Business Law Quiz 2

Ch 11 A package is delivered to your door and the delivery person asks you to sign a receipt for the package. You actually sign a promissory note promising to pay the delivery person $5,000! The note is: a. void due to fraud in the execution. b. voidable due to fraud in the execution. c. void due to fraud in the inducement. d. voidable due to fraud in the inducement.

A

Ch 11 In order for an act or threat to constitute duress, it needs to be at least: a. contrary to public policy. b. tortious, but not necessarily criminal. c. a criminal act or threat. d. none of the above.

A

Ch 12 CPA: Which of the following will be legally binding on all the parties despite the lack of consideration? a. A promise to donate money to a charity which was relied upon by the charity in incurring large expenditures b. An employer's promise to pay an employee an additional $400 per month for the remainder of the employee's agreed-upon year of employment. c. An oral promise by a merchant to keep its offer open for 60 days. d. A material modification signed by the parties to a contract to purchase and sell a parcel of land.

A

Ch 12 Debbie promises to pay Bill $2,000 if Bill paints Debbie's house. Bill doesn't say a word but paints Debbie's house. This is an example of: a. a unilateral contract. b. a bilateral contract. c. a gratuitous contract. d. none of the above.

A

Ch 9 A manifestation of the intention to act or refrain from acting in a specified way is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

A

Ch 9 All of the following are relevant to defining the principles of contract law EXCEPT: a. federal common law. b. state common law. c. Restatements of the Law of Contracts. d. Uniform Commercial Code.

A

Ch 9 An executed contract is one in which: a. all duties under it have been performed by all parties to the contract. b. at least one party has performed all of its duties under the contract. c. there are one or more unperformed promises by any party to the contract. d. the contract is wholly unperformed by one or more of the parties.

A

Ch 9 CPA: Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on: a. unilateral contract. b. unjust enrichment. c. public policy. d. quasi contract.

A

Ch 9 Contract law: a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century. c. has remained static throughout the nineteenth and twentieth centuries. d. is governed primarily by the Uniform Commercial Code.

A

Ch 10 CPA: On April 1, Fine Corp. faxed Moss an offer to purchase Moss' warehouse for $500,000. The offer stated that it would remain open only until April 4 and that acceptance must be received to be effective. Moss sent an acceptance on April 4 by overnight mail and Fine received it on April 5. Which of the following statements is correct? a. No contract was formed because Moss sent the acceptance by an unauthorized method. b. No contract was formed because Fine received Moss' acceptance after April 4. c. A contract was formed when Moss sent the acceptance. d. A contract was formed when Fine received Moss' acceptance.

B

Ch 10 Carol Customer sees an ad in a newspaper for a clock radio for $8. She goes to the store and wants to buy the item advertised in the newspaper at the price quoted. Carol is: a. making a counteroffer. b. making an offer to buy. c. making an acceptance of the store's offer to sell. d. making an acceptance of the store's firm offer.

B

Ch 10 Pat mails Trish an offer to buy Blackacre. Trish receives the offer on May 1. On May 2, Trish delivers a letter of acceptance to National Express, but due to their error the letter is not sent by the company until May 3. Pat receives the acceptance on May 4. A contract is formed on: a. May 1 b. May 2 c. May 3 d. May 4

B

Ch 10 Under the Code, if two parties, at least one of whom is not a merchant, intend to enter into a binding contract but the offeree in her acceptance includes additional terms for the contract, those terms are construed as: a. mere surplus and are ignored. b. proposals for addition to the contract. c. terms of the contract provided they do not materially alter the agreement. d. terms of the contract provided they are not material and are not objected to by the offeror within a reasonable time.

B

Ch 11 CPA: In order for a purchaser of land to avoid a contract with the seller based on duress, it must be shown that the seller's improper threats: a. constituted a crime or tort. b. actually induced the purchaser to assent to the contract. c. would have induced a reasonably prudent person to assent to the contract. d. were made with the intent that the purchaser be influenced by them.

B

Ch 11 In which of the following situations would silence constitute a misrepresentation? a. The parties are dealing at arm's length in a business transaction. b. A person fails to disclose a fact which she knows would correct a mistake upon which the other party is relying, and the nondisclosure is a failure to act in good faith. c. A buyer knows that a new highway is proposed through the seller's property, making it more valuable than the seller realizes. d. All of the above.

B

Ch 11 The courts would not carefully scrutinize a contract between the parties in which of the following relationships? a. Trustee and beneficiary. b. Manufacturer and wholesaler. c. Agent and principal. d. Physician and patient.

B

Ch 11 The law grants relief in a situation involving mistake only where there has been: a. a unilateral mistake by one party as to the nature of the subject matter of the contract. b. a mutual mistake of material fact. c. a unilateral mistake by one party to the contract occasioned by his failure to read the document before assenting to it. d. a unilateral mistake by one party to the contract as to its legal effect.

B

Ch 12 Colleen agrees to pay $10 for David's computer which is worth $300. Colleen's consideration: a. is not legally sufficient. b. appears to be inadequate but is probably legally sufficient. c. is a forbearance. d. is inadequate but the contract will be enforced based on moral obligation.

B

Ch 12 Widget Manufacturing Corporation of America contracts with the Poly Plastic Company of Wisconsin to buy from Poly all of the plastic it will need next year in its manufacturing process. This is an example of a(n): a. illusory contract. b. requirements contract. c. output contract. d. exclusive dealing contract.

B

Ch 9 A contract in which one party seeks an act in exchange for a promise is a(n): a. quasi contract. b. unilateral contract. c. implied in fact contract. d. bilateral contract.

B

Ch 9 The Uniform Commercial Code defines goods as: a. tangible and intangible personal property. b. tangible personal property. c. land and anything attached to it. d. none of the above.

B

Ch 10 A leading manufacturer of electronic equipment writes a letter to its wholesale distributors offering to sell its most popular VCR for $100 and stating that it will accept orders at that price for 30 days. This is a(n): a. option to sell. b. auction without reserve. c. firm offer. d. requirements contract.

C

Ch 10 A rejection of an offer by the offeree is effective: a. at the moment that the offeree signs the notice of rejection. b. at the moment that the offeree dispatches the notice of rejection. c. at the moment that the offeror receives the notice of rejection. d. none of the above

C

Ch 10 Advertisements, circulars, quotation sheets, and other similar business communications usually do not constitute offers because: a. they do not contain a promise. b. they leave unexpressed many terms which would be necessary to the making of a contract. c. both (a) and (b). d. none of the above.

C

Ch 10 Whether or not a person's words or conduct constitutes an offer is determined according to: a. the subjective intent of the offeror. b. the subjective intent of the offeree. c. the objective, reasonable person standard. d. none of the above.

C

Ch 10 Which of the following would be an offer? a. Will you buy my computer for $1000? b. I sure would like to sell this computer for $1000. c. I'll sell you this computer for $1000. d. None of the above are offers.

C

Ch 10 With respect to agreements for the sale of goods, the Code provides standards by which omitted terms may be ascertained, provided: a. the parties actually agreed upon the open term but negligently failed to include it in the written contract. b. the parties actually discussed the open term but intentionally failed to include it in the writ-ten contract. c. the parties intended to enter into a binding contract regardless of whether they actually discussed the open term or not. d. the parties did not intend to enter into a binding contract regardless of whether they actually discussed the open term or not.

C

Ch 11 A contract entered into or induced by undue influence on the part of the dominant party is: a. valid. b. void. c. voidable. d. unenforceable.

C

Ch 11 Carl Contractor submits a bid that contains a substantial error in addition. a. This is a unilateral mistake. Carl is bound by the error. b. Carl is guilty of fraud in the inducement. c. If the error is an obvious one that the other party knew of when it accepted the contract, Carl can avoid the contract. d. Carl can avoid the contract based upon duress.

C

Ch 11 In determining whether an improper threat constitutes duress, it must be shown that: a. the threat would have induced a reasonable person to assent to the contract. b. the threat was intended by the coercing party to coerce assent on the part of the person claiming to be the victim of duress. c. the threat actually coerced assent on the part of the person claiming to be the victim of duress. d. none of the above.

C

Ch 11 Which of the following would be a statement of fact? a. For the price, this is the best typewriter available. b. This is the one that I would recommend. c. This furniture was refinished last year. d. With a few more lessons, you should be able to compete in the regional dance competition.

C

Ch 12 CPA: In order to satisfy the consideration requirement to form a contract, the consideration exchanged by the parties must: a. have a monetary value. b. conform to the parties' subjective intent. c. be legally sufficient. d. have approximately the same value.

C

Ch 12 Carl Contractor pledges to contribute $500 to the local United Fund for charity. a. This promise lacks consideration and will not be enforced. b. This promise is a firm offer under the Code and will be enforced. c. There is the probability of reliance by the United Fund and the promise will be enforced under the doctrine of promissory estoppel. d. This promise is a preexisting public obligation and will be enforced.

C

Ch 12 Crime Stoppers offers a reward of $500 for information leading to the arrest and conviction of a criminal who has committed several recent burglaries. Paul Police Officer has been working on the case and applies for the reward based upon information he has gathered while on duty. Paul cannot collect the reward under the: a. legal detriment rule. b. inadequacy of consideration rule. c. preexisting duty rule. d. promissory estoppel rule.

C

Ch 12 Slick owes Gullible $50. Slick offers to let Gullible have Slick's pocket knife if he will accept $25 and forgive the rest of the debt. Later Gullible sues for the balance of the debt. a. Gullible will win because there was no consideration. b. Gullible will lose because he should have sued as soon as he got the knife. c. Slick will win because the knife constituted legally sufficient consideration. d. Slick will lose because he still owes $25.

C

Ch 12 The requirement of consideration is satisfied by: a. a promise exchanged for a promise. b. a promise exchanged for an act. c. both (a) and (b). d. neither (a) nor (b).

C

Ch 12 To be legally sufficient, the consideration for a promise must be: a. a legal detriment to the promisee. b. a legal benefit to the promisor. c. either (a) or (b). d. neither (a) nor (b).

C

Ch 12 Which of the following is necessary in order to satisfy the consideration requirement? a. Legal sufficiency b. Bargained-for exchange c. Both (a) and (b) d. Neither (a) nor (b).

C

Ch 12 Which of the following would be an illusory promise? a. Sara agrees to sell her total production to Bill. b. Bill agrees to buy his total widget requirement from Sara. c. Bill agrees to buy all the widgets he wants from Sara. d. Bill agrees to buy Sara's total production of widgets if he inherits enough money from Uncle John to do so.

C

Ch 9 A contract in which the parties indicate their assent in words is a(n): a. quasi-contract. b. implied contract. c. express contract. d. unlawful contract.

C

Ch 9 A promise or a 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, is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.

C

Ch 9 UCC Article 2 applies to contracts involving which of the following? a. The services of an accountant b. An employment relationship c. The sale of a television set d. The sale of a private residence.

C

Ch 11 A misrepresentation is material in which of the following cases: a. Seller believes goods are of less value than buyer believes them to be, but seller remains silent. b. Seller represents a fact knowing it would be likely to induce a reasonable buyer to manifest his assent. c. Seller knows the misrepresentation would be likely to induce the buyer to act. d. (b) or (c), but not (a).

D

Ch 11 Knowledge of falsity and intention to deceive under fraud in the inducement may be shown by: a. actual knowledge. b. lack of belief of the statement's truthfulness. c. reckless indifference as to its truthfulness. d. all of the above.

D

Ch 11 The requisite elements of fraud in the inducement include: a. a false representation of material fact. b. a representation made with knowledge of its falsity and the intention to deceive. c. a false representation justifiably relied upon. d. All of the elements above are required to be shown.

D

Ch 12 A promise by Andrew to pay Barry $1,000 if he refrains from suing Andrew, which is accepted by Barry not suing is: a. supported by consideration. b. enforceable because Barry has incurred a legal detriment by refraining from bringing suit. c. enforceable because Andrew has received a legal benefit. d. all of the above.

D

Ch 12 Which of the following is legally sufficient consideration? a. The performance of a preexisting public obligation b. The performance of a preexisting contractual obligation c. The settlement of an undisputed matured debt of $10,000 arising out of the purchase of land for $8,500 d. The settlement of a debt subject to honest dispute as to its amount.

D

Ch 12 Which of the following promises must be supported by consideration to be enforceable? a. A promise to pay a debt barred by the statute of limitations b. A promise to pay a debt discharged in bankruptcy c. A promise that has been justifiably relied on by the promisee to his detriment d. A modification of an existing contract under common law.

D

Ch 9 A contract in which both parties exchange promises is a(n): a. formal contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.

D

Ch 9 A contract which fails to satisfy the requirements of the statute of frauds is: a. valid. b. void. c. voidable. d. unenforceable.

D

Ch 9 Bill Businessman places an ad in the local newspaper saying, "Reward: $50 for return of my golden retriever named Fido." The ad lists his address and telephone number. If Tim Teenager finds Fido and returns him to Bill, there will be: a. an executed contract requiring that Bill pay Tim $50. b. a bilateral contract, because two people are involved. c. an implied in fact contract requiring that Bill pay Tim $50. d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.

D

Ch 9 Each of the following is an essential element of a binding promise EXCEPT: a. mutual assent. b. consideration. c. capacity. d. a writing signed by the parties.

D

Ch 9 The remedies provided for breach of contract include: a. compensatory damages. b. punitive damages. c. reliance damages. d. (a) and (c), but not (b).

D

Ch 12 The performance of a preexisting contractual obligation that is neither doubtful nor the subject of honest dispute is not legally sufficient consideration, because the doing of what one is legally bound to do is neither a detriment to the promisee nor a benefit to the promisor.

T

Ch 12 To be legally sufficient, the consideration for the promise must be either a legal detriment to the promisee or a legal benefit to the promisor.

T

Ch 12 Under the Code, a merchant's offer to buy or sell goods is not revocable for lack of considera-tion during the time stated that it is open or if no time is stated, for a reasonable time, but in either event for a period not to exceed three months.

T

Ch 12 Words of promise that make the performance of the purported promisor entirely optional result in an illusory contract.

T

Ch 9 A quasi contract is not a contract, but rather is an obligation imposed regardless of the intention of the parties in order to assure a just and equitable result.

T

Ch 9 An executory contract is one in which there are one or more unperformed promises by any party to the contract.

T

Ch 9 As defined by the UCC, a sale is the transfer of title to goods from seller to buyer for a price.

T

Ch 9 In a "quasi-contract" situation, the remedy granted will be similar to a breach of contract remedy.

T

Ch 9 In certain circumstances, noncontractual promises are enforced under the doctrine of promissory estoppel in order to avoid injustice.

T

Ch 9 Most contracts are primarily governed by state common law.

T

Ch 9 Nearly every business transaction is based on contract, and even the most common transactions may involve multiple contracts.

T

Ch 9 The courts will presume that the parties intended to form a bilateral contract when it is unclear whether a unilateral or a bilateral contract has been formed.

T

Ch 9 Where general contract law has not been specifically modified by the UCC, the common law of contracts continues to apply.

T

Ch 9 A bilateral contract results from the exchange of a promise for an act, whereas a unilateral contract results from the exchange of a promise for a return promise.

F

Ch 9 A contract may be formed orally or by a writing, but it may not be inferred merely from the conduct of the parties.

F

Ch 9 A contract to provide legal services for a fee is governed by Article 2 of the UCC.

F

Ch 9 A voidable contract is an agreement that does not meet all of the requirements of a binding contract; thus, it is no contract at all and has no legal effect.

F

Ch 9 As defined by the UCC, goods are movable, tangible and intangible personal property.

F

Ch 9 Thomas says to Steve, "If you will paint my garage, I will pay you $75." Steve replies, "Would you make it $85?" Under these facts, Thomas and Steve are both promisors and promisees.

F

Ch 10 An offeree generally may cancel or revoke an offer at any time prior to its acceptance unless the offer: a. is an option contract. b. is a merchant's firm offer under the Code. c. contemplates a unilateral contract and the offeree has begun the invited performance. d. all of the above.

D

Ch 11 A contract assented to by a party acting under improper physical coercion is: a. void. b. voidable at the election of the coerced party. c. binding on both parties. d. none of the above.

A

Ch 10 CPA: Opal offered, in writing, to sell Larkin a parcel of land for $300,000. If Opal dies, the offer will: a. terminate prior to Larkin's acceptance only if Larkin received notice of Opal's death. b. remain open for a reasonable period of time after Opal's death. c. automatically terminate despite Larkin's prior acceptance. d. automatically terminate prior to Larkin's acceptance.

D

Ch 10 In order for an offer to have legal effect, it must: a. be communicated to the offeree. b. manifest an intent to enter into a contract. c. be sufficiently definite and certain in its terms. d. all of the above.

D

Ch 10 Which of the following would be subject to Article 2 of the UCC? a. An agreement to clean someone's yard for $25 b. An option to buy a vacant lot c. An agreement to perform at a charity fundraiser d. None of the above is subject to the UCC.

D

Ch 11 A fiduciary owes which of the following duties? a. Trust b. Loyalty c. Confidence d. All of the above.

D

Ch 10 An offer can be effectively communicated to an offeree by: a. a writing only. b. spoken words only. c. a writing or by spoken words only. d. a writing, by spoken words, or by conduct from which a reasonable person could infer a promise.

D

Ch 12 The agreement of a seller to sell her entire production to a particular purchaser is an illusory agreement because the purchaser doesn't know the quantity being purchased.

F

Ch 12 The doctrine of consideration requires only that the promise or performance of one party be legally sufficient.

F

Ch 12 Under the Code, the modification of a contract for the sale of goods requires the furnishing of additional consideration, just as required under the common law.

F

Ch 10 A contract exists if either party's actions manifest recognition of a contract's existence.

F

Ch 10 A rejection is effective at the moment of its dispatch by the offeree.

F

Ch 10 An offeror's manifestation of intent to enter into a contract is judged by a subjective standard.

F

Ch 10 At an auction announced to be "without reserve," the auctioneer is free to withdraw the goods from sale at any time prior to a bid's acceptance.

F

Ch 10 In order for an offeror's revocation of the offer to be effective, notice of the revocation must be directly communicated to the offeree before acceptance.

F

Ch 10 William, who just purchased a new computer which won't work properly, screams, "I'll sell this thing for $10," and thereby makes an offer.

F

Ch 11 Actionable fraud can usually be based on a statement of opinion as well as a statement of fact.

F

Ch 11 Bill Businessman has decided to buy a copying machine on an installment contract from the Business Supply Store. After looking at machines, Bill is in a hurry, so he signs the agreement without reading it. Later, he discovers that the interest rate is 22% and that there are no guarantees on the machine. Bill can avoid the contract based on mistake.

F

Ch 11 Duress in the form of improper threats must be explicit in order to render the resulting contract voidable.

F

Ch 11 Duress in the form of physical force renders the resulting agreement voidable.

F

Ch 11 Harold Homeowner went to Al's Auto Dealership to look at cars. Harold found a 1980 Plymouth Horizon that he thought would be a good car for his teenagers to drive to school. Al said, "This is the best car in town." Harold buys it for $1,000. Two weeks later, the car breaks down. Al is guilty of fraud in the inducement.

F

Ch 11 In deciding whether a threat is sufficient to constitute duress, the fact that the act or threat would not affect a person of average strength and intelligence is determinative.

F

Ch 11 When parties are dealing at arm's length, silence or nondisclosure usually constitutes fraud.

F

Ch 12 A contract under which the parties' obligation to perform arises only on the happening of a stated event lacks the requisite mutuality of obligation if the specified event may never occur.

F

Ch 12 Bill Businessman has a bad day one Monday morning and signs a contract to buy a piece of real property for $250,000. Later he realizes he has been had, because the property is only worth $100,000. Bill can avoid the contract based on inadequacy of consideration.

F

Ch 12 In a unilateral contract, each promise is the consideration for the other, a relationship that has been referred to as mutuality of obligation.

F

Ch 12 The adequacy of consideration is the same as the legal sufficiency of consideration.

F

Ch 10 A contract for the sale of goods need not specify the price in order to have an effective contract.

T

Ch 10 Although an offeree is generally under no duty to reply to an offer, by custom, usage, or course of dealing, silence or inaction by the offeree may operate as an acceptance.

T

Ch 10 An offer is a proposal, expressed either in words or by conduct, by one person to another indicating a willingness to enter into a contract.

T

Ch 10 If an offer does not state the time within which the offeree may accept, the offer will terminate upon the expiration of a reasonable time.

T

Ch 10 In order to have the mutual assent requisite to the formation of a contract, the offeror must have communicated the offer and the offeree must have knowledge of the offer.

T

Ch 10 The UCC imposes an obligation of good faith in the performance or enforcement of every contract within its scope.

T

Ch 10 Under the Restatements of Contracts and the Code, unless language in the offer, or the circumstances under which it is made indicate otherwise, an offer shall be construed as inviting acceptance in any reasonable manner.

T

Ch 10 Under the UCC, if both parties are merchants, additional terms contained in the offeree's unconditional acceptance will become part of the contract provided they do not materially alter the agreement and are not objected to either in the offer itself or within a reasonable period of time.

T

Ch 10 Under the common law mirror image rule, an offeree's acceptance will not be effective if it deviates from the exact terms of the offer.

T

Ch 11 A contract induced by an innocent misrepresentation is actionable provided all of the remaining elements of fraud are present and the misrepresentation is material.

T

Ch 11 Active concealment, or action intended or known to be likely to keep another from learning a fact he otherwise would have learned, can form the basis for fraud.

T

Ch 11 Before one can avoid a contractual obligation to another party based upon undue influence, there must be a confidential relationship between the parties involved.

T

Ch 11 Fraud in the execution consists of a misrepresentation that deceives the defrauded person as to the very nature of the contract being entered.

T

Ch 11 Fraud in the inducement will result in the contract being voidable.

T

Ch 11 In a legally challenged contract between a guardian and his ward, the law presumes that the guardian took advantage of the ward.

T

Ch 11 It has generally been held that contracts induced by threats of criminal prosecution are voidable, regardless of whether the coerced party had committed an unlawful act.

T

Ch 11 Justifiable reliance requires that the misrepresentation contribute substantially to the misled party's decision to enter into the contract.

T

Ch 12 At common law, a modification of an existing contract must be supported by new consideration in order for the reformed agreement to be enforceable.

T

Ch 12 Bill Businessman agrees to buy 2,000 widgets from the Widget Corporation of America next year for $60 a widget if he wants to for his business. This is an illusory contract.

T

Ch 12 Bill purchased 500 pairs of shoes from Sam at a contract price of $1,000. Fifty pairs were defective and a dispute arose as to the amount owing under the contract. Finally, Bill sent a check for $800, marked it "paid in full," and sent a letter to Sam explaining his reasons for thinking $800 was fair. Sam didn't respond, but he cashed the check. The debt is discharged.

T

Ch 12 In the absence of legal consideration, a promise may nevertheless be enforceable under the doctrine of promissory estoppel if the promisee has relied on the promise to his detriment.

T