BLAW 12
In some jurisdictions, persons who are not eighteen can terminate their minority status by: leaving home and supporting themselves. marrying. petitioning a court for emancipation. all of these choices.
all of these choices
Antonio and Blythe get into a car accident. Because he is likely at fault, Antonio gives to Blythe $3,000 as consideration for Blythe entering into a release whereby she releases Antonio from any further liability resulting from the car accident. They execute a written contract that day. The next day, Blythe takes her car into the repair shop, which provides her with an estimate of $4,200 to make all repairs to her car. What happens? Antonio must pay her the difference of $1,200. Blythe is responsible for paying the difference. The release lacks consideration and is void. The contract needs to be rescinded (i.e., rescission) in order to restore the parties to their original positions.
Blythe is responsible for paying the difference
In almost all states, the age of majority is: 18. 21. 16. any age at which a person leaves home and supports himself or herself.
18
Which of the following types of contracts is not among the types of contracts and clauses that are often held to be contrary to public policy? An exculpatory clause An adhesion contract A contract for the sale of live farm animals A contract in restraint of trade
A contract for the sale of live farm animals
True or false: Rescission is the substitution of one party to a contract for a third party, who agrees to assume the contractual duties.
false
True or false: Two parties can mutually agree to rescind a contract unless it is executory.
false
In order for a court to apply the doctrine of promissory estoppel, four requirements must be met. Which of the following elements is not required? There must be a clear and definite promise. There must have been substantial reliance on this promise. Justice must not be served by enforcing the promise. The promisee must have justifiably relied on the promise.
Justice must not be served by enforcing the promise
John enters into a contract with Katie to paint Katie's house for $10,000. Halfway through the job, John says that he will not complete the job unless if Katie gives him an extra $5,000. Katie agrees. Which of the following is correct? Katie will have to pay the extra $5,000 only if John finishes painting the house. Katie will not have to pay the extra $5,000 since John had a preexisting legal duty to finish painting the house. Katie will have to pay the extra $5,000 because she agreed. Katie will not have to pay the extra $5,000 since the promise was in the past.
Katie will not have to pay the extra $5,000 since John had a preexisting legal duty to finish painting the house
Lucy White was a very wealthy woman. She had three daughters. Lucy told her oldest daughter, Phyllis, that because Phyllis was the oldest and the best daughter, she was going to pay her $5000 every month. Lucy paid Phyllis every month for two years and then stopped paying her, saying that she no longer felt Phyllis was the best daughter. If Phyllis sued Lucy, the court would be likely to hold that: Lucy does not have any obligation to keep paying Phyllis because the payments are gifts. Lucy does not have any obligation to keep paying Phyllis because she does not pay her other children anything. Lucy has an obligation to keep paying Phyllis because she gave Phyllis her word that she would do so. Lucy has an obligation to keep paying Phyllis because Phyllis is her daughter.
Lucy does not have any obligation to keep paying Phyllis because the payments are gifts
Chuck tells Mia that he is looking for a rare edition of The Shining for his book collection, and would pay up to $500 if she were to find him a copy of the book in good condition. Mia is able to locate a copy of the book and pays $450 for it at an auction. She presents the book to Chuck and he refuses to pay her stating that he was only joking. What are Mia's options? Mia may not recover the $450 from Chuck because there was no bargained-for exchange. Mia may recover the $450 from Chuck because consideration is not necessary in an implied contract. Mia may not recover the $450 from Chuck because she did not have a contract with Chuck by formally accepting his offer. Mia may recover the $450 from Chuck because she reasonably and substantially relied on Chuck's promise.
Mia may recover the $450 from Chuck because she reasonably and substantially relied on Chuck's promise
Milo files a suit against Neighbors Insurance Corporation under the doctrine of promissory estoppel. Milo must show that: Milo justifiably relied on Neighbors' promise to his detriment. Neighbors justifiably refused to fulfill a promise to Milo. Milo justifiably refused to fulfill a promise to Neighbors. Neighbors justifiably relied on Milo's promise to its detriment.
Milo justifiably relied on Neighbors' promise to his detriment
A common means of settling a disputed claim, whereby a debtor offers to pay a lesser amount than the creditor purports to be owed
accord and satisfaction
A standard-form contract in which the stronger party dictates the terms
adhesion contract
The age (eighteen years, in most states) at which a person, formerly a minor, is recognized by law as an adult and is legally responsible for his or her actions
age of majority
Which of the following is an example of something of legally sufficient value? A promise to do something that you otherwise have no prior legal obligation to do Performing an action that you otherwise have no prior legal duty to do Refraining from an action that you have a legal right to undertake All of the above None of the above
all of the above
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault, is called: a reformation. an adhesion clause an exculpatory clause. a disaffirmance.
an exculpatory clause
Under the doctrine of promissory estoppel, the promisor will be estopped (barred or prevented) from: establishing a predatory contract. asserting unforeseen difficulties as a defense. carrying out the unenforceable contract. asserting lack of consideration as a defense.
asserting lack of consideration as a defense
The general rule concerning the ability of a minor to disaffirm a contract for necessaries is that the minor: can disaffirm only after turning eighteen. can disaffirm but will remain liable for the reasonable value of the goods. must disaffirm before the age of fourteen. can disaffirm only if the subject matter of the contract is illegal.
can disaffirm but will remain liable for the reasonable value of the goods
Smith Contractors & Builders, Inc. is hired to build a new store for Books on the Border, Inc. The contract sets the amount for the construction at $250,000. After the company begins construction, the builders discover that the building site has many previously undetected problems that will make construction of the building much more expensive than previously anticipated. Smith Contractors & Builders: has no basis to make a case to charge more than the original contract. can make a case to charge more than the original contract based on preexisting duty. can make a case to charge more than the original contract based on unforeseen difficulties. can make a case to charge more than the original contract based on lack of legally sufficient value.
can make a case to charge more than the original contract based on unforeseen difficulties
The value given in return for a promise or performance in a contractual agreement
consideration
The capacity required by the law for a party who enters into a contract to be bound by that contract
contractual capacity
The legal ability to enter into a contractual relationship is called: contractual competence. contractual capacity. emancipation. age of majority.
contractual capacity
A contractual promise of one party to refrain from conducting business similar to that of another party for a certain period of time and within a specified geographical area
covenant not to compete
An agreement to substitute a contractual obligation for another legal action based on a valid claim
covenant not to sue
True or false: In contract law, "consideration" refers to the time that a party takes to evaluate a deal.
false
True or false: No state requires a release to be in writing.
false
The legal avoidance, or setting aside, of a contractual obligation
disaffirmance
Nora signs a contract to buy a car just before reaching the age of majority. After reaching the age of majority, Nora does not take possession or make payments. Most courts would hold that she had: executed the contract. ratified the contract. disaffirmed the contract. rescinded the contract.
disaffirmed the contract
In regard to minors, the act of being freed from parental control
emancipation
A contract between an employer and an employee in which the terms and conditions of employment are stated
employment contract
Sarah offers to sell her bicycle to Janet for $450. After she agrees to pay the $450, Janet learns that the fair market value of the bicycle is only $100. If Janet tries to back out of the contract, a court would most likely: enforce the contract because the additional $350 is a gift to Sarah. not enforce the contract because there is not adequate consideration. enforce the contract because there is adequate consideration. not enforce the contract because the contract is unfair to Janet.
enforce the contract because there is adequate consideration
Central Construction Company (CCC) begins building a restaurant for Diners' Cafe Corporation, but after two months demands an extra $100,000. Diners' agrees to pay. If CCC offers, as a reason for the extra $100,000, that unforeseen soil conditions will add considerable cost to the project, the agreement is: enforceable because of unforeseen difficulties. unenforceable as an illusory promise. enforceable as an accord and satisfaction. unenforceable due to the preexisting duty rule.
enforceable because of unforeseen difficulties
Contractual capacity refers to a person's legal ability to: enter into a contractual relationship. disaffirm a contract. enter into a void contract. draft a contract.
enter into a contractual relationship
Barred, impeded, or precluded
estopped
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault
exculpatory clause
Minors may disaffirm: contracts to be enlisted in the armed services. executed contracts to purchase goods. marriage contracts. none of these choices.
executed contracts to purchase goods
True or false: A lender who makes a loan at a rate below the lawful maximum commits usury.
false
True or false: A promise to do something that one has a prior legal duty to do is not consideration.
false
True or false: A promise to pay for an act that has already occurred is enforceable because the event is certain.
false
True or false: An illusory promise is a promise that is enforceable without consideration.
false
True or false: An obligation is enforceable only if it is supported by past consideration.
false
True or false: For consideration to have "legally sufficient value," it must consist of goods or money.
false
True or false: In contract law, "consideration" refers to the courtesy that one party shows another in negotiating a deal.
false
When analyzing the legality requirement for a valid, enforceable contract, we only need to analyze whether the purpose of the agreement is legal under statutory law. True; there is nothing else that needs to be considered. False; we need to also consider whether or not the contract violates public policy.
false; we need to also consider whether or not the contract violates public policy
The act of refraining from an action that one has a legal right to undertake
forbearance
A contract between Kim and Larry to lease real property contains an exculpatory clause. This clause is: enforceable only if the lease involves residential property. generally enforceable as a matter of public policy. enforceable only if either party is in a business important to the public interest. generally unenforceable.
generally unenforceable
Promissory estoppel was originally applied to situations involving: business transactions. taxes. gifts. satisfaction.
gifts
Jon agrees to sell his K9 Sports Equipment store to Lacy. As part of the sale, Jon promises never to open a similar, competing store anywhere. Jon's promise is most likely: invalid because of the unreasonable terms of area and time. valid because it is part of a sale of an ongoing business. invalid because it is part of a sale of an ongoing business. valid because Jon and Lacy apparently have the capacity to contract.
invalid because of the unreasonable terms of area and time
A debt whose amount has been ascertained, fixed, agreed on, settled, or exactly determined
liquidated debt
Necessities required to maintain a standard of living, such as food, shelter, clothing, and medical attention
necessaries
Elle, a minor acting on her own, signs a contract to buy a horse from Field Equine Ranch. Later, Elle disaffirms the deal. Liability most likely rests with: Elle and her parents. Elle only. Elle's parents only. neither Elle nor her parents.
neither Elle nor her parents
Lara is a real estate broker licensed only in Minnesota. Lara concludes a sale in North Dakota. She can successfully sue to: collect the commission only. collect the commission or keep it if it has already been paid. keep the commission if it has already been paid but not to collect it. neither collect the commission nor keep it.
neither collect the commission nor keep it
Generally, past consideration is: valid only if both parties are over eighteen years of age. as good as forward consideration. no consideration. valid in twenty-three states.
no consideration
Nick represents himself as a contractor in Ohio, but he is not licensed in that state. A contract between Pat and Nick by which Nick agrees to build a warehouse for Pat in Ohio is: enforceable only if Pat knows that Nick is unlicensed. enforceable only if the outcome is successful. enforceable only if Pat does not object after learning of Nick's status. not enforceable.
not enforceable
Zach, who is a billionaire, promises to give $10 million to Do Good Inc., a charity that provides housing to homeless people. In reliance on Zach's promise, the charity enters into a contract with a construction contractor to build a new building. Later, Zach refuses to give Do Good the $10 million. If Do Good Inc. sues Zach for the $10 million, a court would most likely: order Zach to pay the $10 million under the preexisting duty rule. not order Zach to pay the $10 million because it is a gift and lacks consideration. order Zach to pay the $10 million under the doctrine of promissory estoppel. not order Zach to pay the $10 million under the doctrine of promissory estoppel.
order Zach to pay the $10 million under the doctrine of promissory estoppel
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain
past consideration
A doctrine that can be used to enforce a promise when the promisee has justifiably relied on the promise and when justice will be better served by enforcing the promise
promissory estoppel
Charitable subscriptions to religious, educational, or charitable institutions may be enforced under the doctrine of: legally sufficient value. preexisting duty. promissory estoppel. satisfaction.
promissory estoppel
Kenneth's parents own a cattle ranch. When they become too elderly to run the ranch by themselves, Kenneth moves back to the ranch to help them. With his parents' help and permission Kenneth builds a house on the ranch. After he builds it, his parents refuse to deed him the land. Kenneth can sue his parents under the doctrine of: satisfaction. promissory estoppel. unfair accord. covenant not to sue.
promissory estoppel
The doctrine that can prevent an offeror from revoking an offer once the offeree has detrimentally relied on it is known as: voidability of estoppel. an irrevocable offer. promissory estoppel. a lapse of time.
promissory estoppel
Windshield Repair Shop (WRS) promises to pay Vincent $1,000 a week to work for WRS. Vincent accepts and quits his job with Ultra Glass. WRS fails to provide a job for Vincent. Vincent has a cause of action based on: a release. past consideration. an illusory promise. promissory estoppel.
promissory estoppel
A contract with an unlicensed practitioner is generally illegal and unenforceable if the purpose of the licensing statute is to: increase diversity in the professional field. protect the public from unauthorized practitioners. raise government revenues. limit the number of practitioners in the professional field.
protect the public from unauthorized practitioners
The acceptance or confirmation of an act or agreement that gives legal force to an obligation that previously was not enforceable
ratification
A court-ordered correction of a written contract so that it reflects the true intentions of the parties
reformation
If a covenant not to compete is found to be unreasonable in time or geographic area, the court may convert the terms into reasonable ones through a process called: adhesion. accord and satisfaction. reformation. promissory estoppel.
reformation
An agreement in which one party gives up the right to pursue a legal claim against another party
release
A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made
rescission
Which one of the following is not a requirement for a valid enforceable contract? Agreement Legality Rescission Capacity Consideration
rescission
Parents of a minor who enters into a contract are generally: Responsible for the obligations of the minor even if they are not parties to the contract. Responsible for the obligations of the minor only if they are parties to the contract. Not responsible for the obligations of the minor, regardless as to whether or not they are parties to the contract.
responsible for the obligations of the minor only if they are parties to the contract
Clay, a minor, signs a contract to buy a car from Delta Motors by misrepresenting his age as twenty-one. Clay fails to make the payments. Delta sues. In most states, Clay can: not return the car but can avoid further liability. return the car and avoid further liability. not return the car nor avoid further liability. return the car but cannot avoid further liability.
return the car and avoid further liability
The general rule with regard to minors who enter into contracts is that: all such contracts are void. all such contracts are enforceable. some contracts can be avoided by the minor. such contracts can be avoided by the adult party to the contract.
some contracts can be avoided by the minor
Consideration can be defined as: something of value given in exchange for a promise. an arrangement for transferring and allocating risk. a legally defined way to make ethical business deals. a way to promote international trade.
something of value given in exchange for a promise
A definition of the term contractual capacity would be: the ability to enter into a contractual relationship. the ability to mitigate contractual damages. the ability to enter into a void contract. the ability to physically write a contract.
the ability to enter into a contractual relationship
Herm promises to pay Nixie to work as an assistant buyer for his Organic Foods stores. Nixie agrees and quits her job with Pic-U Grocery, but Herm does not hire her. Herm is most likely liable to Nixie under: the doctrine of promissory estoppel. the preexisting duty rule. the concept of accord and satisfaction. no circumstances.
the doctrine of promissory estoppel
U-Can-Own-It Corporation sells appliances to less educated consumers, including Vi, on installment plans. U-Can-Own-It files a suit against Vi when she stops making payments. Vi claims that the deal is unconscionable. The court will most likely consider: the parties' relative bargaining power. the quality of related products in the general market. the geographic area of the relevant market. the relation of this deal to those of other customers.
the parties' relative bargaining power
A contract entered into by a mentally incompetent person (whom a court has not previously declared incompetent) may be valid if: the person becomes mentally competent after executing the contract. the person entered into the contract during a lucid interval. the mental incompetence is due to voluntary intoxication. none of these choices.
the person entered into the contract during a lucid interval
True or false: A bargained-for exchange is one of the elements of consideration.
true
True or false: A businessperson who sells a business in reliance on a promise by another may be entitled to damages under the doctrine of promissory estoppel.
true
True or false: A contract that calls for the performance of an illegal act is not enforceable.
true
True or false: A covenant not to sue is the substitution of a contractual obligation for a legal action.
true
True or false: Disaffirmance is the legal avoidance of a contractual obligation.
true
True or false: In most states, a release requires a signed writing.
true
True or false: Legally sufficient consideration is something of value in the eyes of the law.
true
True or false: Normally, a court of law will not question the adequacy of consideration.
true
True or false: Promissory estoppel requires reliance of a substantial and definite character.
true
True or false: Some states provide for the termination of minority status on marriage.
true
True or false: The doctrine of promissory estoppel requires a clear and definite promise.
true
A contract or clause that is void on the basis of public policy because one party was forced to accept terms that are unfairly burdensome and that unfairly benefit the other party
unconscionable
Central Construction Company (CCC) begins building a restaurant for Diners' Cafe Corporation, but after two months demands an extra $100,000. Diners' agrees to pay. If CCC offers no reason for the extra $100,000, but says only that it will otherwise stop construction, the agreement is: enforceable because of unforeseen difficulties. unenforceable as an illusory promise. enforceable as an accord and satisfaction. unenforceable due to the preexisting duty rule.
unenforceable due to the preexisting duty rule
A debt that is uncertain in amount
unliquidated debt
Charging an illegal rate of interest
usury
The highest legal interest rate in the state where a finance company resides is 18%. Nevertheless, the finance company charges 22-25% interest on the loans it makes. The finance company has committed: restraint of trade. usury. procedural unconscionability. breach of public policy.
usury
Edie obtains a consumer loan from First State Bank at an interest rate that exceeds the state's maximum. First State has: engaged in a restraint of trade. underestimated the risk of the loan's nonpayment. calculated the optimum rate that the market will bear. violated the usury laws.
violated the usury laws
If a court has previously determined that a person is mentally incompetent and has appointed a guardian to represent the person, any contract made by that mentally incompetent person is: valid. voidable. affirmed. void.
void
Collins contracted to loan Merrell $400 so that Merrell could gamble with the money. Merrell lost the entire amount and refused to repay Collins on the loan contract. Collins then filed a lawsuit in a Kentucky state court against Merrell for breaching the contract. Merrell claimed that he did not have to repay the loan because gambling was illegal in Kentucky and therefore their contract was void. The court most likely found that the contract was: valid, because Collins did not gamble. void, because it was unconscionable. valid, because Merrell would be unjustly enriched if he did not have to repay the loan. void, because it was for an illegal purpose.
void, because it was for an illegal purpose
Under which of the following scenarios is it possible to have a voidable contract? When one of the parties is a minor (and he/she may be able to void the contract). When one of the parties entered into the contract at a time when he/she lacked an understanding of what he/she was getting into. When one of the parties was intoxicated at the time of entering into the contract. When one of the parties entered into the contract in reliance of a material misrepresentation (fraud). All of the above
when one of the parties was intoxicated at the time of entering into the contract
On Tad's eighteenth birthday, he decides that he no longer wants to keep a car he bought from U-Pick Autos, Inc., when he was seventeen. His right to disaffirm the deal will depend on: the car's current condition. whether Tad acts within a reasonable period of time. the car's condition when Tad bought it. whether U-Pick has the right to disaffirm.
whether Tad acts within a reasonable period of time
Under the doctrine of promissory estoppel, a person who has reasonably and substantially relied on the promise of another can obtain some measure of recovery, even though the promise was made: to a minor. without consideration. under duress. without contractual capacity.
without consideration
In an employment contract, a covenant not to compete prohibits an employee from: ever starting a competing business after terminating employment. working for a competitor for a specified period of time after terminating employment. leaving the company for a specified period of time. ever working for a competitor after terminating employment.
working for a competitor for a specified period of time after terminating employment
Are there any other ways in which to provide a party with consideration other than by paying money to that party? (yes/no)
yes
