BLAW test 2

Which of the following statements, if false, is most likely to create liability for fraud or misrepresentation?

"This crane will lift a 10,000-pound load."

Ahmed promises to sell his boat to Mendel, and Mendel promises to buy it from Ahmed. What type of contract is this?

A bilateral contract

Ryan borrowed $10,000 from Baker, promising to repay it with $1,000 interest on Jan. 1, 2016. There is no dispute as to the terms or amount of the loan. On the due date of the loan, Ryan gave Baker a valid check for $10,500 marked "payment in full for loan due Jan. 1, 2016." Baker accepted the check and deposited it into his account. If Baker then sues Ryan for the unpaid $500, what is the result?

Baker wins, because Ryan gave no consideration in exchange for Baker's promise to forgive $500.

Which source of law requires the acceptance be an identical or almost identical "mirror image" of the offer in order to form a contract?

Common Law

A party who has the right to rescind a contract may do so at any time.

False

A promise to refrain from smoking cannot be legal consideration because a promise to refrain from doing something that one has a legal right to do is not valid consideration.

False

Alan and Brian contracted for Alan to mow Brian's lawn once a week for 20 weeks, at a price of $20 per week. Three weeks later, Alan demands $25 per week to mow Brian's lawn, and Brian agrees. Later, if Brian only pays Alan $20 per week and Alan sues Brian for the difference, Brian's promise to pay $25 per week is enforceable.

False

Article 2 of the UCC will never apply to contracts that involve both the sale of goods and services; instead the common law will always apply.

False

Contracts must always be in writing to be enforceable.

False

Fraud requires that there was an active concealment of a fact, such as installing new carpeting over a wood floor damaged by extensive dry rot, but would not include simply failing to volunteer information, such as the fact that a house was built with defective drywall.

False

If an offer for services states that the offeree must accept the offer by certified mail, and the offeree accepts by regular mail, then the acceptance is effective only when it is received by the offeror.

False

Present intent to contract is judged by a subjective test.

False

Which of the following is true regarding promissory estoppel?

It may apply when one relies upon another's promise to his detriment, even though there is no contract.

Death or insanity of the offeror has what legal effect on the offer?

It terminates the offer automatically.

John and his friends, all sailing enthusiasts, are co-owners of sailboat. John promised that he would obtain insurance for the sailboat for an upcoming voyage. However, John fails to insure the sailboat, and it sinks in rough seas. The co-owners sue John for breach of contract. Will they succeed?

No, because it was a purely gratuitous promise.

Jim saw an advertisement in the Daily Press stating that the Brass Cro store was offering to sell Browning shotguns, model 100, for $400. Jim went the next day to the Brass Cro store and said "Here is $400. I accept your offer to sell me a Browning model 100 for $400." Has an enforceable contract been formed?

No, because the ad was not an offer.

Leonard and Barry had a long-standing personal and professional relationship. In 2001, Barry's business began experiencing financial troubles. The two friends discussed Barry's financial difficulties. In 2003, Leonard flew from Atlanta to New York to meet Barry. Prior to Leonard's flight, Barry's employee faxed copies of various construction contracts and correspondence relating to Barry's projects to Leonard for his review. In late 2005, Leonard billed Barry $40,000 that Leonard claimed Barry owed on the alleged oral contract. Barry did not pay the bill. Leonard filed suit against Barry for breach of contract. Will Leonard succeed?

No, because there was no valid acceptance by Barry, and thus no valid contract formed.

Otto inherited an old safe from his uncle. Otto did not have the combination to the safe and had no idea of its contents, if any. Nevertheless, he sold the safe to his friend Marcel "as is" for $35. When Marcel hired a locksmith to open the safe, he found $25,000 in cash. Now Otto wants to rescind the contract, claiming that the doctrine of mistake gives him that right. Identify the accurate statement

Otto is not correct, because Otto assumed the risk of the mistake.

Arnold agrees to lease Bob the fourth floor of his house. Arnold himself resides on the second floor. The person typing the contract strikes the wrong keys, and the contract reads "second floor." Neither Arnold nor Bob notices this error when they read and sign the contract. What will the court do?

Reform the contract

Joe sells his business to Shirley. During the negotiations, Joe tells Shirley that the business has turned a profit for the last five years. In reality, the business operated at a loss for each of those years. However, Shirley did not hear Joe's misstatement. Shirley cannot rescind the contract because:

Shirley did not actually rely on Joe's misstatement.

Daisy Company, a retail garden supply store, sends a purchase order to Johnson & Parkins, a distributor of rose bushes. The terms of the purchase order state: "500 bushes of American Beauty roses at $2.00 each. Shipping costs payable by Johnson & Parkins. Delivery within 15 days of the date on this purchase order. Payable within 90 days of delivery." Johnson & Parkins receives the purchase order and immediately sends an invoice. The Johnson & Parkins invoice reads, in pertinent part: "Total cost of order is $1,000 (500 x $2.00 each). All disputes between merchant and seller arising from this order will be resolved by binding arbitration in Los Angeles, California." Under UCC §2-207, which of the following statements most accurately describes the legal result of the "arbitration clause"?

There is a valid contract between the parties. The arbitration clause becomes part of the contract unless the new term materially alters the offer.

A orally offers to sell B 100 premium-grade fountain pens but neglects to state the price. Such pens typically sell for $1 each. B orally accepts. Immediately thereafter, A tries to back out of the deal. At this point in time, which of the following is most likely to be true?

There is a valid contract.

Kyle emailed Tara offering to sell Tara his car. Tara left the email open on her desk, where her roommate, Maggie, saw it. After reading the email, Maggie replied to Kyle and stated that she (Maggie) wanted to accept Kyle's offer. Which of the following is true?

There is no contract between Kyle and Maggie because Kyle did not communicate the offer to Maggie.

A and B have a contract. A has 100% performed, and B has 50% performed. This is an executory contract.

True

A contract is a legally enforceable promise or set of promises.

True

A makes an offer for services to B, saying, "You may respond by registered letter." B accepts by a properly dispatched registered letter. This acceptance is effective upon dispatch of the registered letter.

True

A party injured by fraud in a contract for the sale of goods can both rescind the contract and sue for damages.

True

A promises to pay B $50 if B will mow A's lawn. B does not promise to mow A's lawn, however later that day B completely and satisfactorily does mow A's lawn. This is an example of a unilateral contract.

True

Allen promises to pay Bob $100 per week, in exchange for Bob's promise not to physically assault Charlie. There is no consideration for Allen's promise.

True

An advertisement offering a reward for the return of lost property usually is treated as an offer for a unilateral contract.

True

Best Buy orders 200 TV's from Sony at $500 each. Best Buy later attempts to cancel the contract. Sony refuses, but agrees to reduce the price to $400 each. Sony's promise to reduce the price to $400 each is enforceable.

True

Bob offers to sell his bike to Sue for $100, and promises to keep his offer open for five days. Sue thanks him and leaves. At this point, Bob still has the power to revoke his offer.

True

If a term is left open in a sale of goods contract, that open term or "gap" can be filled by inserting a presumption found in the UCC's "gap filling" rules.

True

If no UCC rule applies to an issue regarding a sale of goods contract, the common law rules apply.

True

In order for a unilateral mistake to make a contract voidable, either the non-mistaken party must have caused or knew of the mistake, or enforcement of the contract must be unconscionable.

True

In return for services that Michael performed for James in the past, James promises to pay Michael $1000. There is no consideration for James' promise.

True

Ratification ends the right to rescind a contract.

True

The UCC's rules often result in the formation of a contract even though no contract may exist under the traditional common law rules.

True

The three requirements for a valid offer are: present intent to contract, definiteness and communication to the offeree.

True

To accept an offer for a unilateral contract, the offeree must fully perform the requested act.

True

Today, courts have shown a growing tendency to apply the "mirror-image rule" in a liberal fashion, by holding that only material differences between an offer and an alleged acceptance is a counteroffer and would result in a rejection of the offer.

True

UCC section 2-207 allows contract formation even when there is some difference between the terms of the offer and the terms of the acceptance.

True

A faxed its standard form regarding the sale of goods to B. B responded by faxing its standard form to A. The standard forms do not agree on material terms. Under UCC section 2-207, when will there be a contract? Assume that B did not make its acceptance expressly conditional on A's agreeing to any additional or different terms.

When B's form is considered to be a definite and timely expression of acceptance.

Chica, a women's clothing store, held a "prize drawing" for a $500 shopping spree on Saturday that it had advertised throughout the week. Participation in the drawing required being at the store by noon and completing a form that included personal information and placing it in a box. The information would then be put into a database for marketing purposes. Susan arrived at the store by noon, completed the form and gave the requested personal information. Susan was the winner of the $500 shopping spree drawing. Has she given "consideration" for the prize?

Yes, she made an effort to go to the store and gave personal information that was for the store's use.

Joe offered to sell his car to Beth for $5,000. Beth responded by saying "ok, and I want the new seat covers included at that price." Beth's response is:

an acceptance and the additional term is considered a proposal for addition to the contract.

Sig promises to purchase all of the widgets that he wants at a price of $4.50 per widget, and Carl accepts the offer. This is an example of:

an illusory promise

Smith says to Ford, "I'd like to buy your house," and Ford responds, "Ok, you've got a deal!" This is not a valid offer because of a lack of:

definiteness in the terms of the offer

In order for the consideration requirement in contracts to be met:

each party must give consideration.

Pedro sold his car to Juan, telling him that the car only had 50,000 miles of use. The odometer read 50,000. In truth, the actual mileage was 150,000. However, Pedro did not know this, as he had purchased the car from Maria, who had told him that the mileage was 40,000 at the time of that sale, when in truth it was 140,000. Pedro had driven the car for 10,000 miles and he believed that it had only 50,000 miles when he told Juan that was the mileage. Soon Juan discovered the truth and sued Pedro. Pedro will:

lose because legal misrepresentation has occurred.

Which of the following is not a basic element of a contract?

made for any purpose or objective.