LES 305 - Chapter 12
What categories of payments survive a bankruptcy?
Alimony, child support, student loans, & taxes
What are the elements of Fraud?
Knowing and intentional disclosure/failure to disclose, in circumstances where you have a duty to disclose
What are the requirements of undue influence?
Must have a relationship based on trust and confidence, with an abuse of the trust (attorneys/clients, elderly parents/children, spouses)
What is a third-party beneficiary?
Not directly involved in the formation of a contract, but is listed within as a beneficiary
What are "conditions precedent" in contract performance?
When certain conditions must occur before performance is required. "I will buy your house, but first, the kitchen sink needs replaced"
Which of the following statements in a letter from a collector to a debtor would be a violation of FDCPA? a. "We will be contacting your employer to let him know of this problem." b. "We will file suit if payment is not made within 30 days." c. "We will be calling you at your home." d. All of the above are violations.
a. "We will be contacting your employer to let him know of this problem."
How long does a creditor have to respond to a debtor who has raised billing questions? a. 30 days b. 60 days c. 90 days d. 120 days
a. 30 days
Kristen took her computer to the A1 Computers to have it repaired. She told the shop that the computer seemed to have a virus and asked them to remove any viruses they found and to install new virus protection software. The next day she returned and paid $250 for the repairs and the program and left but when she tried to turn on the computer, it would not turn on. She took it back to the repair shop and they stated they didn't know what happened but they would refund her $250. She filed a lawsuit and demanded that they not only refund her money but buy her a new computer comparable to the old one. What type of damages is Kristen asking for? a. Compensatory and incidental damages. b. Liquidated and consequential damages. c. Incidental and liquidated damages. d. Consequential and compensatory damages.
a. Compensatory and incidental damages.
Tristan Colbert owns an appliance store. He has ordered 10 Subzero refrigerators for his store at a cost of $2,500 each from Plains Manufacturing. Tristan ordered the refrigerators in anticipation of an order he was going to receive from a custom-home builder. Plains Manufacturing experienced a flood at its plant in Iowa City and lost all goods in production. They were unable to deliver the refrigerators to Tristan and notified him immediately of the problem. Tristan has to purchase the 10 refrigerators from another plant at a cost of $3,000 each. Suppose that instead of a flood, Plains simply did not deliver the refrigerators. Which of the following is correct? a. Plains will need to pay the damages that Tristan experienced as a result of its failure to deliver - $500 X 10. b. Plains can use the defense of impracticability. c. Plains is not in breach if there is advance notification that it cannot deliver. d. This contract need not be in writing to be enforceable.
a. Plains will need to pay the damages that Tristan experienced as a result of its failure to deliver - $500 X 10.
Sekelow Enterprises is a debt collection agency. It uses postcards to contact consumer debtors it is attempting to collect from for its clients. The name "Sekelow Enterprises" and the company address appear on the postcards used along with: "VERY IMPORTANT: PLEASE CONTACT US ABOUT YOUR DILLARD'S DEBT." a. Sekelow has violated the Fair Debt Collections Practices Act. b. Sekelow has not violated the Fair Debt Collections Practices Act if it follows up with a phone call and verification of debt. c. Sekelow cannot collect the debt without registering as a credit repair organization. d. both a and c
a. Sekelow has violated the Fair Debt Collections Practices Act.
Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Suppose that the listing agent was aware of the home's history and the drug dealer's arrest and conviction. The agent told the neighbors to cooperate by not disclosing any information to Dana. "Look," the agent told them, "you can get the house sold and keep your values up or let it sit there and have the old druggies come by and destroy it." Which of the following statements is true? a. The real estate agent has committed fraud. b. The real estate agent is under no obligation to disclose the information. c. The most the real estate agent has committed is misrepresentation. d. none of the above
a. The real estate agent has committed fraud.
Jessica is going to work as a lifeguard at Big River Water Park. As a part of her new-hire package, she was asked to sign several documents, one of which stated that the water park would not be held responsible for any injuries that happened to her during the course of her work. Which of the following is true? a. This type of clause would not be enforced by the courts. b. This clause is legal and used to protect companies. c. This is a violation of usury laws. d. This is a violation of the covenants clause.
a. The type of clause would not be enforced by the courts
People from the United States pledged $3.3 billion to support the rebuilding efforts in Haiti following the 2010 earthquake there. However, after 3 years, half of the money has not been dispersed, and nearly 500,000 people still live in tents. As a result, many who have made pledges have decided not to fulfill the remainder of their pledges because of the inaction on the part of the relief fund in getting the funds dispersed, the buildings rebuilt, and the housing constructed. What issue is there about whether there is a contractual obligation? a. Whether a pledge to make a gift is supported by consideration. b. Whether there can be a pledge across country borders. c. The inability to enforce international contracts. d. Whether the pledges were in writing.
a. Whether a pledge to make a gift is supported by consideration.
Garnishments: a. are attachments of funds for executing a judgment. b. are not regulated by federal laws. c. can take up to 75 percent of the debtor's wages. d. all of the above
a. are attachments of funds for executing a judgment.
What rights does a debtor have if he/she discovers inaccuracies in the credit report? a. can ask to have it eliminated b. can sue for libel c. can provide a separate credit report d. all of the above
a. can ask to have it eliminated
A seller recovering the difference between his resale price and the buyer's original contract price is an example of: a. compensatory damages. b. incidental damages. c. liquidated damages. d. none of the above
a. compensatory damages.
A letter of credit: a. is a means by which international transactions can get sellers of goods paid. b. is required to qualify for a consumer credit purchase. c. is void in the United States. d. allows the buyer to collect damages from the seller.
a. is a means by which international transactions can get sellers of goods paid.
In order to recover damages under the Fair Credit Billing Act, the debtor must: a. make a written objection. b. file a complaint with the Federal Reserve Board. c. notify the creditor of the error within 30 days of receiving the bill. d. all of the above
a. make a written objection.
The Fair Credit Reporting Act applies: a. only to consumer reporting agencies. b. to all information on consumer debtors. c. to consumer and commercial credit. d. none of the above
a. only to consumer reporting agencies.
Which of the following acts by a third-party collector would be a violation of the FDCPA? a. sending the debtor a postcard that reads: "Don't let this bill affect your excellent credit rating" b. calling the debtor at home at 8:30 AM to confirm the debt c. referring the account to an attorney for a lawsuit d. filing suit without first contacting the debtor
a. sending the debtor a postcard that reads: "Don't let this bill affect your excellent credit rating"
Incidental damages include: a. the costs of finding substitute buyers or goods. b. liquidated damages. c. the difference in the cost of the goods. d. all of the above
a. the costs of finding substitute buyers or goods.
Which of the following statements (if later established as untrue) would constitute a misrepresentation defense to contract formation? a. "You are going to love this house as we have." b. "This farm's well is adequate for household, ranch, and crop needs." c. "The school system here is very fine." d. "Our buyers are the happiest customers around."
b. "This farm's well is adequate for household, ranch, and crop needs."
People from the United States pledged $3.3 billion to support the rebuilding efforts in Haiti following the 2010 earthquake there. However, after 3 years, half of the money has not been dispersed, and nearly 500,000 people still live in tents. As a result, many who have made pledges have decided not to fulfill the remainder of their pledges because of the inaction on the part of the relief fund in getting the funds dispersed, the buildings rebuilt, and the housing constructed. What would be their grounds for terminating the payment of their pledges? a. Misrepresentation b. Lack of performance c. Fraud d. Undue influence
b. Lack of performance
Tristan Colbert owns an appliance store. He has ordered 10 Subzero refrigerators for his store at a cost of $2,500 each from Plains Manufacturing. Tristan ordered the refrigerators in anticipation of an order he was going to receive from a custom-home builder. Plains Manufacturing experienced a flood at its plant in Iowa City and lost all goods in production. They were unable to deliver the refrigerators to Tristan and notified him immediately of the problem. Tristan has to purchase the 10 refrigerators from another plant at a cost of $3,000 each. Which of the following statements is correct about the situation? a. Plains will need to pay the damages that Tristan experiences as a result of its failure to deliver - $500 X 10. b. Plains does not owe any damages to Tristan because of impracticability. c. Plains can use the defense of impossibility. d. This contract is governed by common law principles of damages.
b. Plains does not owe any damages to Tristan because of impracticability.
Sandy purchased a computer from Big Box. Big Box did not disclose to her that the computer was a return item. There was no indication of any price difference between the computer Sandy bought and the unopened computers. Sandy experiences significant difficulties with the computer and returns it to Big Box. Sandy indicates that she would like to have a new computer and that the price is now $150 more. Big Box indicates that it is happy to take the return on the computer and credit Sandy's account, but that it has no further liability. Which of the following is correct? a. Sandy has no damages since Big Box took back the computer. b. Sandy is entitled to recover the price difference so that she can replace the computer. c. Sandy is entitled to the return, but no additional damages. d. Big Box's position is correct.
b. Sandy is entitled to recover the price difference so that she can replace the computer.
The Hoffmans were having their home remodeled by All-Right Contractors. The roof had to be removed in order to build the second story the Hoffmans had contracted and designed to build. After All-Right had removed the roof, but before a covering was placed over the exposed half of the home, All-Right's foreman said the job would cost an additional $12,500. The Hoffmans refused to agree to the additional fees and All-Right's foreman said, "Suit yourselves. Looks like rain for the next day or two," and left. The Hoffmans called All-Right and agreed to pay the $12,500 extra and went in to sign the paperwork. Which of the following statements is true? a. The contract for the additional $12,500 is valid and binding. b. The contract for the additional $12,500 is invalid because of duress. c. The contract was not valid because of duress, but the Hoffmans signed anyway - so there is a valid and enforceable agreement. d. none of the above
b. The contract for the additional $12,500 is invalid because of duress.
Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Which of the following statements is true? a. Dana has no grounds for rescinding her agreement. b. The information about the drug dealer was material and should have been disclosed to her. c. Withholding information about the former drug-dealer owner is not misrepresentation. d. none of the above
b. The information about the drug dealer was material and should have been disclosed to her.
The Morrisons are about to purchase their first home in a new town. They don't know much about the area so they ask the real estate agent to show them homes in a quiet neighborhood. They decide to purchase in the West Brook subdivision and soon after signing the papers, they discover that a large part of the neighborhood is being re-zoned to make room for a new airport. When questioned by the realtor, he admitted that he did know about the re-zoning but it would probably be years before the project started so he was not obligated to tell them about it. Which of the following is true?a. The realtor is guilty of duress. b. The realtor is guilty of misrepresentation. c. The realtor was not obligated to tell the Morrison's about the re-zoning. d. The realtor is guilty of fraud.
b. The realtor is guilty of misrepresentation
Diana and Charles Windsor are considering purchasing a swimming pool. The representatives of Fun-in-the-Sun Pool arrange a meeting at the Windsor's home to discuss the price and draw up plans. The Windsors sign a contract for the pool for a price of $12,000 with payments of $3000 each month for the next four months while the pool is under construction. The Windsors also agree to pay a carrying charge for the payments of $250.00. Two days after signing the contract, the backhoe operator arrives ready to dig the pool, but Charles tells him the contract is off. The Windsors: a. have breached their contract and will be liable to Fun-in-the-Sun for damages. b. are protected by their three-day rescission rights under Regulation Z. c. do not have the three-day rescission rights since there are no monthly installment payments over a period of one year. d. none of the above
b. are protected by their three-day rescission rights under Regulation Z.
Paula Sanford has filed a voluntary petition in bankruptcy. Paula has a job but admits that she is in over her head on credit card debt. The bankruptcy court: a. can allow Paula to declare bankruptcy because she has debts. b. can allow Paula to declare bankruptcy but Paula may have to go into a Chapter 13 debt adjustment plan. c. has no remedies for consumers with only credit card debt. d. none of the above
b. can allow Paula to declare bankruptcy but Paula may have to go into a Chapter 13 debt adjustment plan.
Costco, Inc. had a contract to purchase 300,000 electric mini-Mercedes from HUMBENZ Toy Co. The toy cars were to be delivered by November 1. On October 23, the Consumer Product Safety Commission announced a recall of the toy cars as well as a ban on their sales because of electrical shorts and a high risk of fire in the cars. HUMBENZ has not delivered the cars to Costco. HUMBENZ: a. has breached its contract with Costco. b. has a void contract with Costco because the subject matter is now illegal. c. must still deliver the cars because its contract predated the recall and ban. d. none of the above
b. has a void contract with Costco because the subject matter is now illegal.
RaeAnn and Rick Telford purchased an existing home in a neighborhood of multi-million-dollar homes. After moving in, the Telfords learned that the home had been owned formerly by a couple that was indicted for drug trafficking. The home had been raided by DEA agents, and there had been a shoot-out before the couple was taken into custody. The couple's youngest child was killed in the house during the shoot-out. RaeAnn and Rick: a. have no recourse if there is nothing physically wrong with the house. b. have a remedy of damages or rescission if this information was withheld from them. c. have no remedy because neither sellers nor brokers are required to disclose psychological issues with properties. d. none of the above
b. have a remedy of damages or rescission if this information was withheld from them.
Doug Weston had a six-month apartment lease. The lease provided that if Doug ended the lease early, he would be required to forfeit his security deposit and his last month's rent. This provision in the lease agreement: a. is void as against public policy. b. is a liquidated damages clause. c. is an assignment of benefits. d. is substantial performance.
b. is a liquidated damages clause.
Angela, age 17, is injured in a car accident and receives $5,200 in medical treatment at the emergency room. The hospital sends a bill to Angela, who signed the admitting form in which she agreed to pay for the treatment. Angela: a. is a minor and need not pay the bills. b. is liable for the bill as a necessity. c. can rescind the agreement. d. none of the above
b. is liable for the bill as a necessity.
Angela, age 17, is injured in a car accident and receives $5,200 in medical treatment at the emergency room. The hospital sends a bill to Angela, who signed the admitting form in which she agreed to pay for the treatment. Suppose that Angela turned 18 between the time of the accident and when she received the bill. Angela: a. is a minor and need not pay the bills. b. is liable for the bill as a necessity. c. can rescind the agreement. d. none of the above
b. is liable for the bill as a necessity.
Ralph Deuschle owned an ice sculpture company. Ralph provides ice sculptures for private weddings, parties, and receptions. The Canasta Resort was a large hotel located near Ralph that was not satisfied with its current catering company's ice sculptures and its events manager liked Ralph's work. The events manager approached Ralph and indicated the Canasta would like to have an ongoing supply contract but that its needs would require Ralph to expand his business, both with additional space and 3 new employees. Ralph entered into a supply contract with the Canasta and the events manager told a lending officer at the bank where Ralph got his construction mortgage for the business expansion that the Canasta would be sending all of its business to Ralph. The Canasta then began to rethink its events focus and marketing and decided to cut back on ice sculptures. Ralph could not use the additional space and the three employees had to be laid off. The Canasta: a. has no liability to Ralph for the downturn in amount of ice sculptures ordered if it did not guarantee a minimum amount to be purchased. b. may be liable to Ralph under a theory of a lack of good faith. c. is entitled to refocus its business and has not breached its contract. d. none of the above
b. may be liable to Ralph under a theory of a lack of good faith.
Bethany Tolson had a contract to supply ice to Jake's Creamery. Bethany found that the demands for her ice were exceeding her ability to supply it and she recruited Callie Oldham to take over her supply contract for Jake. Bethany, Jake, and Callie all sign an agreement to substitute Callie in the supply contract. Which of the following describes what has been done? a. accord and satisfaction b. novation c. modification d. impracticability defense
b. novation
Paddock Pools constructed a swimming pool and deck for the Jensens' home. Paddock installed the wrong trim on the pool. It would cost $2800 to change the trim - one-fifth the total cost of the pool. The Jensens refuse to pay anything for the pool. Paddock's best defense is: a. duress. b. substantial performance. c. mistake. d. failure of conditions.
b. substantial performance.
Which of the following statements would not be a basis for misrepresentation? a. "This toothpaste is the best tasting around." b. "This house is built the way they used to build houses." c. "There is no merger pending for the company." d. All of the above are sufficient bases for misrepresentation.
c. "There is no merger pending for the company."
Akon had an idea for a website called "Fantrace," a site that would help celebrities connect with their fans. Akon entered into an agreement with Broomfield for his help in building the site and Khalilian to help with marketing. Broomfield had recommended his friend, Khalilian, for the project because of his connections with celebrities. However, Broomfield did not tell Akon that he knew that Khalilian was a liar and that he had also been in prison. When things did not go well in working with the two, Akon sought to set aside the contract on the grounds of misrepresentation. Which of the following is correct? a. Withholding information is not misrepresentation. b. Broomfield had no obligation to make any disclosures about his friend. c. Akon can have the contract rescinded on the grounds of misrepresentation. d. Intent is not present, so there is no case for misrepresentation.
c. Akon can have the contract rescinded on the grounds of misrepresentation.
Alice, age 17, purchased a 2005 Kia auto at the Tempe Autoplex. After driving the vehicle for three months, Alice returned to the Autoplex for her money. She did not, however, have the Kia. "It was stolen at school last week." Which of the following statements is true? a. Alice may not rescind the agreement. b. Alice may rescind the agreement only if the stolen Kia is found. c. Alice may rescind the agreement regardless of whether she has the car. d. none of the above
c. Alice may rescind the agreement regardless of whether she has the car.
Andy Seagroves purchased a computer from Best Buy. Best Buy did not disclose to him that the computer was a return item. There was no indication of any price difference between the computer Andy bought and the unopened computers. Andy experiences significant difficulties with the computer and returns it to Best Buy. Andy indicates that he would like to have a new computer and that the price is now $150 more. Best Buy indicates that it is happy to take the return on the computer and credit Andy's account, but that it has no further liability. a. Best Buy's position is correct. b. Andy has no damages since Best Buy took back the computer. c. Andy is entitled to recover the price difference so that he can replace the computer. d. Andy is entitled to the return, but no additional damages. e. none of the above
c. Andy is entitled to recover the price difference so that he can replace the computer.
Which of the following sections of the federal bankruptcy laws deals with consumer debt adjustment plans? a. Chapter 7 b. Chapter 11 c. Chapter 13 d. CRO provisions
c. Chapter 13
On Monday, Marcia agreed to buy Joey's car for $8,000 when she gets paid on Friday. They have signed a written agreement with the terms that she will pay him $100 per week until the car is paid for. On Thursday, the car is involved in an auto accident and is totaled. Does Marcia have to pay for the car? a. No, because Joey was guilty of fraud. b. Yes, because they had a written agreement. c. No, because the car is totaled and no longer exists. d. Yes, because she agreed to buy it without any stipulation on the condition.
c. No, because the car is totaled and no longer exists
Bentley owes a credit card company $18,000 and has not made a payment in 4 months. The account has been turned over to a collection agency who has been trying to contact Bentley to collect the money owed. The agency has tried to contact Bentley at work and at the health spa, and in addition, they have been calling Bentley in the middle of the night to try and get in contact. Which of the following is true? a. The agency can only speak to people at Bentley's workplace if they specifically say they are calling about the $18,000 debt. b. The agency can use any methods to contact Bentley because he owes them a large amount of money. c. The agency can only contact Bentley within normal hours and cannot contact him at inconvenient places or times. d. The agency cannot attempt to contact Bentley.
c. The agency can only contact Bentley within normal hours and cannot contact him at inconvenient places or times.
Rose, a minor, purchased a new car from Sheehan Buick for $5,000. Rose later, while still a minor, elected to disaffirm the purchase and notified Sheehan of her decision. She also requested a full refund of the purchase price. Sheehan refused, and Rose brought an action to invalidate the contract and to seek a refund of the purchase price. What will be the likely result? a. The contract is valid and enforceable as to Rose, as she ratified the contract when she took possession of the vehicle. b. The contract is void because it is between an auto dealership and a minor. c. The contract is voidable at the option of Rose because she is a minor. d. The contract is valid and enforceable as to Rose, and she must continue to pay for the vehicle.
c. The contract is voidable at the option of Rose because she is a minor.
Which of the following statements would be a basis for claiming misrepresentation? a. This car is a real honey. b. This car has the finest road performance going. c. This car has the fastest zero to 60 acceleration on the planet. d. This car represents status. e. All of the above could be a basis for misrepresentation.
c. This car has the fastest zero to 60 acceleration on the planet.
A provision in a contract requiring that a buyer obtain financing before a deal can go through is an example of: a. a contract with no consideration. b. economic duress. c. a condition precedent. d. none of the above
c. a condition precedent.
Which of the following is not covered by the Fair Debt Collections Practices Act? a. an attorney collecting for a client b. a collection agency with one exclusive client c. a hospital using its collection department to collect fees from patients d. an attorney collecting on a contingent fee basis e. All of the above are covered under the FDCPA.
c. a hospital using its collection department to collect fees from patients
If a consumer requests a credit reporting agency to correct his/her credit report: a. the agency must comply. b. the agency need only include a copy of the request in its report. c. any corrections made must be sent to all report recipients over the last two years. d. none of the above
c. any corrections made must be sent to all report recipients over the last two years.
The three-day-cooling-off period applies to: a. credit contracts in which a security interest in the home is given. b. second mortgages on homes. c. both a and b d. none of the above
c. both a and b
Which of the following is prohibited under the FDCPA? a. contacting third parties for current address information on the debtor b. contacting the debtor at his/her place of employment c. contacting the debtor after the debtor requests no further contact d. All of the above are prohibited.
c. contacting the debtor after the debtor requests no further contact
Duress requires proof of: a. physical force. b. threat of physical force. c. deprivation of a meaningful choice. d. none of the above
c. deprivation of a meaningful choice.
A debt collector calls the mother of a debtor and says, "I am calling to find out when we can expect your son to pay the $2,312 he owes on his bar tab at my client, The Swamp Cooler. It has been six months and he has not made a payment." The debt collector: a. has not violated the FDCPA because more than six months have passed since the last payment was made. b. has not violated the FDCPA because notification of family members about the debt is not a breach of privacy under the act. c. has violated the FDCPA. d. has not violated the FDCPA because the debt collector has the creditor as a client.
c. has violated the FDCPA.
Force majeure clauses: a. are liquidated damages clauses. b. are void. c. serve to shift the risk of unforeseen events. d. none of the above
c. serve to shift the risk of unforeseen events.
Credit counselors are regulated under: a. the Fair Debt Collections Practices Act. b. Dodd-Frank - Consumer Financial Protection Act. c. the Credit Repair Organizations Act. d. the Fair Credit Billing Act.
c. the Credit Repair Organizations Act.
Clothing For Accountants is a popular retail store owned by I.M. Material. Material has just sold the business to Phil Forma. Phil has asked that a covenant not to compete be inserted into the agreement. Such covenants are: a. void as against public policy. b. only valid in employment contracts. c. valid if reasonable in time and geographic scope. d. none of the above
c. valid if reasonable in time and geographic scope.
Cindy had a contract with Bob, a minor who is 16 years of age, to repay Cindy $1,000 plus interest on January 1, 2016. The loan was used to buy a computer. It is now August 1, 2017 and Cindy has not received any payment. Cindy wishes to file suit to collect the $2,000. Cindy's contract with Bob is: a. unenforceable. b. valid. c. voidable. d. void
c. voidable
If entered into by a minor, which of the following contractual situations may be enforceable against the minor? a. Student loan agreements b. Military obligations c. Payment for reasonable value for necessities d. All of the above
d. All of the above
Which of the following would not be a basis for misrepresentation? a. These shrubs will survive in direct sunlight. b. This lawnmower has a safety turn-off switch. c. This soft water system will add five years to the life of your washing machine. d. All of the above are a basis for misrepresentation.
d. All of the above are a basis for misrepresentation.
Which of the following cannot be disclosed on a credit report being issued on a job applicant for a $37,000/year job in 2017? a. a bankruptcy in 2012 b. a judgment paid in 2003 c. a criminal conviction for running a meth lab in 2009 d. All of the above can be disclosed.
d. All of the above can be disclosed.
Allegheny Energy Supply Co. and Monogahela Power Co., a subsidiary, filed suit against Anker West Virginia Mining Co., later acquired by International Coal Group, for breach of contract. The parties had a contract for Allegheny and Monogahela to buy all of the coal produced from a proposed "Sycamore 2" mine, located in Harrison County, W.Va. The coal promised amounted to about 1.8 million tons per year, not less than 20 million tons total. Anker has never produced the necessary amount of coal, topping out at 480,000 tons per year in total from the mine. Anker had sent a letter to Allegheny in 2006 claiming physical difficulties at the mine and a change in the enforcement of regulations relating to coal mining near gas wells hampered their ability to extract coal from the mine. As a result, Anker said it was unable to deliver the necessary coal. Which defense to performance is Anker relying on? a. Misrepresentation b. Parol evidence c. Failure of conditions d. Force majeure
d. Force majeure
James Krieg has finished law school but has unsuccessfully taken the bar exam twice. Krieg is running low on patience and cash. He has begun writing wills to see him through this time of crisis and is charging $200 per will. Some of his will clients have refused to pay Krieg and he wishes to take them to a small claims court. Which of the following statements is true? a. Krieg could recover the fees on a quasi-contract theory. b. Krieg could recover the fees since the licensing after the bar exam is simply to raise funds. c. Krieg agreements are voidable. d. Krieg agreements are void.
d. Krieg agreements are void.
Who is covered under the Fair Debt Collections Practices Act? a. an attorney collecting a debt for himself b. Macy's collecting a debt through its own collection subsidiary c. a hospital collecting a debt from a patient d. None of the above is covered under the FDCPA.
d. None of the above is covered under the FDCPA.
Ralph Deuschle owned an ice sculpture company. Ralph provides ice sculptures for private weddings, parties, and receptions. The Canasta Resort was a large hotel located near Ralph that was not satisfied with its current catering company's ice sculptures and its events manager liked Ralph's work. The events manager approached Ralph and indicated the Canasta would like to have an ongoing supply contract but that its needs would require Ralph to expand his business, both with additional space and 3 new employees. Ralph entered into a supply contract with the Canasta and the events manager told a lending officer at the bank where Ralph got his construction mortgage for the business expansion that the Canasta would be sending all of its business to Ralph. The Canasta then began to rethink its events focus and marketing and decided to cut back on ice sculptures. Ralph could not use the additional space and the three employees had to be laid off. Which of the following statements is correct? a. The Canasta has no liability to Ralph for the downturn in amount of ice sculptures ordered if it did not guarantee a minimum amount to be purchased. b. Ralph may be entitled to recover liquidated damages from Canasta due to nonperformance of the contract. c. The Canasta is liable to Ralph, but a court will likely only award him nominal damages. d. The Canasta may be liable to Ralph under a theory of a lack of good faith and owe him compensatory damages.
d. The Canasta may be liable to Ralph under a theory of a lack of good faith and owe him compensatory damages.
Sue and Kevin Kellman signed a contract for the construction of a cabin near Pinetop. In building the $562,000 cabin, the builder discovered that it had to put the vent for the heating system in the area where the hall closet is located. The result was that the Kellman's had a half-closet there instead of a full-length closet that was open to the floor. The Kellmans: a. need not pay for the cabin because of this material breach. b. can be compensated under the doctrine of force majeure. c. can be compensated under the doctrine of commercial impracticability. d. can be compensated under the doctrine of substantial performance.
d. can be compensated under the doctrine of substantial performance.
Which of the following is not eligible to disclosure of a consumer debtor's credit report? a. a consumer debtor requesting the report without a credit application pending b. a creditor who has a signed credit application from the consumer debtor c. a potential employer d. the spouse of the consumer debtor
d. the spouse of the consumer debtor
Under the Fair Credit Reporting Act, consumers have which of the following rights? a. privacy and no disclosure without permission b. right to dispute information in the report c. right to correction d. right to rebuttal statement e. consumers have all of the above rights
e. consumers have all of the above rights
What is the capacity for a contract?
the needs to be an age to enter a contract- can be voidable. Persons deemed not mentally capable, contracts are void
Which of the following contracts would be void? a. A contract with a person declared mentally incompetent. b. A contract with a minor. c. A contract with a force majeure clause. d. All of the above are void.
a. A contract with a person declared mentally incompetent.
What necessaries were provided to the minor in Yale v. Fountain?
Life-saving medical care
The elements of misrepresentation
Misstatement of a material fact, reliance, and damages
An implied-in-law contract in Yale v Fountain was between the provider and the......?
The minor
A minor's right to disaffirm a contract is conditioned on: a. the ability to return the contract consideration. b. whether the minor misrepresented his/her age. c. a time limit of six months. d. none of the above
d. none of the above
In Yale V. Fountain, the primary contract was between the medical provider and.....?
The parents
Which of the following is true about a line of credit secured by the equity in the debtor's home? a. there is a three-day rescission period b. the same levels of disclosure for other types of credit are not required c. the monthly payments need not be disclosed d. All of the above are true.
a. there is a three-day rescission period
Contracts with illegal subject matter are: a. void. b. voidable. c. neither a nor b
a. void.
Bob, age 17, has entered into a contract to buy a car. The contract is: a. voidable. b. void. c. voidable only if Bob can return the car. d. enforceable since it is for a necessary. e. none of the above
a. voidable.
The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years within a one-mile radius of the sold business. Such an agreement: a. is void as against public policy. b. is void as unconscionable. c. is void as usurious. d. is valid and enforceable.
d. is valid and enforceable.
The court in the case involving the ACT exam (Durrett) held that: a. duress was clearly involved. b. the clicking on terms for agreement online do not become part of the contract. c. ACT's provisions were unconscionable. d. it could not rule on the defense of the plaintiff being a minor.
d. it could not rule on the defense of the plaintiff being a minor.
Undue influence requires the presence of: a. a fiduciary relationship. b. some threat or force. c. a lack of capacity in the contracting party. d. none of the above
d. none of the above
Compensatory v incidental damages
Compensatory: direct damages as result of breach (car promised was sold to someone else) Incidental: compensate for further losses (placing a new add for a car that wasn't bought)
What is the difference between assignment and delegation?
Delegation is the transfer of contractual duties and obligations, assignment is the third-party contract rights that are brought forward afterwards
What is the remedy for misrepresentation?
Rescission - Contract is set aside, parties are restored to pre-contract positions
What is a bill of lading used for?
The assurance of payment in international contracts; gives a title to controlled goods
What is the purpose of a force majeure clause?
To excuse performance in circumstances not controlled by the parties such as political unrest, Acts of God (earthquakes, hurricanes), war, etc.
The Fair Debt Collections Practices Act applies to: a. collection agencies. b. all consumer credit businesses. c. the IRS. d. banks. e. all of the above
a. collection agencies.
Which of the following is prohibited in the collection of consumer debt by the Fair Debt Collections Practices Act? a. 7 AM calls at the debtor's place of employment. b. 7 AM calls at the debtor's home. c. 7 AM calls at the debtor's parents' home. d. all of the above
d. all of the above