Exam 2 practice questions
Kris buys Liz's house for $300,000, which is s surprisingly low price for the house. If the contract is later disputed incourt, the court is likely to declare Kris's consideration a. past. b. illusory. c. legally sufficient. d. inadequate
C
T/F A promise to pay another's debt only if that party fails to pay always must be in writing to be enforceable.
False
The unconditional assignment of rights under a contract extinguishes any defenses that the obligor had against the assignor. a. True b. False
False; Assignee's rights are subject to the same defenses."
T/F An exchange of e-mails can create a binding agreement
True
T/F: A promise to pay a previous debt barred by a statute of limitations can be enforced without consideration
True
The O'Neals enter into a contract with a builder to build them a new house. The builder drafts the contract. Later, there is a question as to whether the contract price included installation of sliding shower doors in the house. The builder claims that the doors are not included, but the contract is ambiguous on that point. In these circumstances, the builder will have to provide the sliding shower doors. a. True b. False
True
When one creditor guarantees a debtor's debt to another creditor to forestall litigation, the guaranty does not need to be in writing to be enforceable. a. True b. False
True
T/F A butcher sells meat to Good Eats restaurant. The butcher has been struggling to pay bills, so that Yoder's farm is reluctant to keep supplying the butcher with pork and beef. The owner of Good Eats orally promises Yoder to pay any bill that the butcher fails to pay. This oral promise is enforceable in court
True This is a collateral promise. Good Eats made it to ensure its own ongoing supply of meat—main purpose to help itself
A clause allowing one party the option to cancel the performance of a contract before it begins a. makes the contract illusory and unenforceable. b. is a release. c. is an example of an exculpatory clause. d. builds desirable flexibility into the contract
A
Ann assigned her right to receive money from Carrie to Bill. What interest, if any, does Ann retain in the contract with Carrie after the transfer of this right to Bill? a. Ann's right to payment ended with her assignment to Bill. b. Ann may sue in her own right as the original obligee under the contract. c. Ann may sue in her own right as the original obligor under the contract. d. Ann may sue to enforce Bill's right to receive the money due under the original contra
A
Clive's agreement to buy a sport utility vehicle subject to the condition that he be approved by a bank for the financing is an example of a. a condition precedent .b. a concurrent condition. c. a collateral promise. d. a condition subsequent
A
Commercial Rebuild LLC enters into a contract to remodel Dockside Marina, agreeing to use only products from Eagle Supplies. Halfway through the project, Commercial refuses to finish the job. The contract can be enforced against Commercial by a. Dockside only. b. any interested third party, including a contracting party's employee. c. Eagle only. d. Dockside or Eagle.
A
Lana agrees to work as Michelle's personal assistant for one year but dies in the ninth month of the contract. Lana'sestate a. is discharged from any contractual liability. b. must find a competent assistant to fulfill the contract. c. must pay damages. d. must refund any money paid to Lana on the contract.
A
Mrs. Cho enters into a written contract with Camp Tanadoonah to send her son Lewis there for two weeks this summer, for $1,000. Lewis is a. a donee beneficiary. b. an obligor. c. an incidental beneficiary. d. a delegatee
A
The state of Nevada enacts a usury statute. With respect to different types of transactions, including ordinary loans, the purpose of the statute is to a. set a maximum rate of interest. b. regulate certain forms of gambling. c. specify clauses that must be included in certain contracts. d. prohibit certain contracts based on their subject matter.
A
The nonbreaching party must a. mitigate damages. b. pay nominal damages. c. agree to modify the contract to make it easier for the breaching party to comply. d. return to the position he or she was in before the contract was formed
A Key word is "must." D is incorrect. Regarding damages, the nonbreaching party can do better than this—"benefit of the bargain" as though it was fully performed.
Assume that parties enter into an oral agreement and record their agreement in a written contract. The signed written contract contains a clerical error, so that it does not conform to what the parties agreed to orally. In order to enforce their true agreement, a party should seek a. rescission. b. reformation. c. restitution. d. revocation.
B
Contracts relating to real estate are governed by a. the Uniform Commercial Code. b. the common law. c. both the Uniform Commercial Code and the common law
B
In the majority of states, a. minors cannot disaffirm a contract without the express consent of the other party to the contract. b. minors must return remaining property, if any, as a condition of disaffirming a contract .c. minors can disaffirm a contract only if ALL property is returned in good condition or the other party is madewhole.
B
Laminate LLC agrees to buy factory equipment from Metalwork Company. Metalwork assigns the right to payment on the deal to Nations Credit Corporation. When the buyer discovers the fraud, the firm returns the equipment and cancels their contract. Laminate a. must pay the entire contract price b. need not pay any of the contract price c. must reimburse Nations Credit for costs with respect to the assignment d. must pay a prorated amount of the contract price to Nations Credit.
B
On March 1, Jimenez Designs leaves an offer of engagement at your office. On March 2, you send Jimenez an acceptance via U.S. Mail. On March 3, you telephone Jimenez to reject the offer. On March 4, Jimenez receives your acceptance. Which of the following is true? a. There is a valid contract as of March 1. b. There is a valid contract as of March 2. c. There is a valid contract as of March 4. d. There is not a valid contract because you changed your mind and notified Jimenez prompt
B
Once the obligor receives notice of the assignment, only performance to the _________ can discharge the obligor. a. assignor. b. assignee c. Performance to either of the above will discharge the obligor. d. None of the above. The obligor has no duty to perform once an assignment has occurred
B
Range Free Farms enters into a contract to deliver to Sara's Market a truckload of eggs for a certain payment. RangeFree fails to deliver. Sara's Market a. must pay in anticipation of the delivery to avoid a breach of contract. b. does not have to pay because Range Free did not perform. c. must pay under the contract, but can sue Range Free for breach. d. does not have to pay, but then cannot sue Range Free.
B
To welcome the Rioses as new neighbors, Susan arranges to have a basket of gourmet food items sent to them. Susan pays $200 to Festive Baskets for the delivery. The basket Festive delivers is not what Susan had ordered. Could the Rioses successfully bring a small claims court action for this breach? a. Yes, against Susan. b. Yes, against Festive. c. Yes, against both Susan and Festive. d. No. Only Susan could pursue a claim here, as it is she who entered the contract with Festive
B
The Statute of Frauds may provide a defense to enforcement of what type of oral contracts? a. Executed contracts. b. Executory contracts. c. Quasi contracts. d. both a and b.
B Statute of Frauds ceases to be an issue once the k is executed. Then it's clear the parties recognized that there was an agreement.
Builders Inc. agrees to construct an office building for Commerce Center Corporation. The project proceeds accordingto plan, but before it is done, the buyer tells Builders to quit. In a suit for breach, Builders may recover a. the costs needed to complete construction. b. nothing. c. profits plus the costs incurred up to the time of the breach. d. the contract price
C
Emily contracts in writing to buy the jersey worn by quarterback Tom Brady in the 2021 Super Bowl from RT Collectibles, for a price of $4,000, which she paid at the time the contract was signed. RT now refuses to deliver. Emilyshould seek a. restitution. b. the current value of the jersey on the open market c. specific performance. d. punitive damages.
C
Failure to obtain a required license will not void a contract if which of the following is true? a. The plaintiff receives compensatory damages. b. The professional is licensed in another jurisdiction. c. The license requirement is a revenue-raising measure and not one designed to protect the public. d. The work is done up to licensing standards
C
Fez makes and sells camping gear. Fez and Gobi enter into a contract for a delivery of the gear to Gobi's Outfitters retail locations for an invoiced price. Fez transfers the right to payment under the contract to Haulers Distribution Inc. This transfer is a. a delegation. b. a third party beneficiary contract. c. an assignment. d. prohibited.
C
Guardian Security Inc. and Hedge Fund Corporation enter into an oral contract under which Guardian agrees to provide services for Hedge's offices "for as long as needed." This contract may be enforceable by a. Hedge only. b. Guardian only. c. either Guardian or Hedge. d. any interested third party, such as one of the firms' employees.
C
Lorenzo sells "Picasso's original Woman in Blue" to Coleman for $8 million. Both parties believed the painting to bean original Picasso. Shortly after delivery, Coleman discovers the painting is a very skillful fake. Can Coleman rescindthe contract? a. Yes, due to excessive consideration paid. b. Yes, due to fraud. c. Yes, due to mutual mistake of fact. d. No
C
Monday, Xi tells Yard Work that he will pay $500 if a variety of tasks are completed by Friday. Wednesday, Yard Work is more than half done with the work, Xi changed his mind. a. there was a bilateral contract as of Monday. Xi cannot unilaterally void the contract. b. the parties had a unilateral contract as soon as Yard Work began to perform. c. Xi cannot revoke the offer. Yard Work is entitled to be paid at least for the work completed. d. the parties had no contract. Yard Work has no recourse
C
Real estate developer Navarro receives three bids. The highbid, from Heritage Construction, is for $1.7 million. The low bid is from Albion Construction, for $1.5 million. LindenConstruction bid $1.6 million. Given these facts, a. Navarro has a contract with Heritage for $1.7 million. b. Navarro has a contract with Linden, for $1.6 million (the "reasonable" median price). c. Navarro can choose to accept any of the bids or not. d. Navarro has a contract with Albion for $1.5 million
C
Sy enters into a contract with Truck Company to work as a driver. If a dispute arises over the deal, under the plain meaning rule, the court CANNOT consider any evidence outside the document if a. the parties' intent cannot be determined from the contract's language. b. the contract lacks a provision on a disputed issue. c. the words in the contract appear clear. d. a contract term can be interpreted in more than one way.
C
Wayne agrees to purchase a unique collection of comic books costing $1,000 from Alan and gives Alan $300 as apartial payment. Alan refuses to give Wayne the comics when Wayne shows up to pay the rest of the money. Wayneshould seek a. quasi-contractual recovery. b. rescission. c. specific performance. d. reformation of the contrac
C
What does the term "scienter" mean? a. In a scientific manner. b. "Let the buyer beware." c. Knowing misrepresentation. d. Mathematically calculated
C
Which of the following contracts would NOT have to be in writing to be enforceable? a. Contract for the sale of a car for $25,000. b. Contract for the sale of a television for $600. c. Contract with a personal trainer to provide fitness services for the next twelve weeks, for $1,000. d. Contract granting the electric company an easement, giving it the right to keep equipment permanently on your land, in exchange for payment of $1,00
C
Tony owes his roommate Mike $10. One night, Mike orders a pizza. When the delivery man arrives, Mike says,"Tony, if you pay for this pizza, we'll call the debt even." Tony agrees, and pays the delivery man. In this arrangement, how can the delivery man be characterized? a. an assignee. b. an incidental beneficiary. c. an intended beneficiary. d. none of the above
C Creditor beneficiary
A local heating oil supplier has a written contract with a homeowner to deliver all the heating oil the homeowner needs for the 2022/2023 winter season for $300/month. What type of contract is this? a. illusory. b. unconscionable. c. requirements. d. option. e. output
C Output would be that the heating oil company agrees to sell all the oil it produces to this homeowner. Not the situation here
Fred sold his business to James. As part of the sales contract, James agreed to pay off a bill Fred owed to one of his suppliers. Assume that James does not pay the supplier as called for in the contract. Which parties may file suit against him? a. Fred only. b. The supplier only. c. Both Fred and the supplier. d. None of the above
C The supplier is a creditor beneficiary. The supplier may sue James, the promisor. Fred, the promisee, may also sue James, because James has failed to carry out their sales contract as agreed. (The supplier could also sue Fred, becauseFred owes him money, but that is not what the question asks
Restaurant Food's sales representative mistakenly offers via email to sell the beef to Steak House for $1,000. The offer should have been for $1,600. Steak House's manager immediately accepts. Restaurant Foods a. is bound to the deal but can charge the intended price. b. is bound to the deal at the offered price. c. can rescind the deal. d. can rescind the deal and recover damages for the mistake
C This is a scrivener's error—exception to the rule that there is no relief in the case of unilateral mistake
Tom and Bill formed a contract six years ago, and Tom has still not fulfilled his part of the bargain. The statute of limitations in their state is four years. What kind of contract exists today? a. Valid and enforceable. b. Void. c. Unenforceable. d. Voidable.
C statute of limitations = unenforceable
Darnell buys a used car from ABC Motors. He assumed that the heater worked, but did not turn it on because it was hot outside. The sales person assured him it was "a terrific car." Darnell later learned that the heater was broken, the car would not start when the temperature drops below 40 degrees, and that the car really had 53,000 miles on it. All of these problems were known to the sales person when the car was sold, but she did not mention them to Darnell. Can Darnell get out of the contract and get his money back? If so, which is Darnell's best argument? a. Yes, because it is not a terrific car. b. Yes, because the sales person had a legal obligation to disclose the heater problem. c. Yes, because the sales person had a legal obligation to disclose the starter problem. d. Yes, because the sales person had a legal obligation to disclose the odometer problem. e. No.
C. Yes, because the sales person had a legal obligation to disclose the starter problem
Bernadette enters into a contract to operate a Caramel Coffee franchise, which Caramel Coffee agrees to support as long as Bernadette maintains her business license. Caramel Coffee's duty to perform is a. not conditional. b. subject to a condition precedent. c. subject to a concurrent condition. d. subject to a condition subsequent
D
Carl had a contract to deliver 600 yards of carpeting to Renovator for installation in an office complex. Three days before the delivery date, Carl called to say that he would not be able to deliver the carpeting "any time in the near future." Carl's statement constitutes ______ of the contract. a. waiver. b. forbearance. c. release. d. repudiation
D
Dry Gulch Farms hires Elliot to repair its irrigation system on site on a certain date for $2,500, but Elliot does notshow up as agreed. Dry Gulch hires Fernando to do the job for $2,000. Dry Gulch may recover from Elliot a. nothing. b. compensatory damages. c. consequential damages. d. nominal damages.
D
Joe offers by mail to sell his car to Roya for $17,000. Roya receives the offer on March 10. March 11, she signs the offer to accept it, and drops the acceptance in the mail. On March 12, Roya emails Joe that she rejects his offer. Joe receives the acceptance in the mail on March 14. Can Joe hold Roya to this contract? a. No, because the rejection arrived first. b. Yes, if $12,000 is a reasonable price for the car c. Yes, if she has not already committed to that other deal. d. Yes
D
Physicians Clinic orders by phone from Quality Medical Supply ten cases of disposable nitrile gloves for $100 percase. After three cases are delivered and accepted, the clinic repudiates the contract. Quality Medical can enforce the contract to a. the full extent. This contract need not be in writing to be enforceable. b. no extent because the contract needs to be in writing to be enforceable. c. the extent of the seven undelivered boxes. d. the extent of the three accepted boxes.
D
Sandra orally agreed to sell her house to Drake for $200,000. Sandra agreed to sell the house to someone else for $220,000. she wrote a letter to Drake mentioning both prices and contained an adequate description of the real estate. If Drake sues Sandra for breach of contract, a. Sandra wins, the Statute of Frauds applies. b. Sandra wins, due to the changed circumstances. c. Sandra wins, $200,000 is not adequate consideration. d. Drake wins, as he can rely on Sandra's memorandum
D
To be enforceable, a contract that is required to be in writing must include a. no particular signatures. b. the signature of the party who is seeking enforcement. c. the signatures of all of the parties to the agreement. d. the signature of the party against whom enforcement is sought
D
You decide to sell your car via Craigslist (version of newspaper classified ads). Roya, responding to your post, writes that she agrees tobuy it for $10,000. You respond, "I've decided I really need to get $14,000." Given this exchange, a. The court will average the two prices, and you must sell to Roya for $12,000. b. There is a valid contract for $10,000. c. There is a valid contract for $14,000. d. There is no valid contract because this advertisement was not an offer.
D
Ben agrees to pay an attorney $5,000 for legal services, buys a truckload of beer for $400, and to work for KPMG forone year for $10,000 per month, set to begin immediately. To be enforceable, a writing is required for a. the attorney .b. the beer. c. the employment agreement. d. a and c. e. none of the choices
E
Margaret mails an offer to Jack. The offer by its terms is to remain open until April 1. On March 30, Jack dispatches his acceptance. In which of the following circumstances would the parties have a contract? a. If the acceptance were sent via Federal Express overnight service. The Fed Ex package is somehow diverted through no fault of Jack, and is not received until April 2. B. If the acceptance were sent via U.S. Mail, but Jack forgot to put a stamp on it. It is returned to Jack and then not delivered to Margaret until April 8 C. In both of the above situations the parties would have a contract. D. In neither of the above situations would the parties have a contract
a. If the acceptance were sent via Federal Express overnight service. The Fed Ex package is somehow diverted through no fault of Jack, and is not received until April 2.
Edie orally offers to sell her bicycle to Adam for $500. Adam responds, "Is that your best price?" Edie affirms that $500 is her best price. Adam then states, "OK, I'll buy it." Given this exchange, which of the following statements is TRUE? a. The parties have made a contract, but it is unenforceable because it is not in writing. b. The parties have a valid, enforceable contract. c. The parties have a contract so long as $500 is a reasonable price for the bike. d. The parties do not have a contract. When Adam asked, "Is that your best price?", he made a counteroffer. He is now the offeror.
a. The parties have made a contract, but it is unenforceable because it is not in writing.
Drummond hires BigCo. to build a new warehouse. BigCo. is to be paid $800,000 for the job at its conclusion, and will see a profit of $100,000. After the building is halfway completed and BigCo. has spent $400,000 on supplies and labor costs, Drummond repudiates the contract, due to a downturn in its business. To what amount of damages would BigCo. be entitled? a. $800,000. b. $500,000. c. $400,000. d. $100,000. e. $0.
b. $500,000.
Dependable Contractors, Inc. (DCI) has a government contract to build a wind tunnel to test airplanes. DCI is to be paid $1 million for the work. DCI is one-third of the way finished with the project, and on its way to a timely completion. Assume also that the government breaches the contract by calling off the project. Under normal common law rules, what would appear to be the appropriate remedy for DCI? a. Costs to date only. b. Costs to date plus expected profit. c. Costs to date plus reasonable penalty. d. The entire $1 million contract price
b. Costs to date plus expected profit.
McDougall agrees in writing "to pay Jane $5,000 for painting his house, on the condition that Jane finish the job no later than Oct. 15, 2023." Both parties sign the contract. Jane does not finish the job by that date. Given these facts, a. Jane is discharged. b. McDougall is discharged. c. Both parties are discharged. d. Neither party is discharged
b. McDougall is discharged.
Lu, an adult, today offers "to stay in Hubert's house to provide security while Hubert is in Florida during the month of December 2023 if Hubert promises to pay her a fee of $3000 and a bottle of champagne on December 31." Hubert orally agrees to this arrangement. Given these facts, Lu and Hubert's agreement is: a. implied-in-fact. b. executory. c. unenforceable. d. quasi contractual.
b. executory.
Professor Murphy contracts with a publisher to write a new Business Law textbook. Regarding this contract, Murphy's students are a. obligees. b. intended beneficiaries. c. incidental beneficiaries. d. in privity.
c. incidental beneficiaries.
The Restatement of Contracts states: "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." This statement describes which doctrine? a. Judicial forbearance. b. Partial performance. c. Substantial performance. d. Promissory estoppel. e. Accord and satisfaction.
d. Promissory estoppel.
Professor Murphy enters into a contract "to author a new Business Law textbook" for West Publishing, in exchange for a payment by West of $10,000. This is the entire agreement. Which of the following statements is true? a. This contract must be in writing to be enforceable, due to the price. b. This contract must be in writing to be enforceable, if Murphy takes longer than a year to finish the task. c. This contract must be in writing to be enforceable, if the task will likely take longer than a year. d. This contract need not be in writing to be enforceable.
d. This contract need not be in writing to be enforceable.
T/F A written contract must consist of a single document to constitute an enforceable contract
false
T/F In construing a contract, courts give greater weight to usage of the trade than to the course of dealing between the parties
false
T/F Unusual and unexpected damages resulting from peculiar facts not known to the breaching party are recoverable as consequential damages
false
T/F Josie hired Ed to paint her house for $1,000. He did a good job and completed the work in a timely fashion. Josie is satisfied with the work, but finds herself financially strapped so that paying the entire cost would be difficult. She sends acheck for $800, with notation that it is "payment in full." If Ed cashes the check, accord and satisfaction has taken place.
false
T/F: Banks may not assign their loan contracts to other firms.
false
T/F: The assignment of the same contract right to two different persons creates parallel and equal rights and obligations
false
t/F A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor
false
T/F Under the objective theory of contracts, a contract is enforceable only if it has a clearly defined objective
false objective theory of contracts: states that an agreement between two parties exists if a reasonable person could judge the acts and behaviors of the parties enough to objectively construe agreement.
T/F Eileen enters into a contract to sell her car to Emily. The written contract calls for Emily to take immediate possession of the car and to make three payments of $2,000 each on Nov. 1, Jan. 1, and March 1. The written contract also containsan anti-assignment clause. Eileen turns the car over to Emily today and then assigns the right to Emily's future paymentsto Pat. This assignment is void and ineffective
false Such assignments are always allowed for public policy reasons
T/F Privity of contract establishes the basic principle that contracting parties have a right to privacy in the information expressed in their contract
false: Privity means generally only the two parties to the contract have any rights or obligations under it
T/F A minor can ratify a contract and thus make it enforceable
true
T/F Lido orally agrees to buy Ray's car for $10,000. Ray delivers the car and Lido pays. She soon regrets entering into the deal and seeks to rescind it due to the fact that there was no written contract. Lido's claim will fail
true
T/F Once the obligor receives proper notice, only performance to the assignee can discharge the obligor's obligation
true
