BLAW

Hugh recently purchased a motorcycle for $4,000 but has had extensive problems starting the motor. In disgust at not being able to start the motorcycle, Hugh shouts to his friends, "Any of you want to buy this thing for $20?" A contract will be formed if a friend gives Hugh a twenty-dollar bill.

False

If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he cannot sell it to anyone else during that time.

False

If Thomas seemingly offers to sell to Raquel his Toro lawnmower but he intends to offer and believes he is offering her his Murray mower, and she accepts the offer, reasonably believing it was for the Toro, no contract has been formed because there is no mutual assent.

False

If an offer states that a reply must be received by a certain date, the contract is formed at the time the offeree sends or dispatches the acceptance.

False

If no time limit is stated, an offer will not terminate until both parties agree.

False

If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute duress.

False

In an output contract, the seller can operate a factory on a 24-hour-a-day schedule and insist that the buyer take all of the output when that buyer had operated only eight hours a day at the time the contract was made and the buyer had knowledge of the eight-hour-a-day operating schedule.

False

In most states, a contract under seal is binding without consideration.

False

In order for an offer to end by lapse of time, the offeror must specify the time within which the offer is to be accepted.

False

In settling a liquidated debt, payment of a smaller amount before the due date would constitute consideration, but paying a lesser amount on the due date at an agreed-upon different place of payment would not be legally sufficient consideration.

False

Jerry received a bill for $300 from Johnson for a tune-up Johnson had performed on Jerry's car. Jerry called Johnson and told him, "The car runs no better now than before the tune-up. I am sending you $100 and no more." Johnson received the $100 check which was marked "paid in full" and cashed it. Jerry is still liable to Johnson for $200.

False

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

False

Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms.

False

Majorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence

False

On June 1, a civic club made an offer of $500 to a beer distributor to have ten kegs delivered to the city park for a July 4th fund-raising event. On June 30, the city passed a new law prohibiting consumption of alcohol in the city park. The civic club's offer is terminated on June 30.

True

On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection.

True

Otherwise illusory promises may be transformed by some courts into actual promises by implying an obligation of good faith and fair dealing.

True

Pablo promises to sell to Candice an automobile for $20,000, for which Candice promises $20,000. A bilateral contract exists.

True

Physical compulsion and improper threats are the two basic types of duress.

True

Rescission is usually permitted where the parties to a contract are both mistaken about a material fact.

True

Scienter is the element of fraud that requires that the person who makes the misrepresentation knows that it is false or has reckless indifference as to its truthfulness.

True

Th element of exchange is absent where a promise is given for an act that has already been done

True

The Code has changed the common law rule regarding modification of a preexisting contract by providing that a contract for the sale of goods can be effectively modified by the parties without new consideration, provided they intend to do so and act in good faith.

True

The Code's firm offer rule applies only to offers in writing that are made by a merchant offeror.

True

The Restatement provides that a promise following the rendering of emergency services is binding even if not supported by consideration if necessary to prevent injustice.

True

The central idea behind consideration is that the parties have intentionally entered into a bargained exchange with one another and have given each other something in exchange for a promise or performance.

True

The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.

True

The person to whom an offer is made is an offeree.

True

The term "past consideration" is not really consideration at all because the law will not find a contract where there is no bargained-for-exchange.

True

There are two distinct types of fraud

True

To obtain relief for negligent or innocent misrepresentation all the remaining elements of fraud must be present and the misrepresentation must be material.

True

To sustain a case of fraudulent misrepresentation, the injured party must prove that he actually relied upon the false representation.

True

Under the UCC, exclusive dealing contracts are binding because sufficient consideration is deemed to be present.

True

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

True

Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship

True

When a bid is made at an auction, it can be revoked if the auctioneer has not yet accepted the bid because the auctioneer has the power of acceptance.

True

According to the UCC, only a merchant can make a firm offer to a buyer.

True

In a bilateral contract, if one party is not bound, neither party is bound

True

In a unilateral contract, a promise is exchanged for an act or forbearance to act

True

In general, acceptance is effective upon dispatch

True

In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

True

In some state a promise under seal is binding without consideration

True

Non fraudulent representation is made without scienter

True

An offer under Article 2 of the UCC that is irrevocable even though no consideration is given to keep it open is known as a(n): a. option. b. firm offer. c. requirements contract. d. output contract.

B

Historically, courts held that representations of law were statements of fact, but the present trend is to recognize that they have only the effect of statements of opinion.

False

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay:

$60, since the modified agreement is supported by additional consideration

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:

A

Carlos ordered an aluminum storm door for $249.99. Before it was delivered, the same store from which he ordered the door ran an ad in the paper for the same storm door at $179.99. Carlos calls the store and demands the advertised price. They say okay. a. Carlos must pay $179.99. b. Carlos must pay $249.99. c. There is no contract. d. There is a contract for the reasonable value of the door.

A

Elvis makes an offer to Miguel, but before Miguel can accept, the state supreme court decides a case that makes the offer illegal. What is the effect of the court decision on the offer? a. The court decision automatically terminates the offer. b. The court decision has no effect on the offer. c. The court decision acts as a condition on the offer. d. The court decision acts as a rejection of the offer by the offeree.

A

Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy. a. Maxine has revoked her offer to Tom. b. Maxine's offer is a firm offer and she must sell Tom a video camera for $200. c. Maxine must get the camera back from Cindy if Tom accepts within two weeks. d. Both (b) and (c) are appropriate alternatives in this case.

A

Rob repairs a door for Howard. In return, Howard is supposed to pay Rob $75 on November 1 at Howard's house. Which of the following would constitute legally sufficient consideration? a. Howard pays Rob $60 on November 1 but, after checking with Rob, brings payment to Rob's house. b. Rob comes to Howard's house to collect the $75 on November 1, but Howard only has $50. Rob tells Howard to forget the other $25. c. Since this is an unliquidated debt, the only legally sufficient consideration is Howard's payment of $75 to Rob on November 1 at Howard's house. d. Since this is a liquidated debt, the only legally sufficient consideration is Howard's payment of $75 to Rob on November 1 at Howard's house.

A

Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction? a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable. b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. c. Stan is under a pre-existing legal obligation to pay the $800. d. Both (b) and (c).

A

The Rogers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the Thompsons, decided to sell and called Mr. Rogers. Before he could get back in touch with Mr. Thompson, Mr. Rogers suffered a heart attack and died. Mr. Rogers' adult daughter, to whom the Thompsons had not spoken, still wants the house. a. She may not accept since the offer is terminated. b. She may not accept because she does not have the capacity. c. She may accept since the contract offer is assignable. d. She may accept since the offer cannot be revoked without notice.

A

The requirement of legally sufficient consideration: a. is that the parties have agreed to an exchange and it imposed a legal detriment upon the promisee or conferred a legal benefit upon the promisor. b. has nothing to do with the value of what is exchanged. c. means the subject matter that the parties agree to exchange has to have the same value. d. is the same as the requirement of adequacy of consideration.

A

Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose. Rose had a very small house and did not have a separate bedroom and bath for 12-year-old Tommy. She and Tommy decided to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid. The stock transfers are: a. presumed voidable unless Rose can show no unfair advantage was taken. b. presumed valid unless it can be proven that Tommy was taken advantage of. c. null and void because of undue influence. d. presumed void because of duress.

A

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract? a. Yes, since the acceptance was received before the rejection b. No, because the rejection was effective upon dispatch c. No, because the rejection terminated the offer d. Yes, because the acceptance is always effective upon dispatch

A

Which of the following are the two basic elements to consideration? a. Bargained-for exchange legal sufficiency b. Legal detriment and legal benefit c. Legal sufficiency and legal adequacy d. Promise and forbearance

A

Which of the following is enforceable without consideration? a. A new promise to pay a debt barred by the statute of limitations. b. An illusory promise. c. Under the common law, a promise made to satisfy a preexisting moral obligation. d. A promise by a father to pay someone for rendering emergency services to his injured son before the father had arrived at the accident scene.

A

William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. a. The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000. b. Under the UCC, the substitute contract is binding, because there is the payment of additional money. c. William is in breach of contract. John need not pay any additional money. d. William is under a pre-existing moral duty to perform at the originally agreed-upon price.

A

According to general (common) contract law, the _____ must be the ______ of the offer.

Acceptance; mirror image

If an offer has not stated time by which it must be accepted, when does the offer terminate?

After a reasonable period of time

Which of the following offers cannot be revoked? a. Any offer by a merchant under the UCC. b. Any offer that is in writing that promises to leave the offer open for three months or less. c. Any offer that is in writing, signed, and promises to leave the offer open whether it is made by a merchant or not. d. All of these are incorrect

All of these are correct

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She signed a promissory note at a high but not illegal rate of interest. What result? a. It is valid because she signed it. b. It is valid because the threat to bring a civil suit to collect money owed is permissible. c. It is invalid because she signed under duress. d. It is invalid because the agency put her under undue pressure.

B

A purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs is a(n) ____ contract. a. illusory b. requirements c. output d. exclusive dealing

B

Alice offers to sell her computer, monitor, and printer to Bradley for $300. Bradley says he will accept provided that Alice includes her word processing software. What is the status of their discussions? a. There is a valid contract for the computer, the monitor, the printer, and the software. b. There is no contract, because Bradley has made a counteroffer. c. There is no contract, because the time for delivery has not been decided. d. There is no contract, because the offer has been revoked by the offeror.

B

An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as: a. an output contract. b. a requirements contract. c. a firm offer. d. promissory estoppel.

B

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. a. This is an illusory contract, because Darla doesn't know whether she will receive the money for sure. b. The consideration moving from Darla to Edward is the promise of $6,000 subject to a condition. c. Darla's conditional promise is sufficient consideration unless Darla knows she cannot receive at least $6,000 from her uncle's estate. d. Both (b) and (c).

B

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. a. Elmer has made a firm offer to Fred which cannot be revoked. b. Elmer can revoke his offer at any time before acceptance, because there is no consideration to keep the offer open. c. Elmer must keep the offer open, because this is an option contract. d. Elmer is prohibited from revoking his offer to Fred under the doctrine of promissory estoppel.

B

Gary mails an offer to Brian on June 15. Brian receives the offer on June 16. Gary mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18 and Gary receives the acceptance on June 20. Brian receives the revocation on June 19. Was a contract formed? a. Yes, on June 16 b. Yes, on June 18 c. Yes, on June 20 d. No, the offer was revoked before acceptance

B

Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable? a. Yes, there is no way for the dealer to get the extra money anyway b. Yes, there is consideration for the modified amount c. No, there is no consideration and the dealer can sue for the extra $300 d. No, there is an implied contract to pay the dealer whatever he billed Jack

B

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. Because of the threat, Kenneth signs the contract. a. This contract is voidable at Kenneth's option. b. James has committed physical duress against Kenneth. c. This is an example of economic duress. d. All of the above.

B

Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $1 million from her mother's will. a. Janet has made an illusory promise. b. Janet's promise is legally sufficient unless Janet knew at the time she made the promise that she could not inherit the $1 million. c. Janet has made a conditional promise which is not sufficient to form consideration. d. Janet's promise is legally inadequate and the courts will therefore not enforce it.

B

Tyler contracts to build a garage for Wilbur for a price of $6,000. Because of an increase in the cost of labor and materials, Tyler refuses to perform. Wilbur wants the garage, so he agrees to pay an additional $500. a. Wilbur must pay the additional $500. b. Tyler has given no additional consideration, and under the common law must perform at the agreed upon original price. c. The substitute agreement is an illusory contract. d. The debt is a disputed one, and therefore Wilbur is obligated to pay the additional money.

B

Wayne helped Hank study all night for an important exam. After Hank got an A on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it." a. There is no contract because there is no mutual assent. b. There is no contract because there is no valid consideration. c. There is no contract because $10 is reasonably inadequate consideration. d. There is a contract with sufficient consideration.

B

A ____ is an offeree's refusal to accept an offer. a. revocation. b. counteroffer c. rejection d. statutory irrevocability

C

Andrew agrees to paint Betty's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job unless Betty agrees to pay him $100 more. What law applies to this fact situation? a. The acceptance of additional money to settle a disputed claim is supported by consideration. b. A past obligation is sufficient consideration for a new promise. c. Andrew gives no additional consideration in return for modification of a preexisting contract. d. Betty has made a promise in exchange for a forbearance.

C

Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in Eliza's store on sale for $3,000. Which of the following is true? a. She can get it back because of fraudulent concealment of the value. b. She can get the true value, because it would not be fair otherwise. c. She cannot rescind the contract because Eliza did not have a duty to tell her the value of the table. d. She cannot rescind the contract because she did not rely on Eliza to give her a fair price.

C

In general, which of the following will not terminate an offer? a. The death of the offeree b. The death of the offeror c. An inquiry by the offeree as to size or materials d. An acceptance that adds a material term

C

In which of the following situations will a smaller sum be unable to discharge a larger debt? a. If the smaller sum is paid before the due date of the larger debt. b. If an additional article or service is given together with the payment of the smaller sum. c. If the smaller sum is paid when the larger sum would ordinarily be due, but the debtor is on the verge of insolvency. d. A smaller sum is never able to discharge a larger debt.

C

Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following is correct? a. Marilyn will have to pay $20,000. b. This is a contract under seal which is enforceable. c. This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. d. This is the settlement of a disputed debt that requires no additional consideration on the part of Bravo Builders.

C

Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. She has been offered a two-year graduate fellowship, but she will not be able to pay the loan back if she accepts the fellowship. The bank manager tells Sue that if she pays $3,000 now, they will forgive the loan. Should Sue accept the offer? a. No, because the bank can still sue for the remaining $2,000 b. No, because the manager's promise is not binding on the bank c. Yes, because the early payment of the loan is consideration that makes the bank's promise binding d. Yes, because the bank must do whatever the manager says

C

Which of the following requires consideration in order to be binding upon the parties? a. A written promise by a merchant to keep an offer to buy goods open for 14 days b. Material modification of a sale of goods contract under Article 2 of the UCC c. Material alteration of a personal service contract d. Settlement of a disputed debt

C

Which of the following statements is most accurate concerning charitable subscription promises? a. They are generally not enforceable. b. The courts equate them with gifts. c. They are generally enforceable if there is reliance by the charity. d. The Restatement uses a strict reliance requirement in relation to charitable subscriptions.

C

Which of the following will support a contract? a. An illusory promise b. Past consideration c. Forbearance to do an act d. A pre-existing public obligation

C

Albert read Gem City's ad in the local newspaper advertising a one-quarter carat diamond ring for $89. Albert rushed to the store to buy the ring only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the ring. a. The ad is a firm offer by the merchant, and the ring must be sold for $89. b. The ad is a contract and the store must abide by terms stated in the contract. c. The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him. d. Albert is merely making an offer to Gem City to buy the ring for $89 plus sales tax.

D

An ad in a newspaper or a circular describing goods and stating prices would generally be considered a(n): a. firm offer if made by a merchant. b. offer if made by a merchant, but not a firm offer. c. offer irrespective of who made the offer. d. invitation to buyers to make an offer to buy goods.

D

Barbara, a wealthy widow, promises the pastor of her church that she will donate $20,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $80,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. a. The doctrine of promissory estoppel can be applied to this case. b. The promise to pay $20,000 is a promise to give a gift and is therefore not enforceable. c. Under the Restatement, Barbara's promise is enforceable. d. Both (a) and (c).

D

Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years. a. Acme is obligated to use its best efforts to supply the goods even if no such clause appears in the written franchise agreement. b. According to the UCC, unless otherwise agreed, Doug must use his best efforts to promote the sale of the widgets in his territory. c. Under the UCC, such an agreement lacks consideration. d. Both (a) and (b).

D

Gail sent a letter of acceptance to an offer that has expired. Gail has made: a. a contract. b. a rejection. c. a revocation. d. an offer.

D

If there is no time specified for the acceptance of an offer, when does the offer terminate? a. After 24 hours b. After 48 hours c. After two weeks d. After a reasonable period of time

D

Jason's mother would like him to go to college, so in June he enrolls at State University. He also quits his job and tells his mother his plans to continue taking classes. His mother says, "I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485. Which of the following is true regarding his mother's promise? a. It is enforceable, because Jason returned to college. b. It is enforceable, because Jason is giving up the right to do something else. c. It is unenforceable, because it is a unilateral contract. d. It is unenforceable, because Jason had already enrolled in school and there is no consideration.

D

Jesse makes an offer to Ike, and Ike accepts; then the state legislature passes a law that makes performance of the contract illegal. What is the effect of the new statute on the contract? a. The contract is severed; any portions that are legal must still be performed and any portions that have been made illegal must not be performed. b. The statute has no effect on the contract. c. The statute acts as a condition on the contract. d. The statute discharges the obligations of both parties under the contract.

D

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed, only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement is most accurate? a. McHenry is not liable to Nancy since there is no consideration. b. McHenry is not liable to Nancy since there is past consideration. c. McHenry is liable to Nancy since adequate consideration is given by both parties. d. McHenry is liable to Nancy based on the concept of promissory estoppel.

D

When does acceptance of an offer to enter into a unilateral contract generally occur? a. Upon notice of intent to accept by the offeree. b. Upon full performance by the offeror with the intention of accepting. c. Upon commencement of performance by the offeree. d. Upon full performance by the offeree with the intention of accepting.

D

Which of the following gratuitous promises are enforceable by statute? a. A good-faith contract modification in a contract for the sale of goods b. A written offer signed by a merchant to buy or sell goods that assures it will be kept open for one month c. A renunciation of a claim in a written waiver that is signed and delivered by the aggrieved party when the contract involves a sale of goods d. All of the above are enforceable by statute.

D

Which of the following is correct with regard to counteroffers? a. A counteroffer operates as a rejection of the original offer. b. A conditional acceptance is a common type of counteroffer. c. The receipt of a counteroffer terminates the original offer. d. All of the above are correct.

D

An offer must be in one particular form to have legal effect.

FALSE

A liquidated debt is an obligation the existence or amount of which is in dispute.

False

A modification of a contract for the sale of goods must always be supported by additional consideration.

False

A unilateral mistake of fact is ordinarily ground for avoiding a contract

False

Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the land was worth more than $160,000. Al can have the contract avoided based upon fraud.

False

An advertisement is usually an offer to sell

False

An agreement to sell the entire production of a particular plant to a particular purchaser is a requirements contract.

False

An arm's-length transaction is one in which the parties owe each other special duties.

False

An auctioneer is free to withdraw the goods from sale if the sale is advertised or announced in explicit terms to be without reserve.

False

An auctioneer is the offeror and each bid is a counteroffer until a final bid is accepted.

False

An exclusive dealing contract is one type of contract which is illusory because it lacks consideration.

False

An implied contract is not an enforceable contract.

False

An offer is an indefinite proposal made by one person to another.

False

An offer is effective as soon as it is dispatched.

False

Consideration has only one basic element, which is a bargained-for exchange.

False

Contracts generally require adequacy of consideration where the consideration given by both parties is of fair value and equitable.

False

D owes C a past-due undisputed debt of $500. D sees C in a bar and pays him $400. C then says to D, "Forget about the other $100 you owe me. I'm glad to get the $400." C's promise to discharge the remainder of the debt is binding.

False

Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange.

False

For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of opinion.

False

For a misrepresentation to be fraud in the inducement, it need not be material.

False

Fraud in the inducement will render an agreement void.

False

Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.

False

George offered to paint Catherine's barn for $4,000. Catherine said she would accept the offer if George would paint the woodshed, too. At this point, they have made a valid and enforceable contract.

False

A valid offer may be in the form of an act for a promise, which is an offer to enter into an inverted unilateral contract.

True

Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.

False

Mistake by failure to read a document is grounds to void a contract.

False

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.

False

Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

False

Ricardo posts a sign in the neighborhood offering $50 for the return of his Saint Bernard. Alicia, who knows nothing of the reward, finds the dog and returns it to Ricardo. Alicia is entitled to the reward.

False

Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce him to keep his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him.

False

Sandy's private secretary promises to keep the contents of a letter she typed secret if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy has to pay her for the day.

False

Silence can never be an acceptance.

False

The Abbot Corporation contracts with the Baker Corporation to sell to Baker its entire production. After signing the agreement, Abbot can increase its production from one shift to two shifts and Baker will have to buy all of the doubled production.

False

The UCC and the Restatement make no provision for supplying terms omitted by the parties' contract.

False

The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods.

False

The difference between fraud and misrepresentation is that fraud involves malice while non fraudulent misrepresentation is always innocent.

False

The law applies a subjective standard of intent in determining whether there was the requisite intent to enter into a contract.

False

The most uncommon type of duress involves the use of economic and social coercion.

False

The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract.

False

The test for duress is objective and the act must be classified as a tort or a crime in order to be wrongful.

False

The trustee of a trust does not owe a fiduciary duty to the beneficiary of that trust.

False

There is no necessity to distinguish language which constitutes an offer from that which merely solicits or invites offers.

False

Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed.

False

Retail stores typically put advertisements in newspapers describing goods and stating prices. These ads are generally considered to be:

Invitations to buyers to make an offer to buy the goods described.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible?

None of them are eligible

The mirror image rule relates to which required element of a contract?

The acceptance

A basic element of fraud is a false representation or a misrepresentation

True

A conditional promise is a promise the performance of which depends upon the happening or not happening of an event not certain to occur.

True

A contract exists when an offer has been accepted.

True

A famous decision involving mistake as to the meaning of contract terms is Raffles v. Wichelhaus, a case involving two ships with the same name which were confused by the two parties to the contract.

True

A few states provide by statute that the parties need to provide no new consideration when modifying any contract.

True

A modification of a preexisting contract occurs when the parties agree to change one or more of its items

True

A new promise to perform a voidable obligation that has not been avoided previously is enforceable without new consideration.

True

A party to a contract may be entitled to relief even if he is contributorily negligent in relying on a fraudulent misrepresentation

True

A promise to pay $1,000 a year to a local police officer not to have your store vandalized is legally unenforceable under the rule that makes performance of a pre-existing legal obligation legally insufficient consideration.

True

A seller's promise to service a sewing machine free for the next 90 days when she has no intention of doing so is actionable as a false representation of a fact if the other elements of fraud are present.

True

A unilateral contract may consist of a promise exchanged for an act or forbearance

True

Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al is suspicious and asks her why she wants to buy the place. She says she would like to live in the country. Al then asks her if she thinks there might be valuable minerals under the land. Betty laughs and says she doubts that very much, so Al sells her the farm for $160,000. Al later realizes that the land was worth more than he was paid. Betty's statement to Al was a misrepresentation requisite for fraud.

True

An act that is contrary to public policy or is morally reprehensible may constitute duress.

True

An illusory promise has the form of a promise but imposes no real obligation.

True

An offer can be communicated by words or by conduct.

True

An offer must be communicated to the offeree in order for the offer to be effective.

True

At the marriage of her daughter, Lorna is given papers to sign which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution.

True

Both the Code and the Restatement provide that an authorized means of accepting an offer is any reasonable means of communication.

True

Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

True

Commercial reasonableness is a standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved.

True

Consideration does not require an actual benefit to both side of an agreement

True

Consideration exchanged for a promise does not require both legal detriment to the promisee and legal benefit to the promisor

True

Contract law generally places more importance on the intent of the parties to form a contract than on the inclusion of certain terms in the contract.

True

Contracts binding without consideration include promises to pay debts barred by a statute of limitations and debts discharged in bankruptcy.

True

Death or insanity of either the offeror or the offeree ordinarily terminates the offer.

True

Economic duress renders a contract voidable

True

For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

True

If Sam agrees to sell to Thomas all of the tomatoes he wants at $25 a bushel, there is no contract for lack of consideration.

True

If a confidential relationship exists between parties to a contract, the law presumes that undue influence exists if it appears that the dominant party has gained at the other party's expense, but the presumption can be rebutted by evidence that it was not exercised.

True

If a promise is illusory, mutuality of obligation is lacking.

True

If a seller occupies a fiduciary relationship with the buyer and fails to make full disclosure to the buyer, then the latter will be able to avoid the transaction.

True

If an agreement is not voluntary and knowing, it will be either void or voidable.

True

If an offeror makes an offer to an offeree by letter and it is lost in the mail, no legally sufficient offer has been made.

True

If the offer specifies it MUST be accepted by telegram, a letter will not be a valid means of acceptance.

True

When is there an effective acceptance of an offer to enter into a unilateral contract? a. When the offeree says he probably will do what was asked of him in the offer. b. When the offeree begins to do what was asked of him in the offer. c. When the offeree has substantially but not fully performed what was asked of him in the offer. d. When the offeree has fully performed what was asked of him in the offer.

When the offeree has fully performed what was asked of him in the offer

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month. If Robbie does, is there a binding contract?

Yes, because Robbie gave up a legal right

Bill faxes Harry an offer at 9 a.m. on Monday and the fax arrives at Harry's office at 9:02 a.m. Monday. Because Harry is taking a vacation day on Monday, he does not read the fax until Tuesday at noon. Harry decides to accept Bill's offer and tells his assistant at 3 p.m. Tuesday to prepare an acceptance for his signature. The acceptance is placed on Harry's desk at 4:45 p.m. Tuesday. Harry signs the acceptance and gives it to his assistant to fax back to Bill at 9 a.m. Wednesday. The assistant does so immediately; however, due to malfunctioning of Bill's fax machine, Bill does not receive Harry's acceptance until Friday morning. The offer is effective at __________ and the acceptance is effective at __________. a. 9:02 Monday; approximately 9 a.m. Wednesday b. Tuesday noon; Friday morning c. 9 a.m. Monday; 3 p.m. Tuesday d. Tuesday noon; 9 a.m. Wednesday

a. 9:02 Monday; approximately 9 A.M. Wednesday

Furniture Store runs an ad in the local Sunday newspaper announcing a special Veteran's Day offer of a free Brandname chairside table to the first three veterans who come into the store on Veteran's Day. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location and its hours. Joe is a Veteran. He goes to the store on Veteran's Day, but he arrives after the hours listed in the ad and the store has closed. Joe sticks a post-it on the store door saying that he is a veteran and wants the table. Which of the following statements is correct about his offer? a. According to the court in Osprey L.L.C. v. Kelly-Moore Paint Co., Inc., Joe's sticking a the post-it on the door of the store is not the authorized means of accepting the store's offer and is not likely be considered a sufficient substitute for the ad's requirement that the offer be accepted by coming into the store because it does not ensure that the offeror will receive the acceptance at all and it does not ensure that the acceptance will be received before the offer has expired by its terms. b. Joe will be entitled to the table as long as no more than two other veterans accepted the offer before him. c. According to the court in Osprey L.L.C. v. Kelly-Moore Paint Co., Inc., Joe's sticking a the post-it on the door of the store is not the authorized means of accepting the store's offer, but will likely be considered a sufficient substitute for the ad's requirement that the offer be accepted by coming into the store. d. According to the court in Lefkowitz v. Great Minneapolis Surplus Store, Inc., Joe's post-it will be considered an offer rather than an acceptance because the ad was not specific enough to be considered an offer.

a. According to the court in Osprey L.L.C. v. Kelly-Moore Paint Co., Inc., Joe's sticking a the post-it on the door of the store is not the authorized means of accepting the store's offer and is not likely be considered a sufficient substitute for the ad's requirement that the offer be accepted by coming into the store because it does not ensure that the offeror will receive the acceptance at all and it does not ensure that the acceptance will be received before the offer has expired by its terms.

Who would likely be considered a merchant under the UCC with respect to the goods in question? a. An authorized Apple computer dealer selling accessories for Apple computers and Apple-related products. b. An authorized Apple computer dealer selling the old shelving in the Apple store that was used to display the Apple products before the store was redecorated. c. An authorized Apple computer dealer selling household goods at a yard sale at his home. d. All of these are correct.

a. An authorized Apple computer dealer selling accessories for Apple computers and Apple-related products

BigOil promises Gasnow as many barrels of oil as they shall chose at $50 per barrel. In this case: a. BigOil has made an illusory promise. b. BigOil's promise is legally sufficient unless BigOil knows they are running out of oil. c. BigOil has made a conditional promise which is not sufficient to form consideration. d. BigOil's promise is legally inadequate and the courts will therefore not enforce it

a. BigOil has made an illusory promise

Debra delivers a package to Jackie and requests Jackie to sign a receipt for the package, holds out a simple sheet of paper that says "Receipt," and shows a line where Jackie is supposed to sign. The line, which appears to be at the bottom of the receipt, is actually a promissory note for a $10,000 loan. Jackie signed the line, as indicated by Debra and did not know that she was signing a note. This scenario is an example of: a. Fraud in the execution. b. Fraud in the inducement. c. Undue Influence. d. Duress.

a. Fraud in the execution

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Which statement is true? a. Harry has made a counteroffer. Unless Bill accepts the counteroffer, there is no contract. b. Harry has made a counteroffer. If Bill does not accept the counteroffer, Harry can still accept Bill's original offer unless Bill revokes it. c. Harry has revoked Bill's offer. d. Under the UCC, Harry has accepted the offer even though his acceptance was not the mirror image of the offer

a. Harry made a counteroffer. Unless Bill accepts the counteroffer, there is no contract

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000. Later, Sam finds out 1970 Corvettes which are in excellent condition and have all the original parts sell for closer to $57,000. He changes his mind about selling his Corvette to Sam for $7,000. Which of the following statements about the offer is correct? a. Sam can revoke his offer to Bob at any time so long as there is still an offer to revoke. b. Sam cannot revoke his offer to Bob if Sam sells cars because then his offer is a firm offer. c. Sam can reject his offer to Bob at any time so long as there is still an offer to reject. d. Sam cannot revoke his offer to Bob because he made it via email and email is considered a writing.

a. Sam can revoke his offer to Bob at any time so long as there is still an offer to revoke

Which is not correct about the UCC's "Battle of the Forms" rule? a. The UCC battle of the forms rule is what common law calls the mirror image rule b. The UCC battle of the forms rule changes the common law's mirror image rule c. The UCC battle of the forms rule may result in a contract with terms that are not identical to the terms included in the offer d. What gets included in the final contract terms may depend upon whether the parties are merchants

a. The UCC battle of the forms rule is what common law calls the mirror image rule

For purposes of general contract law (common law), an offer must: a. be sufficiently definite and certain. b. be made to only to one person. c. be intended by the offeror to be an offer. d. All of these are correct.

a. be sufficiently definite and certain

Contracts induced by threats of __________ are not voidable, unlike threats of __________ regardless of whether the coerced party had committed an unlawful act. a. civil prosecution; criminal prosecution b. criminal prosecution; civil prosecution c. tortious conduct; civil prosecution d. None of these are correct.

a. civil prosecution; criminal prosecution

If a court was to consider whether Joe (or Pharzime) committed fraud in their contracts, what of the following elements would not need to be proven? a. damages b. false representation c. justifiable reliance d. scienter

a. damages

3. Furniture Store runs an ad in the local Sunday newspaper announcing a special sale on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. Joe goes to the store to purchase the table but sees another very similar table that is not on sale ("the regularly priced table"). He offers to buy the regularly priced table from the store for the sale price of the Brand Name table. The store says that it cannot sell it at the sale price, but it can sell it for 10% off the listed price. Joe says that is too much money to spend for the regularly priced table. Joe continues to shop around. Seeing nothing he likes, he decides to buy the regularly priced table for 10% off. When he goes to pay for the table, the store charges him full price. If challenged in court, the court is most likely to: a. find that the Joe's initial rejection of the store's offer to sell the regularly price table for 10% off effectively terminated that offer; that Joe is now making an offer to purchase the regularly priced table for 10% less than the asking price; and the store is free to accept or reject Joe's offer. b. find that the store effectively revoked its offer when it charged Joe full price. c. find that the store is contractually obligated to sell the table to Joe at 10% off the regular price because the store made that offer to Joe and Joe accepted the store's offer. d. find that by going into the store to look at the advertised table, Joe accepted the store's offer to sell the Brand Name table to Joe for the sale price and, therefore, Joe is contractually obligated to pay for and accept the Brand Name table.

a. find that the Joe's initial rejection of the store's offer to sell the regularly price table for 10% off effectively terminated that offer; that Joe is now making an offer to purchase the regularly priced table for 10% less than the asking price; and the store is free to accept or reject Joe's offer.

A resulting contract is void when it is brought about by? a. fraud in the execution b. fraud in the inducement c. innocent misrepresentation d. All of these are correct

a. fraud in the execution

If a court found that Joe (or Pharzime) committed fraud in inducement to their contracts, to what remedy or remedies is the aggrieved party entitled? a. rescission and damages, if out of pocket expenses were incurred as a result of the fraud b. restitution c. ratification of the contract d. rescission

a. rescission and damages, if out of pocket expenses were incurred as result of the fraud

To establish fraud, the misrepresentation must have been known by the one making it to be false and must be made with an intent to deceive. That knowledge is known as: a. scienter. b. negligent misrepresentation. c. sales puffery. d. All of these are correct

a. scienter

In DiLorenzo v. Valve and Primer Corporation, the court considered which of the following issues? a. Whether DiLorenzo supplied consideration in exchange for the stock option. b. Whether other companies were attempting to hire DiLorenzo away from Valve and Primer. c. Whether the board resolution occurred if only DiLorenzo had documentation of it. d. Whether Valve & Primer conditioned the alleged stock option on DiLorenzo's promise to remain in its employment.

a. whether Dilorenzo supplied consideration in exchange for the stock option

Annie wants to buy a vehicle that will tow a camper. She gives the specific measurements and weight of the trailer to the salesman. The salesman tells her that the SUV Annie sees on the car lot would be just perfect to tow the trailer. Annie test drives the vehicle and then buys it. In this case: a. Annie has a valid cause of action for fraud. b. Annie was not justified in relying upon the salesman's representation that the car would tow the trailer. c. the salesman is in a confidential relationship with Annie d. the element of scienter is missing

b. Annie was not justified in relying upon the salesman's representation that the car would tow the trailer

The law very carefully scrutinizes contracts between those in a relationship of trust and confidence that is likely to permit one party to take unfair advantage of the other. Which of the following is not an example of that type of relationship?\ a. Agent and principal. b. Hairdresser and client. c. Parent and child. d. Doctor and patient

b. Hairdresser and client

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Bill says he is not interested in fixing the roof. Harry then tells Bill he will still buy the house. Bill tells Harry the house is no longer for sale to Harry. Which statement is true? a. Bill must sell the house to Harry because Harry accepted his offer to sell the house for $90,000. b. Harry's counteroffer terminated Bill's offer, and Bill's rejection of both Harry's counteroffer ($90,000 plus fix the roof) and offer ($90,000) leave Bill free to make a new offer to sell the house to anyone he chooses, including Harry, and under any terms he chooses as long as the terms are not illegal. c. If Bill will not sell the house to Harry for $90,000, he cannot sell the house to anyone for $90.000. d. Harry's counteroffer terminated Bill's offer; however, Bill can still change his mind and accept either Harry's counteroffer or Harry's offer to buy Bill's house for $90,000.

b. Harry's counteroffer terminated Bill's offer, and Bill's rejection of both Harry's counteroffer ($90,000 plus fix the roof) and offer ($90,000) leave Bill free to make a new offer to sell the house to anyone he chooses, including Harry, and under any terms he chooses as long as the terms are not illegal.

Suppose that Jack, Hal, and Sophia enter into an agreement for the sale of the restaurant, with Jack stating in the agreement that if he feels comfortable with his finances in his retirement, that he will not sell the frozen food in competition with the restaurant. After the sale, the stock market rises considerably, and Jack's net worth quadruples. He still decides to sell the frozen food. Hal and Sophia sue. What is the result? a. Hal and Sophia would win since the contract mentioned the non-competition agreement. b. Jack would win since the promise not to compete was illusory. c. Jack would win, unless that Hal and Sophia could prove that Jack was comfortable with his finances in his retirement. d. Hal and Sophia would win since Jack's net worth quadrupled.

b. Jack would win since the promise not to compete was illusory

__________ means doing that which the promise was under no prior legal obligation to do. a. Bargained-for exchange b. Legal detriment c. Bilateral d. illusory

b. Legal detriment

If Joe introduces himself as Dr. Early to sell to Gensol, knowing that people will assume that he was a medical doctor, but he never tells anyone that he is, would contracts entered into be considered fraudulent? a. Probably, since he is giving his opinions of the merits of Gensol. b. Probably not, because there is no statement of a material fact since he did not say he was a medical doctor. c. Probably, because he would have scienter. d. Probably not, because he would have scienter

b. Probably not, because there is no statement of a material fact since he did not say he was a medical doctor

Billy freely agrees to sell Roger a painting for $100. Billy thinks the painting is ugly and a piece of junk. Neither Billy nor Roger are art aficionados or knowledgeable about art. After the sale is made, however, Billy discovers that the painting is worth $10,000. If Billy tries to void his agreement for lack of consideration with Roger and loses, what would be the best reason under these facts? a. Billy was under no duress at the time of the sale. b. The consideration, although disproportionate, is nevertheless adequate because he was done freely. c. Billy made a unilateral mistake. d. None of these are correct.

b. The consideration, although disproportionate, is nevertheless adequate because he was done freely

Which of the following would be material to the sale of a racehorse? a. The horse's coloring is chestnut. b. The horse's running time in the last race was the fastest in the circuit. c. The horse was ridden by Josh Jockey in the last race. d. All of these are correct.

b. The horse's running time in the last race was the fastest in the circuit

Furniture Store runs an ad in the local Sunday newspaper announcing a Veteran's Day special on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. If Joe goes into the store sometime during the day on Veteran's day and tries to buy a Brandname chairside table, but is told the store has sold out of that particular table, according to the court in Lefkowitz v. Great Minneapolis Surplus Store, Inc.: a. The store is likely to be in breach of contract because the ad was an offer that Joe accepted. b. The store is not likely to be in breach of contract because the facts and circumstances regarding its ad indicate that the ad was intended to be like most ads—an invitation for the public to make an offer—and the store did not accept Joe's offer. c. The store is not likely to be in breach of contract because Joe wasn't the first person to accept the offer made in its ad. d. the store is not likely to be in breach of contract because an ad made to the general public can never be an offer.

b. The store is not likely to be in breach of contract because the facts and circumstances regarding its ad indicate that the ad was intended to be like most ads—an invitation for the public to make an offer—and the store did not accept Joe's offer.

Suppose at the end of the meeting, Jack makes an offer regarding the restaurant buyout, which includes the non-competition agreement. Prior to Hal and Sophia agreeing to the offer however, Jack changes his mind. Can he do so? a. No, unless the offer states that it is revocable. b. Yes, as long as he actually communicates the revocation to Hal and Sophia (or their agent) prior to acceptance. c. Yes, and there is no need to actually communicate the revocation to Hal and Sophia (or their agent) prior to acceptance. d. No, once an offer is made, it can never be revoked.

b. Yes, as long as he actually communicates the revocation to Hal and Sophia (or their agent) prior to acceptance

In some situations the courts will enforce new promises to perform an obligation that originally was not enforceable. Which of the following would be that sort of promise? a. An illusory promise. b. A new promise to pay a debt barred by the statute of limitations. c. A promise to supply all of the materials a manufacturer will need for the production of a certain item for a specified period of time. d. In the majority of states, a promise by a father to pay someone who rendered emergency services to his injured son before the father had arrived at the accident scene.

b. a new promise to pay a debt barred by the statute of limitations

To be effective, an offer must: a. be in a specified format. b. be communicated to the offeree c. always contain the price of a product or service offered. d. be spoken directly to the offeree.

b. be communicated to the offeree

The fact that the consideration turns out to be disappointing __________ the binding character of the contract. a. does affect b. does not affect c. sometimes affects d. None of these are correct

b. does not affect

A person should not be held to an agreement he has not entered voluntarily. Accordingly, the law will not enforce any contract induced by: a. puffery. b. duress. c. mistake. d. All of these are correct.

b. duress

A person is not entitled to relief from fraud, unless she can show that she: a. was unduly influenced. b. justifiably relied on the misrepresentation. c. was physically forced to comply. d. All of these are correct.

b. justifiably relied on the misrepresentation

An offer for the sale of goods under the UCC: a. must include a price. b. must include the quantity. c. must be made by a merchant. d. must include the time and place of delivery.

b. must include the quantity

As an exception to the rule on courts inquiring as to the adequacy of the consideration, a court will take evidence to establish: a. one party clearly has the better of the deal. b. one party claims to have been defrauded. c. one party has more business experience than the other. d. one party shows a much lower price nationally-advertised on television.

b. one party claims to have been defrauded

Baxter, a plumber, wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Baxter's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000. In this case: a. Baxter must perform for the agreed upon price, because he has made a unilateral mistake. b. the city was aware of Baxter's mistake. When it accepted the bid, with knowledge of Baxter's mistake, the city sought to take an unconscionable advantage of Baxter's error. c. there is a case of mutual mistake. d. All of these are correct

b. the city was aware of Baxter's mistake. When it accepted the bid, with knowledge of Baxter's mistake, the city sought to take an unconscionable advantage of Baxter's error.

When only one party is mistaken as to a fact of facts of the transaction, it is termed: a. negligent misrepresentation. b. unilateral mistake. c. subjective concealment. d. mutual mistake.

b. unilateral mistake

All of the following will serve as adequate consideration except? a. Forbearance to do an act b. Performance of services c. An illusory promise d. A promise to perform

c. An illusory promise

Which of the following offers cannot be revoked? a. An offer to pay the high school student next door if he takes in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is prior to leaving for vacation. b. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before any mail has been delivered. c. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before your return from vacation but after he has collected your mail for all the days that you have been on vacation up until the revocation. d. None of these are correct.

c. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before your return from vacation but after he has collected your mail for all the days that you have been on vacation up until the revocation.

A convenience store robbery has occurred. The merchant's association has offered a $2,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming they are entitled to the money. Which of the following people would not be eligible for the reward? a. A customer of the store. b. An off-duty game warden from a county other than the one where the arrest occurred. c. An on-duty sheriff's deputy in the county where the arrest occurred. d. All of these individuals would be eligible.

c. An on-duty sheriff's deputy in the country where the arrest occurred

__________ is what each party to a contract gives up to the other in making their agreement. a. Contract under seal b. Promissory estoppel c. Consideration d. None of these are correct

c. Consideration

Which of the following will terminate an offer? a. Rejection by the offeror. b. Subsequent illegality of the purpose but not of the subject matter of the offer. c. Destruction of the subject matter of the offer. d. Death of the offeree but not of the offeror.

c. Destruction of the subject matter of the offer

__________ is an unenforceable promise under the law of contract because of a lack of consideration. a. Fraud b. Mutual mistake c. Gift d. Justifiable reliance

c. Gift

Suppose that Jack, Sophia, and Hal enter into a contract to close on the business without the non-competition agreement. Jack states that he would probably sign the non-competition agreement if they included an extra $100,000. A month later, Hal and Sophia bring Jack $100,000. What is the result? a. Jack cannot change his mind, since he stated that he would probably accept $100,000 additional for the non-competition agreement. b. If Jack does not accept the $100,000, he may not sell the frozen food, but only for a reasonable amount of time. c. If Jack does not accept the $100,000, there is a valid contract for the sale of the business, without a non-competition clause. d. If Jack does not accept the $100,000, there is no valid contract for the sale of the

c. If Jack does not accept the $100,000, there is a valid contract for the sale of the business, without a non-competition clause.

Furniture Store runs an ad in the local Sunday newspaper announcing a special sale on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. Joe goes online and places an order for the table. Two months later, Furniture Store sends Joe an email notifying Joe of the store's acceptance of his order and charges his account. Joe no longer wants the table. According to the court in Sherrod v. Kidd: a. Joe is contractually obligated to pay for and accept the table because he did not notify the store that he had withdrawn his offer to buy the table. b. Joe will be contractually bound to this contract unless he dies or becomes incompetent before the store sends the email confirmation that his offer has been accepted. c. Joe is not likely to be contractually bound to this purchase because two months is likely to be more than a reasonable amount of time within which the store had to accept Joe's offer. d. Joe was contractually bound when he went online and accepted the store's offer to sell the table

c. Joe is not likely to be contractually bound to this purchase because two months is likely to be more than a reasonable amount of time within which the store had to accept Joe's offer.

Moe is Larry's attorney. Larry is a high school dropout with a tenth-grade education and no job. Moe graduated from an elite law school and is a highly-skilled attorney. Larry recently inherited a substantial amount of money from his mother. Rather than continue to utilize his late mother's financial management company (Golden Wealth), Moe successfully persuades Larry--after hours of closed door meetings and very high-level talks about the stock market, tax law, and legal jargon--to move his money from Golden Wealth and enter into a 10-year management agreement with Stooge Wealth Management, which is owned by Moe's best friend Curly. If Larry seeks to later void his agreement with Stooge Wealth Management, what would be his winning argument? a. Larry was under duress to enter into an agreement with Stooge Wealth Management. b. Moe and Larry experienced mutual mistake. c. Moe exerted undue influence on Larry to switch from Golden Wealth to Stooge Wealth. d. Larry experienced unilateral mistake.

c. Moe exerted undue influence on Larry to switch from Golden Wealth to Stooge Wealth.

Ned's father orally promises to give him a car for his twenty-first birthday. Using the rule in most states, can Ned legally enforce this promise? a. Yes, Ned can sue his father based on the promise. b. Yes, Ned can sue his promise based on the statute of frauds. c. No, a gratuitous (or gift) promise is unenforceable. d. No, Ned should have gotten the promise in writing

c. No, a gratuitous (gift) promise is unenforceable

In the case of Berardi v. Meadowbrook Mall Company, the court found economic duress, such as that found renders a contract void. Is this statement correct? a. Yes, the court ruled that there was economic duress and overturned the lower court's summary judgment. b. Yes, Meadowbrook took unfair advantage of Berardi to collect its debt. c. No, the court affirmed the summary judgment. d. No, economic duress cannot occur between two people in business

c. No, the court affirmed the summary judgement

The Acme Corporation contracts with the ToysandMoretoys Corporation to sell to ToysandMoretoys its entire production. After signing the agreement, if Acme increases its production from one shift to two shifts will ToysandMoretoys have to buy all of the doubled production? a. Yes, they take the risk that Acme will increase production. b. Yes, they are lucky to get the chance to handle the product exclusively. c. No, there are good faith limitations on output contracts. d. No, ToysandMoretoys always has the right to limit how much they buy

c. No, there are good faith limitations output contracts

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000 and also said that he would give Bob two weeks to accept Sam's offer before he started advertising the Corvette for sale. One week later, Bob learns that Sam has sold his 1970 Corvette to Terry. Which of the following statements about the offer is correct? a. Sam's offer to Bob is not a firm offer, but he cannot sell the car to Terry until the two weeks are up. b. Sam's offer to Bob is a firm offer; and he must get his car back from Terry and sell it to Bob for $7,000 if Bob accepts his offer within the two weeks. c. Sam's action of selling the car to Terry is a revocation of his offer to Bob. d. Terry will not have to sell the car to Bob for $7,000 if Bob wants the car if Terry paid $9,000 for the car.

c. Sam's action of selling the car to Terry is a revocation of his offer to Bob

Betty is looking at the grocery ads in the newspaper and sees that canned tuna is on sale for 6 cents. Because this is an amazingly low price, she rushes off to the grocery store. She loads 10 cans into her cart, goes to the checkout counter and hands the cashier 60 cents. The cashier asks for $6.90 and tells her that the tuna is 69 cents per can and that the ad was a misprint. Betty demands that the tuna be sold to her for 6 cents a can. Which of the following statements about the ad is correct? a. The ad is a firm offer made by a merchant and the grocer must sell Betty the tuna for 6 cents a can. b. The ad is a contract and the store has a contractual obligation to sell the tuna to Betty for 6 cents a can. c. The ad is an invitation for others to make offers. Betty has made an offer to buy the tuna for 6 cents a can and the grocer has rejected Betty's offer, but countered with an offer to sell it to Betty for 69 cents per can. d. The ad is an offer and Betty has accepted the grocer's offer; therefore, there now is a contract between the grocer and Betty for the sale of tuna in exchange for 6 cents per can.

c. The ad is an invitation for others to make offers. Betty has made an offer to buy the tuna for 6 cents a can and the grocer has rejected Betty's offer, but countered with an offer to sell it to Betty for 69 cents per can.

Stephanie induces Wanda to purchase 100 shares in Zazzy Corporation at a price of $100 per share. Stephanie tells Wanda that she paid $150 for them the previous month. In fact Stephanie only paid $50. How can this representation of a past event be characterized? a. The fact that was misrepresented was not material. b. This is a mutual mistake of fact. c. The representation of a past event is a misrepresentation of fact. d. The representation is a misrepresentation of law

c. The representation of a past event is a misrepresentation of fact

In the Maroun v. Wyreless Systems, Inc. case, the court considered which of the following reason to grant summary judgment in Wyreless Systems' favor? a. Wyrless Systems properly exercised the business judgment rule. b. Wyreless Systems was merely puffing its terms to Maroun. c. Wyreless Systems' complained-of statements by Maroun were based on future events, and thus could not be a basis for misrepresentation. d. Wyreless Systems is not liable for duress.

c. Wyreless Systems' complained of statement by Maroun were based on future events, and thus could not be a basis of misrepresentation

Maggie owns a valuable show dog, which she knows is suffering from a disease only discoverable by a competent veterinarian. Maggie offers to sell this show dog to Naomi but does not inform her about the dog's condition. Naomi, who is not a veterinarian, makes a reasonable examination of the dog and concludes that the dog is in normal condition and purchases it from Maggie. If Naomi later discovers that the show dog suffers from the disease, can he have the sale set aside? a. None of these answers are correct. b. No, because Maggie and Noami already agreed to the sale. c. Yes, because the dog has a hidden defect that would not be discovered in an ordinary examination and Maggie failed to disclose it. d. No, because Naomi should have conducted a more rigorous examination of the dog.

c. Yes, because the dog has a hidden defect that would not be discovered in an ordinary examination and Maggie failed to disclose it.

Sometimes the law imposes a duty of disclosure. When a fiduciary is silent, silence may constitute fraud. A fiduciary is one who: a. has the same duty of disclosure to the other party to the relationship as one who is not a fiduciary. b. must deal at arm's length with the other party to the relationship. c. is in a confidential relationship who owes a duty of trust and loyalty to another. d. All of these are correct.

c. is in a confidential relationship who owes duty of trust and loyalty to another

A contract based on __________ is not enforceable. a. legal detriment b. legal benefit c. past consideration d. unequal consideration

c. past consideration

Patrick held a baseball bat to Eric's head to compel him to sign a contract advantageous to Patrick. This contract was entered under: a. improper threats. b. false representation. c. physical duress. d. undue influence

c. physical duress

Francisco is a concert violinist who is scheduled to perform at the Kennedy Center for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, sold by the dealer who was trying to make quick money. In this case: a. the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation. b. Francisco has made a unilateral mistake and cannot avoid the contract. c. the dealer has committed fraud in the inducement. d. the dealer has committed fraud in the inducement

c. the dealer has committed fraud in the inducement

One issue before the court in New England Rock Services, Inc. v. Empire Paving, Inc.case was: a. whether the NER did a poor job of bidding the job due to lack of preparation on their part. b. whether Empire was operating in good faith during the course of the conduct. c. whether the modified agreement between NER and Empire was valid and enforceable as supported by sufficient consideration. d. whether the purchase order signed to modify the contract was a sufficient writing under the statute of frauds.

c. whether the modified agreement between NER and Empire was valid and enforceable as supported by sufficient consideration

Sometimes a party makes misrepresentations, which if untrue, could constitute a material misrepresentation. Which of the following fits that description? a. "This is the one that I would buy." b. "This is the best tablet on the market." c. "These tires will wear like iron." d. "This car has a new engine."

d. "This care has a new engine"

Leo tells Nora "I promise to pay you $5,000 next year." Next year, Leo fails to pay Nora and Nora sues. Is Leo's promise enforceable? a. No, this promise is unsupported by consideration. b. No, because Nora is not undertaking anything to her legal detriment. c. No, because Leo's promise is a gratuitous promise made without consideration. d. All of these are correct.

d. All of these are correct

The Jones' have always admired a house that sits on the top of a hill owned by the Smiths. Martin is a mutual friend of both the Jones and the Smiths. One day, Martin mentions to the Smiths how much the Jones would love to buy the Smith home. The Smiths say that if they sell the house, they would be happy to sell it to the Jones. Martin relays this conversation to the Jones and the Jones immediately call the Smiths to accept the Smith's offer to sell. Have Smiths made an offer to sell their home to the Jones? a. No. The Smiths did not objectively intend to make an offer because they did not clearly state they were willing to sell the house. b. No. The Smiths did not include a selling price in their conversation with Martin so the offer would fail for lack of specificity and definiteness. c. None of these are correct. d. All of these are correct.

d. All of these are correct

Which of the following, if any, are requisites for fraud in the execution? a. False representation as to the very nature of the contract. b. Signing party does not know the character or essential terms of the contract. c. Renders the transaction void. d. All of these are correct.

d. All of these are correct

How do parties usually show mutual assent? a. By one party making an offer and the other party making a counteroffer. b. By one party making an offer in writing and the other party accepting in writing. c. By one party making an oral offer and the other party accepting by performing. d. By one party making an offer in words or by conduct and the other party accepting in words or by conduct.

d. By one party making an offer in words or by conduct and the other party accepting in words or by conduct

4. Chase and Tyler are best friends and fellow police officers. One day, Chase came home with a brand new, top-of-the-line Ford F-150 4x4 pickup valued at $38,000 and showed it to Tyler. Tyler told Chase that he wanted a truck just like his. Jokingly, Chase says, "Sure thing, buddy. I'll sell you my new pickup for $100 and a six-pack of beer!" If Tyler seeks to accept Chase's offer, what is Chase's best defense? a. Chase was merely advertising a price to Tyler. b. Chase's offer is undervalued. c. Chase's terms were open. d. Chase intended the offer as a joke and a reasonable person would understand it to be a joke.

d. Chase intended the offer as a joke and a reasonable person would understand it to be a joke

__________ is an intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance on the misrepresentation. Fraud in the inducement renders the contract __________ by the defrauded party. a. Silence; void b. Fraud by concealment; void c. Fraud in the execution; voidable d. Fraud in the inducement; voidable

d. Fraud is the inducement; voidable

Suppose that Jack, Hal, and Sophia enter into an agreement in regards to the sale of the restaurant. The contract includes the non-competition agreement. A few months later, Jack decides that he will sell the frozen food in violation of non-competition agreement, unless if Hal and Sophia agree to pay him an extra $100,000. Hal and Sophia agree, since they do not want to fight. Six months later, however, they still have not paid and Jack sues. What is the result? a. Hal and Sophia would win since agreeing to not do something, in this case sell the food, is not valid consideration. b. Jack would win since Hal and Sophia agreed to pay the extra $100,000. c. Jack would win since agreeing to not do something, in this case sell the food, is not valid consideration. d. Hal and Sophia would win, since Jack already had a prior existing legal duty to not compete with them.

d. Hal and Sophia would win, since Jack already had a prior existing legal duty to not compete with them.

Mike, a 75-year-old mechanic, returned Carrie her car after fixing the brakes. Mike told Carrie: "I put some new brakes on her—she should brake with complete ease!" When Carrie drives away, she cannot stop her car and crashes into a dumpster. It is later discovered that Mike failed to reconnect one of the brake lines. There is no indication that Mike knew that he failed to reconnect the brake line. If Carrie sues Mike for fraud, and the court sides with Mike, what would be the court's reason? a. Mike was puffing. b. Carrie did not experience duress. c. Mike's statement was not a fact. d. Mike lacked scienter because he did not make the statement with the intent to deceive.

d. Mike lacked scienter because he did not make the statement with the intent to deceive

Alan finds Marcia's dog on the side of the road. He then takes the dog home and treats the dog's injuries. When he calls Marcia to tell her he has found the dog, she promises to reimburse Alan for the cost of treating the dog. Is Marcia's promise binding? a. Yes, because she should be grateful to him. b. Yes, because Marcia promised to pay him. c. No, because Alan is not a health care professional. d. No, because there was no bargained-for exchange.

d. No, because there was no bargained-for exchange

Andrew received a bill for $500 from Jeff for a tune-up Jeff performed on Andrew's SUV. Andrew called Jeff and told him, "The car runs no better now than before the tune-up. I am sending you $200 and no more." Jeff received the $200 check which was marked "paid in full SUV repair" and cashed it. Is Andrew still liable to Jeff for the remaining $300? a. Yes, Andrew is liable for the full amount of the repair. b. Yes, only a court can order that the amount was unfair. c. No, customers can pay the amount they think is fair. d. No, if the check is marked "paid in full" and references the transaction.

d. No, if the check is marked "paid in full" and references the transaction

Jose offers to sell George his iPad 3 for $150 and explains that George has five days to accept. After three days, Jose accidentally drops his iPad 3 from his third-floor apartment balcony, shattering it into tiny pieces. On the fourth day, George, who does not know that the iPad was shattered, notifies Jose that he accepts the offer. Do Jose and George have a valid contract? a. Yes, an offer was made and George accepted it. b. Yes, so long as the mirror rule is fulfilled. c. No, because the offer and acceptance were not in writing. d. No, the destruction of the iPad terminated Jose's offer.

d. No, the destruction of the iPad terminated Jose's offer

In the case of Denney v. Reppert,did the court allow the employees of a bank to collect a reward, because they supplied information that led to the arrest and conviction of a man who robbed their bank? a. Yes, the bank wants to encourage other employees to step forward in the future. b. Yes, the reward was offered and they had the information that was needed to identify the robber. c. No, they didn't physically arrest the robber. d. No, the employees were under a pre-existing duty to the bank and to the public.

d. No, the employees were under a pre-existing duty to the bank and to the public

Which of the following can be consideration for a promise? a. Refraining from assaulting one's roommate. b. Promising to refrain from stealing from the boss. c. Refraining from using a controlled substance. d. Refraining from smoking cigarettes.

d. Refraining from smoking cigarettes

Suppose that Jack states that he would sell the restaurant with the non-competition agreement for an extra $100,000. Hal and Sophia say they will buy the restaurant, but will only pay an extra $75,000 for the non-competition agreement. Jack says no to this counteroffer. Hal and Sophia then say they will pay $100,000 for the non-competition agreement. Do they now have a valid contract? a. Yes, for the sale of the restaurant with the non-competition agreement for an extra $100,000. b. Yes, for the sale of the restaurant with non-competition agreement for an extra $75,000. c. Yes, but only for sale of the restaurant, without the non-competition agreement. d. There would be no valid contract.

d. There would be no valid contract

Sam agrees to sell Gina a BMW automobile, both believe to be inoperable, purely for parts. The contract price is $500. Prior to the delivery of the BMW, Sam discovers that the car was simply out of fuel, runs like a dream, and refuses to deliver the automobile to Gina. The value of the operable BMW is now at $3,000. if the court allows Sam to rescind the contract, what would be the reason a. Sam was under duress. b. All of these are correct. c. This is a case of unilateral mistake on Sam's part. d. This is a case of material mistake by both parties

d. This is a case of material mistake by both parties

Darryl contracted with Right Builders to build an addition to his house for $25,000. After digging the foundation, Darryl decides he wants to have the house done earlier than was originally agreed. Right Builders agree, but say that it will need to charge an additional $5,000 for the job. Assuming Darryl agrees, which of the following is correct? a. Darryl will only have to pay $20,000. b. This is a contract under seal which is enforceable. c. This is the settlement of a disputed debt that requires no additional consideration on the part of Right Builders. d. This is a modification of a preexisting contract, but Right Builders has provided additional consideration since they are expediting the completion of the project

d. This is a modification of a preexisting contract, but Right Builders has provided additional consideration since they are expediting the completion of the project

Suppose that Jack makes an offer to sell the restaurant on July 10th. Hal and Sophia decide to think it over. On July 15th, they mail a letter of acceptance to Jack. On July 16th, Hal and Sophia change their mind and call Jack, stating that they do not want to purchase the business. On July 20th, Jack receives the letter of acceptance. Would there be a valid contract? a. Yes, a valid contract was formed on July 20th when the letter of acceptance was received. b. No, because Hal and Sophia informed Jack that they did not want to buy the business prior to Jack receiving the letter of acceptance. c. Yes, a valid contract was at the time that Jack opens the letter and actually reads it. d. Yes, a valid contract was formed on July 15th when the letter of acceptance was sent.

d. Yes, a valid contract was formed on July 15th when the letter of acceptance was sent

Ordinarily, courts do not consider the __________ of the consideration given for a promise. a. legality b. assumption of the risk c. modification d. adequacy

d. adequacy

One issue before the court in Vanegas v. American Energy Services case was: a. whether the sale of the company was contingent on the continued presence of the Vanegas and the other original employees. b. whether AES would have failed had the original employees not continued their employment. c. whether the employees who remained with AES were sufficiently compensated for their work. d. whether AES was bound by a promise to pay at-will employees 5% of the value of the sale of the company if they continued their employment after the sale.

d. whether AES was bound by a promise to pay at-will employees 5% of the value of the sale of the company if they continued their employment after the sale.

One issue before the court in Neugebauer v. Neugebauer case was: a. whether the price for the land was adequate consideration. b. whether Lincoln's actions toward his mother in securing the land contract were fraudulent. c. whether the actions of Lincoln in arranging the purchase of his mother's land were unconscionable. d. whether the real estate contract in the case should be rescinded on the grounds of undue influence.

d. whether the real estate contract in the case should be rescinded on the grounds of undue influence