GBUS2003 - Module 3
As a general rule, a promise must be supported by consideration. Which of the following is an exception to the rule and can be enforced without the support of consideration?
An obligation of record such as a judgment
Mary contracts to sell Rachel her violin for $10,000, based on an appraisal of the instrument. Their contract provides that even if the appraisal is later found to be mistaken, the sale price will not be altered. One month after the sale, Rachel learns that the violin is only worth $5000. Which of the following is true:
Because the contract specified what would happen in the case of a mistake, the sale price will not be altered.
Mark owes $2000 each to his business partners, Ryan, Bryan, and Clark. Since Mark is facing financial difficulties, his business partners agree to accept a total amount of $4800 from Mark as a cancellation of the unpaid balance due to them. This type of an agreement is known as a _____.
composition of creditors
Which of the following is true of contracts that limit the freedom of marriage?
An agreement not to marry during minority is valid.
Which of the following is an example of passive fraud?
An attorney fails to tell his or her client of an offer to settle a case.
The legal rate of interest is a rate:
that is applied when no rate is specified.
Allen enters into a contract with Joe to sell his car. However by mistake, he undervalues his car. Though the actual value of the car is $6000, he sells it to Joe for $3000. During the purchase, Joe is aware of the actual value but does not communicate this fact to Allen. Which of the following is likely to be true in such a scenario?
Joe is entitled to keep the car because the contract is valid.
_____ is a means of destroying another's free will by one party obtaining consent to a contract as a result of a wrongful threat to do the other person or family members some harm.
Duress
Contracts which are designed to limit competition are acceptable by law.
False
When charitable enterprises are financed by voluntary subscriptions of many people, the promise of each person is generally not held to be enforceable
False
Which of the following statements is true of fraud in the execution?
It occurs when a party does not intend to sign a contract, as the nature of the writing is not understood
Which of the following is true of undue influence?
It refers to a person in a special relationship causing another's action contrary to free will.
Which of the following is true of the doctrine of promissory estoppel?
It requires the promisor to reasonably expect the promise to induce action by the promisee.
A contract not to compete is valid in which of the following instances?
The buyer of a business prohibiting the seller from engaging in the same business in a certain town
Which of the following is true regarding parties who make mutual mistakes of law?
The parties are expected to have knowledge of the law when making the contract
Which of the following is true of Sunday contracts?
Their laws are a result of statutes.
When parties to a contract mutually agree to cancel an old contract and replace it with a new one, which of the following is true?
To be enforceable, there must be added features in the new contract benefiting both parties.
Consideration distinguishes mere agreements from legally enforceable obligations.
True
Generally, a part payment of a past-due debt is not consideration to support the creditor's promise to cancel the balance of the debt.
True
In which of the following situations is a state most likely to enforce a usury law?
X charges a very high rate of interest on money borrowed by Y.
If a contract is divisible so that the legal parts can be performed separately from the illegal parts, then the legal parts of the contract are:
enforceable
As a general rule, a unilateral mistake made at the time of contracting has an effect on the validity of a contract.
false
When one refrains or promises to refrain from doing something, this conduct is known as _____
forbearance
Mark, a civil engineer, entered into a contract with David. As per the contract, Mark agreed to design and build a house for David for a specified fee. Mark provided David with an estimation of the total cost and the contract was mutually agreed upon. However, during construction, when Mark increased the price due to a miscalculation on his part, David refused to pay the amount. This scenario is an example of a _____ mistake.
unilateral
A contract must be for a lawful purpose, which must be achieved in a lawful manner, otherwise the contract is:
void.