Blaw Ch. 11-16,18-20 multiple choice
Alpha and Xenon companies are both major international conglomerates. They are negotiating a contract whereby Alpha will install a computer system for Xenon. One clause in the contract states thatAlpha will not be liable for damages caused by the negligent installation of the computer system, except that Alpha warrants the system and will fix any problem for a period of two years following installation. Alpha completes the installation of the computer system. Xenon loads extensive amounts of information on the system, but all of it is destroyed because Alpha negligently installed the memory chips. Alpha fixes the memory, but Xenon incurred significant expenses in recreating the lost information. Xenon sues for these expenses. Alpha defends with the noted clause in the contract.
Alpha wins; this exculpatory clause is enforceable
Which of the following duties can probably be delegated?
An agreement to paint a house
Which of the following exculpatory clauses will most likely be enforceable?
An exculpatory clause that relieves a riding stable of negligence
Ralph is a professional football player. He signs a valid contract with the Jets. Later, he claims that he was also promised free use of the Jets' private jet, but this was not in the contract. What type of clausein his contract would prevent him from flying away with this claim?
An integration clause.
Which of the following would suffice for a signature on a writing under the statute of frauds?
Any of the above would suffice. Judges define "signature" very broadly
Virginia borrowed money from G & L Lending at 35% interest per year. The state maximum interest rate is 20% per year. Virginia defaulted on the loan. What amount can G& L collect from Virginia?
Any one of the above may be correct. The answer depends on the particular state law
Stanziano Construction needs a backhoe to complete a project. If it pays Hofmann Rentals for temporary use of the equipment, the transaction will be governed by:
Article 2A of the UCC
In the case of Sepulveda v. Aviles, the New York Supreme Court, Appellate Division, found evidence ofundue influence in:
Aviles's use of Seals' funds and credit cards
Ethel's Exercise World plans to order three weight machines from Pete's Push, Pedal and Pull, Inc. for a total of $15,000. Pete's demands that Ethel's friend, Moneybags, a wealthy independent businesswoman (not connected with Ethel's business in any way) promise to pay Pete's for the three machines if Ethel's Exercise World does not. Which of the promises in this problem must be in writing to be enforceable?
Both Moneybag's promise and Ethel's Exercise World's promise
If a court orders rescission and restitution of a contract under which Nala sold a baseball card to Shirley in exchange for $450:
Both a and b
A nonparty to a contract may enforce the contract if the person is:
Both a and c
Wayne agrees over the phone to sell L.J. Cartwright 1,000 yards of 1-inch diameter rope. Wayne honestly believes that L.J. Cartwright offered to pay $1.00 per yard whereas L.J.Cartwright actually offered to pay 75 cents per yard. If the parties subsequently take their dispute to court, the fact that L.J.Cartwright admits on the stand that he offered to pay Wayne 75 cents per yard will
Both a and c are correct
Garth's Imports sold a car to Wally on credit for $30,000. Garth assigned to Cassandra all of his rights to receive money from Wally. Cassandra did not inform Wally of the assignment. Therefore, Wally continued to make the next three payments directly to Garth. Shortly thereafter, Garth left the country with the money. If Cassandra sues Wally for the missing three payments:
Cassandra will not be able to collect the money from Wally
Office Plus, an office supply store, ordered 600 blank CDs from Curtis Co., a manufacturer of computer products. Office Plus placed the order using a preprinted purchase order form; Curtis acknowledged the order by sending a preprinted acceptance form back to Office Plus. Unlike Office Plus' form which says nothing about packaging, Curtis's form specifies that the CDs will be packaged in cases of 10 CDs per box, 10 boxes per case. Which statement is correct?
Curtis's packaging term is an additional term and therefore a part of the contract unless Office Plus promptly objects to the term
Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. Bob hires Rob to take his place as the builder on this contract. What has Bob done?
Delegated his duties
Jamie is building a house on her lot. She invites Earnie of Earnie's Excavation to bid on the excavationjob. Earnie observes that the lot next to Jamie's is also under excavation and the soil in that lot is normal and not excessively rocky. Based on the assumption that the soil in Jamie's lot will be similar, he and Jamie agree that the excavation will cost $3,000. When Earnie starts digging, he learns there is solid rock under Jamie's lot. Earnie says it will cost an extra $2,500 for the excavation work. Jamie agrees just to get the job done but later refuses to pay a dime more than $3,000. If Earnie sues, the most likely result would be:
Earnie wins, as the modification was due to unforeseen difficulties
Which of the following is least likely to be regarded as a necessary?
Educational expenses
Peter, a minor, purchased a car from ACME Motors. Using a fake ID, he misrepresented his age to be 18. The contract is fully executed. Which of the following is correct?
Either b or c may be applicable depending on the law of the jurisdiction in which the contract was formed.
Travel Lines offered to sell 10 round-trip tickets to Elaine. Travel Lines stated that the acceptance mustbe in writing by USPS next-day service. Which of the following acceptances will create a contract between Travel Lines and Elaine?
Elaine sends a letter by USPS next-day service to Travel Lines stating that she will buy the tickets
Farmer's Fortune Insurance has a contract with Farmer Fran to insure her crops against insect damage. The contract does not specify which insects are covered or how much damage is necessary to make a claim. The contract will probably be enforced in favor of:
Farmer Fran
The concept that an injured party may recover consequential damages only if the breaching party should have foreseen them was established in:
Hadley v. Baxendale
Betty's BBQ orally contracts with Denny's Design House for 10,000 matchbooks at the price of 10 cents per matchbook. The matchbooks are to be embossed with a logo to be designed by Denny's Design promoting Betty's BBQ. Price, payment terms, delivery terms are agreed upon between the parties. Denny's Design creates the logo, gets Betty's BBQ's approval of the design and begins applying the logo on the matchbook covers. Denny's Design has almost finished the order when Betty'sBBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order. Denny's Design sues, but Betty's BBQ states that the agreement is unenforceable under the statute of frauds. Who wins?
Denny's Design House wins. This situation falls under an exception to the statute of frauds
Bernie owes an undisputed amount to Wilde's Heating & Air Conditioning. Which of the following is true?
If Wilde's agrees to accept less than the full amount as full payment, the agreement is not binding
In which case is the offer still valid at the time the acceptance is made?
In a face-to-face transaction, Pat offers to sell Mike his stereo and Mike accepts
Jerry purchased a laptop computer for his personal use from Computer City on an installment loan contract. The sales contract stated that in the event the contract is assigned to a third party, the purchaser (Jerry) promises he will not assert any claim or defense against the assignee which he might have against Computer City. Computer City immediately assigns the contract rights to Finance USA. The computer stops working within two weeks of the purchase
In general, this type of waiver is not permitted in consumer contracts, so Jerry can raise hisclaim against Finance USA.
Jack mails an offer to Joan that states, "I offer to sell you my car for $2000. If I don't hear from you in 10 days, I will assume you are willing to buy the car for the stated price." Jack hears nothing by the deadline and assumes he has a deal. What is the result?
Joan is not bound. Generally an offeree must say or do something to accept an offer
Barb has been a children's day care provider for several years in the small town of Sallton. She has decided to give it all up and move to the big city for excitement and adventure. She sells her business to Ken, agreeing not to open a competing business within five miles of Sallton for a period of nine months. After five months of the big city life, Barb is broke and moves back to Sallton. She opens a small day care business. Ken sues on the noncompete clause. What is the most likely result?
Ken wins. The agreement is enforceable.
Linda assigns to Ben a right to receive rent payments. The law implies the following warranty on Linda's part:
Linda actually has a right to the rental payments
Which of the following statements is incorrect concerning liquidated damages?
Liquidated damages are enforceable even if the amount is considered to be a penalty on thebreaching party.
Marty, a 16-year-old, contracted with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. He agreed to make monthly payments until the purchase price plus interest were paid in full. It is three years later and Marty has not disaffirmed the contract and has made regular payments on the cycle since turning 18. Which of the following is correct?
Marty has ratified the contract and is now bound by its terms.
Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for $1,500. Mary says she really likes the collection but is only willing to pay $1,000. Which of the following is correct?
Mary's counteroffer terminates Carl's offer of $1,500
Derek and Abyan were discussing business over lunch when they agreed on the sale of a five-acre parcel of land. Since neither of them had any paper with them, Derek wrote the following on a napkin: "Abyan agrees to purchase from Derek a 5-acre parcel located at the local address of 123 105th Street, St. Joseph, Minnesota, U.S.A. for the price of $4,500 per acre. Transfer of title, payment, and possession to take place on May 1, 2011." Abyan signed the napkin. On May 1, 2011, Derek was readyto close the deal and transfer title but Abyan refused to pay the purchase price. If Derek sues Abyan forthe price of the land, the most likely result will be:
Derek will win because the writing is sufficient under the statute of frauds
Which of the following relationships will ordinarily not create an insurable interest?
Doctor and patient
Which of the following statements, if made by a seller who knows the statement to be untruthful, would not be misrepresentation of material fact resulting in a cause of action for fraud?
"There is no better car in the world."
What phrase explains how a requirements contract can be valid?
"in good faith"
Bob, a house builder, contracts with Ollie to build a house on Ollie's lot. The total price of the construction is $100,000, $20,000 of which will be Bob's profit. After Bob has put $10,000 worth of materials into the house, Ollie wrongfully refuses to let him finish the house. If Bob sues for damages, he will be able to collect:
$30,000
Which statement most accurately describes third party beneficiary rights?
A beneficiary may enforce a contract if the parties intended to benefit him and if enforcing the promise will satisfy a duty of the promisee to the beneficiary
Which of the following types of property would be classified as "goods" under Article 2 of the UCC?
A computer
Which of the following contracts is most likely to be declared unconscionable?
A consumer sales contract which charges 300 times the fair market value of the goods.
Acme Co. offers to buy 1000 widgets from Widget World Co. The written offer provides for 1000 at $10 per widget, to be delivered May 1. The offer has no other provisions. Widget World sends a written acceptance. However, the acceptance also states that if any claim arises under this contract, Widget World must be notified within 10 days. Acme does not object to this provision. Both parties aremerchants. Which of the following best describes this situation?
A contract exists. If the additional terms are construed to be material, they are not part of the contract. If the additional terms are not material, they are part of the contract.
Which of the following are generally considered to be legal offers?
A note scribbled on a restaurant napkin that includes the details of the offer
Which of the following contracts requires a writing under the UCC, Article 2?
A toy manufacturer contracted to sell dolls valued at $10,000 to a department store.
UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally. These include all but which of the following?
A writing sufficient under the statute of frauds may be a simple memo, a letter, or informal note, but need not itself be a contract
A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used car dealer's advertising. The contract was probably written by:
A+ Modeling Agency's lawyer.
During the development of commercial law centuries ago, businessmen throughout England and Europe:
All of the above
For the purposes of the statute of frauds, an interest in land includes:
All of the above
The UCC deals with unconscionability in a contract by providing that a court may:
All of the above
To be valid, a noncompete clause must be:
All of the above
Under the UCC, which of the following contracts may be enforceable, even without a written memorandum?
All of the above
Which of the following offers are considered to be irrevocable for a given period?
All of the above
Which of the following promises ordinarily must be in writing to be enforceable?
All of the above
The stated purpose(s) of Article 2 of the UCC is/are:
All of the above are correct.
Generally, a seller has no duty to disclose facts. However, there is a duty to disclose information or facts if the disclosure is necessary to:
All of the above are true
To simplify, clarify, and modernize the law governing commercial transactions, the UCC permits the use of "open terms" in sales contracts. In the use of "open terms," which of the following is true?
All of the above are true.
Angie, a minor, wants to avoid a contract she made with Cumberland Cycles. She may disaffirm the contract by:
All of the answers are correct.
Alfred orally promised to pay Robert a salary of $30,000 per year for five years and his moving expenses up to $10,000 if Robert would quit his job and come to work for him at his manufacturing plant. Robert agreed to do so, but requested a written contract. Alfred assured him that the company attorney would prepare such a contract as soon as possible, but Alfred needed Robert to start at once. Accordingly, Robert sold his house, moved his family, and commenced to work for Alfred. He was fired without cause two months later. No written contract was ever executed. Can Robert enforce Alfred's oral promise?
Maybe. Robert should go to court under the theory of promissory estoppel. Alfred made anoral promise that Robert relied upon, and the way to avoid injustice is to enforce the promise.
Mid-American Oil had a contract with NSB Company to supply 1,000 gallons of oil by September 1. The contract contained a provision which required all modifications to be written and signed by the company presidents. In early August, an executive of Mid-American talked with the purchasing agent of NSB who orally agreed to two shipments of oil; one in September and the second one in December. By September 30, when only 500 gallons had been delivered, NSB sued. The likely outcome of this lawsuit is:
NSB wins because the modification has to be in writing
Wendell, new to the area, selects a doctor from the telephone book and visits that doctor to have a splinter extracted. Unbeknownst to Wendell, the doctor has never passed the state licensing exams. Later, when Wendell discovers the truth, he refuses to pay his bill. If the doctor sues for recovery of thefee, will the court support the doctor's claim?
No, the court is likely to take the position that it is not in the public's best interests to enforce contracts with unlicensed doctors
Martin, Human Resources Director for Spring Co., sent Lynn the following signed letter: "This letter confirms our offer to you. We will pay for your moving expenses, up to $1,500. Your starting date will be February 1, and you will become eligible for health care benefits as of May 1. You will receive a starting salary of $36,500 annually, with reviews and eligibility for increases at six months, 12 months,and annually thereafter. Vacation will be for two weeks a year after one year." Spring fired Lynn eight months after she started to work, and Lynn sued arguing the letter constituted a memorandum of an oral contract for employment for five years. Is the letter sufficient to satisfy the statute of frauds?
No, to satisfy the statute of frauds, the memorandum must contain all essential terms of thecontract
Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Twomonths after Vicki took delivery of the car, she discovered that the transmission needed to be replaced.Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sales representative's statements concerning the warranty?
No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty
Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers. Which of the following statements is true?
Police Officer Paul is not entitled to the reward because he was under a pre-existing duty to make the arrest
Which of the following is NOT one of the four focused steps in reading a contract?
Re-write with a lawyer.
Ron, a minor, goes to the hospital for treatment of the flu. On the new-patient form Ron signs, he agrees to pay for any care or treatment he receives. When billed for the treatment:
Ron must pay for the value of the benefit he received, because medical care is a necessary.
Dean Builders agrees to purchase all of its sump pump requirements for the new houses it builds from Satisfactory Sump Pump, Inc. These two business have had similar agreements the last three years and Dean's requirements have averaged 100 sump pumps per year. This year there was an unusually wet spring and Dean's requirements doubled to 200 sump pumps. Because of the high demand of sump pumps, the market price of the pumps tripled. Satisfactory Sump Pump, Inc. delivers 100 pumps at $75, the contract price. Satisfactory has exhausted its inventory and cannot deliver any more, so Dean buys the other 100 pumps from other suppliers at $225 each. Dean sues Satisfactory Sump Pump, Inc. for the additional expense. What is the most likely result?
Satisfactory Sump Pump, Inc. wins; requirements contracts are governed by a good faith standard, and it was unreasonable for Dean to demand so many additional pumps
Which of the following is an example of an exculpatory clause?
Seller is not responsible for property damage regardless of the cause of the injury
Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper; one that would keep him comfortable if the temperature drops to 10 degrees Fahrenheit.The salesperson told Seth they were sold out of that bag, but there were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contract. Which is true?
Seth will not prevail, as the advertisement was simply an invitation to negotiate
Which of the following is most likely to constitute fraud?
Silence as to a toxic waste problem on real property that the buyer would not reasonably find.
Mark works as a bartender at The Little Nipper, a local bar. Under state law, bartenders are required to be licensed. The licensing requires filling out an application and submitting a $50 application fee. The application does not require any special education or experience, just the $50 fee. Craig enters Mark's bar, orders a round of drinks for the house, then notices that Mark's license is not on display behind thebar. Craig learns that Mark is not licensed and refuses to pay for the round of drinks. The Little Nipper sues. What result?
Since this is a revenue-raising statute, The Little Nipper wins
Sonny, a college student, places a telephone order for a new computer from Computers, Inc. The price of the computer is $1500. The clerk who takes the order sends Sonny a copy of the invoice. The next week, Sonny calls back and tries to cancel his order
Sonny can cancel the order; the invoice is unenforceable against him, as he did not sign theinvoice
Scott is trying to introduce oral evidence in court to alter the terms of a written contract he had with Bonnie. Bonnie has raised the parol evidence rule as an objection to Scott's testimony. In which of the following circumstances will Scott not be able to introduce the oral evidence?
The contract has an integration clause in it and Scott's point of contention is covered in detail in the contract, although not to his favor.
The Plaza Hotel contracts with EZ Lawn to have EZ mow the grass on the Plaza grounds for the next 10 years. However, there is a clause in the contract that states if the hotel chooses, the contract may be terminated provided Plaza pays EZ $2,000 on termination. Which of the following is correct?
The contract is enforceable because the option to cancel clause is supported by consideration
Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1. On June 1, Summer Sports notified Brahma that it will not honor the agreement. Which statement is correct?
The contract is enforceable for 20 jet skis
Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct?
The contract is illegal and void
E-mation entered into a contract with a consumer, Ezra, a recent immigrant to the United States, who spoke very little English, and had no formal education. The contract provided for Ezra to pay $2500 for a computer system. The system was worth $400. If E-mation sued Ezra for enforcement the contract, what is the most likely result?
The contract is unenforceable because it is unconscionable
Mike owns a house in a poor area of a large city. Mike is on disability and his total monthly income is $700. A sales representative visits his home, selling a water purification system. Mike signs a contract that calls for monthly payments of $500 for the next 10 years. The water system is worth no more than $1000. Mike thought he was signing a permission slip allowing the salesman to conduct a free water test to determine the toxins in the water. How would a court most likely describe this contract?
The contract is unenforceable because it is unconscionable
Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest are paid in full. Which of the following is correct?
The contract is voidable by Marty
Suppose that Lenny Lawyer enters into an agreement with Cindy Client that his fee will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce. State law makes such a contingency fee arrangement illegal in divorce actions. What will be the probable outcome if Lenny attempts to enforce the agreement?
The contract will be void as violating a statute. Lenny will not be able to recover anything
Abby dies, and her good friend, Clay is appointed to administer Abby's estate. Abby's house was in poor condition, so Clay orally hired a contractor to make repairs. Clay also orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. The estate does not pay the repair bill. Who can the contractor collect from, if anyone?
The contractor can collect from the estate only
Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job?
The costs of mailing resumes to prospective employers.
Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, the most likely result would be?
The court will enjoin Ralph from playing with any team other than the Jets
E-mation, Inc hires Marvin to steal trade secrets from one of its competitors for $10,000. Marvin demands half of the money up front. E-mation pays Marvin $5000 but Marvin decides not to pursue theft of the trade secrets. E-mation sues Marvin for the return of the $5000. What will the court do with this contract?
The court will not do anything to help E-mation get its money back
Which of the following is generally NOT in the introductory paragraph of a contract?
The location of contracting.
Which of the following statements is incorrect concerning arbitration?
The losing party in an arbitration can file an appeal in a District Appellate Court.
Long's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from Durham. Subsequently, Durham called and asked to ship mink-colored dresses instead of heather gray.
The modification is enforceable
Dick offers to sell Jane his 1955 Thunderbird convertible. Before Jane can accept the offer, lightning strikes the car and it is totally destroyed. Which of the following is true?
The offer is terminated by law
Floyd offers to sell his 1967 Ford Mustang convertible to Tim. Before they conclude their negotiations,Floyd dies. Which of the following is true?
The offer terminates automatically upon Floyd's death
Which statement is true about definitions in a contract?
The parties to the contract may be defined with shorter designations than their actual names
Which of the following is NOT a true statement about fraud?
The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract.
Which of the following is true regarding an open price term?
The price is the "reasonable" price at the time of delivery
David and George have a contract wherein George agrees to buy sporting goods and equipment. Since the goods are not to be delivered for several months, they left the price open. Under the UCC, which ofthe following will be true?
The price will be the reasonable price based on fair market value of the goods at the time of delivery
Oxtron, Inc. sent the following price list to its customers. Dispensers SBC-500J $670.00 True TDD-1 $875.00 True TDD-2 $1,465.00 True TDD-3 $1,515.00CO2 Tank and Regulator $150.00 Which statement is correct?
These price quotes would generally not be considered offers
Jeff was a subcontractor, bidding on a contract for ACE Corp., the general contractor. When adding up the total of materials and labor, Jeff's secretary mistakenly moved the decimal point one place, ending up with a bid of $3500 rather than $35,000. ACE Corp. accepted Jeff's bid, mostly because all the other bids were over $30,000. When Jeff learned of the mistake, he tells ACE Corp. that he cannot do the job for $3500. If ACE Corp. sues to enforce this contract, what is the most likely result?
This is a unilateral mistake, but one where ACE Corp. knew that a mistake had been made. Jeff should be able to rescind the contract
Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions?
Totally integrated contracts
The main difference between the UCC requirement for a writing for a contract for the sale of goods and the common law is that the:
UCC does not require all the terms of the agreement to be in writing
Vivian goes to an auction and sees a rare antique lamp that is an identical match to one she already has.At the proper time she bids on the lamp and is the highest bidder. Even though she is the highest bidder, the auctioneer refuses to accept her bid and withdraws the lamp from the auction. Can the auctioneer do that?
Unless otherwise stated, the auctioneer had the right to withdraw the item before the fall ofthe hammer
Wally owns 200 acres of land. Wally offers to sell the land to Robert for $1,500 per acre. Robert replies that he does not need 200 acres of land but would like to buy 40 acres at $1,500 per acre. Wallyagrees to sell but does not identify which 40 acres. Later, Wally refuses to sell any land to Robert. What is the result?
Wally wins; this agreement is too indefinite since it does not identify which 40 acres are to be sold
Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter's boss told him, "I'm really grateful for the year that you have worked here. I am going to give you a bonus of $1,000 in your last paycheck." When Walter got his last paycheck, there was no bonus. If Walter sues, the likely result will be:
Walter will lose, as he gave no consideration.
In January, Alex promised to pay Y-K Inc. $5,000 if it would refrain from filing suit against him on a breach of contract action. Y-K agreed and accepted a $5,000 check from Alex. Which of the following statements is correct?
Y-K's promise to refrain from suing Alex was supported by legal consideration and is enforceable
Zero, Inc. agreed to build Millie a storage building for $8,000. After beginning the project, Zero realized that it could not complete the job and make a profit. Zero demanded $9,500 to complete the building. Millie agreed to pay the $9,500. When the project was complete, Millie tendered $8,000 to Zero for the job. If Zero sues Millie for the remaining $1,500:
Zero will lose because there was no legal consideration to support the additional $1,500
In which of the following situations is the seller a merchant under Article 2 of the UCC?
Zompa Inc., a toy manufacturer, contracted to sell dolls to TonTon Department Store
In the case of Worldwide Insurance v. Klopp, the Supreme Court of Delaware found that:
a contract provision requiring arbitration and then permitting appeal by either party was void as unconscionable
An unliquidated debt can be described as:
a debt in which the existence or amount is in dispute
An example of the type of relationship required to find undue influence would be:
a doctor-patient relationship
A spouse who is named the beneficiary of a life insurance policy would ordinarily be:
a donee beneficiary
Susan took out a life insurance policy on herself, paying all of the premium payments. She named her daughter, Jessica, as the beneficiary under the policy. Jessica has not given anything in consideration for the policy. Jessica is:
a donee beneficiary who has rights to enforce the policy once Susan dies
Pamela is planning to sell her home decorating store to her daughter. Pamela has:
a greater duty to reveal problems in the business because her daughter assumes she will be honest
A contract clause which specifies the amount of damages to be paid in the event of a breach is called
a liquidated damages clause
Harriett raises and sells hippos. In order to keep her hippos happy and healthy, she feeds them Hippo Chow, which she buys from the local pet store. Under the UCC, Harriett is:
a merchant of hippos, but not of Hippo Chow
A force majeure event is:
a natural disaster that claims human life or leads to the declaration of a state of emergency
Molly and Craig are the original parties to a contract. Craig is obligated to design a Website for Molly. They subsequently make an agreement with Eric that Eric should take the place of Craig and assume all of Craig's rights and duties under the contract. The agreement releases Craig from his obligations under the contract. This agreement is:
a novation
Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. The potatoes are beginning to rot. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered:
a reasonable mitigation of damages
Cheryl enters into a contract with Gabe. In this contract, Cheryl asks Gabe to pay the money he owes her from the contract to her friend Leah because Leah is having financial troubles. Leah is:
a third party donee beneficiary
The Tavern's secret recipe for its pizza sauce would be considered:
a trade secret, and an employment noncompete clause would be enforceable to protect it.
A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. This is:
a valid assignment because this is a simple transfer of the right to receive money
Generally, in comparison to a donee beneficiary, a creditor beneficiary has:
about the same legal rights.
Nate works as a carnival barker. His employment contract specifies that he can be fired if he "loses hisvoice." This is an example of:
ambiguity
If Crosby and Dash are in disagreement as to the exact amount of money that Crosby owes Dash, then they may choose to form a new agreement at a set amount. If they both perform the new agreement, their conduct would be an example of:
an accord and satisfaction
Bailey Co. and Spryt Bros. enter into a contract for the manufacture and sale of 400 lawn chairs. If both parties agree that a modification is necessary:
an agreement to rescind the contract will terminate the contractual rights of Bailey Co. and Spryt Bros. if neither of them had completed their obligations
The remedy of reformation:
an be used to correct mistakes in the original contract
When Mohammed was hired by Pomico, Inc., he signed the following agreement, "Upon termination of my employment with Pomico, I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement, important to protecting secret information developed in the employer's business, is:
an enforceable agreement not to compete
Marco agrees to sell Clowns R Us some balloons. The contract states that Clowns may buy as many balloons as it wishes. This agreement is:
an illusory contract
"I'll sell you my car if I decide to sell it" is an example of:
an illusory promise
In breach of the partnership agreement, Trimble, a partner in the partnership of Morris, Newt, and Oppie, Ltd. quits the partnership and goes to work for a competitor. The former partners may ask the court for:
an injunction to prevent Trimble from working in competition with the former partners.
Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is:
an integration clause.
Specific performance may be available for the breach of a contract to sell:
an original painting
An agreement in which a buyer agrees to buy all the goods produced by a manufacturer is known as:
an output contract
Deborah purchased a boat from Sun 'N Surf Marine. She later learned that the salesman had made misrepresentations to induce her to make the purchase. Under UCC Section 2-721, Deborah can rescind the contract:
and sue for damages whether the misrepresentation was fraudulent or innocent
In bailment cases, exculpatory clauses:
are somewhat more likely to be enforced than in other types of cases.
A rock group assigns its payment under a performance contract to the Costume Shop, a business that has supplied the group with outrageous stage outfits, and to which the group owes a great sum of money. Under this arrangement the rock group is the:
assignor
If a court awards nominal damages it will generally:
award a very small amount of money
In order to satisfy the statute of frauds, a writing must:
be signed by the defendant and contain the name of each party, the subject matter of the agreement, and the essential terms and promises.
Standard provisions in a contract that are often listed under the heading "Miscellaneous" are called:
boilerplate.
When one party to a contract fails to perform as promised, it is called:
breach.
Amy Hudson has been trying to purchase Glen Cappel's antique desk for some time, but Glen has beenreluctant to sell. One evening Glen said to Amy, "Okay, I'll sell the desk for $550." Amy replied, "Thank you, Glen. I accept." The agreement was not reduced to writing, but Glen and Amy did shake hands. Two days later, Amy sent Glen a letter outlining the terms of the agreement, and stating that shewould deliver $550 cash according to the agreement within ten days. The letter was signed, "Best regards, Amy." Later, Amy had second thoughts, and refused to go through with the purchase. Nothing had been exchanged at this point. Glen:
can enforce the contract against Amy because the statute of frauds is satisfied under this situation
Ted and Alice own their recreational vehicle subject to a security agreement to Third U.S. Bank to secure the repayment of the purchase money loan. Ted and Alice sell their RV to Bob and Carol, who agree to take over the loan payments to the bank. There is no novation with the bank. Under these facts, if Bob and Carol do not make the loan payments, Third U.S. Bank:
can sue Bob, Carol, Ted, and Alice
Mercury Motors inadvertently mixes up a work order on Peter's car. Peter brought the car in to have the tires rotated. Mercury tuned up the motor by mistake, conferring a benefit on Peter. If Mercury Motors insists that Peter pay for the price of the tune-up, Mercury Motors:
cannot recover its expectation interest because there was no enforceable agreement
Which of the following is NOT a standard provision frequently found in contracts?
choice of compensation..
All Seasons, Inc. ordered $5,000 worth of Christmas decorations from Santa, Inc. The shipment of decorations was to arrive no later than October 1, but did not arrive until December 1. All Seasons wasable to purchase some of the unfulfilled order through other suppliers, but had to pay 15% more than the price under contract with Santa, Inc. As a result of the delay, All Seasons' sales were down 25%. All Seasons can recover:
compensatory damages and consequential damages
Public policy means the law that comes from the:
courts that decide what would have a negative impact on society
If the subject of the contract includes issues that may be controversial, it is best to:
deal with them up front before the relationship is strained.
The Uniform Electronic Transmission Act (UETA):
declares that a contract or signature may not be denied enforceability just because it is in electronic form
The title of a contract should be:
descriptive of the agreement, and typed in all capital letters.
Mark's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house, and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Mark agreed to the settlement. If he changed his mind, he can probably rescind the settlement on the basis of:
duress
If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods for $10,000 when the price should have been $1,000, a court will most likely:
enforce the agreement, relying on oral testimony to determine the correct price
Bob signed an agreement with Joe under which Bob agreed to purchase all the hay that Joe grew during the coming growing season. This contract will be:
enforceable as long as both parties act in good faith and Bob doesn't suddenly demand more hay than what was reasonably estimated
Tuan is president and sole shareholder of Entertainment, Inc. Entertainment, Inc. wishes to borrow money, but to do so, the bank requires Tuan to orally agree to personally pay the debt of the corporation if Entertainment, Inc. cannot. Tuan's guarantee to repay is:
enforceable because of the leading object rule
Robin and Bellman, both merchants, orally agree to a contract for the sale of $5000 of accessories. Bellman, the buyer, sends to Robin, the seller, a written confirmation of the sale, which is sufficient against Bellman under the statute of frauds and which Bellman signs. Robin does not sign. Robin failsto perform the contract and does not ship out the goods. Bellman sues. This contract is:
enforceable even without Robin's signature because both parties are merchants.
A promise by Derkin Restaurants to buy all of the produce it needs this next year at an established price from Elfredo's Produce would be an:
enforceable requirements contract
An agreement to pay a lesser amount to settle an unliquidated debt is:
enforceable, as there is consideration
Willis and Leslie orally agree to the sale of a parcel of land for $50,000: one-half payable now as a down payment; one-half payable in 30 days at the time of closing when the title will be transferred. The buyer, Willis, is to have possession immediately. Willis pays Leslie $25,000, takes possession of the land, and starts building a house. At the time of closing, Willis has made a substantial beginning onthe house. However, Leslie refuses to transfer the title, claiming the oral contract is not enforceable. This contract is:
enforceable, because Willis has partially performed the oral contract and made improvements on the land
When a business is concerned about selling to minors because of their right to disaffirm contracts, the business might protect itself by:
equiring an adult co-signer
In a "mixed contract," one involving a sale of both goods and services, the court will:
first determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law.
An assignment:
for consideration is irrevocable
An assignment is valid:
from the moment it is made.
When a party to a contract makes a unilateral mistake, the contract:
generally cannot be rescinded by the mistaken party unless the contract is unconscionable or it is proven that the nonmistaken party knew of the error
The difference between the UCC requirement of good faith and doctrine of unconscionability is that:
good faith focuses on the parties' behavior as they perform the contract
Judith is a CPA with an excellent reputation and client base. She sells her tax preparation business to Shawn, and the sales contract includes a noncompete clause restricting Judith from opening a similar business for two years within a 10-mile radius of her former office. If she opens a tax preparation office five miles away after one year, a court would probably:
grant an injunction barring her from operating the new office
Trey, a full-time college student, sold his car to Don, another student. In the performance of this contract, Trey:
has a duty of good faith which means honesty in fact
Newt, a gun dealer, offers to sell a rare civil war musket to Rush, another dealer, for "$15,000, insurance and shipping paid by buyer." Rush responds, "I accept. Insurance and shipping costs divided equally between seller and buyer." The parties:
have a contract and, in the majority of states, the different terms will cancel each other out.
A requirements contract is a contract:
in which the seller provides all of the goods that the buyer needs.
Costs to store a vehicle for a short period of time after an auto dealer fails to complete the contract to purchase the vehicle would be:
incidental damages
An exculpatory clause is generally unenforceable when:
it involves public transportation.
A letter of intent is not likely to be enforceable unless:
it is clear that both parties intended to be bound by the letter.
A contract most likely will be declared unconscionable if:
it is oppressive and the weaker party did not fully understand the consequences of the agreement
The most accurate statement regarding economic duress is:
it may be grounds for rescission.
The Kelsoe v. International Wood Products, Inc. case was an example of:
lack of consideration
Tyron purchased a vacant lot and entered into a contract with BZ Inc. to construct a shopping center onthe site. Douglas heard about this contract and built a restaurant on an adjoining piece of property because of the planned shopping center. Tyron was unable to raise the necessary capital and was unable to perform the contract with BZ, Inc. Douglas sued Tyron for breach of contract as a third partybeneficiary. Douglas will probably:
lose as a third party incidental beneficiary
Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will:
lose because he will not be able to prove reliance on the misrepresentation
Wright Company contracted with the city of St. Louis to train and employ disadvantaged youths. If Wright fails to fulfill the contract and is sued by one of the disadvantaged youths, the youth would:
lose, as he is an incidental beneficiary
Ryan, a minor, contracted to sell his auto to Ed, a 28-year-old. Ryan later refused to complete the sale. If Ed sues to enforce the contract, Ed will:
lose, because the contract is voidable by Ryan
Under the UCC, if a seller of goods breaches the contract, the buyer:
may "cover" and then receive the difference between the original contract price and the "cover" price
Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. Wellington:
may choose not to resell the fabric and settle for the difference between the contract price and the market value
Under the Uniform Commercial Code, an agreement modifying a contract:
may not require consideration
Hensley and Boyer have been negotiating for several months over issues related to the purchase and sale of some real estate. They draft a letter of intent which:
may or may not be an offer, depending on the exact language and whether the document indicates that the parties have reached an agreement
Mentally infirmed Sasha contracts to purchase a piano for $2,500 in 60 monthly installment payments. Six months later she tries to void the contract on grounds of mental impairment. A court will:
normally void the contract but will require Sasha to return the piano
Eintz Corp. hired Jose to bribe a foreign government official into awarding a $3 million contract to Eintz. Eintz gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts. Instead of paying the bribe, Jose pocketed all of the money. If Eintz sues Jose, Eintz will:
not be able to recover the $12,000
If Becky promises not to drink alcohol until she becomes a legal adult in exchange for Ben's promise of $1,000, the agreement is:
not enforceable because Becky does not have a legal right to drink alcohol
Robert hired James, a CPA, to prepare his tax returns. James was too busy and delegated the work to Sara, also a CPA. This delegation is:
not enforceable, as Robert hired James to perform personal services
John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100 bucks!" John has:
not made an offer because under the circumstances a reasonable person would not conclude that John had intent to make an offer.
If Rudy offers Oscar $200 for his laptop valued at $600 and Oscar agrees, a court will probably:
not set aside the agreement based on the adequacy of the consideration
Renita, a merchant, has received a signed, written confirmation from Merchants, Inc. referring to goods she had not ordered. Renita should:
object to the confirmation in writing within 10 days
Jaime offered to buy Kevin's bike. Jamie is the:
offeror
An insurance contract is not considered to be a legalized form of gambling because:
one must have an insurable interest in the person being insured
In a promissory estoppel case, a court will generally award:
only reliance damages.
Johann, a well-known musician, agrees to give ten guitar lessons to Elton for $2,000. Nothing in the contract itself prohibits a delegation. If Johann delegates his obligation to Eugene, a second-year musical student and enthusiastic guitar player, then the delegation will probably be:
prohibited because the contract is for service from a specific person.
If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind," then Jane's statement is:
puffery
If each party's promises are listed separately in the contract, the are probably:
reciprocal promises
In the case of scrivener's errors (commonly known as typos), a court will usually:
reform the contract if it is clear that the mistake is not what the parties intended
Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the evidence is clear that the two parties intended to agree to 50 days, the courts will probably apply the remedy of:
reformation
Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties negotiated and meant to say in the written agreement, delivery in 50 days. If the two cannot settle this dispute, and Archie still wants to deliver the champagne, then Archie should sue for the remedy of:
reformation
When courts consider economic duress, they consider all the following factors EXCEPT:
relative size of the contract
Statements of facts about the past and present are called:
representations and warranties.
Under a contract for the sale of land, the statute of frauds:
requires the defendant to sign the agreement
Larry purchased a Leisure Lawnmower because the company salesperson intentionally misled him by assuring him that the mower was self-propelled, had a mulching feature, and had a five-year unlimited manufacturer's warranty. When Fred finds out that his new Leisure Lawnmower is not self-propelled, does not mulch, and has a 90-day warranty, he may successfully sue for:
restitution and possibly punitive damages
Under the UCC statute of frauds, the writing for a sale of goods must:
state quantity.
Upon graduating from college, Kathy announced her plans to enter law school the following fall and tomarry Rick in December. Kathy's father was afraid that marriage during her first year in law school might cause her to fall behind in her studies or cause her to drop out of school. He called Kathy and promised her $10,000 if she postponed her wedding until after completion of her first year of law school. Kathy agreed and postponed the wedding for a year. Kathy successfully completed her first year of law school, but soon thereafter, Kathy's father died. The administrator of her father's estate claimed she was not entitled to the $10,000 because there was no consideration for her father's promise. If Kathy sues the estate, she will probably be:
successful, as there was consideration
By definition, a sale under Article 2 of the UCC requires:
that title to the goods pass between the seller and the buyer and that a price be paid for the goods
Mary owes $3,800 on her credit card. She sends the credit card company a check for $800 with the notation "payment in full" on the check. If the credit card issuer cashes the check:
the check may be subject to a UCC exception to the general rules for accord and satisfaction cases involving checks
If Morales and Rolfes Supply negotiate for the purchase and sale of a supply of fuel for a three-year period for Morales' business:
the contract may indicate a method for determining the price, without stating a definite price.
Solomon breaches his contract with Neal to purchase the 500 pairs of socks he had promised to buy. Neal is able to sell the 500 pairs to Renny for a much lower amount. Neal then sues Solomon for damages. Neal will be able to recover:
the difference between Solomon's contract price and the amount paid by Renny
The status of a third party is determined by:
the intent of the contracting parties
Claude agrees to lease his house to Irvin for nine months, the lease to begin six months from the signing of the contract. Under the statute of frauds:
the lease is required to be in writing because of the one-year rule
If an offer specifies no time limit in which to accept:
the offeree has a reasonable period during which to accept
In a contract modification, the phrase, "charged with such amendment" means:
the party who will be adversely affected by the change.
Regency Construction placed an order for two hundred 2 x 4s from Lumber Jack. If the place of delivery and time for shipping the goods are not specified, the UCC provides:
the place of delivery is Lumber Jack's and the time for delivering the lumber is a reasonable time based on normal trade practice
In the Schauer v. Mandarin Gems of California, Inc. case, the court held:
the plaintiff was entitled to proceed with her contract claim against the jeweler because the jeweler must have understood that she was an intended beneficiary of the sales contract
One reason you may not need a written contract is:
the terms of the agreement are simple and the value of the transaction is small.
The Utah Court of Appeals in the Dementas v. Estate of Tallas case found:
the trial court correctly determined that there was no consideration to support Tallas's promise.
A seller's form clearly states no warranty is included. The buyer's form states that the seller warrants the goods for one year. In this case:
the warranty term is a "different term," and the majority of states hold that a contract can be formed but the contradictory terms cancel each other out.
The intent of the offeror to extend an offer to the offeree is generally determined by reference to:
the words and conduct of the offeror.
Compensatory damages are typically assessed against the breaching party:
to put the non-breaching party in the position it would have been in if the contract hadn't been breached
Reformation is:
uncommon
When a contract falls within the statute of frauds but is not reduced to a writing, the contract is:
unenforceable
Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill, and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who got only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. The probable result will be:
unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property.
A donee beneficiary:
usually does not give consideration in return for the gift
When a party to a contract intentionally makes the terms of a contract unclear, it is called:
vagueness
Brandon orally assigned his right to $100 from a lawn mowing contract to Will as a gift. This assignment is:
valid even though it was oral and there was no consideration from Will
ABC Siding, Inc. manufactures aluminum siding. ABC enters into a contract to deliver siding to Slippery Siding, Ltd., a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and signed by both parties. This prohibition against oral modifications is:
valid regardless of whether the clause is signed separately.
Which of the following is NOT one of the three ways to amend a written contract?
verbally agreeing to the changes and shaking hands on the deal.
On January 8, Quastrar, Inc. sent Hylavian Company a letter offering to sell $10,000 in restaurant supplies. On January 18, Hylavian mailed a letter to Quastrar accepting the offer. Quastrar received theacceptance letter on January 20. On January 17, Quastrar sent a letter revoking the offer. Hylavian received this letter on January 21. A contract between Quastrar and Hylavian:
was formed on January 18
The first step a court takes in choosing a remedy is to determine:
what interest it is trying to protect
Generally, reasonable liquidated damage clauses will be enforced:
when actual damages are difficult to determine
A third party beneficiary's status occurs:
when the contract is created
In determining whether parties intended to reduce their agreement to writing, which of the following factors would normally NOT be considered:
whether or not the terms are complete.
The Johnsons decided to sell their summer cabin on Beech Lake. They sent flyers out to all who previously had expressed an interest in buying the cabin stating that they were planning on selling theircabin. The flyer described the location of the property, the size of the lot, and the price. If one of the recipients responds by sending a letter accepting, an agreement:
will not be formed because the flyer was sent out as an invitation to make an offer.
in the historic case of Hamer v. Sidway, the nephew:
won, as there was consideration
