ACCT 324 Ch. 13

Which of the following falls under Article 2 of the Uniform Commercial Code (UCC)?

Contract for the sale of a good

Felipe, Adam, and Shirley are neighbors. Felipe overhears Adam's offer to sell an antique clock to Shirley for $3,000. Under these circumstances, _____.

Felipe makes a new offer to Adam when he offers to buy the clock for $3,000

Ronald agrees that he owes a bank $10,000, as claimed by the bank. Ronald explains to the bank that he can only pay the bank $8,000 as full payment toward the money he owes. The bank agrees to accept $8,000 from him. The following month, Ronald receives his new bank statement claiming that he still owes the bank $2,000. Which of the following statements is true of this scenario?

If Ronald does not agree to pay the remaining $2,000, the creditor may sue Ronald for the balance it believes is owed

While interpreting contracts, which of the following rules applies?

If numerals and numbers written out in words conflict, the written words prevail.

A void contract is:

In effect not a contract at all; either its object is illegal or it has some defect so serious that it is not a contract.

Which of the following is true of the mailbox rule?

It provides that the acceptance of an offer is valid when the offeree places it in the mailbox.

In employment contracts, what is the purpose of covenants not to compete?

It restrains an employee from competing with her boss for a designated period of time after she quits her current job.

Amy offers to paint Louis's house for $1,000. The offer stated that acceptance in person was required. Within a reasonable time, Louis e-mailed Amy his acceptance. Which of the following statements is true about this situation?

Louis has not accepted the offer as required by the offeror, and there is no contract

Maya pays $5,000 and purchases a car from her friend, Jane. Later, Maya realizes that the car is worth less than $3000. Which of the following statements will be true if Maya plans to sue her friend?

Maya cannot sue Jane because the court seldom considers adequacy of consideration.

_____ are best described as contractual obligations imposed by the courts in order to prevent one party from being unjustly enriched at the expense of another.

Quasi-contracts

Which of the following is true of the intent of an offeror to be bound by an agreement?

The courts interpret intent to contract only by the offeror's outward manifestations

Which of the following is true of authorized means of acceptance of an offer?

The means by which an offeree can communicate acceptance to an offeror can be expressly stated in the offer.

Which of the following statements accurately brings out the difference between bilateral and unilateral contracts?

Unilateral contracts call for actions, not promises, whereas bilateral contracts involve promises in exchange for promises.

In which of the following situations do the parties to a contract lack contractual capacity?

When one of the parties to the contract is intoxicated

when is a contract voidable?

When the contract is entered into by a minor

When is a contract deemed void?

When the contract is entered into by an intoxicated person who has been adjudicated a habitual drunkard

Which of the following conditions would terminate an offer, even if the offeree does not know of the terminating event?

When the offeror loses the legal capacity to enter into a contract

A(n) _____ is best described as an agreement presented on a take-it-or-leave-it basis or as the only chance the presented party will have to enter into it.

adhesion contract

Which of the following can be considered an offer?

an auction without reserve

a counteroffer occurs when:

an offer is made by an offeree to his or her offeror relating to the same matter as the original offer made by the offeror.

The law of contracts is primarily _____.

common law

_____ as an element of a contract refers to what each party gets in exchange for his or her promise under the contract.

consideration

_____ is best described as what a person will receive in return for performing a contract obligation.

consideration

A(n) _____ is defined as a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty.

contract

Jason agrees to buy Sara's car for $10,000. However, Sara tells Jason that she will only sell the car to him if he pays $12,000. In this scenario, Sara makes a(n):

counteroffer

Which of the following conditions must be present for an offer to have a legal effect? correct

definite and certain terms

A(n) _____ occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.

express ratification

Which of the following refers to agreements in which parties pay consideration for the chance, or opportunity, to obtain an amount of money or property?

gambling

To prove that a contract is implied, or implied-in-fact, it is necessary for a plaintiff to establish that a defendant:

had an opportunity to reject the property or service received but did not.

Brian offers to sell Rachel his computer for $200. Rachel says that she will look at the computer in the morning, and if she likes it she will buy it for $200. At this point, Rachel has not committed to doing anything. This is an example of a(n):

illusory promise

A(n) _____ is best described as a contract that arises not from words but from the conduct of the parties.

implied contract

When a counteroffer is made by an offeree, the original offer:

is terminated

Which of the following can be used as a defense to the enforcement of a contract?

lack of genuine assent

Which of the following elements of a contract refers to the mental ability of a person to understand his or her rights and obligations under a contract and comply with the terms?

legal capacity

When there is no dispute over the amount of debt or existence of debt, it is referred to as a _____

liquidated debt

If an offer merely authorizes certain modes of acceptance but does not condition acceptance on the use of those modes, use of an unauthorized means of acceptance:

makes the acceptance void and unenforceable.

In a contract made by a minor, the:

minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority.

Which of the following indicates that the terms of an acceptance must reflect the terms of an offer?

mirror-image rule

In an unliquidated debt, an accord is best described as the:

new agreement to pay less than the creditor claims is owed.

The _____ states that we base the existence of a contract on the parties' outward manifestations of intent and we base its interpretation on how a reasonable person would interpret it.

objective theory of contracts

In a liquidated debt, _____

once the debtor makes a different payment, the debt is satisfied and the creditor may not collect anything else

A key feature of a voidable contract is that:

one or both parties have the ability to either withdraw from or enforce the contract.

Lucas is planning to buy a house owned by Janet. He gives her an initial amount of $10,000 to hold the offer open for a 45-day period. Janet will deduct the $10,000 from the purchase price if Lucas purchases the property within those 45 days. If he does not, Janet can keep the $10,000 and offer the house to another party. Which of the following contracts does this scenario best illustrate?

option contract

n a unilateral contract, if one party's consideration is a promise, the:

other party's consideration will be an act.

Kevin is offered a job by a reputed company in a different city. To take up the new job, Kevin quits his previous job and moves to the new city along with his family. When he shows up at work, he is told that there is no job. Kevin can sue the employer under the theory of _____.

promissory estoppel

Tracy offers Liam a job as a store manager at a liquor store, which she plans to open in a small property owned by her husband. The property is located near a school. Before Liam accepts the offer, the state passes a rule that liquor stores cannot be located within a five-mile radius of a school. In this scenario, the employment offer terminates due to:

subsequent illegality of the subject matter.

A debt is unliquidated when:

the parties dispute over the existence or amount of the debt.

f a party to a contract asks for an additional amount of money and agrees to do more work than the contract requires, the result is that the promise:

to do the extra work is valid consideration

_____ occurs when a party gives a loan at an interest rate exceeding the legal maximum.

usury

contract entered into by a person suffering from mental problems yet who still understands the nature of the contract and the obligations it imposes is considered _____

valid

If a person has been adjudicated insane and has a guardian appointed, any contract the person attempts to enter into is

void

Section 16 of the Restatement of Contracts provides that contracts of an intoxicated person are _____ if the other party had reason to know that intoxication rendered the person unable to understand the nature and consequences of the transaction.

voidable