test 3 answers

Dawson entered into a contract with Jensen for the sale of Dawson's boat. Which set of legal rules governs this transaction? A. Contract rules of the common law B. Contract rules of the Uniform Commercial Code C. Equity rules that ensure fairness in transactions D. Marine law

Contract rules of the uniform commercial code

A partnership is an income tax-paying entity for federal income tax purposes. True False

False

A promise to refrain from smoking cannot be legal consideration because it does not convey anything of economic value to the other party. True or False

False

A sole proprietorship is a legal entity separate from its owner. True or False

False

Contracts must always be in writing to be enforceable. True or False?

False

Speaking generally, a quasi-contract applies where there has been foreseeable reliance on an express promise. True or False?

False

A corporation is a legal entity independent of its owners. True False

True

A creditor who fails to file suit to collect a debt within the time prescribed by the appropriate statute of limitations loses the right to collect it. True or False

True

Abby promises to pay Brian $50 if he will mow Abby's lawn. Brian does not promise to mow Abby's lawn; however, later that day, Brian completely and satisfactorily does mow Abby's lawn. This is an example of a unilateral contract. True or False?

True

If a term is left open in a sale of goods contract, that open term or "gap" can be filled by inserting a presumption found in the UCC's "gap-filling" rules. True or False?

True

In determining whether consideration exists, the law is not concerned with any disproportion in value between the things exchanged in a contract. True or False

True

John is a partner of Aegon Services, a limited liability partnership firm. He committed fraud and embezzled $1 million from a client. The other partners would not be personally liable for John's malpractice. True False

True

John promises to pay Robert $100 per week, in exchange for Robert's promise not to beat John up. There is no consideration for John's promise. True or False

True

Michael and William contracted for Michael to mow William's lawn once a week for 20 weeks, at a price of $20 per week. Later, without terminating the first contract, the parties modify the contract as follows: Michael will mow William's lawn in exactly the same way for exactly the same time period, in exchange for William's promise to pay Michael $22 per week. There is no consideration for William's promise. True or False

True

The offeror is said to be the "master of the offer". This means that offerors have the power to determine the terms and conditions under which they are bound to a contract. True or false?

True

The sole proprietor has the right to deduct business losses on his individual tax return. True or False

True

The three requirements for a valid offer are: present intent to contract, definiteness, and communication to the offeree. True or False?

True

Aaron promises to sell his boat to Matt, and Matt promises to buy it from Aaron. What type of contract is this? A. A unilateral contract B. A quasi-contract C. A bilateral contract D. A promissory estoppel contract

a bilateral contract

Regarding the formation of a general partnership, which of the following is not a legal requirement but has been described as "highly desirable"? A. A formal, written partnership agreement B. An oral agreement C. An exchange of mutual consideration D. An agreement limiting the liability of the partners

a formal, written partnership agreement

Which of the following meets the requirements of consideration? A. A promise not to engage in a crime or tort B. A promise without a binding obligation C. A promise that involves the exchange of a legal value D. A promise to do a preexisting duty

a promise that involves the exchange of a legal value

To qualify as a contract, a set of promises must be based on a voluntary agreement, which is made up of an offer and a(n) _____ of that offer. A. understanding B. writing C. assumption D. acceptance

acceptance

Which of the following is the first step in the contract formation process? A. Signing the agreement B. An offer in definite terms C. Selection of partners D. Drafting the agreement

an offer in definite terms

Partners of a partnership: A. are not liable for all the obligations of their partnership. B. are entitled to income of the partnership, which must be reported on their individual federal income tax returns. C. are not permitted to deduct partnership losses on their individual federal income tax returns. D. can create a partnership only by complying with a statute.

are entitled to income of the partnership, which must be reported on their individual federal income tax returns

A joint venture is a(n): A. association limited to no more than two persons in business for profit. B. enterprise of numerous co-owners in a nonprofit undertaking. C. corporate enterprise for undertaking multiple projects of various durations. D. association of persons engaged as co-owners in a single undertaking for profit.

association of persons engaged as co-owners in a single undertaking for profit

Able borrowed $10,000 from Baker, promising to return it with $1,000 interest on January 1, 2006. There is no dispute that Able owes Baker $11,000 due on January 1, 2006. On that day, Able gave Baker a valid check in the amount of $10,500 marked "payment in full for loan due January 1, 2006." Baker accepted that check and deposited it into his account. If Baker then sues Able for the unpaid $500, what would the result be? A. Able wins, because Baker accepted the lesser payment. B. Able wins, because Baker made an implied promise to accept $10,500 as full payment, thereby forgiving $500 of the loan. C. Baker wins, because Able gave no consideration in exchange for Baker's promise to forgive $500 of the loan. D. Baker wins, because marking "payment in full" can never relieve a party of its original obligations under a contract.

baker wins, because able gave no consideration in exchange for baker's promise to forgive $500 of the loan

Gift promises are not generally enforceable because they lack: A. legality. B. capacity. C. consideration. D. agreement.

consideration

According to the classical contract law, courts are: A. contract makers. B. contract breakers. C. contract enforcers. D. contract negotiators.

contract enforcers

A computer manufacturer offered to sell sophisticated computer equipment to another country. Two days later, before the offer was accepted, Congress placed an embargo on all sales to this country; and therefore, the offer was terminated by the embargo. This is an example of: A. promissory estoppel. B. destruction of subject matter. C. intervening illegality. D. revocation.

intervening illegality

Which of the following conditions characterizes a firm offer regarding the sale of goods? A. It must be verbally communicated. B. It can be revoked by the offeror prior to acceptance. C. It must be made in the presence of a government official. D. It must be made by an offeror who is a merchant.

it must be made by an offeror who is a merchant

Which of the following is not a necessary element of the definition of partnership according to the RUPA? A. Co-ownership of the assets used by the business B. Association of two or more persons C. Limited liability of partners D. Carrying on of a business

limited liability of partners

The general common law rule on contract modifications holds that an agreement to modify an existing contract requires a(n): A. necessary increase in the value of the exchange. B. inclusion of a new party to the contract. C. new and independent consideration. D. economic exchange of substantial value.

new and independent consideration

Which of the following is an exception to the general rule that rejections terminate offers? A. Unilateral contracts B. Bilateral contracts C. Firm offers D. Option contracts

option contracts

A partner's contribution is also called _____. A. partnership property B. partnership liability C. partnership cash flow D. partnership capital

partnership capital

Which of the following is NOT covered by Article 2 of the UCC? A. Vehicles B. Appliances C. Real estate services D. Books

real estate services

A fundamental difference between a promissory estoppel and traditional contract principles is that a promissory estoppel protects: A. reliance. B. bargains. C. agreements. D. consideration.

reliance

Ashley says to Ford, "I'd like to buy your house," and Ford responds, "You've got a deal". This exchange lacks _____. A. partners B. communication C. object D. specificity

specificity

Dan, President of BAZ Co., is happy with the extraordinary performance of Naomi, a BAZ Co. senior accountant. Dan informs Naomi that because of her superlative work in the past fiscal year, he is going to give her a 5 percent raise effective next month. Naomi, who has never heard of anyone at BAZ Co. getting a raise, is thrilled and thanks Dan. Later that day, Dan realizes that giving Naomi this raise might cause all senior accountants to demand salary increases. Dan decides not to give Naomi a raise after all. He believes that his promise to give her a raise is not legally binding. Dan is correct because: A. there was no bargained-for exchange for the raise. B. of the "preexisting duty" rule. C. past consideration is not an act or promise. D. past consideration is not liquidated.

there was no bargained-for exchange for the raise

In return for services Charles performed for Richard in the past, Richard promises to pay Charles $1000. There is no consideration for Richard's promise. True or False

true

Bill is 25 years old. His uncle had promised in writing to pay him $2,000 if Bill would refrain from drinking alcohol for one year. Bill refrained from drinking alcohol for one year. However, his uncle now refuses to pay Bill as agreed-upon. The uncle claims that because Bill suffered no detriment by refraining from alcohol, his non-drinking does not constitute legal consideration and therefore no contract was formed. If Bill sues his uncle, Bill will: A. win because Bill had a legal right to drink alcohol. B. lose because consideration must have monetary value. C. win because no consideration is needed in this contract. D. lose because refraining from an action can never be considered legal consideration.

win because bill had a legal right to drink alcohol

Chica, a women's clothing store, held a "prize drawing" for a $500 shopping spree on Saturday that it had advertised throughout the week. Participation in the drawing required being at the store by noon and completing an application form that included personal information and placing it in a box. The information would then be put into a database for marketing purposes. Fashion consultants offering merchandise for sale greeted customers arriving at the store on Saturday morning. Joy was the winner of the drawing. Has she given consideration for the prize? A. No, she gave no legal value to Chica. B. No, unless she purchased an item from one of the fashion consultants. C. Yes, she came to the store and gave information that was for the store's use. D. Yes, unless the store was conveniently located.

yes, she came to the store and gave information that was for the store's use