ACCT 324 Commercial Law

To recover damages in a breach-of-contract case, the plaintiff must demonstrate that he used reasonable efforts to minimize the damage resulting from the breach. This is referred to as

the duty to mitigate.

Juan, Dwayne, and Sonia are co-workers. Juan overhears Dwayne's offer to sell an antique car to Sonia for $15,000. Under these circumstances,

Juan makes a new offer to Dwayne when he offers to buy the car for $15,000.

Covenants not to compete in conjunction with the sale of a business are generally enforceable if which of the following conditions are met?

Provided the covenant not to compete is reasonable with regard time and location, the covenant will be enforceable.

If a plaintiff has no actual damages from a breach of contract but the plaintiff has been wronged by the defendant, the court may award

nominal damages.

A and B enter into a contract. A few days later, they agree to discharge each other from the contract. What has occurred?

A mutual rescission

If an agreement is illegal, the contract is ________.

void

At an auction, if the seller is treated as making an offer to accept the highest bid, then the auction is

without reserve

Under the UCC, courts will uphold modifications or limitations to remedies unless the remedies fail in their ________

essential purpose

Belinda mails Harold an offer on March 2nd. Harold receives the offer on March 4th and immediately mails a rejection. On March 5th, Harold changes his mind and mails Belinda an acceptance. Belinda receives the acceptance on March 6th and the rejection on March 7th. Is there a contract?

Yes, the acceptance is effective when mailed on March 5th.

When one party gives a promise as consideration and the other party gives a(n) ________blank in consideration, a unilateral contract will result.

act

Consideration can be anything, as long as it is the product of a(n):

bargained-for exchange.

When parties agree that a debt is owed and the amount of that debt, then that debt is considered to be:

liquidated.

When a court can void the illegal part of an agreement and enforce the rest if the terms represent the main purpose of the original agreement, it is a(n) ________contract.

severable

If a nonbreaching buyer seeks the remedy of "cover," the buyer must establish all but which of the following?

The buyer must purchase goods identical to the goods specified in the contract.

For an unliquidated debt,

once the debtor pays the amount agreed on by both the parties, the debt is fully discharged.

A revocation is effective

when the offeree receives it

If the parties have not negotiated the liquidated damages in the contract, the UCC allows a nonbreaching seller to claim against a breaching buyer ________blank or $500, whichever is less, as liquidated damages.

20 percent of the purchase price

Under the UCC, which of the following statements regarding liquidated damages is accurate?

Liquidated damages must be identified before the breach occurs by the parties.

All but which of the following are situations in which a contract may be discharged by operation of law?

Novation

When a minor enters into a contract, the minor has which of the following rights?

The minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority.

UCC Sections 2-703(f) and 2A-523(1)(a) allow a seller or lessor to cancel the contract if the buyer or lessee is in:

breach

In which of the following situations does an express ratification by a minor occur?

An express ratification occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.

Under the Uniform Commercial Code (UCC), which of the following statements is true of the remedies available to buyers and lessees when a seller or lessor breaches a sales contract?

Buyers or lessees are allowed to accept nonconforming goods and then seek monetary damages to give them the benefit of the bargain.

________ performance occurs when all aspects of the parties' duties under the contract are carried out perfectly.

Complete

Which of the following is a future event that terminates the obligations of the parties to a contract when it occurs?

Condition subsequent

Jorge offers to build Larry a garage for $20,000. The offer stated that acceptance in person was required. Within a reasonable time, Larry e-mailed Jorge his acceptance. Which of the following statements is true about this situation?

Larry has not accepted the offer as required by the offeror, and there is no contract.

Which rule says that the terms of an acceptance must reflect the terms of an offer?

Mirror-image rule

Regarding the enforceability of a present promise, which of the following is an accurate statement regarding past consideration?

Past consideration is no consideration at all.

________blank occurs when one party makes a promise knowing the other party will reasonably rely on it, the other party does reasonably rely on it, and the only way to avoid injustice is to enforce the promise.

Promissory estoppel

________ contracts contain multiple parts that can each be performed separately and for which separate consideration is offered.

Severable

Which remedy usually requires that the seller or lessor deliver the particular goods identified in the contract?

Specific performance

To justify recovery based on a quasi-contract, a plaintiff must prove all but which of the following elements?

The defendant would be enriched by receiving the benefit that was the result of a unilateral mistake on behalf of the plaintiff.

All but which of the following demonstrate an acceptance by the offeree?

The offeree makes a new offer to the offeror to continue negotiations which ultimately leads to a contract.

Contracts may be terminated by agreement of the parties or by operation of law. All but which of the following are examples of a contract being terminated by agreement of the parties?

Tolling of the statute of limitations

Wanda purchases a motorcycle from her friend, Leslie. She pays Leslie $8,000. Later, Wanda realizes that the motorcycle is worth less than $4,000. If Wanda plans to sue Leslie, which of the following statements applies?

Wanda cannot sue Leslie because the court seldom considers adequacy of consideration.

If someone suffering from dementia has been appointed a guardian, which of the following is true regarding that person's ability to enter into a contract?

When someone has been appointed a guardian, that person's contracts are considered void.

When can silence generally be used as a form of acceptance?

When the parties agree that silence will be an acceptance

According to the Uniform Commercial Code (UCC), the remedy of last resort available to sellers and lessors in the case of breach of a sales contract is:

canceling the contract.

When, after reaching the age of majority, the person states orally or in writing that he or she intends to be bound by the contract entered into as a minor, there is a(n) ________

express ratification

Varun offers to sell Danielle his used smart phone for $150. Danielle says that she will look at the phone the next day, and if she likes it, she will pay $150 for it. At this point, Danielle has not committed to doing anything. This is an example of a(n):

illusory promise.

The UCC allows a seller or lessor to stop delivery of the goods if the goods are ________

in transit

Marty is a football player and he has a contract to play for Team One for 6 months. Two months into his contract, Marty decides to switch to a different team because they pay more. In order to prevent Marty from playing with a different team for the remainder of the contract, Team One can obtain a(n)________blank.

injunction

If a buyer decides to terminate a contract because the seller materially alters a written contract without the knowledge of the buyer, then the contract is discharged by

operation of law.

Sections 2-716(1) and 2A-521(1) under the Uniform Commercial Code (UCC) allow nonbreaching buyers and lessees to seek the remedy of specific performance when:

the goods are unique.

In a(n) ________blank debt, the parties either disagree about whether money is owed or dispute the amount.

unliquidated

If a person has not been adjudicated insane but suffers from a mental illness that prevents her from understanding the nature and obligations of a transaction, the contract is ________

voidable

In most states, a minor does not have the right to affirm which of the following contracts?

Car purchase contract

Jonathan offers to sell Paulette six video poker machines. Before Paulette can accept or reject Jonathan's offer, the state legislature passes a statute that the purchase, sale, and possession of video poker machines is illegal. In this scenario, Jonathan's offer terminates due to which of the following rules?

Subsequent illegality of the subject matter

When there is no dispute over the amount of debt or existence of debt, it is referred to as a:

liquidated debt.

If nothing is stated to the contrary in the terms of an auction, the auction is presumed to be ________blank, which means that the seller is merely expressing intent to receive offers.

with reserve