Test 2 Business Law Ch 11 - 19

8. A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct? a. Although the price is somewhat unclear, the parties have entered into a contract. b. This is an agreement to agree, and is not binding. c. This agreement fails for indefiniteness. d. The carpenter is bound by the agreement, but not the customer.

Although the price is somewhat unclear, the parties have entered into a contract

35. Which of the following duties would most likely not be delegable? a. Joe has a contractual duty to pay Izzie $50. b. Ken has a contractual duty to deliver 50 bushels of corn to Martin by October 1. c. Andy has a duty to teach an accounting class at a community college during the fall semester. d. Josh has a duty to mow Genelle's lawn at least once a week.

Andy has a duty to teach an accounting class at a community college during the fall semester. (requires speciality(degree),)

12. Jose visited a garage sale and found a baseball card collection which he believed was worth over $1,000. He bought the collection for $50.00 from Wanda. Later Jose discovered the collection was essentially worthless and demands his money back from Wanda. Must Wanda refund Jose's money? a. No, the contract is enforceable because Jose was operating under a unilateral mistake and Wanda did not know the value of the cards. b. Yes, the contract is enforceable because Jose made a unilateral mistake of fact. c. Yes, the contract is enforceable because of mutual mistake of fact. d. No, the contract is enforceable because of mutual mistake of value.

No, the contract is enforceable because Jose was operating under a unilateral mistake and Wanda did not know the value of the cards.

48. If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date in the mail, a. no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after the deadline for acceptance. b. a contract is formed, but the contract is voidable at the election of the offeror. c. the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed. d. the acceptance is timely and a contract is formed, but only if the offeror actually receives the acceptance by the deadline specified for acceptance.

The acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed.

14. Judy, a widow, just sold a piece of property. She will live off that money during her retirement. Judy dotes on her son, Chris, who asks her to invest her money in his restaurant, which is faltering. He tells her that if she does not lend him the money she will never see him again. She is afraid of being alone and agrees to his request, but soon changes her mind and asks for her money back. Chris claims they have formed a binding contract. What is your conclusion? a. The contract is voidable based on duress. b. The contract is valid because it was a unilateral mistake. c. The contract is voidable based on undue influence. d. The contract is voidable based on fraud.

The contract is voidable based on undue influence.

40. V3 was a successful singing group that contracted to perform at the "Metalsubstance" rock concert. V3 was aware that the promoter would sustain a substantial loss if the group failed to perform. The members of the group were stricken with a virus that confined them to their beds. The promoter sued for breach of contract. What is the probable result? a. V3 is liable for damages for breach of contract. b. The contract was discharged by impossibility of performance. c. In order to avoid liability for breach of contract, V3 must arrange for another group of comparable quality and reputation to perform on the scheduled date. d. V3 will be deemed to have substantially performed the contract.

The contract was discharged by impossibility of performance.

13. Marquez agrees to buy Dale's pickup truck so he can pull his trailer. Both Marquez and Dale believe that the truck is big enough to do the job. After they complete the deal, Marquez finds that the truck is not strong enough to handle the trailer. The contract between Marquez and Dale can be rescinded because of: a. a unilateral mistake. b. a defective acceptance. c. a mutual mistake. d. negligent misrepresentation.

a mutual mistake

39. In which case will performance on the exact date specified in the contract most likely be deemed essential? a. a sale of goods that fluctuate rapidly in value. b. a sale of goods that remain stable in value. c. a sale of real estate. d. a sale of goods where no harm results from a delay in performance.

a sale of goods that fluctuate rapidly in value

10. If an offeree accepts an offer before it is effectively revoked: a. a void contract is formed. b. a voidable contract is formed. c. an unenforceable contract is formed. d. a valid contract is formed.

a valid contract is formed

6. The first statement made by one of two persons can be anyone of the following except: a. acceptance. b. preliminary discussion. c. invitation to negotiate. d. a survey.

acceptance

22. A(n) _______ contract is a take-it-or-leave-it contract that is unenforceable because it is deemed to be too harsh or oppressive to one of the contracting parties. a. unilateral influence b. bilateral influence c. adhesion d. non-compete

adhesion contract

33. Alberto enters into a contract with a contractor to build a parking garage in Gotham City. Stop-N-Go will greatly benefit from this contract since Alberto's parking garage is adjacent to Stop-n-Go. In this scenario Stop-n-Go is: a. an incidental beneficiary. b. a partial beneficiary. c. a donee beneficiary. d. an implied beneficiary:

an incidental beneficiary

37. When a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the payment: a. as directed by the debtor. b. to the oldest outstanding debt. c. to the most recent outstanding debt. d. to the largest outstanding debt.

as directed by the debtor

46. The party making an assignment is called the: a. assignee. b. assignor. c. obligor. d. successor.

assignor

41. The failure to act or perform in the manner called for by a contract is a: a. waiver. b. breach. c. forbearance. d. reservation of right.

breach

44. The damages that are typically recoverable when a contract has been breached and one party has suffered loss are called: a. punitive damages. b. emotional distress damages. c. compensatory damages. d. liquidated damages.

compensatory damages

19. A(n) _______ is a promise that depends on the occurrence of a specified condition in order for the promise to be binding. a. cancellation provision. b. preexisting legal obligation. c. conditional promise. d. good-faith adjustment.

conditional promise

45. The remedy of specific performance will most likely be granted in the case of a(n): a. employment contract. b. contract to buy shares of publicly-traded stock. c. contract for the sale of a business. d. contract for the sale of Florida oranges.

contract for the sale of a business

34. The making of an assignment __________ the assignor of any obligation of the contract. a. relieves b. conditionally relieves c. does not relieve d. discharges

does not relieve

47. An executory contract is: a. void if neither party has performed. b. One that has been completely performed. c. entered into but not fully performed. d. always unilateral in nature.

entered into but not fully performed (executory = to be executed)

9. An offer that is indefinite may be clarified by reference to another writing through: a. incorporation. b. reference. c. annotation. d. indexing.

incorporation

32. If there is a time limitation or any other restriction in a contract, a third-party beneficiary: a. may ignore it. b. may void it. c. is bound thereby. d. must consent to be bound thereby before it is effective.

is bound thereby

4. A contract is a(n) ________ agreement for which the _______.: a. promissory, parties make mutual promises. b. multi-party, law gives a remedy. c. obligation, obligor promises to pay the obligee. d. legally binding, law gives a remedy.

legally binding, law gives a remedy

31. A third-party beneficiary: a. may be obligated to pay for services rendered. b. may bring suit on and enforce the contract. c. must consent to the contract. d. must be identified by name.

may bring suit on and enforce the contract

42. Repeated breaches and waivers are generally interpreted to indicate: (same contract) a. poor business practices. b. illegal behavior. c. ignorance of the law. d. modification of contract.

modification of contract

7. A customer went into a store and saw a beautiful leather jacket bearing a price tag of $29. The customer handed the cashier a $50 bill and said, "I accept. We have a deal." The cashier then noticed the price tag and told the customer an error had been made and that the price was $229. In this case: a. the customer validly accepted the store's offer. b. the price tag was a firm offer. c. no contract was formed because the customer's offer was refused. d. the customer is the offeree.

no contract was formed because the customer's offer was refused

43. If a plaintiff seeking damages in a breach of contract action receives $1 in damages, the damages would most likely be classified as: a. punitive damages. b. exemplary damages. c. nominal damages. d. compensatory damages.

nominal damages

20. Ordinarily, a promise to perform an existing legal obligation is: a. not consideration. b. binding if the promisor promises to perform with extra care. c. binding if the promisor promises to perform to suit the personal satisfaction of the promisee. d. binding if the promisee would experience substantial loss due to breach of the promise.

not consideration

2. The promisor in a contract may also be called the: a. obligor. b. grantor c. obligee d. grantee

obligor

49. Bankruptcy results in a discharge of contractual obligations by __________. a. default b. equity c. operation of law d. oath or affirmation

operation of law

30. When a contract proves to be a bad bargain: a. the injured party is never bound by the terms of the contract. b. courts will always imply terms that are necessary to avoid hardship. c. parties are generally still bound by the terms of the contract. d. the contract must be rewritten.

parties are generally still bound by the terms of the contract

38. A contract can be discharged by impossibility in all the following scenarios except: a. destruction of subject matter in a sales contract. b. performance under the contract becomes 25% more expensive due to currency fluctuations in construction contract. c. when the law changes. d. death of obligee in a personal services contract.

performance under the contract becomes 25% more expensive due to currency fluctuations in a construction contract

5. An obligation to pay for the reasonable value of services rendered when there is no contract would be called: a. quasi-contractual. b. quasi-enforceable. c. semi-lawful. d. valid.

quasi-contractual

17. None of the following can be legal consideration except: a. Refraining from beating one's spouse. b. Promising to refrain from beating one's spouse. c. Refraining from smoking cigarettes. d. Refraining from using cocaine.

refraining from smoking cigarettes. (the others are illegal)

18. Liz agrees to cook 20 dinners for Brian, and in exchange, Brian will repair all of the plumbing in Liz's house. Liz and Brian's 'deal' has: a. insufficient consideration, because cooking twenty dinners is not worth as much as repairing all of the plumbing in Liz's house. b. insufficient consideration, because this kind of bargain is against public policy. c. insufficient consideration, because there is a clear lack of any bargain. d. sufficient consideration, because Liz has promised something of value.

sufficient consideration, because Liz has promised something of value

36. An offer to perform is known as a(n) __________. a. rendering b. offering c. tinder d. tender

tender

24. One element involved in the determination of unconscionability is: a. the comparative bargaining power of the parties. b. the opportunity to make a contract for better terms with someone else. c. the course of the economy after the contract is made. d. whether a loss will be sustained by performance of the contract.

the comparative bargaining power of the parties

21. Even if a contract appears legal on its face, it may be unenforceable if: a. the illegal contract has not been performed. b. the contract has been partially performed. c. the contract has been fully performed. d. the contract has an illegal purpose.

the contract has an illegal purpose

50. The parol evidence rule may not apply if: a. the contract is materially incomplete. b. the parties disagree on the meaning of the contract. c. there is no ambiguity regarding the terms of the contract. d. one party is unable to perform the contractual obligations.

the contract is materially incomplete

29. A contract is created by which the terms are stated to be for consideration in the amount of $3,000. If typewritten in the contract is the term "four thousand dollars," while the amount of $3,000 is printed within the form: a. the contract will be interpreted to be for $3,000. b. the contract will be interpreted to be for $4,000. c. there is a contract but the courts will not specify the dollar amount, as a conflict exists. d. a compromise settlement amount of $3,500 will be used.

the contract will be interpreted to be for $4,000

25. The validity of a contract is not affected by: a. the effect of the contract on the community. b. unconscionability. c. the absence of good faith. d. the fact that the contract turned out to be a bad bargain for one of the parties.

the fact that the contract turned out to be a bad bargain for one of the parties

15. The obligation of a cosigner is discharged by: a. the minority status of one of the parties. b. the majority status of one of the parties. c. the court's declaration of the contract's provision of necessaries. d. the payment of the debt.

the payment of the debt

27. A promise to pay a debt must be in writing if: a. the debt is for more than $500. b. the debt is now due and payable. c. the promise is to pay the debt of another. d. the debt owed is the promisor's.

the promise is to pay the debt of another

26. An oral contract can be enforced when it relates to: a. the purchase of a television set for $200. b. the sale of an interest in land for $400. c. managing a factory for five years. d. a promise to answer for the debt of another.

the purchase of a television set for $200

28. When interpreting an integrated contract, a court will exclude parol evidence in all of the following cases except: a. to add to the terms of a contract. b. to modify the terms of a contract. c. to contradict the terms of a contract. d. to show fraud.

to show fraud

11. Contractual capacity is the ability to: a. read and write. b. sign a written contract. c. understand that a contract is being made and to understand its general nature. d. understand the legal meaning of the contract being made.

understand that a contract is being made and to understand its general nature

3. An offer of a reward for the arrest and conviction of a criminal is an example of a: a. unilateral contract. b. bilateral contract. c. quasi contract. d. formal contract.

unilateral contract

23. In an employment contract, agreements not to compete are: a. illegal b. uniformly held to be in the public interest and therefore legal c. valid only if the restriction protects the employee d. valid, if the restriction is reasonable and necessary for the protection of the former employer

valid, if the restriction is reasonable and necessary for the protection of the former employer

1. A legally binding agreement that can be rejected at the option of one of the parties is called a(n): a. void agreement. b. revoked contract. c. voidable contract. d. optional agreement.

voidable contract

16. Consideration is: a. the concern shown by the other contracting party. b. what is demanded by the promisor as the price for the promise. c. a stated number of dollars. d. the concern of both contracting parties for the protection of the environment.

what is demanded by the promisor as the price for the promise