Business Law Chapter 8

Under the objective theory of contracts, a contract is not enforceable without a clearly defined objective. True or False

False

Omar asserts that a deal he entered into with Pat to sponsor and host a motivational conference for independent sales representatives was formed as the result of a mistake. Omar's best defense to the enforcement of this contract is a. preliminary indications of unsatisfactory results. b. a desire not to perform. c. the lack of a party's voluntary consent. d. insufficient capital.

c. the lack of a party's voluntary

Lon says to Misty, "I would like to sell you my vinyl records." This statement is a. an offer. b .a circular, not an offer. c. a request, not an offer. d. an invitation to negotiate, not an offer.

d. an invitation to negotiate, not an offer

Shipping Corporation enters into contracts with distributors and other buyers in e-commerce, and in traditional commerce. Between Shipping and its customers, the UETA applies if the parties agree to conduct transactions by a. carrier only b. verbal communication. c. paper documents. d. electronic means.

d. electronic means

The offeror can revoke the offer only by expressly repudiating it. True or False

False

The primary purpose of the Uniform Electronic Transactions Act is to create new rules for electronic contracts. True or False

False

For an e-signature to be enforceable, however, the contracting parties must have agreed to use electronic signatures. ​ True or False

True

If one party to a contract has fully performed but the other has not, the contract is executory. True or False

True

The offeree must accept the offer without adding or changing any terms. True or False

True

Domestic Gas Company offers to sell Energy Ltd. a certain quantity of liquefied natural gas. If Energy sends an acceptance via Domestic's authorized mode of communication, it will be effective when it is a. in transit. b. written. c. received. d. sent.

c. received

The offeror's act of withdrawing an offer is referred to as: a. counteroffer. b. invitation to offer. c. revocation. d. repudiation.

c. revocation

According to a ______, the party who opens the box automatically accepts the terms by keeping the goods. a. browse-wrap agreement b. partnering agreement c. shrink-wrap agreement d. click-on agreement

c. shrink-wrap agreement

Oceans, Inc., a seafood distributor, agrees to buy from Paul, a commercial fisherman, any "overstock" of fish that Paul catches in excess of his legal limit. This agreement is most likely a. voidable. b. enforceable. c. void. d. quasi.

c. void

Brie buys a subscription to music provided by Concerto, an online streaming service. Before gaining access, Brie must click "I agree" to a provision stating that she will not make and sell copies of the music. This provision is

d. a click-on agreement

Nevin negotiates a deal for the sale of twenty-five acres of farmland to Otis. Nevin promises to hold the offer open in return for a small payment but does not state an exact period of time. With respect to this offer a. the deal is binding except for the promise to hold the offer open. b. the deal is done. c. the offer must be held open for an indefinite period. d. a reasonable period of time is implied.

d. a reasonable period of time is implied

Marketing, Inc., offers to create a campaign to increase N'Ice Cream, Inc.'s online business. N'Ice agrees to pay for the service. These parties have a. a quasi-contract. b. no contract. c. an implied contract. d. an express contract.

d. an express contract

Steel Mill, Inc., makes an offer to Tom to enter into a contract to work as a mechanical engineer for a certain salary for one-year subject to a five-year renewal based on his performance. Tom accepts the offer. This is a valid contract because it includes a. a price and a subject. b. a duration and a termination. c. specific quality standards. d. an offer and an acceptance.

d. an offer and an acceptance

Larry advertises a reward for the return of his lost dog. Miguel does not learn of the reward but finds and returns the dog. With respect to Miguel, Larry's ad is not an offer because it lacks the element of a. definite terms. b. serious intent. c. surprise d. communication.

d. communication

Kim promises to pay Leo $500 to install a sump pump in Kim's warehouse. Leo completes the installation. The act of installing the pump a. imposes no obligation on Kim unless she is satisfied with the job. b. imposes a moral obligation on Kim to pay Leo. c. is not sufficient consideration because it is not goods or money. d. is the consideration that creates Kim's obligation to pay Leo.

d. is the consideration that creates Kim's obligation to pay Leo.

Shep offers to make digital copies of Reliable Company's business conference videotapes, CDs, DVDs, and other media for $500. Under the mailbox rule, Reliable's acceptance by e-mail will be considered effective when a. followed up by a confirmation letter sent by regular mail. b. composed on a Reliable computer. c. received by Shep. d. sent from Reliable's email.

d. sent from Reliable's mail

Anton tells Brooke, who has no knowledge of Shakespearean comedy, that he will tutor her in the subject for $50. As an offer, this is

d. effective

The elements of consideration, in a bilateral contract for a sale of goods, are the sale and the goods. True or False

False

Dale's Uncle Ed tells Dale, "If I feel you deserve it at the time, I will give you a new car when you graduate from college." Ed's promise is a. enforceable. b. illusory. c. a preexisting duty. d. a forbearance.

b. illusory

On May 1 Ralph offers to harvest Sam's corn crop and promises to keep the offer open until June 1. On May 3 Ralph mails Sam a letter revoking the offer. Sam receives the letter on May 5 and responds on May 6. Ralph's revocation of the offer became effective on a. May 3. b. May 5. c. no date because the offer is irrevocable. d. May 6.

d. May 6

Lon says to Misty, "I would like to sell you my vinyl records." This statement is a. an offer. b. an invitation to negotiate, not an offer. c. a circular, not an offer. d. a request, not an offer.

b. an invitation to negotiate, not an offer

Quasi contracts are imposed on parties in the interest of fairness and justice. True or False

True

Rejection of an offer is effective only when it is actually received. True or False

True

Rescission is the unmaking of a contract so as to return the parties to the positions they occupied before the contract was made. True or False

True

The modification of a contract may be fair and equitable in view of circumstances not anticipated by the parties when the contract was made. True or False

True

With respect to consideration, a bargained-for exchange distinguishes a contract from a gift. True or False

True

Cass, a certified public accountant, agrees to perform an audit for Drone Distribution, Inc. These parties are most likely to follow the rules of contract law in order to a. satisfy a moral obligation. b. obtain confidential information. c. avoid potential disputes d. acquire business acumen

c. avoid potential disputes

Nevin negotiates a deal for the sale of twenty-five acres of farmland to Otis. Nevin promises to hold the offer open in return for a small payment but does not state an exact period of time. With respect to this offer a. a reasonable period of time is implied. b. the deal is binding except for the promise to hold the offer open. c. the offer must be held open for an indefinite period. d. the deal is done.

a. a reasonable period of time is implied

A request to negotiate is an offer True or False

False

An offer must express reasonably definite terms to be effective—no term may be reasonably inferred. True or False

False

An offer that can be accepted simply by a promise to perform does not create a binding contract. True or False

False

Choice of law provisions in e-contracts have been found to be invalid. True or False

False

Courts normally do not enforce the terms of click-on agreements. True or False

False

Normally, a court will evaluate the adequacy of consideration based solely on the comparative value of the things exchanged as part of the agreement. True or False

False

One element necessary for an effective offer is the terms must be reasonably priced. True or False

False

Performance, such as a payment of funds or a delivery of goods, must take place for a bilateral contract to be formed. True or False

False

Putting up an item for sale on an online auction site is an offer. True or False

False

Shrink-wrap terms are enforceable even if a buyer does not discover them until after the parties have entered into a contract. True or False

False

The E-sign Act applies to all types of legal documents. True or False

False

For the doctrine of promissory estoppel to be applied, there must be a clear and definite promise True or False

True

In effect, a counteroffer converts the original offeror into an offeree with the power of acceptance. True or False

True

Painting a garage can constitute "something of legally sufficient value." True or False

True

A click-on agreement can indicate the acceptance of an online offer. True or False

True

A contract is an implied contract if the conduct of the parties creates and defines some of the terms. True or False

True

A preliminary agreement can constitute a binding contract if the parties have agreed on all essential terms. True or False

True

Acceptance is timely if it is effective before the offer is terminated. True or False

True

Acceptance of an e-contract must show that the offeree voluntarily assented to the offer's terms. True or False

True

An e-offer might include an arbitration clause specifying that any dispute arising under the contract will be arbitrated in a designated forum. True or False

True

Before the UETA applies, each party to a transaction must agree to conduct it by electronic means. True or False

True

Red offers to pay Sara to deliver certain documents within thirty minutes. Sara can accept the offer only by completing the task within the deadline. If she does, Red and Sara will have a. a unilateral contract. b. a bilateral contract. c. a void contract. d. an executive contract.

a. a unilateral contract

Fabien offers to sell his Graphic Signs LLC business to Hanna for $100,000. Hanna replies, "The price is too high. I will pay $75,000." Hanna has a. accepted the offer. b. rejected the offer and made a counteroffer. c. made a counteroffer without rejecting the offer. d. rejected the offer without making a counteroffer.

b. rejected the offer and made a counteroffer

Luke puts his motorcycle up for sale via a post on an online auction site. This is a. a price list, not an offer. b. an offer. c. an invitation to negotiate, not an offer. d. a request, not an offer.

c. an invitation to negotiate, not an offer

Once the electronic record _____________________________ or comes under the control of the recipient, the UETA deems it to have been sent.

c. leaves control of the sender

Jan tells Lee she will pay him to babysit her son Mark weekday evenings for six months. Lee agrees. Jan and Lee have formed ​ a. a unilateral contract. b. an unenforceable contract. c. a void contract d. a bilateral contract.

d. a bilateral contract

Barry purchases some goods online from Acme Corp. He had clicked the accept terms box on the website when purchasing, which included a dispute resolution agreement that all disputes be sent to arbitration. He is unhappy with the product and injured by it. He brings a lawsuit in court against Acme Corp, and Acme files to dismiss based on the arbitration agreement. Barry will: a. is not able to seek any damages from Acme. b. be able to sue Acme in court c. seek damages without going to court. d. have to pursue arbitration for his dispute.

d. have to pursue arbitration for his dispute

Online contracts may be formed not only for the sale of goods and services, but also for: a. future contracts. b. negotiations. c. intellectual property. d. licensing.

d. licensing

The U.S. Department of Justice needs to have construction work done on a federal courthouse. The agency asks contractors to submit bids. This is a. an invitation to submit offers, not an offer itself. b. a request to negotiate, not an offer. c. an advertisement, not an offer. d. an offer.

a. an invitation to submit offers, not an offer itself

Sloane drives into Tire Service and asks to have a tire replaced on her car. Tire Service replaces the tire, but before Sloane pays for it, any contract between them is a. executory. b. void. c. unenforceable. d. executed.

a. executory

EcoEnergy LLC files a suit against Fiber Optics, Inc., claiming that the consideration for their contract is inadequate—that the plaintiff will not realize sufficient financial benefit from the deal to make it worthwhile. Most likely, the court will a. not question the adequacy of consideration. b. not determine whether consideration was exchanged. c. ask "how much" consideration was given. d. evaluate the fairness of the bargain.

a. not question the adequacy of consideration

Cindy, a real estate agent, sells her friend Doug's house without charging a commission. In return, Doug promises to give Cindy $1,000. This promise is not an enforceable contract because

a. the house has already been sold - the consideration is past

Under a contract with River Valley Farm, Sancho begins grading a terraced hillside for planting. Halfway through the project, Sancho asks for $5,000 over the contract price, claiming an increase in the "cost of doing business." The farm agrees, but later refuses to pay. The agreement to pay more is a. unenforceable, because Sancho's request modified the contract. b. unenforceable, because Sancho's performance was a preexisting duty. c. enforceable. d. unenforceable, because the farm's promise was illusory.

b. unenforceable, because Sancho's performance was a preexisting duty

Sports Bar and Tasty Bakery are adjacent businesses with adjoining parking lots. Sports Bar offers Tasty a discount on purchases if the bakery will not tow the cars of Sports Bar's patrons who park in the bakery's lot. The discount is legally sufficient consideration a. under no circumstances. b. only if Tasty uses it. c. because it is a promise of something of value. d. only if Sports Bar adds a cash rebate.

c. because it is a promise of something of value

Without a legal framework of reasonably assured expectations within which to make plans, businesspersons would most reliably be able to count only on others' a. moral standards. b. empathy. c. good faith. d. innocence.

c. good faith

Business Center, Inc., and Catering LLC enter into a contract. Later, they agree to rescind it and enter into a new contract. If the first contract was subject to a preexisting duty, the new contract will most likely be a. enforceable b. valid. c. invalid. d. voidable.

c. invalid

Greta files a suit against Home Repair Corporation under the doctrine of promissory estoppel. Greta must show that a. Home Repair justifiably refused to fulfill a promise to Greta. b. Home Repair justifiably relied on Greta's promise. c. she justifiably refused to fulfill a promise to Home Repair. d. she justifiably relied on Home Repair's promise.

d. she justifiably relied on Home Repair's promise

Fresh Agro, Inc., offers to deliver produce to Growers' Market for a certain price. Fresh's intent to extend an offer is determined by reference to Fresh's a. subjective, unexpressed intentions. b. specific products. c. market assumptions. d. words and actions.

d. words and actions