changes her mind and tells Jason by email that she accepts his offer. Which of the following answers correctly describes the legal effects of the above described actions by Natalie and Jason? a. No contract formed between Natalie and Jason because on March 3, Natalie sent a counteroffer to Jason which terminated Jason's March 1 offer. Since the March 1 offer was terminated on March 3, it could not be accepted by Natalie on March 6. Natalie's email on March 3 was a new offer to Jason, which Jason never accepted. b. A contract formed obligating Jason to pay Natalie $1,500,000 on March 5 when Natalie sent the email to Jason c. A contract formed obligating Jason to pay Natalie $1,000,000 on March 6 when Natalie sent the email to Jason. d. No contract formed between Natalie and Jason because on March 5, Natalie sent a counteroffer to Jason which terminated Jason's March 1 offer. Since the March 1 offer was terminated on March 5, it could not be accepted by Natalie on March 6. Natalie's email on March 6 is a new offer to Jason.

d. No contract formed between Natalie and Jason because on March 5, Natalie sent a counteroffer to Jason which terminated Jason's March 1 offer. Since the March 1 offer was terminated on March 5, it could not be accepted by Natalie on March 6. Natalie's email on March 6 is a new offer to Jason.

Which of the following would be subject to Article 2 of the UCC? a. An agreement to clean someone's yard for $25 b. An option to buy a vacant lot c. An agreement to perform at a charity fundraiser d. None of the above is subject to the UCC.

d. None of the above is subject to the UCC.

In the case of a gratuitous assignment, which of the following would not be revocable? a. The donee-assignee receives payment of the claim from the obligor. b. The donee-assignee obtains a judgment against the obligor. c. The donee-assignee obtains a new contract with the obligor. d. None of the above would be revocable.

d. None of the above would be revocable.

Under the UCC, to determine if a material breach has occurred under a contract, the test known as __________________ is applied. a. Anticipatory repudiation rule. b. Prevention of performance rule. c. Discharge by operation of law rule. d. Perfect Tender Rule

d. Perfect Tender Rule

Which of the following contracts is only voidable, and NOT void or valid? a. At the marriage of her daughter, Lorna is given papers to sign, which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices is a contract of sale obligating Lorna to buy the failing catering company for a price equal to ten times the value of the company. Lorna signs all the papers including the contract of sale, thinking all the documents are invoices for the wedding. b. Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the land was worth more than $160,000. c. Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than Bob originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. d. Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that the dog will fetch. Al relies on these statements and purchases the dog. Although the dog can fetch the dog is eight years old.

d. Sam wants to sell his golden retriever to Al. Sam tells Al that the dog is three years old and that the dog will fetch. Al relies on these statements and purchases the dog. Although the dog can fetch the dog is eight years old.

Which of the following statements if TRUE? a. Under the UCC, the Mirror Image Rule requires the terms of an acceptance to exactly match the terms of the offer. b. A contract is automatically invalid if all of the terms are not clearly stated. c. Under the common law, the offer and acceptance do not have to be identical regarding terms. d. Silence can be acceptance if the offeror and offeree have agreed that silence is acceptance.

d. Silence can be acceptance if the offeror and offeree have agreed that silence is acceptance.

On June 1, the Godfather offers to pay a contractor $3,600 for the labor to remodel the Godfather's kitchen. The contractor realized it was an offer he just could not refuse (sorry about my bad attempt at humor). On June 1, The contractor agrees to complete the work within ten (10) months and will start work immediately. Assuming no duress or other illegal activity, which of the following statements is CORRECT? a. This contract would be covered by common law and would need to bein writing since it is over $500. b. The contract between the Godfather and the contractor would need to be in writing because the contract is for the remodeling of real property. c. The contract between the Godfather and the contractor would need to be in writing because the contract is covered by the UCC. d. Since it is possible that the work on the kitchen can be completed in 1 year or less, the contract with the Godfather does not need to be in writing to be enforceable.

d. Since it is possible that the work on the kitchen can be completed in 1 year or less, the contract with the Godfather does not need to be in writing to be enforceable.

CPA: Kaye contracted to sell Hodges a building for $310,000. The contract required Hodges to pay the entire amount at closing. Kaye refused to close the sale of the building. Hodges sued Kaye. To what relief is Hodges entitled? a. Punitive damages and compensatory damages b. Specific performance and compensatory damages c. Consequential damages or punitive damages d. Specific performance

d. Specific performance

The requirement that Consideration be a "Bargained for Exchange" can be best described as follows: a. That the legal detriment and legal benefit of only one party to a contract must be "new" to that party at the time of the formation of the contract. b. The concept of Bargained for Exchange only applies to UCC contracts. c. Consideration received in the past DOES constitute a Bargained for Exchange. d. That the legal detriment and legal benefit of each party to a contract must be "new" to that party at the time of the formation of the contract.

d. That the legal detriment and legal benefit of each party to a contract must be "new" to that party at the time of the formation of the contract.

Outdoor Adventure contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made, and the trip booked on April 1 with the trip to begin on June 1. On May 1, Kevin notified Outdoor Adventures that he had changed his mind and would be unable to make the trip. He also refused to pay Outdoor Adventures any compensation. a. A. Because the contract is executory, Outdoor Adventures has suffered no damages, and Kevin has not obligation to pay any compensation. b. B. Kevin has anticipatorily repudiated the contract and may be liable to Outdoor Adventures for any damages. c. C. Outdoor Adventures may sue immediately or wait until June 1 to see if Kevin will perform his contractual duties. d. The answers labeled as B and C are correct.

d. The answers labeled as B and C are correct.

Which of the following is legally sufficient consideration? a. The performance of a preexisting public obligation b. The performance of a preexisting contractual obligation c. The settlement of an undisputed matured debt of $10,000 arising out of the purchase of land for $8,500 d. The settlement of a debt subject to honest dispute as to its amount

d. The settlement of a debt subject to honest dispute as to its amount

Marilyn contracted with Bravo Builders to build an addition to her house for $150,000. After digging the foundation and finding nothing unusual, Bravo decides that the construction will take more work and more concrete than Bravo had originally thought and that Bravo will need to charge an additional $25,000 for the job. Assuming Marilyn agrees, which of the following is correct? a. Since the contract is executory, Marilyn will have to pay the $150,000 plus the additional $25,000. b. This is a modification of a preexisting contract, which under the UCC does NOT need to be supported by additional consideration on the part of Bravo Builders. Marilyn will have to pay $150,000 plus the additional $25,000. c. This is the settlement of a disputed debt that requires no additional consideration on the part of Bravo Builders. d. This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. Marilyn will only have to pay $150,000.

d. This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. Marilyn will only have to pay $150,000.

A man and a woman make mutual promises to marry. Unknown to the woman, the man is already married. a. This is an agreement to commit a crime, which renders the agreement void. b. Both parties are in pari delicto. c. If the woman is unaware of the man's other marriage, she could pursue an action for money damages against him. d. Two of the above are correct, (a) and (c).

d. Two of the above are correct, (a) and (c).

Sam Seller has a contract to provide 100 widgets to Bill Buyer at a price of $10 a widget. Delivery is to be on October 1. Due to unanticipated delays, Sam is unable to get the widgets to Bill until October 2. Bill is not harmed by the delay but sues anyway, because he is angry with Sam. a. Sam's failure to deliver the goods on October 1 is a violation of the Code's perfect tender rule, even if it is not a material breach. b. Bill cannot sue, because this is not a material breach. c. If Bill cannot establish any incidental or consequential damages as a result of the breach, he will only be able to recover nominal damages. d. Two of the above are correct, (a) and (c).

d. Two of the above are correct, (a) and (c).

An agreement between three parties to substitute a new promisee or promisor in place of an existing promisee or promisor is called: a. a condition subsequent. b. a mutual rescission. c. an accord and satisfaction. d. a novation.

d. a novation.

Bill Businessman places an ad in the local newspaper saying, "Reward: $50 for return of my golden retriever named Fido." The ad lists his address and telephone number. If Tim Teenager finds Fido and returns him to Bill, there will be: a. an executed contract requiring that Bill pay Tim $50. b. a bilateral contract, because two people are involved. c. an implied in fact contract requiring that Bill pay Tim $50. d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.

d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.

Each of the following is an essential element of a binding promise EXCEPT: a. mutual assent. b. consideration. c. capacity. d. a writing signed by the parties.

d. a writing signed by the parties.

An offer can be effectively communicated to an offeree by: a. a writing only. b. spoken words only. c. a writing or by spoken words only. d. a writing, by spoken words, or by conduct from which a reasonable person could infer a promise.

d. a writing, by spoken words, or by conduct from which a reasonable person could infer a promise.

A minor may disaffirm a contract for personal property: a. before attaining majority. b. on the day of attaining majority. c. within a reasonable time after reaching majority. d. all of the above.

d. all of the above.

A party with a power of avoidance may lose that power if: a. he affirms the contract. b. he delays unreasonably in exercising the power of disaffirmance. c. the rights of third parties intervene. d. all of the above.

d. all of the above.

A person who lacks sufficient mental capacity to enter into a contract is one who is: a. adjudicated incompetent by a court decree. b. incompetent, although not adjudicated as such by a court decree. c. unable to understand the nature and effect of her acts. d. all of the above.

d. all of the above.

A promise by Andrew to pay Barry $1,000 if he refrains from suing Andrew, which is accepted by Barry not suing is: a. supported by consideration. b. enforceable because Barry has incurred a legal detriment by refraining from bringing suit. c. enforceable because Andrew has received a legal benefit. d. all of the above.

d. all of the above.

An offeror generally may cancel or revoke an offer at any time prior to its acceptance unless the offer: a. is an option contract. b. is a merchant's firm offer under the Code. c. contemplates a unilateral contract and the offeree has begun the invited performance. d. all of the above.

d. all of the above.

An uncured material breach of contract: a. gives rise to a cause of action for damages by the aggrieved party. b. operates as an excuse for nonperformance by the aggrieved party. c. discharges the aggrieved party from any further duty under the contract. d. all of the above.

d. all of the above.

In order for an offer to have legal effect, it must: a. be communicated to the offeree. b. manifest an intent to enter into a contract. c. be sufficiently definite and certain in its terms. d. all of the above.

d. all of the above.

Knowledge of falsity and intention to deceive under fraud in the inducement may be shown by: a. actual knowledge. b. lack of belief of the statement's truthfulness. c. reckless indifference as to its truthfulness. d. all of the above.

d. all of the above.

In a contract for the sale of goods costing more than $500, the statute of frauds provisions apply except: a. where an admission has been made. b. where the goods have been specially manufactured. c. where there has been a delivery of and payment for the goods. d. all the above are exceptions to statute of frauds provisions.

d. all the above are exceptions to statute of frauds provisions.

Mindy goes to her broker, purchases 300 shares of Apple stock, and instructs the broker to register the stock in her husband Jim's name. The stock is intended as a Christmas gift from Mindy to Jim. Related to the contract between Mindy and her broker, Jim becomes: a. an incidental third party beneficiary b. an intended creditor third party beneficiary c. an assignee d. an intended donee third party beneficiary

d. an intended donee third party beneficiary

CPA: Opal offered, in writing, to sell Larkin a parcel of land for $300,000. If Opal dies, the offer will: a. terminate prior to Larkin's acceptance only if Larkin received notice of Opal's death. b. remain open for a reasonable period of time after Opal's death. c. automatically terminate despite Larkin's prior acceptance. d. automatically terminate prior to Larkin's acceptance.

d. automatically terminate prior to Larkin's acceptance.

A contract in which both parties exchange promises is a(n): a. formal contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.

d. bilateral contract.

Harold hired Blake Painters to paint his house. Blake decides he has too many jobs and delegates the duties to the Andrews Company. If Andrews does a poor job, and drips paint on Harold's flowers and windows, Harold: a. can sue Blake, but he cannot sue Andrews. b. can sue Andrews, but he cannot sue Blake. c. cannot sue, because he has accepted the benefits of the assignment. d. can sue both Blake and Andrews.

d. can sue both Blake and Andrews.

The parol evidence rule will bar the introduction of: a. evidence that one of the parties to the contract was a minor. b. evidence of fraud in the formation of the contract. c. evidence of usage and custom that is not inconsistent with the terms of the written agreement. d. evidence of a letter written prior to the execution of the final contract stating that the price to be charged for the goods was $2.00 each rather than $2.10 as provided in the final contract.

d. evidence of a letter written prior to the execution of the final contract stating that the price to be charged for the goods was $2.00 each rather than $2.10 as provided in the final contract.

In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be ____________? a. Of approximately equal value. b. Fair and reasonable under the circumstances. c. exchanged simultaneously by the parties. d. legally sufficient

d. legally sufficient

David and Sharon entered into a written contract involving the performance of some marketing services. A week later, they both changed their minds and agreed in writing to cancel the contract. This is an example of: a. accord and satisfaction. b. novation. c. substituted contract. d. mutual rescission.

d. mutual rescission.

Where one party to an illegal contract is less at fault than the other, she may: a. enforce the entire contract. b. receive no assistance from the court at all. c. recover out-of-pocket expenses only. d. recover payments made or property transferred.

d. recover payments made or property transferred.

Michael pays $500 down on a new computer to be used in the office. The salesperson told him the computer has a 100,000 megabyte memory. Michael learns from other sources that this is blatantly untrue and realizes now that the salesperson induced him to enter into the contract based upon fraud in the inducement. The company refuses to return the down payment. If Michael sues, an appropriate remedy would be: a. injunction. b. punitive damages. c. nominal damages. d. rescission and restitution.

d. rescission and restitution.

Darrell owns a parcel of land that he purchased by obtaining a loan from the First National Bank, and the loan has not been paid off yet. Darrell agrees to sell the land to Paul for $50,000. Darrell and Paul together go to the First National Bank to discuss the sale and purchase with the banker. Darrell, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Darrell will be discharged from all further liability on the mortgage. In this case: a. Darrell is a third party beneficiary of the agreement between Paul and the bank. b. the bank is a third party donee beneficiary. c. the bank can collect from Darrell if Paul defaults. d. the agreement among the three is a novation.

d. the agreement among the three is a novation.

Kelley borrows $3,000 from Paul and orally agrees to repay him in three annual installments. Most courts would hold: a. Article 2 of the UCC controls this loan. b. the oral contract is enforceable only through the doctrine of promissory estoppel. c. the oral contract is unenforceable because it cannot be performed within one year. d. the oral contract is enforceable because Paul fully performed his obligation under the contract.

d. the oral contract is enforceable because Paul fully performed his obligation under the contract.

In considering whether a covenant not to compete included in the sale of a business is reasonable, courts will consider all of the following factors except: a. the geographic area covered. b. the time period for which the restraint is to be in effect. c. the hardship imposed on the promisor. d. the price that the promisee paid for the business.

d. the price that the promisee paid for the business.

Fred is a concert violinist who is scheduled to perform at Carnegie Hall for the first time. Fred buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the very expensive price for a Stradivarius. Carl is not an expert in verification of violins. He later learns the violin is an imitation, which should not have fooled the dealer. In this case: a. Since the dealer was only negligent, fraud in the inducement does not exist and Fred may not void the contract. b. Fred has made a unilateral mistake and cannot avoid the contract. c. the sale is voidable by the purchaser for mutual mistake. d. the sale may be rescinded, because the dealer has made a negligent fraudulent misrepresentation which induced Fred to purchase the violin and the misrepresentation was material.

d. the sale may be rescinded, because the dealer has made a negligent fraudulent misrepresentation which induced Fred to purchase the violin and the misrepresentation was material.

A contract which fails to satisfy the requirements of the statute of frauds is: a. valid. b. void. c. voidable. d. unenforceable.

d. unenforceable.

All of the following situations represent exceptions to the strict rule of unenforceability of illegal agreements except: a. where a party to the illegal agreement withdraws from the transaction prior to the performance. b. where one of the parties to the agreement is a party protected by the statute violated. c. where the parties are not equally at fault. d. where the parties are in pari delicto.

d. where the parties are in pari delicto.

Asher is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Asher is treated at the hospital and released a day later. The hospital sends him a bill for $4,500, which Asher refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious. Asher: a. has entered into a unilateral contract with the hospital and therefore will have to pay the bill. b. and the hospital have entered into a bilateral contract, the terms of which require that he pay the bill. c. has entered into an implied in fact contract with the hospital. d. will have to pay the hospital the reasonable value of their services because this is a quasi-contractual agreement.

d. will have to pay the hospital the reasonable value of their services because this is a quasi-contractual agreement.

CPA: In September 1999, Cobb Company contracted with Thrifty Oil Company for delivery of 100,000 gallons of heating oil at the price of $1.20 per gallon at regular specified intervals during the upcoming winter. Due to an unseasonably warm winter, Cobb took delivery on only 70,000 gallons. In a suit against Cobb for breach of contract, Thrifty will: a. lose, because Cobb acted in good faith. b. lose, because both parties are merchants and the UCC recognizes commercial impracticability. c. win, because this is a requirements contract. d. win, because the change of circumstances could have been contemplated by the parties.

d. win, because the change of circumstances could have been contemplated by the parties.

Match the terms related to offer/acceptance to a proper description of that term: When an acceptance does not comply with the requirements set forth in the offer, such as a time deadline.

defective acceptance

Match the description of a third party with the property type of third party beneficiary: Veronica entered into a contract with a local car dealer to have a new convertible sports car delivered to her daughter, Jasmine, as a college graduation present. In this contract, Jasmine is a

donee beneficiary

Match the type of third party beneficiary with who, if anyone, the third party beneficiary can the contract against: can only enforce contract against 1 party to the original contract

donee beneficiary

In considering whether a covenant not to compete is reasonable, courts will consider all of the following factors except: a. the geographic area covered in the covenant not to compete. b. the hardship imposed on the promisor (the person agreeing not to compete). c. the time period for which the covenant not to compete is to be in effect. d. The interest of the Employer is protecting its proprietary information. e. All of these factors will be considered by a court.

e. All of these factors will be considered by a court.

The Uniform Commercial Code does not apply to: a. insurance contracts b. contracts involving real property c. employment contracts d. service contracts e. all of these

e. all of these

By an oral agreement entered into on January 1, 2000, A hires B to work for eleven months starting on February 1, 2000. This contract is: a. enforceable because this contract is outside the statute of frauds. b. enforceable because it can be performed within a year. The year is measured from the start of performance under the contract. c. unenforceable because the contract was not in writing. d. unenforceable because it cannot be performed within one year of when it was made.

enforceable because this contract is outside the statute of frauds.

Which of the following contracts are within the statute of frauds and therefore must meet its requirements in order to be enforceable? a. A contract to sell half-acre lots of land in a 60-acre subdivision b. Three of these answers describe a contract that is within the statute of frauds. c. A contract for a bicycle costing $499. d. A six-month lease of an apartment e. A deed granting an easement f. Two of these answers describe a contract that is within the statute of frauds.

f. Two of these answers describe a contract that is within the statute of frauds.

A bilateral contract results from the exchange of a promise for an act, whereas a unilateral contract results from the exchange of a promise for a return promise.

false

A contract exists if either party's actions manifest recognition of a contract's existence.

false

A contract may be formed orally or by a writing, but it may not be inferred merely from the conduct of the parties.

false

A contract term that sets the amount of damages to be paid in event of a breach of contract is enforceable even if it is not a reasonable forecast of the loss that would result from the breach.

false

A contract to provide legal services for a fee is governed by Article 2 of the UCC.

false

A contract under which the parties' obligation to perform arises only on the happening of a stated event lacks the requisite mutuality of obligation if the specified event may never occur.

false

A course of dealing is a practice or method of dealing regularly observed and followed in a place, vocation, or trade.

false

A minor who contracts for a necessary will be liable for the full contract price.

false

A promisor's good faith, personal belief that she lacks the necessary capability or competence to perform her contractual duties will excuse her from liability for nonperformance.

false

A rejection is effective at the moment of its dispatch by the offeree.

false

A revenue licensing statute is one designed to protect the public against unqualified persons.

false

A voidable contract is an agreement that does not meet all of the requirements of a binding contract; thus, it is no contract at all and has no legal effect.

false

A writing required under the UCC, Article 2 statute of frauds must be signed at the end of the writing with the intent to authenticate the writing.

false

Actionable fraud can usually be based on a statement of opinion as well as a statement of fact.

false

After an effective assignment of rights, both the assignor and the assignee have a right to the obligor's performance.

false

Although no special words or particular form are necessary to create an assignment, an assignment must be supported by consideration to be effective.

false

An exculpatory clause is a contractual clause that exempts a party from liability for his own poor business judgment in entering into a contract.

false

An implied warranty is an explicitly made contractual promise regarding contract rights transferred.

false

An offeror's manifestation of intent to enter into a contract is judged by a subjective standard.

false

As defined by the UCC, goods are movable, tangible and intangible personal property.

false

At an auction announced to be "without reserve," the auctioneer is free to withdraw the goods from sale at any time prior to a bid's acceptance.

false

Big Bucks, Inc. pays Andrew Attorney to lobby for a law that would increase its annual income. This is an illegal contract.

false

Bill Businessman has a bad day one Monday morning and signs a contract to buy a piece of real property for $250,000. Later he realizes he has been had, because the property is only worth $100,000. Bill can avoid the contract based on inadequacy of consideration.

false

Bill Businessman has decided to buy a copying machine on an installment contract from the Business Supply Store. After looking at machines, Bill is in a hurry, so he signs the agreement without reading it. Later, he discovers that the interest rate is 22% and that there are no guarantees on the machine. Bill can avoid the contract based on mistake.

false

Duress in the form of improper threats must be explicit in order to render the resulting contract voidable.

false

Duress in the form of physical force renders the resulting agreement voidable.

false

Even if a contract for interior decorating is expressly made subject to a subjective condition of satisfaction, courts will apply an objective, reasonable person standard to evaluate performance.

false

First Bank issues a consumer loan to Happy Homemaker at an annual rate of interest of 16%. In most states, this would be an illegal contract, because First Bank is in violation of a usury law.

false

Harold Homeowner went to Al's Auto Dealership to look at cars. Harold found a 1980 Plymouth Horizon that he thought would be a good car for his teenagers to drive to school. Al said, "This is the best car in town." Harold buys it for $1,000. Two weeks later, the car breaks down. Al is guilty of fraud in the inducement.

false

Harold sells his used car to Tina and assigns his rights in his auto liability insurance policy to her. This is a valid assignment.

false

If a court finds that a part of a contract is unconscionable, it must deny enforcement of the entire contract.

false

If a tort and a contract are so connected that to enforce the tort action the court must enforce the minor's contract, the court will enforce the contract and the minor will be liable in tort.

false

If successive assignments have taken place, the majority rule is that the first assignee to notify the obligor will prevail in a dispute among the successive assignees.

false

In a unilateral contract, each promise is the consideration for the other, a relationship that has been referred to as mutuality of obligation.

false

In deciding whether a threat is sufficient to constitute duress, the fact that the act or threat would not affect a person of average strength and intelligence is determinative.

false

In order for an offeror's revocation of the offer to be effective, notice of the revocation must be directly communicated to the offeree before acceptance.

false

In order to comply with the requirements of most statutes of frauds, the writing or memorandum must be signed by both parties to the agreement.

false

In order to prove that a person with a mental defect lacks the necessary capacity to enter into a contract, it must be shown that the person is permanently insane.

false

In the absence of a specific statutory provision, an unlicensed person engaged in a business or profession for which a license is required cannot recover for services rendered if the licensing statute was enacted in order to raise revenue.

false

It is optional with the parties, under the statute of frauds, whether to reduce their agreement to writing.

false

Loss of value is the difference between the value of the promised performance of the breaching party and the value of the expected performance to the non-breaching party.

false

Once contractual promises have been made, there is no way for the parties to escape from liability for nonperformance.

false

Sara bets Bill that Hilltop High will win the big game. This is an enforceable agreement.

false

Seventeen-year-old Tim Teenager has just completed a course in business law. He now wants to disaffirm his student loan agreements. Most states allow a minor to avoid contracts for student loans.

false

Specific performance may be ordered in a contract situation calling for personal services.

false

The adequacy of consideration is the same as the legal sufficiency of consideration.

false

The agreement of a seller to sell her entire production to a particular purchaser is an illusory agreement because the purchaser doesn't know the quantity being purchased.

false

The doctrine of consideration requires only that the promise or performance of one party be legally sufficient.

false

The parol evidence rule is a rule of evidence that prohibits the parties from subsequently orally modifying their written contract.

false

The rights of an intended beneficiary vest at the time of the making of the contract or at the time he learns of its making, whichever is later.

false

Thomas says to Steve, "If you will paint my garage, I will pay you $75." Steve replies, "Would you make it $85?" Under these facts, Thomas and Steve are both promisors and promisees.

false

Under the Code, the modification of a contract for the sale of goods requires the furnishing of additional consideration, just as required under the common law.

false

Under the doctrine of election of remedies, the injured party's choice of one available remedy will bar the choice of an additional, consistent remedy.

false

Under the parol evidence rule, words can be introduced in court which vary or contradict the terms of an integrated contract.

false

Under the perfect performance rule, the Code provides that a deviation in performance by a party in any contract constitutes a material breach.

false

Usury statutes establish the minimum rate of permissible interest that may be contracted for between a lender and a borrower of money.

false

When parties are dealing at arm's length, silence or nondisclosure usually constitutes fraud.

false

William, who just purchased a new computer which won't work properly, screams, "I'll sell this thing for $10," and thereby makes an offer.

false

Match the type of third party beneficiary with who, if anyone, the third party beneficiary can the contract against: cannot enforce contract

incidental beneficiary

Match the description of a purported contract with the proper type of contract. Do not assume either party to the contract has done something unless I tell you: Maria posted several signs in the neighborhood offering $50 for the return of her lost cat. Dave calls to get a description of the cat and tells Maria, "I'll look for your cat."

no contract is formed

Match the following situations with the most accurate description of whether an offer and/or acceptance exists: David's question to Albert, "Would you be interested in buying my computer for $800?"

not an offer, lacks intent to make offer

Match the terms related to offer/acceptance to a proper description of that term: Must be communicated, intended as an offer and must be definite. Is Effective on Receipt.

offer

Match the following situations with the most accurate description of whether an offer and/or acceptance exists: Don offers to sell his diamond ring to Emily. If Diane overhears the offer and says, "I accept the offer":

offer only, not an acceptance since offer not made to person accepting

Match the following situations with the most accurate description of whether an offer and/or acceptance exists: George offered to paint Catherine's barn for $3,000. Catherine said she would accept the offer if George would paint the woodshed, too.

offer, then counteroffer. offer extinguished.

A collateral promise is an undertaking to be secondarily liable.

true

A condition is an event whose happening or nonhappening affects a duty of performance under a contract.

true

A contract for the sale of goods need not specify the price in order to have an effective contract.

true

A contract induced by an innocent misrepresentation is actionable provided all of the remaining elements of fraud are present and the misrepresentation is material.

true

A contract may condition the performance of a party upon the approval of a third party.

true

A court may grant an equitable remedy, even though the terms of the agreement prohibit such relief, if the court feels an injustice would otherwise occur.

true

A minor has the option of ratifying a contract after reaching majority, which makes the contract binding ab initio.

true

A person may be able to avoid a contractual agreement even though she understands what she is doing but cannot control her behavior, thereby failing to act in a reasonable or rational way.

true

A quasi contract is not a contract, but rather is an obligation imposed regardless of the intention of the parties in order to assure a just and equitable result.

true

A third party is an intended beneficiary if the promisee's purpose in bargaining for and obtaining the promisor's promise was to make a gift to the beneficiary.

true

Active concealment, or action intended or known to be likely to keep another from learning a fact he otherwise would have learned, can form the basis for fraud.

true

After an effective delegation of duties, both the delegator and the delegatee are liable to the obligee for performance of the contractual duty.

true

An assignment of rights is the voluntary transfer to a third party of the rights arising from the contract.

true

An executory contract is one in which there are one or more unperformed promises by any party to the contract.

true

An offer is a proposal, expressed either in words or by conduct, by one person to another indicating a willingness to enter into a contract.

true

As a general rule, a contract entered into by a minor is voidable at the minor's option.

true

As defined by the UCC, a sale is the transfer of title to goods from seller to buyer for a price.

true

At common law, a modification of an existing contract must be supported by new consideration in order for the reformed agreement to be enforceable.

true

Before one can avoid a contractual obligation based upon undue influence, there must exist a confidential relationship between the parties involved.

true

Bill Businessman agrees to buy 2,000 widgets from the Widget Corporation of America next year for $60 a widget if he wants to for his business. This is an illusory contract.

true

Bill purchased 500 pairs of shoes from Sam at a contract price of $1,000. Fifty pairs were defective and a dispute arose as to the amount owing under the contract. Finally, Bill sent a check for $800, marked it "paid in full," and sent a letter to Sam explaining his reasons for thinking $800 was fair. Sam didn't respond, but he cashed the check. The debt is discharged.

true

Brian owes Albert $500. Brian, Albert, and Clarence agree that Brian will be discharged from the obligation and that Clarence will pay the debt. This is a novation.

true

Carol Customer signs a consumer purchase agreement for a VCR in which she agrees to make monthly payments. In fine print on the back, the contract also provides that if she misses a payment, she will confess judgment and pay all costs necessary in enforcing the contract without raising any defenses against the lender. This is an unconscionable contract.

true

Compensatory damages are only recoverable for damages that the party in breach had reason to foresee as a probable result of a breach when the contract was made.

true

Consequential damages include lost profits and property damage resulting from defective performance. (question should be worded "Consequential damages include lost profits and property damage not resulting directly from defective performance." If the property damage results directly from the defective performance, the damage is "Incidental Damage". )

true

Disaffirmance may be either express or implied.

true

Donna is in her last semester of dental school. On weekends she cleans the teeth of her friends and relatives and then sends them a bill for $25. These are illegal contracts, because Donna is not yet licensed.

true

Even if an unforeseeable, extraordinary loss results from a breach of contract, the injured party may still recover for any ordinary loss resulting from the breach. (the injured party can't recover for the unforeseeable, extraordinary loss, but can recover for the "ordinary" loss.)

true

Except in the case of a contract to transfer land, a minor can disaffirm a contract before attaining majority or within a reasonable time thereafter.

true

Fraud in the execution consists of a misrepresentation that deceives the defrauded person as to the very nature of the contract being entered.

true

Fraud in the inducement will result in the contract being voidable.

true

Generally the breaching party will not be liable in damages for a loss that was not foreseeable at the time of entering into the contract.

true

If an offer does not state the time within which the offeree may accept, the offer will terminate upon the expiration of a reasonable time.

true

In a "quasi-contract" situation, the remedy granted will be similar to a breach of contract remedy.

true

In a legally challenged contract between a guardian and his ward, the law presumes that the guardian took advantage of the ward.

true

In a novation, the delegator will be discharged and the third party will become directly bound on her promise to the obligee.

true

In an action by the intended beneficiary of a third-party beneficiary contract, the promisor may assert any defense that would have been available to him had the action been brought by the promisee.

true

In cases involving the enforceability of covenants not to compete in employment contracts, courts must carefully balance the public policy favoring the employer's right to protect his business interests against the public policy favoring full opportunity for individuals to gain employment.

true

In certain circumstances, noncontractual promises are enforced under the doctrine of promissory estoppel in order to avoid injustice.

true

In determining contractual capacity under the cognitive ability test, individuals who are taking prescribed medication are treated the same as those who are incompetent.

true

In most states, minors who fraudulently misrepresented their age at the time a contract was entered into may nevertheless disaffirm the contract.

true

In most states, the measure of damages for misrepresentation depends upon whether the misrepresentation was fraudulent or nonfraudulent.

true

In order to have the mutual assent requisite to the formation of a contract, the offeror must have communicated the offer and the offeree must have knowledge of the offer.

true

In the absence of an agreement to the contrary, the law assumes that the respective performances under a contract are concurrent conditions.

true

In the absence of legal consideration, a promise may nevertheless be enforceable under the doctrine of promissory estoppel if the promisee has relied on the promise to his detriment.

true

It has generally been held that contracts induced by threats of criminal prosecution are voidable, regardless of whether the coerced party had committed an unlawful act.

true

Justifiable reliance requires that the misrepresentation contribute substantially to the misled party's decision to enter into the contract.

true

Kevin builds a house for Paul and Virginia Demmit. The contract calls for extra grade, stain-resistant carpet. The pattern selected by the Demmits is not available when the carpeting is supposed to be installed, so Kevin substitutes a comparable grade similar carpet. Kevin has substantially performed the contract. Substantial performance plus a small amount of damages will discharge Kevin's contractual obligations, even if the Demmits think the substituted carpet ruins the house.

true

Most contract rights, including rights under an option contract, are assignable.

true

Nearly every business transaction is based on contract, and even the most common transactions may involve multiple contracts.

true

Procedural unconscionability involves scrutiny for the presence of "bargaining naughtiness."

true

Recovery for necessaries furnished to a minor is based upon the reasonable value of the item furnished and not the contract price.

true

Sarah orders a microwave oven from Myriad's Department Store and requests that it be delivered to her sister Theresa. Theresa is a third-party intended beneficiary.

true

Scott has a household insurance policy which requires that he notify the company within two weeks of any loss before he is eligible to receive payment for his loss. The notification requirement is a condition precedent.

true

Subject to a few exceptions, neither party to an illegal contract can sue the other for breach nor recover for any performance rendered.

true

The "marriage provision" of the statute of frauds applies only if a promise to marry is made in consideration for some promise other than a mutual promise to marry.

true

The Restatement provides that punitive damages are not recoverable for a breach of contract unless the breach also gives rise to a tort for which punitive damages are recoverable.

true

The UCC imposes an obligation of good faith in the performance or enforcement of every contract within its scope.

true

The UCC provides that a contract for the sale of goods for the price of $500 or more must satisfy the requirements of the statute of frauds.

true

The courts will not enforce an agreement declared illegal by statute.

true

The courts will presume that the parties intended to form a bilateral contract when it is unclear whether a unilateral or a bilateral contract has been formed.

true

The parol evidence rule applies to all integrated, written contracts and deals with what terms are part of the contract.

true

The parol evidence rule does not apply to parol evidence which is used to show a subsequent mutual rescission of a contract.

true

The performance of a preexisting contractual obligation that is neither doubtful nor the subject of honest dispute is not legally sufficient consideration, because the doing of what one is legally bound to do is neither a detriment to the promisee nor a benefit to the promisor.

true

The power of avoidance may be lost if the party having the power does not rescind within a reasonable time.

true

The president of Big Bucks, Inc. pays a state official $500 to give the corporation's application for a government contract special consideration. This is an illegal contract.

true

The primary purpose of contract remedies is to compensate the injured party for the loss resulting from the contract breach by attempting to provide an equivalent of the promised performance.

true

The statute of frauds does not relate to the circumstances surrounding the making of a contract or to the validity of a contract.

true

The suretyship provision has been interpreted not to include promises made to a debtor.

true

To avoid a contract, an intoxicated person must act promptly, upon regaining capacity, to disaffirm.

true

To be legally sufficient, the consideration for the promise must be either a legal detriment to the promisee or a legal benefit to the promisor.

true

Under the "main purpose rule," an oral contract which would ordinarily require a writing can be enforced.

true

Under the Code, a merchant's offer to buy or sell goods is not revocable for lack of consideration during the time stated that it is open or if no time is stated, for a reasonable time, but in either event for a period not to exceed three months.

true

Under the Code, a person buying goods from a minor has the power to transfer valid title to the goods to a good faith purchaser for value.

true

Under the Code, any deviation from the promised performance in a sales contract will be considered a material breach.

true

Under the Restatement and Code view of impossibility, commercial impracticability will excuse nonperformance.

true

Under the Restatement and the Code, unless the language or circumstances indicate otherwise, an assignment of "all my rights under the contract" is both an assignment of rights and a delegation of the assignor's duties under the contract.

true

Under the Restatements of Contracts and the Code, unless language in the offer, or the circumstances under which it is made indicate otherwise, an offer shall be construed as inviting acceptance in any reasonable manner.

true

Under the UCC, if both parties are merchants, additional terms contained in the offeree's unconditional acceptance will become part of the contract provided they do not materially alter the agreement and are not objected to either in the offer itself or within a reasonable period of time.

true

Under the traditional cognitive ability test, a person is mentally incompetent if unable to comprehend the subject of the contract, its nature, and its probable consequences.

true

When a breach of contract occurs, the injured party has a duty to take steps to minimize the damages that may be sustained.

true

Where general contract law has not been specifically modified by the UCC, the common law of contracts continues to apply.

true

Where the "main purpose" of the promisor is to obtain an economic benefit for herself that she did not previously have, the promise is outside the statute, and need not be in writing to be enforceable.

true

Where the assignee gives consideration in exchange for an assignment, a contract exists between the assignor and the assignee and the assignor may not revoke the assignment.

true

Words of promise that make the performance of the purported promisor entirely optional result in an illusory contract.

true

Match the description of a purported contract with the proper type of contract. Do not assume either party to the contract has done something unless I tell you: Charles says to Wes, "If you will mow my lawn, I will give you $15." Wes says nothing, but he mows the lawn. Charles then pays the $15.

unilateral and executed

Match the description of a purported contract with the proper type of contract. Do not assume either party to the contract has done something unless I tell you: Charles says to Wes, "If you will mow my lawn, I will give you $15." Wes says nothing, but he mows the lawn.

unilateral and executory

Match the terms related to offer/acceptance to a proper description of that term: when an acceptance does not accept all the terms of the offer

variant acceptance