Legal Environment of Business

Sandy guarantees to pay Lester any debts Albert incurs with Lester. Sandy makes this guarantee because she knows that if she does not, Albert will run up a large debt with Lester and be forced to declare bankruptcy. Albert would then most likely be unable to pay Sandy what he owes her. Does this contract have to be in writing? a. No, under the main purpose rule. b. Yes, under the first-definer rule. c. Yes, under the evidentiary rule. d. No, under the nuptial rule.

a. No, under the main purpose rule.

Max and Juli communicate by text message and Juli agrees to marry Max if he promises to take care of her daughter as well. His final text message reply says, "Of course I will take care of her if you marry me. Love you. Max." Juli saves the text messages as proof of his love for her. After they marry, Max refuses to take care of Juli's daughter. Juli attempts to enforce the agreement, but Max argues that it has to be in writing because it is a contract in consideration of marriage. If this ends up in court, the court likely would: a. enforce the agreement, as copies of the text messages are sufficient writings. b. not enforce the agreement because text messages would not be sufficient writings. c. enforce the agreement, because it is obvious that she would expect him to take care of her daughter before she would marry him. d. not enforce the agreement because the terms are unconscionable.

a. enforce the agreement, as copies of the text messages are sufficient writings.

James tells Jennie that if she can find him an original painting by G. Harvey, signed with a No. 1, he will reimburse her up to $2,500. If Jennie finds such a painting, presents it to James, and he refuses to pay, she can recover under the doctrine of: a. promissory estoppel. b. partial performance. c. admission. d. parol evidence.

a. promissory estoppel.

Austin has a contract to sell 500 homemade teddy bears to Ally. The teddy bears typically sell for between $25 and $40. Austin delivers the bears to Ally but she refuses to pay, saying she changed her mind and that the contract is not valid because it is missing the price term. Did the price need to be specified in order for this contract to be valid? a. No, price is not an essential term in any contract. b. No, price need not be included in a contract for the sale of goods under the UCC, so long as the quantity is specified. c. Yes, price is an essential term, so its absence in the writing invalidates the contract. d. Yes, price is the most important term in a contract for the sale of goods under the UCC, so it must be specified in this contract.

b. No, price need not be included in a contract for the sale of goods under the UCC, so long as the quantity is specified.

Judge Macy has reviewed a contract between Martin and Rowan and has determined that the written terms of the contract represent the final agreement between the two parties. According to Judge Macy, their contract is: a. a prenuptial contract. b. an integrated contract. c. a parol contract. d. an incomplete contract.

b. an integrated contract.

Jessica verbally agrees to sell her house to Kandis, and Kandis makes a $10,000 down payment, moves in, and begins the installation of a pool in the backyard. If Jessica changes her mind seven months later and wants her house back, a court would likely find that: a. Jessica may get her house back because one year has not yet passed. b. there is no sale because the contract was not in writing. c. Kandis may keep the house because there has been partial performance. d. Kandis may keep the house because more than six months have passed.

c. Kandis may keep the house because there has been partial performance.

If Juan is buying a tract of land from Ken, in which of the following ways would the legal description NOT be considered part of the contract? a. The legal description is written on a separate piece of paper and attached to the contract with a paper clip. b. The legal description is written in the contract itself. c. The legal description is written on a separate piece of paper and mailed separately from the contract. d. The legal description is written on a separate piece of paper not attached to the contract, but in the same envelope.

c. The legal description is written on a separate piece of paper and mailed separately from the contract.

Gmiendl, Inc., a German company, and Bordeaux Enterprises Co., a French company, verbally agree to a contract for the purchase and sale of plastic bottles. Assume both France and Germany are signatories to the CISG. Is the contract valid? a. No, because the contract violates the Statute of Frauds and requires a writing. b. Yes, because the parties are from two different nations and no contract law applies. c. Yes, because the CISG does not require contracts for sale to be concluded or evidenced by writing. d. No, because the contract requires a signature from each party whenever a multinational contract is formed.

c. Yes, because the CISG does not require contracts for sale to be concluded or evidenced by writing.

James telephones Wanda, expressing interest in purchasing her famous chocolate ice cream. Wanda receives a purchase order for 100 gallons of ice cream from James for $300. On the appointed delivery date, Wanda delivers James 100 gallons of vanilla ice cream, stating that the contract didn't specify what flavor James wanted. James sues Wanda for the chocolate ice cream. A court will likely find that James: a. can submit evidence of the written contract because contracts can be subsequently modified. b. must accept the vanilla ice cream, because the contract had an orally agreed-upon condition precedent. c. can submit evidence of the telephone call expressing interest in chocolate ice cream, even though the contract was ambiguous on which flavor would be purchased. d. must accept the vanilla ice cream, because the contract did not specify the flavor.

c. can submit evidence of the telephone call expressing interest in chocolate ice cream, even though the contract was ambiguous on which flavor would be purchased.

Dillon struggles with his Algebra class and, in August, decides that he needs to get a tutor for the upcoming school year. He persuades Vonda to tutor him beginning in September. They discuss Vonda's fee and hours, and agree that the arrangement will last for the entire school year, ending in May. Under the Statute of Frauds, this contract: a. must be in writing under the Uniform Commercial Code (UCC). b. must be in writing because it is collateral. c. does not need to be in writing. d. must be in writing based on the one-year rule.

c. does not need to be in writing.

One afternoon, after a couple of beers, Steven says that because Marvin has been a helpful neighbor, he can have a right-of-way to drive across Steven's land to get to a fishing pond. Two weeks later, while Marvin is driving across Steven's land, he hears Steven yelling, "Get off my property, you trespasser!" Marvin has: a. a valid oral contract. b. a contract that is void because trespassing is illegal. c. no enforceable contract. d. avoidable oral contract.

c. no enforceable contract.

Garth purchases a boat from a boat manufacturer in another state. The sales contract contains all terms of the sale in great detail and at the end has the statement: "This agreement contains the entire agreement of the parties." If Garth later discovers a problem with the boat and sues for breach of contract, evidence extraneous to the contract: a. will be allowed in court because Garth purchased the boat out of state. b. will be allowed in court because the contract was not a fully integrated contract. c. will not be allowed in court because the contract was a fully integrated contract. d. will be allowed in court because the contract was a fully integrated contract.

c. will not be allowed in court because the contract was a fully integrated contract.

Heather agrees to work for Noah for one year in his law office. Noah writes an employment contract that states that Heather is to earn $20 per hour and to work forty hours per week. Noah terminates Heather's employment after six months. Heather sues to recover what she claims are her losses. At trial, both parties discover that the contract says that Heather's hourly wage is $0.20 per hour. What can Heather and Noah do about the error? a. They are bound by the writing under the Statute of Frauds. b. They can ask the court to rewrite the contract. c. They can offer evidence of the consideration that supported their contract. d. They can offer parol evidence to clarify the clerical error.

d. They can offer parol evidence to clarify the clerical error.

Westin wants to borrow $1,000 from Missy to help pay his deposit at his new apartment. Missy says she will agree to lend him the money, only if Westin promises to repay her within six months and if Westin's friend, Betty, promises to pay if Westin fails to do so. If Betty agrees to the arrangement, Betty's promise is called a: a. limited promise. b. unified promise. c. mutual promise. d. collateral promise.

d. collateral promise.

Linda and Zeke sign a contract for the sale of Zeke's home to Linda. Although the price has yet to be determined, the contract states the property clearly to be sold and the date the house will be delivered to Linda. The contract: a. constitutes a sufficient writing because it states the date that the house will be delivered to Linda. b. constitutes a sufficient writing because it describes the property with sufficient clarity. c. does not constitute a sufficient writing because it does not meet the writing requirements of the Uniform Commercial Code. d. does not constitute a sufficient writing because the contract does not state the price at which the property will be sold.

d. does not constitute a sufficient writing because the contract does not state the price at which the property will be sold.

Beaux is discussing with Brad the purpose of the statute of frauds enacted in all states, and tells him the purpose of the law is to: a. prevent fraud relating to certain contracts. b. prevent the enforcement of contracts that are not signed by all parties. c. prevent a party to a contract from testifying at trial. d. prevent enforcement of certain contracts that are not in writing.

d. prevent enforcement of certain contracts that are not in writing.

Sheryl and Davis agree that before they marry, they should have a prenuptial agreement to determine what will happen to Sheryl's fortune if they divorce or if Sheryl dies. To make their agreement valid, they must: a. have it approved by an outside mediator. b. file it with a circuit court. c. do nothing. Because they will be married, their agreements are automatically valid. d. put it in writing.

d. put it in writing.