Business Law Final Practice

Quasi contracts are used to provide a remedy when the parties enter into a(n): void contract. implied in fact contract. situation in which promissory estoppel applies.

All of these

Arnold has offered to take Bob into his accounting firm as a partner upon payment of $5,000 cash. In response, Bob says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership."

Bob has made a counteroffer and hence there is no contract

If Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora

Bob's obligation to return the money is quasi-contractual.

In the case of Denney v. Reppert the court allowed the employees of a bank to collect a reward, because they supplied information that led to the arrest and conviction of a bank robber.

False

TorF: Article 2 of the UCC lacks relevance in modern society because it, including its amendments, does not provide rules related to electronic commerce.

False

TorF: In the case of Lefkowitz v. Great Minneapolis Surplus Store, Inc., the court decided that the store's advertisement was not a valid offer to enter into a contract but was merely an invitation to make an offer.

False

TorF: Laws passed by congress are the supreme law of the land in the United States and takes precedence over other sources of law

False

TorF: Once a court has decided a case, the principle of stare decisis preludes correction of erroneous decisions

False

TorF: Silence can never be acceptance

False

Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

False

Which of the following results in a void, rather than voidable, agreement? duress by improper threat. Fraud in the execution. Fraud in the inducement. Undue influence.

Fraud in the execution

For an offer to be valid:

The offeree must have knowledge of the offer.

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. He has been offered a two-year graduate fellowship, but he will not be able to pay the loan back if he accepts the fellowship. The bank manager tells Sam that if he pays $3,000 now, they will forgive the loan. Should Sam accept the offer?

Yes, because the early payment of the loan is consideration that makes the bank's promise binding.

Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see if another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract?

Yes, it is likely to be enforceable during employment.

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract?

Yes, since the acceptance was received before the rejection

Which of the following is least likely to be classified as a necessary item for which a minor will be held liable on a contract? A camera. School supplies. Clothing. An automobile.

a camera

Ratification can occur in which of the following ways? hrough express language. As implied from conduct. Through failure to make a timely disaffirmance. All of these.

all of these

the concept of consideration in contract law includes

an inducement to each party to make a return exchange

Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. Which choice does not describe the situation? a bilateral contract. a quasi contract. an implied in fact contract. a unilateral contract.

bilateral contract

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. In this case, Elmer:

can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open.

an ethical decision-making approach that relies on a central authority or set of rules, such as the Koran or the Bible is

ethical fundamentalism

A contract that requires a person to commit a tort will be enforced by the courts.

false

Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Alice now thinks that the contract is not fair to her. This contract is voidable at Alice's option.

false

American courts generally will enforce a gambling agreement.

false

An agreement to pay a public officer something extra for performing his official duty is enforceable.

false

An illusory promise is consideration for a return promise.

false

An output contract is a special form of an illusory contract.

false

Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine's advice would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick's mind or emotions.

false

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000. A unilateral contract exists.

false

Courts will never limit freedom of contract.

false

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

false

Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

false

Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable.

false

The three distinct and independent branches of the United States government are:

federal judiciary, the congress, and the executive branch

the doctrine of promissory estoppel:

is a doctrine enforcing noncontractual promises. includes as a requirement within the doctrine that there has been justifiable reliance on the promise. a doctrine relying on justice and not contractual rights.

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the stone, but told Albert he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sales contract:

is a valid contract that should be enforced by the law, because neither party knew the exact nature of the stone at the time of the sale.

Joanne, a minor, sold her laptop computer to Bruce, an adult. Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor. Under the Uniform Commercial Code, Joanne may:

not avoid her contract with Bruce and may not recover her laptop.

An obligation imposed by law where there has been no agreement or expression of assent by word or act on the part of either party involved is a(n):

quasi contract

The case of In re The Score Board, Inc. involved the issue of:

ratification of a contract upon attaining majority.

a _________ is the refusal to accept an offer

rejection

John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of:

substantive unconscionability.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. If Edward agrees:

the consideration from Darla to Edward is the promise of $6,000 subject to a condition.

Carlos owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and, as part of the transaction, agrees not to engage in the same business anywhere in River City for a period of two years. In this case:

the geographic restraint is reasonable.

Charlene hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information and the suspect is then arrested and convicted. In this case:

the offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Charlene has accepted.

A factor demanding the ethical and social responsibility of business is

the sheer size and power of individual corporations

A disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.

true

A modification of a preexisting contract occurs when the parties agree to change one or more of its terms.

true

Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and wants to get out of the contract. This contract is voidable at Betty's option.

true

An adhesion contract is offered on a "take-it-or-leave-it" basis.

true

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

true

An implied in fact contract is formed by conduct.

true

Andria, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Wood who agrees to testify on behalf of Andria's client at the trial. In return for Dr. Wood's testimony, Andria agrees to pay Dr. Wood $10,000 if they win the case, and $5,000 if they lose. Dr. Wood agrees. The agreement between Andria and Dr. Wood is unenforceable.

true

B& B, Inc. pays an attorney to draft and lobby for a bill which will greatly lessen B & B's tax liability to the state and federal governments. B&B gives the attorney $20,000 in cash to pay legislators for taking the time to listen to him. This is an agreement which is a violation of public policy.

true

By the majority view, a minor need only return any property he has received from the other party if the minor wishes to disaffirm the contract. He has no duty to return the property in the same condition in which he received it.

true

Hal holds a gun to Irving's head and tells him to sign the contract. Irving signs the contract, because he fears for his personal safety. The contract is void, because it was entered into under duress.

true

In a bilateral contract, if one party is not bound, neither party is bound.

true

The legal effect of a usurious loan varies from state to state.

true

Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract can be modified without new consideration.

true

Carlos owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and, as part of the transaction, agrees not to engage in the same business anywhere within the state for a period of four years. The agreement: is reasonable. is unreasonable. unduly interferes with the interests of the public. Two of these.

two of these

A __________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract.

usury statute

Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. This contract is:

void

James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed:

when Brenda tells James she will buy the boat.

An acceptance that contains terms different from or additional to those in the offer receives the same treatment under the common law and under the UCC.

False

James promises to pay Brooke $2,500 if she does not sue him for negligently injuring her in a bicycle accident. If Brooke does not sue, James's promise to pay is binding because it is supported by consideration.

True

TorF: A judge deciding a common law case must look for guidance to similar cases previously decided by the court or superior courts

True

TorF: Article 2 of the Uniform Commercial Code does not apply to the sale of services.

True

TorF: Ethical issues in business settings include corporate governance, whistle-blowing, shareholder voting, and management's duties to shareholders

True

TorF: Ethics can be defined broadly as the study of what is good or right for human beings

True

TorF: The constitution provides that federal statutes are paramount to state constitutions and statutes

True

TorF: The final arbiter as to the constitutionality of law passed by Congress or by the legislature of a state is the Supreme Court of the United States

True

TorF: an acceptance is generally effective upon dispatch

True

"Scienter" is a legal term which means: a. That a buyer has justifiably relied upon the seller's representations b. That the seller had knowledge that his statements are false and had the intention to deceive. c. Sales puffery. d. All of the above

All of the above

Which of the following would generally be considered to be a revenue-raising licensing law? A statute requiring that doctors be licensed. A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. A statute requiring public school teachers to be licensed. A statute that requires insurance agents to pass a test before selling insurance in a state.

A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 60-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. In this case:

Al is in violation of the sale agreement, which contained restrictions that would probably be held to be valid.

Albert read ElectroCorp's ad in the local newspaper advertising a music system for $89. Albert rushed to the store to buy the system only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the music system.

Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus sales tax.

Donald, a minor, makes a contract with Albert, an adult, to buy a motorcycle. One week later, Donald has his eighteenth birthday and shortly thereafter tells Albert he will pick up the motorcycle next week. In this case:

Donald has expressly ratified the contract.

Which of the following is not generally required in order to have a valid contract? Mutual assent. A lawful purpose. Fairness of the bargain. Parties who have contractual capacity.

Fairness of the bargain

William agrees to drill a well up to 200-feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. What is the result?

The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.

Assume an offeree mails a rejection to the offeror on November 1. This rejection arrives at the offeror's place of business on November 5. In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6. Which of the following statements correctly describes the situation? There was no contract. There was a contract since the acceptance was mailed prior to the time the rejection was received. There was no contract because the rejection was mailed first. There was no contract because the acceptance was mailed more than three days subsequent to the rejection.

There was no contract

At age 17, Wanda purchased an expensive sound system from Lectronic City. If Wanda wishes to ratify this contract, Wanda:

may do so at any time by express or implied action before or after reaching the age of majority.