LA245 MIDTERM 2

A valid contract can legally be voided by either party. True False

False

As a general rule, an agent is liable on contracts entered into on behalf of a fully disclosed principal. True False

False

As a general rule, employers have a legal obligation to disclose information about former employees to potential future employers. True False

False

Sweet Plantation, Inc. made a written contract with Candy, Inc. whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.25 per pound. A dispute arose as to how much sugar Sweet is to supply. The parol evidence rule will bar Sweet's introduction of evidence concerning the intent of the requirements of Candy. True False

False

Robert, a minor, buys a stereo from Jane for $200. State law allows a minor to disaffirm contracts within a reasonable time after turning 18. Robert disaffirms the contract the day after turning 18 and returns the stereo. This contract was a valid contract, Robert cannot disaffirm. This contract was a voidable contract, Robert can disaffirm. This contract was a void contract. This contract was unenforceable because it needed to be in writing to be enforceable.

This contract was a voidable contract, Robert can disaffirm.

If Denise is hired to work as a cashier, she has the implied authority to do acts reasonably necessary to carry out her job. True False

True

If a principal person accepts the benefits of an unauthorized transaction, or fails to repudiate it, then the principal is bound by the acts as if they had originally authorized it. True False

True

One purpose of contract law is to determine which agreements are worthy of legal enforcement. True False

True

Under the UCC, a merchant is frequently held to a higher standard of conduct than a non-merchant. True False

True

Erika was planning her first cross country bike trip. She wanted a bike that would handle rough terrain easily because part of the trip would be through Kings Canyon National Park. Salisar is a salesman at Bikes by the Bay, a specialty bike store near Erika. Erika explains the details of the strenuous trip she is planning and states that she needs a very sturdy mountain bike that will handle it. Salisar recommends the Crosstrain 2000, a bike his store is pushing that month because both the store and the salesperson get a bonus for each bike sold. Erika purchases the bike and begins her adventure. Twenty miles into her journey, the front axle breaks due to the rough terrain, causing Erika to plunge down a steep hillside and sustain serious injuries. In advising Erika to purchase the Crosstrain 2000 for her trip, Salisar: breached the implied warranty of fitness for a particular purpose. breached the express warranty of fitness for a particular purpose. breached the implied warranty of merchantability. breached the express warranty of merchantability.

breached the implied warranty of fitness for a particular purpose.

Maxine lost her job as an electrical engineer with a large company that had provided health insurance benefits for Maxine and her family. She now: must try to find insurance on her own or try to find another job with health insurance benefits. is protected under COBRA, which allows her continued health insurance coverage for 18 months as long as she pays the cost. is protected under COBRA, which requires her employer to continue her health insurance coverage for six months under whatever copayment arrangements she had while she was employed. has some protection under the NLRA, which requires her employer to pay for continued health insurance for three months following her termination if she did not leave the company voluntarily.

is protected under COBRA, which allows her continued health insurance coverage for 18 months as long as she pays the cost.

A person who is mentally impaired generally can create only _______ contracts.

voidable

Onida is an employee at Kale's Manufacturing Company. The company makes bicycle tires, and Onida's job is to inspect the inner tubes before they are inserted into the tires. She recently noticed that the inner tubes are thinner than the safety specifications require. Onida tells her supervisor, Tom, about the problem, and is instructed to ignore it because these thinner tubes save the company money. Onida cannot ignore this problem in good conscience, so she tells Tom that if he is not going to report the problem, she will. Tom then fires Onida. Kale's Manufacturing Company is in an employment-at-will state. If Onida brings a lawsuit for wrongful termination, she will likely: be unsuccessful because employment at will means that an employee can be fired at any time for any reason. be unsuccessful because she refused to follow her supervisor's directions. be successful because employment at will means that a company must have a valid reason for terminating an employee. be successful because she was fired for an unlawful reason.

be successful because she was fired for an unlawful reason.

Gerald has been a sales representative for Goldsmith's Department Store for the past five years. When Gerald was hired, the general manager told Gerald that he would have a job there as long as he made $3,000 in sales each month. Every month, Gerald has exceeded that level in sales, so he is surprised when his supervisor calls him into the office and fires him. Gerald tells the supervisor about the promise from the general manager not to fire him as long as his sales were $3,000 each month. The supervisor responds by telling Gerald that the law in this state is employment at will, so he can fire him at any time for any reason. If Gerald sues Goldsmith's for wrongful termination, he will likely: not be successful because employment at will means that an employee can be fired at any time for any reason. be successful because employment at will does not mean that an employee can be fired at any time for any reason. be successful because the general manager orally promised him that he would remain in his job as long as his sales stayed at a specific level, and he has maintained that level. not be successful because the promise from the general manager was not in writing.

be successful because the general manager orally promised him that he would remain in his job as long as his sales stayed at a specific level, and he has maintained that level.

If an offer specifies no time limit in which to accept, the offeree has 30 days to respond. the offeree has 10 days to respond. the offer is not valid and therefore it does not matter when the offeree responds. the offeree has a reasonable period during which to accept.

the offeree has a reasonable period during which to accept.

Circus Pizza contracted with Art to run its birthday parties. Art's responsibilities included supervising the children and organizing the games. Circus did not investigate Art's background, which included a history of assaulting children. Art assaulted a 7-year-old girl in the restaurant's kitchen during a birthday party. Circus Pizza cannot be liable for the damages because Art committed an unforeseeable intentional tort. may be held liable only if Circus actually knew of Art's background. may be held liable on the basis of negligent hiring. cannot be held liable for the damages because Art's conduct was not in the scope of employment.

may be held liable on the basis of negligent hiring.

Ahmir agrees to purchase a shipment of oriental rugs from Oriental Rug Company for the price of $50,000, to be delivered on August 15. On July 15, Ahmir notifies Oriental that he no longer wants to purchase the rugs. Oriental spends $1,000 to advertise the rugs and obtains a new purchaser who buys the rugs for $40,000. Oriental then sues Ahmir for breach of contract. If Oriental is successful in its breach of contract suit against Ahmir, Oriental may receive: $11,000 from Ahmir. nothing from Ahmir, because Oriental was successful in reselling the rugs. $50,000 from Ahmir. $10,000 from Ahmir.

$11,000 from Ahmir.

Under the Fair Labor Standards Act, which of the following scenarios is legal? 12-year-old Molly works several hours per day on her family's farm picking vegetables 14-year-old Luis works full time bagging groceries at a supermarket 13-year-old Dianna works five hours per week stocking shelves at a drugstore 17-year-old Cole has taken a part-time job as a coal miner working alongside his dad

12-year-old Molly works several hours per day on her family's farm picking vegetables

A buyer has an absolute right to reject non-conforming goods as long as the rejection is timely. True False

False

The UCC does not apply to a contract for the sale of goods if the value of the goods is less than $500. True False

False

The element of a contract that states that the parties must be adults of sound mind is consent. True False

False

There is a higher percentage of workers in labor unions now than at any other point in history. True False

False

When Olga asks Sven if he wishes to sell his Harley motorcycle, he replies that he would not sell it "for less than $2,000." Olga replies, "I accept," and hands him $2,000. A contract exists. True False

False

Marco hires Franco to burn down a clothing store that belongs to one of Marco's competitors. Marco pays Franco $1,000 upfront and promises another $3,000 when the job is done. Franco burns down the clothing store and then asks Marco for the rest of the payment. Marco just laughs at Franco and walks away. If Franco sues Marco for payment under the contract: Marco will not have to pay because the agreement lacks consideration. Marco will not have to pay because of the lack of competent parties. Marco will have to pay because all the elements of a contract have been met. Marco will not have to pay because the subject matter of the contract is illegal.

Marco will not have to pay because the subject matter of the contract is illegal.

Heather is an artist and has several watercolors she would like to sell. Heather orally asks Rylee to sell the paintings for her and directs Rylee that each painting should be sold for at least $100. Rylee schedules a showing in her art gallery to display Heather's paintings. On the day of the showing, a customer offers to buy one of the paintings for $100, and Rylee accepts. When Heather finds out the price the painting sold for, she tries to get the painting back from the customer. Heather claims that she and Rylee did not have a written agency agreement, and, therefore, an agency relationship did not exist between them. Is Heather correct? Yes. Allowing this agency agreement to stand would violate the statute of frauds. Yes, most agency agreements must be in writing to be effective. No. Agency agreements are never in writing. No, most agency agreements do not have to be in writing to be effective.

No, most agency agreements do not have to be in writing to be effective.

Roland and Alfreeda enter into a written agency agreement in which Alfreeda will represent Roland as his agent to obtain acting jobs for Roland. No termination provisions are included in the written agreement. If Roland wishes to terminate his agreement with Alfreeda: Roland may do so by providing notice to Alfreeda in any reasonable manner. Roland must do so by sending the termination notice to Alfreeda by certified mail. Roland must do so in writing because the agency agreement is in writing. Roland must do so in person only.

Roland must do so in writing because the agency agreement is in writing.

Ruby, a seventeen-year-old, purchases a car from Smitz Used Auto Sales and agrees to pay for it over a period of twenty-four months. Ruby makes the payments for four months but then decides the car payment is too much for her limited budget. Ruby tells Smitz that she wants to stop making payments and that she wants out of the contract completely. The contract between Ruby and Smitz can be canceled by: Smitz, because Ruby is a minor, but Smitz must allow Ruby to keep the car. Smitz or Ruby, because Ruby is a minor, and Ruby may keep the car. Ruby, because she is a minor, and Ruby may keep the car. Ruby, because she is a minor, but Ruby must return the car.

Ruby, because she is a minor, but Ruby must return the car.

A Purchase Money Security Interest ("PMSI") in consumer goods perfects automatically, without filing. True False

True

A contract may violate public policy even if the agreement does not violate a statute. True False

True

As a general rule, an employer may not discharge a worker for exercising a legal right if that right supports public policy. True False

True

Grover is a sales representative for Avon Products Inc., a company that sells beauty and gift products door-to-door. Ruby, Grover's manager, assigns Grover a certain territory in which to work. The territory that Grover is assigned has historically had one of the highest sales records in the state. Ruby is concerned that Grover is not adequately working the territory, so she allows Regina to also sell in that same territory. Does Grover have any grounds on which to file a lawsuit against Ruby? No, Ruby is just helping Grover fulfill his full potential. Yes, Ruby has violated the duty of compensation and may be liable to Grover for Grover's lost profits. No, Ruby is just looking out for the best interests of the company. Yes, Ruby has violated a principal's duty of cooperation and may be liable to Grover for Grover's lost profits.

Yes, Ruby has violated a principal's duty of cooperation and may be liable to Grover for Grover's lost profits.

Contracts that cannot be performed within ______ are unenforceable unless they are in writing.

a year

Jones Construction Company is building a series of new subdivisions in Newtown over the next two years. Jones enters into a verbal agreement with Harley Concrete Inc. to construct all the driveways and sidewalks in the subdivisions that Jones will be building. Jones and Harley agree on a price of $130 per cubic yard and that Jones will pay Harley at the end of each project. Harley completes the first project, which is four sidewalks and sixteen driveways, and bills Jones for the project. Jones decides that the price is too high and refuses to pay, claiming that they have no obligation to pay because the parties did not have a valid contract. If Harley sues Jones for payment the court would probably: apply quasi contract theory and award $130 per cubic feet, the contract price, to Harley. hold that Harley is entitled to nothing because parties are free to terminate contracts if they so choose. apply quasi contract theory and award the fair market value of the work that Harley completed. hold that Harley is entitled to nothing because the contract violates the Statute of Frauds.

apply quasi contract theory and award the fair market value of the work that Harley completed.

The courts will find an implied contract when justice demands it. conduct of the parties indicates they intended an agreement. there is promissory estoppel. there is undue influence.

conduct of the parties indicates they intended an agreement.

Under the federal legislation known as OSHA, employers must keep records of all workplace injuries. employers must keep records of positive results of workplace drug tests. employers must keep a record of recognized hazards used in the workplace. employers may monitor workers' email messages if the monitoring is done in the ordinary course of business and the employer provides the email system.

employers must keep records of all workplace injuries.

Zayn boards the Big Rock Metro to ride downtown to his job. Zayn gives his money to the driver and takes his seat. Neither the driver nor Zayn says anything. Zayn and the bus driver: have a formal contract. have an express contract. have an implied contract. have no contract.

have an implied contract.

Marie and Molly enter into a written contract to sell Marie's home to Molly. At the time the contract is executed, Marie tells Molly that for the last six months she has been sharing the home with a family of extraterrestrial beings. Marie states that she has asked the extraterrestrials to move out, but they won't; therefore, she is selling the family home to get rid of them and is willing to sell the home to Molly for well below market price. After the sale of the home is complete, Marie's children challenge the sales contract on the grounds that Marie did not have the mental capacity necessary to enter into a contract, even though Marie has not been declared incompetent by the courts. The contract between Marie and Molly can be rescinded: if Marie's children can prove that Marie lacked the mental capacity to comprehend the nature, purpose, and consequences of the contract. only if Marie's children have Marie committed. under no circumstances, because Marie was not adjudicated insane before she signed the contract. by either Marie or Molly.

if Marie's children can prove that Marie lacked the mental capacity to comprehend the nature, purpose, and consequences of the contract.

Marlo is about to be transferred overseas and wants to sell her house. Julianna, who is not a real estate agent, offers to sell the house for Marlo for free. Marlo jumps at the chance to get such a valuable service for free! Because Julianna offered to sell the house for free, Julianna owes Marlo: the duty to use reasonable diligence and skill to sell the house. no duty to sell the house, but if Julianna does attempt to sell the house, she owes Marlo the duty to use reasonable diligence and skill in performing the task. no duty at all, because there was no compensation flowing from Marlo to Julianna. the duty to perform as a reasonable real estate agent would perform in selling the house.

no duty to sell the house, but if Julianna does attempt to sell the house, she owes Marlo the duty to use reasonable diligence and skill in performing the task.

Implied warranties are created by the seller's words or actions. the UCC itself. the buyer's intentions. both the seller and the buyer.

the UCC itself.

Larue owns a horse ranch. Larue enters into a contract with Dora for the purchase of thirty saddles for his ranch to be delivered on a specific date. If the price of the saddles is not included in the contract, under the U.C.C.: Dora, the party furnishing the saddles, will supply the price at the time of delivery and must determine that price in good faith. the court will determine a reasonable price at the time for delivery. Larue, the party purchasing the saddles, will supply the price at the time of delivery and must determine that price in good faith. there is no valid contract because the contract is incomplete.

the court will determine a reasonable price at the time for delivery.

Lloyd purchases a combine harvester from John Deere for use on his wheat farm. The price is $400,000. Wyatt pays $20,000 down and signs a financing agreement with John Deere for the other $380,000, payable in monthly installments. John Deere files a financing statement covering the loan. Lloyd uses the combine for two years and makes all his monthly installment payments. After a major flood destroys Lloyd's crops, Lloyd is desperate for money. Lloyd takes out a loan with Farm Bureau Credit Company for $100,000 and uses the combine for collateral. Because Lloyd cannot currently use the combine due to the extensive damage to his fields from the flood, Lloyd lets Farm Bureau take possession of the combine. Four months later, Lloyd files for bankruptcy. John Deere and Farm Bureau each file claims to reclaim the combine, because it was collateral for their loans to Lloyd. The entity that can lawfully reclaim the combine as collateral for Lloyd's loan is: John Deere. Farm Bureau Credit Company. the bankruptcy trustee. John Deere and Farm Bureau Credit Company.

John Deere.

Selma wants to buy Matilda's house. Selma has been admiring the house for a long time and has asked Matilda repeatedly to sell the house to her, but Matilda has always refused. Finally, Selma tells Matilda that if Matilda does not sell Selma the house, Selma will kill Matilda's daughter. Afraid for her daughter's life, Matilda signs the contract to sell the house to Selma. If Matilda later tries to rescind the contract: Matilda may rescind the contract on the grounds of unconscionability. Matilda may rescind the contract on the grounds of undue influence. Matilda may not rescind the contract because it has all the elements of a valid contract. Matilda may rescind the contract on the grounds that she signed the contract under duress.

Matilda may rescind the contract on the grounds that she signed the contract under duress.

Nadia needs help running her bakery. Nadia contacts her friend Zoey, who has baking experience but lives in another state, and offers Zoey a job. Nadia orally promises Zoey that she will employ Zoey for at least two years. Zoey quits her job in the other state, moves her family, and begins to work for Nadia. After three months, Nadia terminates Zoey's employment. Zoey sues Nadia, claiming they had a contract for two years. If Nadia defends the lawsuit by claiming the contract could not be enforced because it violates the statute of frauds, the court will likely hold in favor of: Zoey, under the theory of promissory estoppel. Nadia, under the theory of promissory estoppel. Nadia, because enforcement of the promise is necessary to avoid injustice. Zoey, because the agreement violated the statute of frauds.

Zoey, under the theory of promissory estoppel.

What is a whistleblower? an employee who thwarts an attempt by fellow employees to form a union an employee who crosses the picket line to return to work an employee who discloses illegal behavior on the part of his or her employer an employee who secretly gives information to his or her employer about union activity

an employee who discloses illegal behavior on the part of his or her employer

Janelle has an art collection that she wants to sell. She calls Amber and tells her to sell the art collection for her at an upcoming auction. Amber agrees. This is an example of express authority. respondeat superior. intermediary agency. apparent authority.

express authority.

In a "mixed contract," one involving a sale of both goods and services, the court will: apply UCC Article 2A. apply the UCC to the provisions of the contract involving the sale of goods and the common law to the provisions involving the sale of services. apply the lex mercatoria to the contract. first determine the dominant purpose of the contract. if the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law.

first determine the dominant purpose of the contract. if the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law.

Rosemary's son Dave was recently injured in an automobile accident and now needs round-the-clock care. Rosemary works at the Silver Spoon Café, which has 63 employees. Rosemary advises her supervisor that she needs to take time off to care for Dave. Rosemary quickly uses up all her accrued leave time, so she applies for time off under the Family and Medical Leave Act (FMLA). Under the FMLA, Rosemary may take unpaid time off to care for her injured son for up to: twelve weeks. ten weeks. twenty-six weeks. fifteen weeks.

twelve weeks

Harold offers to sell Emma his farmland in Bryson County. After discussing the sale at length in front of their friends Nicole and Jackson, Harold and Emma orally agree on a price of $120,000 for the land. The next day, Emma goes to the bank and withdraws $120,000 to pay Harold for the land. When Emma presents the $120,000 to Harold, Harold tells Emma he was just joking and does not wish to sell the land. Emma tries to enforce the deal, and Harold continues to refuse by saying that the deal was not in writing, and, therefore, it is unenforceable. The contract between Harold and Emma for the sale of the land: is enforceable, because there are witnesses to the deal. is not enforceable because it violates the statute of frauds. is enforceable because it complies with the statute of frauds. is not enforceable because of the theory of promissory estoppel.

is not enforceable because it violates the statute of frauds.

Brindley has an old shed on her property that needs to be removed. She posts the following ad on Facebook: "Shed needs to be gone. You take down and haul away. (Much of the wood is reusable.) $100 to the first person to show up and haul this away." This is an example of a(n): bilateral contract. illegal contract. unconscionable contract. unilateral contract.

unilateral contract.

A principal will not be liable to a third party for a tort committed by an employed agent: if the tort is also regarded as a criminal act. unless the principal instructed the agent to commit the tort. if the agency agreement limits the principal's liability for the agent's tort. unless the tort was committed within the scope of the agency relationship.

unless the tort was committed within the scope of the agency relationship.