BLAW EXAM 2
Which of the following refers to special relationships in which one person has taken advantage of his or her dominant position in a relationship to unduly persuade the other person? -Undue influence -Pressing dominance -Fraudulent misrepresentation -Pressing persuasion -Relationship dominance
Undue Influence
Although there are some exceptions, a[n] _____________ mistake does not generally void a contract. -Single -Clear -Unilateral -Mutual -Unclear
Unilateral
All contracts can be categorized as either ___________ or ____________ contracts. -Unilateral or trilateral. -Unilateral or complete. -Bilateral or trilateral. -Bilateral or complete. -Unilateral or bilateral.
Unilateral or Bilateral
Reference - Used Car Problems. Marcy purchased a used car from ABC Motors. Six months later the police seized the car from Marcy on the basis that it was a stolen vehicle. Marcy asked for her money back from ABC Motors. The manager there told her that the car was not stolen; that even if it were stolen, ABC Motors acted in good faith with no knowledge of a theft; and that, therefore, no refund was legally required. ABC Motors had also sold a used car to Frank who wrote a bad check for the car and left town but not before he sold the car to Betty who paid a fair price for the car believing that Frank had all rights to sell it. ABC Motors asked Betty to return the car, but she told ABC to forget it. Assuming that the thief who stole the car sold and delivered it to ABC Motors without the knowledge of any representative of ABC Motors of the theft, what kind of title did ABC Motors have? -Voidable so long as ABC Motors can prove that it had never been charged with dealing in stolen merchandise. -Voidable so long as no manager of ABC Motors had made an affirmative representation that the car was not stolen. -Void. -Voidable so long as ABC Motors can prove that none of its representatives were negligent in disregarding evidence of the theft at any time prior to its resale to Marcy. -Valid.
Void
Because their contracts are _____________, minors have the right, until a reasonable time after reaching the age of majority, to __________, or avoid, their contracts. -Voidable; disaffirm -Void; affirm -Void; resist -Voidable; affirm -Void; disaffirm
Voidable; disaffirm
Which of the following must a mutual mistake involve in order for a mutual mistake to interfere with legal consent? -A material effect on the agreement. -A basic assumption about the subject matter of the contract. -A basic assumption about the subject matter of the contract and an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement, but not a material effect on the agreement. -An admission by one of the parties that a misrepresentation occurred. -A basic assumption about the subject matter of the contract, an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement, and a material effect on the agreement.
A basic assumption about the subject matter of the contract, an adverse effect on a party who did not agree to bear the risk of mistake at the time of the agreement, and a material effect on the agreement.
Which is true regarding a buyer's right to waive warranties? -A buyer may waive express warranties but not implied warranties. -A buyer may waive express warranties and the implied warranty of fitness for a particular purpose, but not the implied warranty of merchantability. -A buyer may waive implied warranties but not express warranties. -A buyer may not waive warranties. -A buyer may waive both express warranties and implied warranties.
A buyer may waive both express warranties and implied warranties.
Which of the following occurs when the sale itself is contingent on approval? -A goods-in-transfer contract -An average delivery contract -A transferable contract -An unapproved contract -A conditional sales contract
A conditional sales contract
Reference - Accidental Sale. ABC Motors ordinarily deals in used cars and also does some amount of repair work. Robby entrusted his automobile to ABC Motors to have the oil changed and get new brakes. The car was parked in the lot along with other cars, some of which were for sale. The manager of ABC Motors accidentally sold the car to Connie because she saw it and took it upon herself to offer a good price. The manager was attempting to increase the shop's profit margin. Connie had no idea that the car did not belong to ABC Motors. When Robby went to pick up the car, he was very upset that it was gone. The manager told Robby that he was very sorry, but that he was not negligent and only made an honest mistake. According to the manager, Robby accepted the risk of this type of loss; and his only recourse was against Connie. Which of the following is a proper identifying term for Connie? -A good-faith purchaser -A voidable purchaser -A valid purchaser -A void purchaser -An interested purchaser for value
A good-faith purchaser
Which of the following occurs when purchased goods are in some kind of storage under the control of a third party, such as a warehouseman? -A goods-in-transfer contract -A goods-in-bailment contract -A conditional sales contract -A simple delivery contract -An average delivery contract
A goods-in-bailment contract
Which of the following are examples of consideration? -A benefit to the promisor but not a detriment to the promissee. -A detriment to the promisee but not a benefit to the promisor. -An accepted offer. -A promise to do something, a benefit to the promisor, or a detriment to the promisee. -A valid counteroffer.
A promise to do something, a benefit to the promisor, or a detriment to the promisee.
A[n] _____________ contract is a contract created by a party to an agreement that is presented to the other party on a take-it-or-leave-it basis. -Outrageous -Adhesion -Unreasonable -Substantively unconscionable -Procedurally unreasonable
Adhesion
In a unilateral contract, the consideration for a promise is _____________. -A return promise. -An Act. -An acknowledgement. -An agreement. -A Consideration.
An act
Which of the following is the right to insure goods against any risk exposure such as damage or destruction? -A collateral interest -An insurable interest -A compensable interest -A valid interest -A paid interest
An insurable interest
In the area of mistake, distinguishing between unilateral and mutual mistakes is important because the classification bears on which contracts ______________. -Lack consideration. -Are voidable. -Lack legality. -None of these because mutual mistakes are not recognized in the area of contracts. -Are void.
Are voidable
Reference - Used Car Sales. Walter sells used cars. He is seeking a way to increase sales and profits because he would like to take his girlfriend on a nice diving trip to the Grand Cayman Islands. The first thing that Walter does is say that during the first week of December, he will give a $500 rebate on used cars under two years old. To spice things up, he also offers to sell any car on the lot that is under five years old for $1,000 to the first three customers who can hula hoop ten hours straight on December 7th. (Hula hooping was a practice popular some years ago in which a large hoop would be swung around by a person, usually around the waist.) Walter was not very concerned about the hula hooping issue because he thought that no one would be able to hula hoop for ten hours straight. Walter put an advertisement pertaining to the rebate and hula hoop opportunity in the local newspaper. The promotion went over very well. Although he had several on hand, Walter ran out of cars under two years old within one day. During the rest of the week shoppers were told that no cars of that description were available. A customer named Sam was very unhappy when he discovered the next day that no cars under two years old were available. On December 7th, while Walter was watching the hula hoopers, Sally was shopping for a car. She was in college and did not have much money. She saw one, an older car, that she liked but she really did not know if it ran or not. She was going to talk to her parents. Walter eventually approached her and Sally asked him if he would take $3,000 for the car. Walter said, "Yes, sold." Sally tried to explain that she needed to talk to her parents first, but Walter would not hear of it. While Walter was still fuming from his encounter with Sally, Zack walked up and started to criticize the nature of Walter's inventory. Walter told him that he had great cars. Zack pointed at an old jalopy that was banged up, had 200,000 miles on it, and a cracked windshield. Zack said, "Sure, I'll pay $10,000 for that car." Walter said, "Sold." Zack said, "Wait a minute. I was only kidding." Walter said, "No way." Meanwhile all the hula hoopers dropped out well prior to ten hours of hula hooping except for Barbara. One minute before the ten hours were up, Walter yelled out "I revoke!" Barbara completed the hula hooping anyway and asked for her car for $1,000. Walter refused saying that the offer was revoked. Sam was very angry and sued Walter for not having a car available that was under two years old so that he could get a good deal and a $500 rebate. Additionally, Barbara sued Walter, and Walter sued Zack and Sally. Which of the following is the likely result in the lawsuit brought by Sam complaining that Walter ran out of cars available for a rebate? What is the most likely result in the lawsuit brought by Barbara against Walter? -Sam will win because Walter should have run another ad revoking the offer. -Sam will lose because he did not properly accept the offer. -Sam will win because Walter was required to have sufficient cars on hand for anyone who requested one. -Sam will lose because court would interpret the intent of Walter as being to invite readers to make an offer that Walter was free to reject. -Sam will win because a rebate was involved. -------------------------------------------------------------- -Walter will win because he was only engaged in preliminary negotiations. -Barbara will win because the ad would be treated as an offer that she properly accepted. -Barbara will win because she properly made an offer that was accepted by Walter when he allowed her to continue hula hooping. -Walter will win because the advertisement was simply inviting customers, such as Barbara, to make an offer. -Walter will win because he properly revoked the offer.
Barbara will win because the ad would be treated as an offer that she properly accepted.
Reference - Patty, who lives in East Tennessee, developed a new type of printer that required very little ink. As a merchant, she entered into contracts to sell the printer to a number of merchants of office supplies in the East Tennessee area for a charge of $600 each. She further entered into a number of contracts with merchants in other states and also in foreign countries. For printers sold in states other than Tennessee and for printers sold outside the U.S., she charged $1,001 each. Patty was a trusting soul who did not require that her arrangements be in writing because she believed that a person's word was his or her bond. She did, however, send a confirming memo to each client to which she received no objections. Patty manufactured a number of printers; but unfortunately, due to a downturn in the economy, a number of her buyers refused to proceed on their contracts, with several claiming that the contracts were unenforceable because they were not in writing. Which of the following is true regarding whether the contracts with clients in the East Tennessee area were required to be in writing? -Because the printers were sold in Patty's home state, no writing was required. -Because the contracts were for amounts priced at $1,000 or more, they were required to be in writing and signed by the buyer; but Patty's memo was sufficient to satisfy the requirement. -Because the contracts were for amounts priced at $1,000 or more, they were required to be in writing and signed by the buyer. -Because the contracts were for amounts priced at $500 or more, they were required to be in writing; but Patty's memo was sufficient to satisfy the requirement.
Because the contracts were for amounts priced at $500 or more, they were required to be in writing; but Patty's memo was sufficient to satisfy the requirement.
When must a disaffirmance of a contract based on minority occur? -Before or within a reasonable time of the minor's reaching the age of majority. -Within 60 days of the minor's reaching the age of majority. -Within one year of the minor's reaching the age of majority. -Within 30 days of the minor's reaching the age of majority. -Within 90 days of the minor's reaching the age of majority.
Before or within a reasonable time of the minor's reaching the age of majority.
Reference - Shady lawyer. Brice had a number of ethical issues come up in law school involving alleged cheating but managed to graduate because nothing was ever proven. Upon obtaining his law license, Brice enjoyed living "on the edge" and engaged in tactics that were at least questionable. One of his clients was an older gentleman, Sam, with significant assets and significant legal issues involving a messy divorce stemming from his involvement with a local dog groomer, Susie. Brice told Sam that he felt certain that he could arrange matters so that Sam could live happily in the Caribbean with Susie but that, in addition to paying a hefty legal fee, Sam would need to name Brice as a significant beneficiary in his will and give Brice power of attorney over his assets. Sam agreed to do so and gave Brice power of attorney, and changed his will to reflect that upon his death, Brice would receive half his estate. The other half went to Susie. Sam also paid the hefty fee Brice demanded. At that point Brice agreed to proceed with negotiations in the divorce. Shortly after the divorce, Sam had an unexpected heart attack and died immediately. Susie, the executor of the will, told Brice that she was reporting him to the state bar association and that he was not entitled to any sums from the estate. Brice told Susie that he knew that Susie had failed to pay income tax for all her dog grooming and that he was reporting her unless she kept her mouth shut and consented to the terms of the contract. Brice also said that in return for keeping his mouth shut, he wanted additional sums purportedly for his work on Sam's divorce. Assuming that Sam had paid all amounts validly due from the divorce proceeding, which of the following is true regarding Brice's attempt to obtain additional fees? -Brice is guilty of duress and undue influence. -Brice is guilty of undue influence. -Brice is guilty of duress. -Brice is not guilty of anything so long as he uses no physical force to obtain Susie's agreement. -Brice is guilty of intentional wrongful disclosure.
Brice is guilty of duress.
Reference - Powder Room Mess. For $300,000, Willis agrees to build a new home for Robert, who is very picky. Willis builds the home to Robert's specifications with one exception. The faucets and linoleum flooring in an upstairs powder room are not exactly what Robert specified. That was a mistake on Willis' part, but he had not intentionally failed to follow specifications. When Robert sees the powder room, he goes ballistic and tells Willis that he will not pay Willis anything for the house. It will take $300 to put in correct faucets and linoleum. Willis says that he is willing to pay $300 to put Robert in the position he would have been in had the correct faucets and linoleum been used, but that is all he is willing to pay. Willis' offer to put Robert in the position he would have been in had the proper faucets and linoleum been used is based on the measure used for what type of damages? -Punitive -Liquidated -Consequential -Compensatory -Nominal
Compensatory
Which of the following occurs when all aspects of the parties' duties under the contract are carried out perfectly? -Absolute performance -Substantial performance -Approved performance -Significant performance -Complete performance
Complete performance
Which of the following consists of something of value given to another party in exchange for something else of value? -Discharge. -Consideration. -Approval. -Accession. -Acknowledgement.
Consideration
A[n] ___________ is 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. -Offer. -Contract. -Consideration. -Acceptance. -Legal object.
Contract
Which of the following contracts are usually voidable? -Contracts entered into as a result of fraud, duress, or undue influence. -Contracts entered into as a result of fraud or duress, but not undue influence. -Contracts entered into as a result of undue influence. -Contracts entered into as a result of fraud.
Contracts entered into as a result of fraud, duress, or undue influence.
A ___________ beneficiary is a third party that benefits from a contract in which the promisor agrees to pay the promisee's debt -Avowed -Creditor -Donee -Incidental -Promised
Creditor
Reference - Garage sale. Richard, who is cleaning out his garage, offers to sell Dawn a used computer for $200. Dawn replies that "I'll think about it and buy it if I decide to do so." Richard also calls Denise and offers to give Denise a used business law book. She is excited to receive the book and tells him that she will pick it up the next day. Richard also agrees to sell a communications book for $50 to Jill who promises to pick it up the next day. Meanwhile, Sam comes to visit, offers Richard $20 for the business law book and Richard sells it to him. Sam also offers Richard $50 for the used computer. Richard sells it to Sam because he does not expect to hear from Dawn. Sam sees the communications book and offers Richard $60 for it. Richard decides to forget about Jill and proceeds to sell the book to Sam for $60. Denise is very angry because Richard did not save the book for her and claims that he breached a contract because she had accepted his offer. Jill is also angry because Richard sold the communications book and informs him that he breached the contract he had with her. Exactly 31 days later, Dawn tells Richard that she would like the computer. She tells him that her response constituted consideration in that it bound him to an option contract and that he should have awaited her final decision. Richard tells Sam that he needs to return everything for a full refund. Sam refuses. Which of the following is true regarding Denise's claim that Richard breached a contract with her because Richard did not save the book for her after she had accepted his offer? Which of the following is true regarding Jill's claim that by selling the communications book for a higher price, Richard breached the contract he had with her? -Denise is correct, and Richard breached a contract he had with her. -Denise is incorrect because her acceptance was illusory. -Denise is correct only if she can show that Richard did not really need the money. -Denise is incorrect because she did not provide any consideration. -Denise is correct only if she can show that she had given past consideration in other dealings with Richard. -------------------------------------------------------------- -Jill is correct only if she can establish that she had prior dealings with Richard. -Jill is incorrect because the amount she agreed to pay was significantly less than the fair market value of the book and, therefore, did not amount to consideration. -Jill is incorrect because her acceptance was illusory. -Jill is correct only if she can establish that she had provided past consideration in addition to the amount she agreed to pay for the book. -Jill is correct.
Denise is incorrect because she did not provide any consideration. Jill is correct.
Reference - Irresponsible Teen. At age 17, in a state in which the age of majority is 18, Sally purchased a prom dress from Formal Stuff. She wore it to the prom and then attempted to return it to the store claiming that she was a minor and that she was entitled to a refund. The dress had clearly been worn and had a purple stain which Sally claimed was from grape juice. Additionally, a few days before she turned 18, Sally purchased a used car from Dings and Dents used cars. She had a deal whereby she paid $100 per month on the car. She drove the car and made payments for fourteen months after she turned 18. Then, she returned the car to Dings and Dents and told them that she wanted all her money back. Dings and Dents claimed the car was a necessity. Sally and her parents claimed that the parents were ready and willing to provide a car to Sally and that she only purchased the car from Dings and Dents because she liked that particular style and color. When purchases of the dress and car were made, the sellers knew that Sally was under the age of 18. In the dispute between Sally and the owner of Dings and Dents, which of the following is true regarding the defense of Sally and her parents that the car was a necessary? -Whether or not parents would buy the item at issue is irrelevant in addressing a claim that an item was a necessary. -The claim will have no effect because the law does not recognize the concept of necessaries when minors are involved. -Social status is always irrelevant in addressing a claim that an item was a necessary. -A minor may not disaffirm a contract for a necessary. -Even if a minor is allowed to disaffirm a contract for a necessary, the minor will still be held liable for the reasonable value of the necessary.
Even if a minor is allowed to disaffirm a contract for a necessary, the minor will still be held liable for the reasonable value of the necessary.
Which of the following occurs when a person reaches the age of majority and states, either orally or in writing, that he or she intends to be bound by the contact entered into as a minor? -Disaffirmance -Implied ratification -Implied novation -Express ratification -Express novation
Express Ratification
When duress is at issue, the ____________ needed for legal consent has been removed by the specifics of the threat. -Specifics -Consideration -Realization -Free will -Knowledge
Free will
Which of the following references goods that are in some kind of storage so the seller cannot transfer physical possession of them? -Goods-in-bailment -Stored pending payment -Goods-in-transit -Stored-in-transit -General to contract
Goods-in-bailment
Reference - Lake House. Harry has two houses, a house on the lake and a house in town. Rebecca wants to buy the house on the lake. Harry and Rebecca orally agree that Rebecca will buy the house on the lake for $300,000. Harry hurriedly writes out a contract providing that he would sell "his house" to Rebecca for $300,000. Harry signs the top of the document. Rebecca does not sign at all. No merger clause is included in the contract. Harry backs out of the contract, and Rebecca sues him. He tells the judge that the statute of frauds is not satisfied because he did not sign the document at the end and also because Rebecca did not sign at all. He also tells the judge that, at any rate, the agreement referred to the house in town, not the house on the lake; and that under the parol evidence rule, he had the right to identify the correct house. Which of the following is true regarding Harry's assertion that the statute of frauds is not satisfied because Rebecca did not sign the document? -Harry is correct. -Harry is incorrect because the statute of frauds did not require Rebecca's signature so long as both the selling price and the type of subject matter involved was referenced. -Harry is incorrect because the statute of frauds did not require her signature so long as the selling price was referenced. -Harry is incorrect because the statute of frauds did not require her signature so long as the type of subject matter involved was referenced. -Harry is incorrect because he is the one being sued, and he signed the document.
Harry is incorrect because he is the one being sued, and he signed the document.
Good faith as applied to non-merchants under the UCC means _____________. -Honesty in law and also reasonable commercial standards of fair dealing -Honesty in fact and honesty in law -Honesty in fact and also reasonable commercial standards of fair dealing -Honesty in fact -Honesty in law
Honesty in fact
When parties are merchants, the UCC requires _____________. -Reasonableness -Honesty in fact and also reasonable commercial standards of fair dealing -Honesty in law -Honesty in fact and honesty in law -Honesty in law and also reasonable commercial standards of fair dealing
Honesty in fact and also reasonable commercial standards of fair dealing
If a licensing statute is intended to protect the public's health, safety, and welfare, an agreement with an unlicensed professional is typically deemed ___________. -Usurious -Enforceable without a fine -Illegal and unenforceable -Enforceable but with a fine -Executed
Illegal unenforceable
Which of the following is true regarding illusory promises? -Illusory promises are consideration. -Illusory promises are consideration only when a sale of goods is involved. -Illusory promises qualify as consideration when past consideration is at issue. -Illusory promises are not consideration. -Illusory promises qualify as consideration when promissory estoppel is at issue.
Illusory promises are not consideration.
If the subject matter of an offer is destroyed, the offer _________. -Is extended for fourteen days. -Is extended for twenty-one days. -Is extended for seven days. -Is extended for thirty days. -Immediately terminates.
Immediately terminates
Under the UCC a delay in delivery or nondelivery, in whole or in part, is not a breach in circumstances in which performance has been made _____________ because a contingency has occurred that was not contemplated when the parties reached the agreement. -Impracticable -More difficult -Unreasonable -Unprofitable -Less profitable
Impracticable
Reference - New Furniture. Penny purchased $3,000 worth of furniture from Bob's furniture shop. Through an arrangement with Bob, Penny financed the purchase through a financing company called Let Us Help You. Twenty-nine days after the goods were delivered to her, Penny had a disagreement with Let Us Help You regarding the amount of interest she would be required to pay. She notified Bob on that day that she was rejecting the goods. Bob claimed that she did not properly reject the furniture and also that she acted in bad faith. Penny says that she properly rejected and denies that she acted in bad faith. She also says that, in any event, she cannot be charged with both wrongful rejection and also bad faith because of double jeopardy. Which of the following is true regarding the standard of good faith that would be applied in regard to Penny? -In this situation, good faith means a lack of commercial impracticability. -In this situation, good faith means honesty in fact. -In this situation, good faith means perfect tender. -In this situation, good faith means honesty in fact and also reasonable commercial standards of fair dealing. -In this situation, good faith means both perfect tender and a lack of commercial impracticability.
In this situation, good faith means honesty in fact.
A[n] _____________ contract is one requiring complete performance by both parties, even if it appears as if the contract contains multiple parts. -Indivisible -Justifiable -Divisible -Adhesion -Independent
Indivisible
Reference - Painted House. Billy had a contract to paint Jan's house for $800 including the duty to clean up any debris. The contract between Billy and Jan did not contain an antiassignment clause. Billy, who was very busy, assigned the contract, including the right to payment and the duty to paint, to Richard who was interested in making some extra money and had experience painting. Billy did not tell Jan about the assignment because he did not want any trouble nor did Richard mention the assignment to her. In fact, Richard never met Jan because he painted while she was at work. After Richard did a good job painting the house, Jan sent a check to Billy for $800. Billy needed the money to pay some bills, so he spent it. He thought he would have money coming in with which to pay Richard, but that did not happen. Richard asked Jan for $800 when it was not forthcoming from Billy. Jan refused. Richard said that he was going to sue her and Billy. Jan called Billy and told him that he had no right to assign the contract. Another problem involved disposal of debris. Although Richard was a good, competent painter, he forgot and left some old paint cans at Jan's house. Jan demanded that Billy come and properly dispose of the paint cans because they could not simply be put in the trash. Billy refused and told her that she would have to get Richard to dispose of the paint cans because that was his responsibility. What would be the likely result of a lawsuit brought by Richard against Jan to recover the $800? -Jan will win because she had no notice that the contract had been assigned and could, therefore, legally pay Billy. -Jan will win only so long as the assignment was for an amount over $500. -Richard will win because Jan accepted the risk that the contract would be assigned. -Richard will win only so long as the assignment was for an amount under $1,000. -Richard will win only so long as Billy has not been declared bankrupt because Jan will be able to recover the amounts at issue from Billy.
Jan will win because she had no notice that the contract had been assigned and could, therefore, legally pay Billy.
A contractual condition of satisfaction may be judged by either a[n] ______________ or ______________ standard depending on the issue involved -Objective; express -Absolute; express -Objective; subjective -Subjective; express -Objective; absolute
Objective;subjective
Monetary damages are also referred to as ______________ damages. -Legal -Public -Injunctive -Equitable -Fair
Legal
Under Article 2(A) of the UCC, a _______________ is a person who transfers the right to possession and use of goods under a lease. -Relater -Lessor -Seller -Lessee -Acquirer
Lessor
As a general rule, most states will not allow a minor to disaffirm contracts for which of the following? -Health insurance -Life insurance and health insurance, but not psychological counseling -Life insurance -Life insurance, health insurance, and psychological counseling -Psychological counseling
Life insurance, health insurance, and psychological counseling
Which of the following is a contractual party who agrees to do something for the other party? -Boundee -Obligor -Obligee -Assignee -Assignor
Obligor
Reference - Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept as pets. Marcy told Lucy that having water on the property was very important. Lucy assured her that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the contract for the land sale was entered into, it was discovered that actually the spring did not run through the corner of Lucy's property. The area in which the spring ran actually belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought that Marcy had bought the older truck when Marcy thought she had purchased the newer truck. Marcy was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Marcy for nuisance. Assuming that Lucy fraudulently made a misrepresentation regarding the spring running through the corner of the farm knowing the statement was not correct, considering only the lack of a spring issue, which of the following is true if Marcy does not want to go through with the sale of the farm? Marcy may rescind the contract, and she will recover $10,000 in damages which is an amount set by federal law. Marcy may rescind the contract, but she may not recover damages. Marcy may rescind the contract and she may also recover damages, but only nominal damages. Marcy may rescind the contract, and she may also sue for damages if she can establish injury. Marcy may sue for damages regardless of whether she can establish injury, but she may not rescind the contract.
Marcy may rescind the contract, and she may also sue for damages if she can establish injury.
Reference - Pet Pig Farm. Marcy wanted to buy Lucy's land and use it to breed small pigs to be kept as pets. Marcy told Lucy that having water on the property was very important. Lucy assured her that a spring ran through one corner of the property. Therefore, Marcy agreed to buy the farm. Although she did not ask Lucy anything about it, Marcy, who loved pigs, assumed that the neighbors would be pleased with the pigs being in the area. In a separate contract, Lucy also agreed to sell Marcy a used truck for $5,000. After the contract for the land sale was entered into, it was discovered that actually the spring did not run through the corner of Lucy's property. The area in which the spring ran actually belonged to a neighbor. Additionally, when Lucy brought Marcy the used truck, Marcy said, "That's not the truck!" It was discovered that Lucy, who had two trucks, thought that Marcy had bought the older truck when Marcy thought she had purchased the newer truck. Marcy was also surprised when she received a petition signed by all surrounding landowners objecting to the presence of the pigs and threatening to sue Marcy for nuisance. Assuming that Lucy innocently made a misrepresentation regarding the spring running through the corner of the farm with no reason to believe that was not correct, considering only the lack of a spring issue, which of the following is true if Marcy does not want to go through with the sale of the farm? -Marcy may rescind the contract and recover compensatory damages only. -Marcy may sue for damages, but she may not rescind the contract. -Marcy may rescind the contract, but she may not recover damages. -Because Lucy acted with scienter, Marcy may receive reliance damages in addition to compensatory damages, and she may rescind the contract. -Because Lucy acted with scienter, Marcy may receive reliance damages in addition to compensatory damages, but she may not rescind the contract.
Marcy may rescind the contract, but she may not recover damages.
A ___________ clause is a clause parties include in a written agreement within the statute of frauds that states that the written agreement accurately reflects the final, complete version of the agreement. -Consolidation -Complete -Merger -Parol -Adhesion
Merger
The obligation to use reasonable efforts to minimize damage resulting from a breach is referred as the duty to ______________ one's damages. -Mitigate -None of these because there is no such obligation -Reduce -Reform -Remit
Mitigate
Which of the following is needed in order for an assignment to be valid? -A UCC 2-301 Form. -No form is required. -A Business 2-547 Form. -A UCC 4-305 Form. -A Business 4-298 Form.
No form is required
Which of the following are duties that typically cannot be delegated to a third party? -Mowing a yard -Payment of money owed -Delivering goods -Painting a portrait -Painting a house
Painting a portrait
When no actual damages result from the breach of a contract, the court may award the plaintiff ______________ damages. -Nominal -Liquidated -Punitive -None of these because no damages are available if no actual damages are incurred. -Consequential
Nominal
Which of the following occurs when the parties to the agreement wish to replace one of the parties with a third party? -Novation -Accord and satisfaction -Alteration -Mutual rescission -Substituted contract
Novation
Reference - Cheap Motorcycle. Tony, a hateful, disgruntled, business law teacher notices that a student, Peter, who is past the age of majority, has bought a new motorcycle. Peter has struggled through school, is in his last semester, and needs to pass business law in order to graduate. Tony tells Peter that he would like to see Peter pass; and, in the next sentence, Tony says that he wants to buy the motorcycle for $100, a price far below the value of the motorcycle. Peter asks if Tony is serious about the price, and Tony replies, "I have the power here!" Tony proceeds to draw up a contract for the sale of the motorcycle for $100 with lots of fine print by which he can sue Peter and recover any maintenance costs for the next five years. Seeing that he is at an advantage, Tony also throws into the deal that Peter will mow Tony's one acre yard for $5 all summer long. After Tony tells Peter to either take the contract or leave it, Tony reluctantly signs. Which of the following is true if Peter seeks to rescind the contractual agreement to sell the motorcycle? -Peter may rescind the agreement on grounds of mistake. -Peter may rescind the agreement on grounds of fraud. -Peter may rescind the agreement on grounds of fraud or unconscionability, but not mistake. -Peter may rescind the agreement on grounds of fraud, unconscionability, and mistake. -Peter may rescind the agreement on grounds of unconscionability.
Peter may rescind the agreement on grounds of unconscionability.
Which of the following occurs when one party makes a promise knowing the other party will rely on it, the other party does rely on it, and the only way to avoid injustice is to enforce the promise? -Quasi estoppel. -Quasi agreement. -Promissory performance. -Promissory estoppel. -Promissory agreement.
Promissory Estoppel
Which of the following is sometimes referred to as an implied-in-law contract? -Express contracts. -Implied-in-fact contracts. -Quasi-contracts. -Express contracts and quasi-contracts. -Express contracts and implied-in-fact contracts.
Quasi-contract
A[n] _____________ contract is an agreement whereby the buyer agrees to purchase all his goods from one seller. -Requirement -Use -Arranged -Output -Supply
Requirement
Reference - Refused Furniture. Selina arranges to sell furniture from her furniture store to Roland for $3,000. Roland was supposed to give Selina a $500 deposit on February 1 and pay the remainder in monthly installments. Selina was to deliver the furniture by February 7. Roland did not pay Selina as promised on February 1. He asked her to wait until March 1, but she refused. She also refused to deliver the furniture. Selina was able to sell the furniture for only $2,500 because of a downturn in the economy. Roland told Selina that she had no right to withhold or sell his furniture and that he was suing. Selina incurred $100 in additional amounts in advertising costs to advertise the furniture that Roland initially purchased. Selina saved $40 in delivery costs because the subsequent purchaser picked up her own furniture. Which of the following is true regarding Roland's claim that Selina had no right to sell the furniture he initially purchased? -Roland is correct but only because of the special UCC exception for consumer goods. -Roland is incorrect. Selina had a right to resell the furniture. -Roland is incorrect but only if Selina can prove that she had no reason to believe that he was a credit risk prior to signing the contract of sale. -Roland is correct. Selina had no right to sell the furniture, but she retained the right to sue him for any deficiency. -Roland is correct because of federal consumer protection laws.
Roland is incorrect. Selina had a right to resell the furniture.
In a conditional sales contract, a _______________ occurs when the seller and buyer agree that the buyer may return the goods at a later time. -Sale-or-return contract -Sale-on-approval contract -Condition-or-sale contract -Return-or-purchase -Return-or-sale
Sale-or-return contract
Reference - Third-Party Woes. Trudy owed Sam $40 for a book she purchased from him. Trudy mowed Betty's yard for $40 and agreed with Betty that Betty would pay Sam for the book. Sam is not initially aware of the agreement. Betty pays no one. Trudy also mowed Bob's yard for $40 in return for Bob's agreement to give the payment to Sally representing Trudy's birthday present to Sally. Bob later refuses to do so saying that promises to give gifts are not enforceable. He then moves out of town. Trudy tells both Sam and Sally that she is broke, that Sam needs to get his $40 for the book from Betty, and that Sally is owed $40 from Bob for her birthday present. Which of the following would be the likely result if Sam sues Trudy for the $40 she owes him for the book? -Sam will win but only because the contract was for an amount under $1,000. -Sam will win but only because he was not aware of the assignment. -Trudy will win because she delegated the duty of payment to Betty. -Sam will win because Trudy cannot avoid her obligations through a delegation. -Sam will win only if Betty cannot be found for service of process.
Sam will win because Trudy cannot avoid her obligations through a delegation.
Reference - Hot Toaster. Rebecca bought a toaster from Super Store and brought it home. A friend of hers, Greg, was at her house making toast. The toaster malfunctioned and shocked Greg resulting in a small burn to his hand requiring medical attention. At a garage sale, Rebecca also purchased a blender from a friend, Samantha. When she paid for the blender, Rebecca said that it would be great for making smoothies. Samantha said nothing and just smiled while taking Rebecca's money. Unfortunately, the blender was not powerful enough to make smoothies. Which of the following is true regarding whether Samantha made an express warranty to Rebecca that the blender would make smoothies? -Samantha made an express warranty by not speaking up regarding problems with the blender only if Rebecca can prove that Samantha knew about the problems. -Samantha made an express warranty by not speaking up regarding problems with blender. -Samantha made an express warranty by not speaking up regarding problems with the blender only if Rebecca cannot prove that Samantha knew about the problems. -Samantha made an express warranty by not speaking up regarding problems with the blender only if Samantha can prove that she did not know about the problems. -Samantha did not make an express warranty.
Samantha did not make an express warranty
Reference - Creaky and Toady. Beverly decides to go on a great trip to Hawaii. She needs someone, however, to take care of her two dogs, Creaky and Toady, while she is gone. Creaky has hives, and Toady passes gas frequently because of a digestive problem. Beverly hires Frank three months in advance and they reach a contractual arrangement whereby he will be paid $200 for keeping the dogs for two weeks. Frank comes over two months before Beverly is set to leave, takes one look at Creaky and Toady, and declares that they are too creepy to be around. Beverly then hires Alice who agrees to care for Creaky and Toady. Two weeks before Beverly is set to leave, however, Alice calls and tells her that she just broke both her legs in an automobile accident, sustained other injuries, and has been put on bed rest for two months. Finally, Alice hires Betty to care for the dogs and heads off to Hawaii where she has a great time. Unfortunately, when Beverly returns home, she finds that Betty fell in love with Creaky and Toady and has absconded with them. It was a month before Beverly was able to get a court order requiring their return. Which of the following is true regarding Alice's refusal to keep Creaky and Toady? -She committed a material breach. -She is discharged from performance because of impossibility of performance. -She is guilty of only a nominal breach because she had a good excuse for breaching. -She is discharged from performance because of frustration of purpose. -She failed to substantially perform but only committed an immaterial breach.
She is discharged from performance because of impossibility of performance.
Reference - Useless Friend. Charles, who is very gullible, is friends with Bobby. Bobby, who cannot be trusted, decides to try to bind Charles to a contract in Bobby's favor. Bobby has Charles sign a contract promising to wash Bobby's car once a week for a month for $80. The contract incorporated by reference terms on the back. The terms on the back were in very small print and required Charles for one year to cook dinner for Bobby, do his laundry, and clean his apartment. Bobby is also very angry with his former girlfriend, Tessa, and decides to start rumors, that would constitute the tort of defamation, such as that she has a vile disease, cheated on tests, and stole from friends. Bobby wants to enlist the help of Charles but knows that Charles would be hesitant to assist in his endeavors. One evening, however, Charles drank too much beer and was clearly intoxicated - a fact apparent to Bobby. Bobby had him sign a contract agreeing to defame Tessa for $50. When he sobers up, Charles tells Bobby that he was drunk and that he has no intention of defaming Tessa, who also happens to be Charles' new girlfriend. He also finally takes a look at the contract involving work for Bobby and tells Bobby that the contract is outrageous and that he has no intentions of going through with any of it. Which of the following would be a possible defense to the contract as far as the harsh and lopsided requirements involving chores is concerned? -Substantive unconscionability -Procedural unconscionability -Unclear drafting -Outrageous wording -Adhesion conscionability
Substantive unconscionability
Which option have most states adopted regarding the rights of third-party beneficiaries of warranties? -That seller's warranties do not extend beyond the buyer and the buyer's immediate family living in the same household. -That seller's warranties do not extend beyond the buyer and the buyer's immediate family. -That seller's warranties extend to anyone injured by the good. -That seller's warranties extend to any reasonable and foreseeable user. -That seller's warranties extend to the buyer's household members and guests.
That seller's warranties extend to any reasonable and foreseeable user.
Which of the following is necessary in order to establish that a mutual mistake involving a basic assumption about the subject matter of a contract was made? -That the mistake involved the existence, quality, or quantity of the items to be exchanged. -That the mistake involved the identity of parties to the contract or whether a party misunderstood the time constraints involved in regard to the contract. -That the mistake involved a misunderstanding of law as to whether or not the UCC applied. -That the mistake involved whether a party could profit from the contract. -That the mistake involved whether a party could profit from the contract or whether a party misunderstood the time constraints involved in regard to the contract.
That the mistake involved the existence, quality, or quantity of the items to be exchanged.
In an origin contract who bears the risk of loss while the goods are in transit? -Both the buyer and seller with the loss being proportioned 75% to the buyer and 25% to the seller -The buyer -Both the buyer and seller with the loss being proportioned 50% to the buyer and 50% to the seller -Both the buyer and seller with the loss being proportioned 25% to the buyer and 75% to the seller -The seller
The buyer
Which of the following is a measure of recovery when a quasi-contract is involved? -The amount sought by the plaintiff in the complaint. -The wholesale price of any good involved. -The amount set forth in the contract. -The fair market value of the matter involved. -Damages will be computed the same as they are computed for any other contract.
The fair market value of the matter involved.
Which of the following states that in the case of multiple assignments of the same right, the first party granted the assignment is the party correctly entitled to the contractual right? -The last-assignment-in-time rule -The English rule -The first-assignment-in-time rule -The American rule -The French rule
The first-assignment-in-time rule
Sally goes to have her hair trimmed and agrees to pay $40 to the stylist. While there, Sally decides that she would also like highlights. The stylist informs her that highlights will cost an additional $30. Sally agrees to the price, gets the highlights, but refuses to pay the extra amount. What is the likely result in a dispute between Sally and the stylist, and why? -Sally will win because there was no valid consideration in exchange for the highlighting. -The stylist will win because she did additional work in exchange for the extra payment and, therefore, a valid unilateral contract existed. -The stylist will win unless Sally can show that she had previously received both a trim and highlights for $40. If she can prove that she previously received both for $40, then the past expectations rule applies. -Sally will win because the stylist had a preexisting duty to have her hair looking as good as possible. -The stylist will win because she did additional work in exchange for the extra payment and, therefore, Sally's promise was supported by valid consideration.
The stylist will win because she did additional work in exchange for the extra payment and, therefore, Sally's promise was supported by valid consideration.
Reference - Refusal to Pay. Business law teacher, Debby needed some yard work done. She told her class that she would give $50 to the first person who mowed her yard. She also entered into an agreement with Brenda to trim some shrubbery for $40. Max went to mow Debby's yard. Unfortunately, just as he finished mowing, a neighborhood dog bit him, and he had to go to the emergency room for a couple of stitches. Debby refused to pay Max on the basis that the agreement was not in writing and that Max ended up being more trouble than he was worth. Max refused to pay the emergency room because he said that they did not have a binding, bilateral contract. Brenda refused to trim the shrubbery because she got a better offer and claimed that she was not bound on the contract until she started to perform. Which of the following is an appropriate characterization of the agreement between Debby and Max? -They had a unilateral contract. -They had a bilateral, implied contract. -They had a bilateral and unilateral contract. -They had a bilateral, express contract. -They did not have any type of enforceable agreement.
They had a unilateral contract.
Which of the following is true regarding express warranties? -They may be part of a brochure, they may arise from a salesperson's oral promise, and a sample or model may provide an express warranty. -They may be part of a brochure and they may arise from a salesperson's oral promise, but a sample or model may not provide an express warranty. -A sample or model may provide an express warranty. -They may be part of a brochure. -They may arise from a salesperson's oral promise.
They may be part of a brochure, they may arise from a salesperson's oral promise, and a sample or model may provide an express warranty.
A[n] ___________ is created when two parties enter into a contract with the intended end purpose of benefiting a third party. -Voidable -Void -Third-party beneficiary -Second-party beneficiary -First-party beneficiary
Third-party beneficiary
Which of the following represents a valid accord and satisfaction? -When a dispute over an unliquidated debt is settled and paid for less than the full amount. -When a dispute over a liquidated debt is settled and paid for the full amount. -When a dispute over either an unliquidated or liquidated debt is settled and paid for less than the full amount. -When a dispute over an unliquidated debt is settled and paid for the full amount. -When a dispute over a liquidated debt is settled and paid for less than the full amount.
When a dispute over an unliquidated debt is settled and paid for less than the full amount.
Under what condition or conditions will a court now find nondisclosure as having the same legal effect as an actual false assertion? When a relationship of trust exists between the parties to the contract and when there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement. -When a relationship of trust exists between the parties to the contract, when there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement, and when the contract at issue is the first contract the parties have undertaken together. -When a relationship of trust exists between the parties to the contract. -When the transaction at issue is the first dealing the parties have undertaken together. -When there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement.
When a relationship of trust exists between the parties to the contract and when there is a failure to correct assertions of fact that are no longer true in light of events that have occurred since the initial consent to the terms of the agreement.
As a general rule, when is revocation effective? -When it is mailed by the offeror. -When it is received by the offeree. -One day after it is made. -Two days after it is made. -Three days after it is made
When it is received by the offeree.
Under the UCC, when may orders for specific performance of a contract for the sale of goods be awarded? -Only when the goods are unique. -When the goods are unique and when the goods are in excess of 500 in quantity. -Only when the goods are in excess of 500 in quantity. -Only when the goods have been ordered at least six months in advance. -When the goods are unique or in other proper circumstances.
When the goods are unique or in other proper circumstances.
Under which of the following circumstances will a court refuse to uphold modifications or limitations to remedies agreed upon by the parties? -When they seem unfair. -When the remedies fail in their essential purpose. -When one party is a corporation. -When one side was not represented by an attorney. -When neither party is a corporation.
When the remedies fail in their essential purpose.
Reference - Powder Room Mess. For $300,000, Willis agrees to build a new home for Robert, who is very picky. Willis builds the home to Robert's specifications with one exception. The faucets and linoleum flooring in an upstairs powder room are not exactly what Robert specified. That was a mistake on Willis' part, but he had not intentionally failed to follow specifications. When Robert sees the powder room, he goes ballistic and tells Willis that he will not pay Willis anything for the house. It will take $300 to put in correct faucets and linoleum. Willis says that he is willing to pay $300 to put Robert in the position he would have been in had the correct faucets and linoleum been used, but that is all he is willing to pay. Which of the following is true regarding whether Willis breached the contract? -Willis materially breached the contract. -Willis breached the contract, but the breach was not material. -Willis did not breach the contract. -Willis committed an anticipatory breach of the contract. -Willis substantially breached the contract.
Willis breached the contract, but the breach was not material.
