LW121 Practice Test 2

d. Bob can back out of the settlement at any time before he cashes the check.

10. Steve is driving to an 8:00 class after staying up all night to study for his LW121 test. He is very tired and nods off while driving. Steve's car runs into the back of Bob's car causing $5,000 dollars of damage to Bob's car. Bob is not injured. Bob gets Steve's insurance information. Steve's insurance adjustor contacts Bob and offers him a check for $5,000 in full and final satisfaction of any liability arising out of this car accident. In exchange for the money, Bob signs a release in which he agrees that he won't sue Steve as a result of the car accident. Later, Bob's friends tell him he is a fool to settle for so little money. Bob hasn't cashed the check yet and calls the insurance adjustor to demand more money. Which of the following statements best describes this situation? a. Bob is not bound by the Release because there is no legal consideration to support the insurance company's payment of $5,000. b. Each of Bob and the insurance company have received legal consideration to support this agreement so it is an enforceable agreement. c. The insurance company can back out of the settlement at any time before Bob cashes the check because there is no legal consideration to support the company's payment of $5,000 to Bob. d. Bob can back out of the settlement at any time before he cashes the check.

d. A contract to buy a used computer for $350.

11. Which of the following contracts is not required to be in writing under the Statute of Frauds? a. A contract to buy a farmhouse for $350,000. b. A contract to buy a car for $6,000. c. A contract to pay someone else's debt if that person fails to. d. A contract to buy a used computer for $350.

c. The second contract at the $1,000,000 purchase price is unenforceable because it is not supported by consideration. The first contract at the purchase price of $925,000 will be enforced

17. Buyer and Seller have entered into a signed written enforceable contract for purchase of a 100-acre farm in upstate New York. The purchase price is $925,000 with a closing date of November 1. One week before the closing, Seller informs Buyer that he will not sell the farm for less than $1,000,000. Buyer is not happy with this but agrees to the new price and they both sign a written contract at the new price. Under these circumstances: a. Since the second contract is in writing and signed and it is the last agreement entered into by the parties, the second contract at the $1,000,000 purchase price will be enforced. b. Because it was unforeseen that the Seller would demand a higher purchase price, under these circumstances, the second contract at the $1,000,000 purchase price will be enforced. c. The second contract at the $1,000,000 purchase price is unenforceable because it is not supported by consideration. The first contract at the purchase price of $925,000 will be enforced. d. The second contract at the $1,000,000 purchase price is unenforceable because contract modifications are never enforceable.

a. Because this is a gift that has been completed, Tom is legally entitled to keep the money.

8. Tom's great aunt Martha has promised him that she will give him $5,000 for Christmas because she is so fond of him. Sure enough, Tom finds a check for $5,000 from great aunt Martha under the Christmas tree. He deposits the check in his bank account the very next day and is thinking about all the ways he can enjoy spending it. The first thing he does with the money, though, is to send great aunt Martha a huge bouquet of flowers as a thank-you present. Before she receives the flowers, though, great aunt Martha leaves the following message on Tom's cell phone: "You ungrateful toad, I haven't heard a word of thanks from you for that generous Christmas gift. I'm taking that money back. Return that check to me immediately or I'll bring you to court." Which of the following is true: a. Because this is a gift that has been completed, Tom is legally entitled to keep the money. b. If great aunt Martha had, in fact, received the thank you flowers within a reasonable time after Christmas, an enforceable contract would have been formed and Tom would be legally entitled to keep the money. c. Since a gift promise lacks consideration, great aunt Martha can legally recover the money. d. If the gift had been for an amount less than $500, under the Statute of Frauds, Tom would be entitled to keep it whether or not he thanked his great Aunt Martha.

b. The limitation of liability provision in the contract is enforceable because it was freely entered into by sophisticated corporations

Acme Metals, Inc. (ìAcmeî), a multi-national corporation, entered into a signed contract with Star Logistics, Inc., (ìStarî) another large corporation with world-wide operations. Under the contract Star agreed to provide warehousing services for Acmeís just-in-time inventory requirements. The contract contained a provision limiting Starís liability for contract damages to $100,000. When $1,000,000 worth of Acmeís inventory was damaged as a result of Starís breach of contract, Acme sued Star claiming damages of $1,000,000. Star defended against the claim on the basis of the limitation of liability provision in the contract and offered Acme $100,000 as full payment for any and all contract damages. Acme claimed that the limitation of liability provision in the contract was unconscionable and therefore unenforceable. Under these circumstances, the most likely result is: a. The limitation of liability provision in the contract will not be enforced because it is unconscionable. b. The limitation of liability provision in the contract is enforceable because it was freely entered into by sophisticated corporations. c. The limitation of liability provision in the contract is enforceable because it results from oppression and surprise. d. The limitation of liability provision in the contract will not be enforced due to unforeseen circumstances.

a. Andy will lose because a guaranty agreement is required to be in writing to be enforceable.

Amanda, a recent university graduate, needed a car to get to her new job. Andy of Andyís Auto World agreed to make a $7,500 car loan to Amanda to finance her purchase of a car if Amanda would provide a creditworthy guarantor for the car loan. To help Amanda obtain the loan for the car, Ted, a friend, told Andy that he would pay the loan if Amanda didn't. If Amanda stops paying the loan and Andy sues Ted to recover the balance due on the loan, the most likely result would be: a. Andy will lose because a guaranty agreement is required to be in writing to be enforceable. b. Andy will lose because an agreement for the sale of goods in excess of $500 is required to be in writing to be enforceable. c. Andy will win because Ted orally agreed to guaranty Amandaís loan. d. Andy will win because Amandaís failure to make the loan payments was an unforeseen circumstance.

c. Barbara is not legally entitled to terminate this contract.

Barbara the Buyer entered into a signed written contract on January 2nd with Stella the Seller for the purchase of Stellaís 2005 red Mazda Miata for a purchase price of $3,500. The contract provided for the closing to take place on January 15th (in other words, the money would be paid by Barbara and the Miata delivered by Stella on January 15th). On January 3rd Barbara changed her mind about buying Stellaís car and she phoned Stella to tell her she wouldnít be going ahead with the purchase. Which of the following is true? a. If Barbara has an objectively good reason for changing her mind, she has the legal right to terminate the contract. b. Because Barbara notified Stella of her decision within three (3) days after signing the contract, this is a valid termination. c. Barbara is not legally entitled to terminate this contract. d. Either party can terminate this contract under the mailbox rule.

b. Bertha made a unilateral mistake and will not be able to rescind the contract.

Bertha entered into a signed written contract with Verizon Wireless for a free cell phone and a 1-year cell phone plan for the period January 1, 2007 through December 31, 2007. The contract contained a termination clause which provided that a termination fee in the amount of $100 would be payable if the customer terminated the contract during the first 6 months of the plan year. Bertha determined that it was essential for her to improve her cell phone experience by purchasing an iPhone and signing up for cell service with AT&T. She brought her Verizon phone back to the Verizon store on March 15, 2007 to turn it in and to terminate her Verizon contract. The customer service representative advised Bertha that she would be charged the $100 termination fee in accordance with the contract and he showed her a copy of her contract which she had signed at the bottom and had initialed in the box next to the termination provision. Bertha responded: "Oh, you see, when I read that provision, I thought it said $10 not $100! If I knew there was a $100 termination fee, I never would have signed the contract." If Verizon sues Bertha to recover the $100 termination fee, the likely result is: a. Bertha will not be able to rescind the contract under the doctrine of promissory estoppel. b. Bertha made a unilateral mistake and will not be able to rescind the contract. c. In order to recover the $100 termination fee, Verizon must show that $100 is the same termination fee charged by its major competitor AT&T. d. Because this is a bilateral mistake of fact, Bertha can rescind the contract and is not liable for the termination fee.

b. Stan will win because Betty signed the letter agreement.

Betty saw a ëFor Saleí sign on her colleague Stanís condo. Betty had always admired Stan's condo and asked him what he would take for it. Stan told her that he was asking $100,000 for it. Betty said that she was prepared to pay $95,000 for the condo and Stan agreed. They orally agreed on all the other aspects of the transaction (including an inspection contingency, down payment and closing date). Betty sent Stan a signed letter agreement along with the deposit check. The letter agreement detailed all the terms they had agreed upon. Stan called Betty the day he received her letter to acknowledge receipt of the deposit and he told her how pleased he was that she was buying his condo. A week before the closing, Betty changed her mind and decided she didnít want to buy Stanís condo. If Stan sues Betty for breach of contract, the most likely result will be: a. Stan will lose because the Statute of Frauds requires both parties to sign the written agreement. b. Stan will win because Betty signed the letter agreement. c. Stan will lose because Betty partially performed the contract when she sent him the deposit. d. Stan will win under the leading object rule.

c. Since Bill was drinking voluntarily, he will be bound by any agreement he has made.

Bill and his friend Sally are celebrating the end of finals week at college. They have both been drinking all afternoon. Bill is clearly drunk by the end of this drinking session. Sally does not appear to be drunk but she is, in fact, highly intoxicated. At this point, Mary approaches Bill and Sally and says: "I need a laptop computer today. Iíll buy a laptop from either one of you for $250." Bill quickly responds: "It's a deal!" Which of the following statements best describes the situation? a. Bill lacks the contractual capacity to enter into an enforceable contract. b. If $250 is a fair price for Bill's laptop, then he is legally required to sell the laptop to Mary for the agreed on price. c. Since Bill was drinking voluntarily, he will be bound by any agreement he has made. d. If Sally had responded "It's a deal!" instead of Bill, the contract would be enforceable.

d. If Bob can prove in a court of law that he did have too much work to get done in August then Hilda is legally obligated to pay the additional $2,500.

Bob the builder enters into a signed written contract with Hilda Homeowner. The contract provides that Bob will build a family room addition to Hilda's house. The contract price is a flat fee of $18,500 with all the work to be completed by September 1. On August 15, Bob asks to meet with Hilda. He tells her that he has more work than he can handle for the month of August. He tells Hilda that if she wants the work done by September 1, she will have to pay him an additional $2,500. Hilda is very upset about this but doesn't want to delay the construction project past September 1. She agrees and enters into a signed written modification agreement with Bob in which she agrees to pay him an additional $2,500 if the construction is completed by September 1. Which of the following is true: a. Since Hilda signed a modification agreement, it is legally enforceable and Hilda is legally obligated to pay the additional $2,500. b. This is an example of pre-existing duty. Since there is no consideration to support the contract modification, Hilda is not legally obligated to pay the additional $2,500. c. Because Bob took advantage of her, Hilda doesn't have to pay Bob anything for the construction project on the legal theory of promissory estoppel. d. If Bob can prove in a court of law that he did have too much work to get done in August then Hilda is legally obligated to pay the additional $2,500.

a. Bob can still disaffirm the contract.

Bob, a 16-year-old minor, buys a snowmobile from Sam, an adult, for $2,000. Bob uses it for 2 months and then advertises the snowmobile for sale for $3,000 but has not yet sold it. At this point: a. Bob can still disaffirm the contract. b. Either Bob or Sam can disaffirm the contract. c. Bob has ratified the contract by trying to sell the snowmobile. d. Bob has ratified the contract by using the snowmobile for 2 months.

c. Cal will lose because there was no legal consideration to support the promise to pay the additional $1,000.

Cal the Carpenter agreed to build Millie a storage building for $8,000. After beginning the project, Cal realized that he needs more money to pay his son's tuition. So Cal demanded an increase in the price to $9,000 to complete the building and Millie agreed. When the building was complete, Millie paid Cal $8,000 for the job. If Cal sues Millie for the remaining $1,000, which of the following statements best describes the situation under the common law of contracts? a. Cal will win; this is a valid modification of an earlier contract. b. Cal will win because Millie had a pre-existing duty to pay the additional amount. c. Cal will lose because there was no legal consideration to support the promise to pay the additional $1,000. d. Cal will lose unless he can prove that he made a mistake when he entered into the contract for the price of $8,000.

c. The contract between Smith and Doe is unenforceable under the Statute of Frauds. Doe will lose the lawsuit.

Christopher Smith was looking to sell his home in Cheshire, CT for $500,000. John Doe had looked at the house and decided he wanted to buy it. Doe contacted Smith over the phone and in their conversation they made an agreement for the sale of the house for $480,000. Soon after, Doe sent Smith a signed letter detailing the terms of their agreement. About three weeks later, Smith entered into a contract with Bill to sell the house for $495,000. If Doe sues Smith for breach of contract, which of the following is true: a. The contract between Smith and Doe is enforceable, because Doe had partly performed the contract by sending the letter to Smith. b. Because Smith and Doe had agreed on the terms over the phone, there is a valid enforceable contract. c. The contract between Smith and Doe is unenforceable under the Statute of Frauds. Doe will lose the lawsuit. d. The contract between Smith and Doe is enforceable, because Doe made an offer to purchase the house before Bill did.

d. The new agreement is enforceable as an accord and satisfaction.

Crosby and Dash are in a good faith disagreement as to the exact amount of money that Crosby owes Dash. They choose to form a new agreement for Crosby to pay Dash an agreed-upon amount of $450. Crosby pays the $450 to Dash. Under these circumstances, which of the following statements is true: a. The new agreement is enforceable under the doctrine of past consideration. b. The new agreement is not enforceable because it is an illusory promise. c. The new agreement is not enforceable due to the preexisting duty rule. d. The new agreement is enforceable as an accord and satisfaction.

c. Denton is entitled to collect $7,600 for the project.

Denton agreed to build a cedar deck for the Thrashers for $7,000 in accordance with a signed written contract. After he began the work, the Thrashers asked Denton to add cedar flower boxes around the deck. Denton replied that it would cost an additional $600 to add these flower boxes. The Thrashers agreed to the additional cost and they both signed a written contract to that effect. Denton finished the deck including the flower boxes and the Thrashers agree that he did an excellent job on the project. Which of the following statements best describes the situation? a. All contract modifications are unenforceable so the Thrashers only owe Denton $7,000. b. The agreement to pay an additional $600 is unenforceable under the pre-existing duty rule. c. Denton is entitled to collect $7,600 for the project. d. The agreement to pay an additional $600 is not supported by consideration so the Thrashers only owe Denton $7,000.

c. Both Moneybag's promise and Ethel's Exercise World's promise.

Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable? a. The promise made by Ethel's Exercise World to buy the weight machines. b. Moneybag's promise to pay if Ethel's Exercise World doesn't. c. Both Moneybag's promise and Ethel's Exercise World's promise. d. None of the promises in this problem need to be in writing.

d. Calvin loses because this is an enforceable settlement of an amount in dispute known as an accord and satisfaction.

Hilda Homeowner enters into a signed written contract with Calvin Carpenter to add a 15 foot by 15 foot deck to the back of her house. The contract price for the work is $4,750 including all material and labor. They agree that the work will be done while Hilda is vacationing in New Hampshire during the first two weeks of July. Calvin completes the deck in the first week of July and leaves his invoice for $4,750 in Hilda's mailbox. When he hadnít been paid for some time, Calvin called Hilda suggesting that he stop by the house that evening to collect payment for the deck. Hilda agreed that Calvin should come over and that evening they had the following discussion: ìHope you had a nice vacation, Hilda. All I need is my check for $4,750 and Iíll be on my way.î ìCalvin, Iím not pleased with the work youíve done. It looked a little on the small side when I first saw it so I asked my son to measure it up for me. It turns out the deck you built is only 12 foot by 12 foot. Thatís a lot smaller than our contract called for.î ìGee, Hilda, Iím awfully sorry about that. I guess I just got a little confused. Tell me, how much are you willing to pay for the deck?î ìCalvin, youíre a real nice boy and I want to be fair to you. Iíll give you the choice. Either you can tear down this deck and build it to the right size ó then Iíll pay you the full $4,750. Or you can leave it as is and Iíll pay you $3,000 for the job.î ìHilda, if itís okay with you, Iíll leave the deck as is and take the $3,000.î Hilda paid Calvin the $3,000 and they signed a mutual release in which they each agreed not to sue the other one over any aspect of the transaction. If Calvin sues Hilda to recover the additional $1,750, the likely result would be: a. Calvin wins because both parties are bound to the terms of the original agreement. b. Calvin loses under the pre-existing duty rule. c. Calvin wins because this was a unilateral mistake on his part. d. Calvin loses because this is an enforceable settlement of an amount in dispute known as an accord and satisfaction.

d. So great that he didn't comprehend the nature of the agreement he was entering into.

In order for someone to avoid a contract on the grounds of intoxication, the level of intoxication must have been: a. At or above the legal limit. b. Only high enough that he was able to notice it. c. At least as high as that of the other party. d. So great that he didn't comprehend the nature of the agreement he was entering into.

b. Not get her car back because under the doctrine of freedom of contract, people are free to enter into a contract on whatever terms they choose.

Jean had just received a promotion and substantial raise. Jean felt her raise would give her much more spending money, so she planned to buy a new sports car. Jean felt she did not need to worry about receiving the best price for her old car, which she thought was worth about $3,000. She sold the car for $500. In fact, the car was worth $5,000, and Jean had not taken into account the additional taxes on her extra income. Jean also decided that for a single mother a sports car would not be very practical. Jean wanted to return the $500 to the purchaser and get her car back. Assuming that Jean will return the $500 to the buyer, Jean can: a. Get her car back if Jean can prove that the buyer knew the car was worth many times what he paid for it. b. Not get her car back because under the doctrine of freedom of contract, people are free to enter into a contract on whatever terms they choose. c. Get the car back based solely on the disparity in the price and value. d. Not get the car back if the buyer had relied on getting a bargain price, but if the buyer could not prove that, Jean could get the car back.

c. Wanda will be able to void the contract because she was so intoxicated when she signed it that she was not able to understand the nature of the agreement she was signing.

Larry the lawyer is planning to get a divorce from his wife Wanda. Wanda has been an alcoholic for the past five years and Larry has finally had enough. Larry prepares an agreement detailing the terms of their divorce. The agreement provides that Wanda will give up custody of their two children as well as the dog and the hamster. Larry will give Wanda one of their cars and a check for $2,500 and that is all she will get from Larry. Larry has signed the agreement and waits until Wanda is nearly passed out from drinking one night. He asks Wanda to sign the agreement, telling her that it is a tax form that needs to be filed with the IRS. Wanda signs it and then passes out. After filing for divorce, Larry presents this signed Agreement to the Court as a binding contract governing the terms of their divorce. Under these circumstances, what is the likely result: a. Because Larry is a lawyer, any contract that he draws up and signs is an enforceable agreement. b. Because Larry is a lawyer, any contract that he draws up in his own divorce is not enforceable. c. Wanda will be able to void the contract because she was so intoxicated when she signed it that she was not able to understand the nature of the agreement she was signing. d. If Larry can prove that it is Wanda's signature on the agreement, then it is enforceable.

d. Mark cannot avoid the contract because this is a unilateral mistake by Mark

Mark was shopping for a used car in February. He went to AutoMegaWorld and test drove a used 2000 Tiger XL. While driving the car, he looked at the climate control center and noticed that the temperature lever was marked "cold" at one end in blue and "hot" in red at the other end. Mark assumed that the "cold" marking meant that the car had air conditioning. Mark wanted to finally have an air-conditioned car. He did not discuss air conditioning in any way with the salesperson. Mark bought the car. Later, when Mark was showing his new car to friends, one of them pointed out to him that the car was not air conditioned. Which of the following statements best describes this situation? a. Mark can avoid the contract on the basis of bilateral mistake. b. Mark can avoid the contract on the basis of unilateral mistake. c. Mark can avoid the contract on the basis of fraud by the salesperson. d. Mark cannot avoid the contract because this is a unilateral mistake by Mark

c. Mary can rescind the contract or recover damages because this is clearly fraud.

Martha was selling some land she owned in Florida to Mary. Martha told Mary that the developer had agreed to build a golf course and swimming pool in the subdivision as part of the development, and that other improvements would be made soon. Martha knew that none of these improvements existed and none were planned. Mary believed Martha and bought the land for $100,000 when it was really only worth $20,000 without these improvements. Mary learns of the error and sues Martha for fraud. Which of the following statements best describes this situation? a. Mary cannot recover because the misrepresentation was not of a material fact. b. Mary cannot recover because she suffered no damages as a result of Martha's misrepresentation. c. Mary can rescind the contract or recover damages because this is clearly fraud. d. Either party can rescind the contract because this is a case of bilateral mistake.

a. Because Mary is a minor, this contract is voidable, but only at the option of Mary, not at the option of Friendly.

Mary, age 16, buys a car from Friendly Auto Dealers. She pays $1,500 for the car. It turns out that the car is really worth $2,500. Friendly wants to disaffirm the contract and get the car back. Which of the following best describes this situation? a. Because Mary is a minor, this contract is voidable, but only at the option of Mary, not at the option of Friendly. b. Because Mary is a minor, this contract is void and Friendly can get back the car by paying Mary $1,500. c. Because Mary has driven the car, the contract cannot be disaffirmed. d. Because Mary is a minor, this contract is void and Friendly can get the car back by paying Mary $2,500.

b. Mike can disaffirm this contract and when he returns the ATV, Cycle Sellers is obligated to give him the $1,000 back.

Mike, who is 16 years old, buys an All Terrain Vehicle for $1,000 from Cycle Sellers. A year later, Mike is injured playing baseball and he can't ride his ATV anymore. He contacts Cycle Sellers and tells them he wants to disaffirm the purchase contract, that he'll bring the ATV in and he wants his $1,000 back. Which of the following is true? a. Mike waited a year before seeking to disaffirm this contract which is beyond a reasonable time so he can not disaffirm the contract. b. Mike can disaffirm this contract and when he returns the ATV, Cycle Sellers is obligated to give him the $1,000 back. c. Mike can disaffirm this contract and when he returns the ATV, Cycle Sellers is obligated to give him back only $500. d. If Mike hadn't injured himself, he would not have the right to disaffirm this contract.

b. Even if Mike signs a statement as part of the contract that states, "I agree not to disaffirm this contract," Mike may still disaffirm when he is 17 years old.

Mike, who is 17 years old, buys a motorcycle from Cycle Sellers, Inc. Assume that Mike pays $3,000 and that the fair value of the motorcycle at the time of purchase is $4,500. Which of the following is true? a. This contract may be rescinded by the seller because Mike is a minor. b. Even if Mike signs a statement as part of the contract that states, "I agree not to disaffirm this contract," Mike may still disaffirm when he is 17 years old. c. Mike can not disaffirm the contract because it can be objectively shown that he wasn't taken advantage of because of his age. d. None of the above.

c. Mrs. Jones entered into a legally enforceable contract to purchase the wreaths.

Mrs. Jones was pleased to see little 12 year old Johnny Jackson march up to her front door selling Christmas wreaths for the Boy Scouts. Johnny asked Mrs. Jones if she would like to buy 4 wreaths again this year and Mrs. Jones said yes: "put me down for my usual 4 wreaths, Johnny." Johnny thanked Mrs. Jones and told her that the money would help the Boy Scout Foundation in its charitable projects. Johnny told Mrs. Jones that he would deliver the wreaths in 3 weeks and would collect the $100 for the wreaths then. When Johnny came back with the wreaths, Mrs. Jones told him that she had changed her mind and wouldn't buy the wreaths. Which of the following statements is true under these facts: a. Mrs. Jones is not legally obligated to purchase the wreaths because the Boy Scout Foundation is a charitable organization. b. Since Johnny is 12 years old, Mrs. Jones can disaffirm the transaction due to lack of contractual capacity. c. Mrs. Jones entered into a legally enforceable contract to purchase the wreaths. d. If Mrs. Jones had notified Johnny that she didn't want to purchase the wreaths within one week after their meeting, this would constitute a valid and timely rescission of the contract.

c. Olga and Helen will not be permitted to recover the insurance proceeds because they do not have an insurable interest in Harry.

Olga and Helen, two elderly women, decide to help out Harry, a homeless man. They arrange for Harry to live in a small but clean apartment for which they pay the rent. They run errands for Harry and occasionally buy groceries for him. Olga and Helen obtain a $50,000 life insurance policy on Harryís life naming themselves as the beneficiaries under the policy (this means that Olga and Helen would receive the $50,000 if Harry dies while the policy is in place). Olga and Helen are in desperate need of money to care for their collection of 20 precious cats. They secretly murder Harry and make a claim for the $50,000 proceeds under the life insurance policy. Which of the following statements best describes this situation? a. Since the insurance company issued the policy, Olga and Helen will be able to recover the insurance proceeds. b. The only basis for the insurance company to withhold payment to Olga and Helen would be if they stopped paying the annual premium on the policy. c. Olga and Helen will not be permitted to recover the insurance proceeds because they do not have an insurable interest in Harry. d. Olga and Helen can only recover from the insurance company the amount they spent for rent and groceries for Harry while he was alive, but in no event more than the $50,000 policy.

c. Because this contract has been completed, there is no basis to cancel the transaction under the statute of frauds.

On Monday, Stuart and Brian entered into an oral agreement that Brian would buy Stuart's gold Rolex watch for $1,500. Later in the week on Friday, Brian handed Stuart a cashier's check for $1,500 and Stuart handed Brian the watch. On Saturday, Brian discovers that the watch is quite heavy and is uncomfortable for him to wear so he calls Stuart and tells him he wants to 'un-do' their deal. Which of the following statements best describes the situation? a. Since this deals with the sale of goods in excess of $500 and the agreement was not in writing, Brian has the right to cancel the transaction and get his money back. b. Brian has the legal right to cancel the transaction and get his money back under the full performance by seller exception to the statute of frauds. c. Because this contract has been completed, there is no basis to cancel the transaction under the statute of frauds. d. This is an example of promissory estoppel so Brian has the legal right to cancel the transaction and get his money back.

c. Pastor Tom will lose because Wallyís promise is not supported by consideration

Pastor Tom was employed by the First Church for 40 years. On Pastor Tomís retirement there was no adequate pension plan. Two months after the retirement, Wally, a wealthy parishioner, appreciative of Pastor Tomís 40 years of exemplary service promised to pay him $500 per month for the rest of his life. Nothing was put in writing about this promise. Wally, however, never came through on this promise and paid Pastor Tom nothing towards his retirement. If Pastor Tom sues Wally to enforce this promise, the most likely result will be: a. If Wally had put his promise to Pastor Tom in writing, then Tom could have enforced it. b. Pastor Tom will win because Wally is under a pre-existing duty to pay him the $500 per month. c. Pastor Tom will lose because Wallyís promise is not supported by consideration. d. Since the amount is liquidated, Pastor Tom can enforce this promise

a. Patty has a strong argument to win under the doctrine of promissory estoppel.

Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, wants to encourage Patty in her studies so he promises to pay Patty support of $200 per month for the next six months. Although Fred didnít ask her to, Patty quits her job in reliance on Fredís financial support so that she can devote full time to her studies for the next six months. Fred makes one payment and then stops with no explanation. If Patty sues Fred to enforce this promise, the most likely result will be: a. Patty has a strong argument to win under the doctrine of promissory estoppel. b. Fred would win because he did not ask Patty to quit her job. c. Patty would win because an enforceable contract was formed when Fred promised to pay her the support. d. Fred would win because this is an accord and Satisfaction

b. Mom's promise is unenforceable.

Sally's mom just heard through the grapevine that she would be getting a big bonus at work so she told Sally that she would buy Sally a new racing bike for Sally's birthday. It turned out that the company cancelled all bonuses so Sally's mom didn't get any bonus. Which of the following statements best describes the situation? a. If Mom had signed a written statement confirming this promise to buy Sally a racing bike for her birthday, then the promise would be enforceable. b. Mom's promise is unenforceable. c. If Sally is under the age of 18, then Mom can rescind the promise to buy her a new bike. d. If Mom does not fulfill her promise to buy Sally a new racing bike, Mom is liable under the doctrine of unilateral mistake.

b. The Buyer can make a good argument that he has partially performed by making a partial payment of the purchase price and by making improvements on the land so the Court should enforce the oral agreement.

Seller and Buyer negotiate for the sale of a house on 10 acres of land. They orally agree on a price of $100,000, with a $10,000 payment to be made within 10 days and the deed delivered within another 60 days. Buyer sends Seller a letter in which all these terms are included, along with a check for $10,000 that Seller deposits. The letter is signed by Buyer. With Seller's permission, Buyer begins construction of a 1,000 square foot addition to the house prior to closing. Seller does not complete the transaction and is in breach of contract. Buyer seeks to enforce the contract. Under these circumstances: a. The Seller can make a good argument that an oral agreement to sell real estate is not enforceable under the Statute of Frauds. b. The Buyer can make a good argument that he has partially performed by making a partial payment of the purchase price and by making improvements on the land so the Court should enforce the oral agreement. c. The Buyer can make a good argument that he justifiably relied on the Seller's promise, that injustice would result from a failure to enforce the oral agreement, and under the doctrine of promissory estoppel the Court should enforce the oral agreement. d. All of the above.

a. Bob cannot recover the $2,000 from Stan because even if Stan knew the car needed a new timing chain, Bob didn't rely on Stan's representations about the condition of the car.

Stan is trying to sell his 2000 Nissan car with 100,000 miles on it. He places an ad for it on Craigslist for $3,000. Stan describes the car in the ad as being "well-maintained and in excellent condition." Bob sees Stan's ad and is interested in buying the car. Before buying it, Bob has the car inspected by his mechanic who says, "Bob, you know, this car has 100,000 miles on it. The timing chain needs to be replaced immediately. Otherwise, it's in excellent condition." Bob buys the car, does not have the timing chain replaced immediately and the following week the timing chain gives out which ruins the engine. The car has to be towed to the mechanic's shop and the repair estimate is $2,000. If Bob sues Stan to recover the $2,000 repair cost, which of the following statements is true? a. Bob cannot recover the $2,000 from Stan because even if Stan knew the car needed a new timing chain, Bob didn't rely on Stan's representations about the condition of the car. b. Bob can recover the $2,000 from Stan on the basis of unilateral mistake. c. Bob cannot recover the $2,000 from Stan based on the pre-existing duty rule. d. Bob can recover the $2,000 from Stan on the basis of unconscionability.

a. Puffery.

The salesman at Best Buy tells a customer that the newest iPhone is the ëcoolestí smartphone on the market. This statement is: a. Puffery. b. Fraud. c. Misrepresentation. d. Unconscionable.

c. The death of Thelma automatically terminated her offer to sell the house to Tom for $240,000 so Tom has no legal claim against Thelma's estate for breach of contract.

Tom lives in Michigan in a neighborhood with many elderly persons. Tom's next door neighbor, Thelma, told him she was going to Arizona to look for a home because she hoped that this would be her last winter in Michigan. Tom had always liked Thelma's house and asked what she was planning to do with it. She said she would be putting it on the market as soon as she found a place she liked in Arizona. Tom then told Thelma that he might be interested in the house. Thelma said, "I'll sell you my house for $240,000. You can think about it because I won't be doing anything else about selling it until I find my new place in Arizona. A real estate agent told me it could bring $270,000, but my price is $240,000 for you." Thelma left a week later and went to Arizona, with nothing further said about the house. On March 25, Thelma sent Tom a fax that she had found a new house and restated the offer's terms and asked Tom if he wanted the house. Tom sent a return fax on March 27 stating that he thought he wanted it, but he needed to check on his finances before committing. Before there were any further communications, Thelma died on March 29. On March 30, not knowing that Thelma had died, Tom sent her another fax in Arizona that he wanted the house at her price of $240,000. Tom did not learn of her death until April 2. Tom then notified the executor of Thelma's estate that he wanted to proceed with his contract to buy the house even though Thelma had died. Which of the following statements best describes the situation? a. Since Tom didn't know about Thelma's death until April 2, his fax of March 30 was a valid acceptance and created a binding contract. b. An enforceable contract was created on March 27 as soon as Tom faxed his letter to Thelma but Thelma's death on March 29 automatically terminated the contract. c. The death of Thelma automatically terminated her offer to sell the house to Tom for $240,000 so Tom has no legal claim against Thelma's estate for breach of contract. d. None of the above.

a. A contract to provide consulting services.

Which of the following contracts is not required to be in writing under the Statute of Frauds? a. A contract to provide consulting services. b. A contract involving the sale of land. c. A contract for the sale of goods of $500 or more. d. A contract to pay someone else's debt if that person fails to

a. An antique pocket watch.

Which of the following is considered tangible personal property (also referred to as 'goods')? a. An antique pocket watch. b. An idea. c. A 400 acre farm with farmhouse. d. 200 shares of stock in Apple, Inc.

d. All of the above

Which of the following ordinarily must be in writing to be enforceable? a. A contract involving the sale of land. b. A contract to sell a car for $1,500. c. An agreement to pay the debts of another person. d. All of the above

d. All of the above

Which of the following statement(s) correctly describes the requirement for consideration in a contract for the sale of goods: a. Under the traditional common law of contracts, to be enforceable a contract must be supported by consideration. b. Under the traditional common law of contracts, to be enforceable a modification to a contract must be supported by consideration. c. Under the Uniform Commercial Code, a modification to a contract for the sale of goods does not need consideration to be binding. d. All of the above

c. Willis can make a good argument that the contract is enforceable because Willis has partially performed the oral contract.

Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning on the house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. Under these circumstances: a. This contract is enforceable, because the statute of frauds does not apply to this interest in land. b. This contract will not be enforced under any circumstances because it is not in writing. c. Willis can make a good argument that the contract is enforceable because Willis has partially performed the oral contract. d. This contract will not be enforced because it is an oral contract for the purchase of real property in excess of $50,000