chapter 20

Ambiguities in contracts are always interpreted in favor of the side that wrote the contract, since they are the ones who know what the provision is supposed to mean.

false

Contracts must use formal terminology such as "whereas" and "heretofore" in order to be legal.

false

Emily runs a children's clothing boutique which takes in local homemade items on a consignment basis. Her standard form contract indicates that Emily has the right to put items on sale without prior approval, but does not specify what effect the sale has on the consignor's payment percentage. Her intent is to keep the same profit she would have had without the sale. She is using ambiguity in her contract to increase her sales and profit.

false

Some contracting parties are intentionally vague in contract terms.

true

Which of the following is generally NOT in the introductory paragraph of a contract? a. The date of the contract b. The nature of the contract c. The covenants of the contract d. The parties to the contract

covenants of a contract

Bob, a house painter, contracts with Ollie to paint a rental house which Ollie owns. Bob hires Rob to take his place as the painter on this contract. What has Bob done? a. Made a scrivener's error b. Delegated his duties c. Severed the contract d. Assigned his rights

delegated his duties

In a contract modification, the phrase "charged with such amendment" refers to a. the party who did NOT suggest the change. b. the party who will benefit from the change. c. the party who suggested the change. d. the party who will be adversely affected by the change.

the party who will be adversely affected by the change.

Any ambiguity in a contract is interpreted against the party who drafted the contract.

true

In the case of a typo, a court will reform a contract if there is clear and convincing evidence that the alleged mistake does not actually reflect the true intent of the parties.

true

A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used car dealer's advertising. The contract was most likely written by a. Sandi. b. A+ Modeling Agency's lawyer. c. the owner of A+ Modeling Agency. d. Sandi's lawyer.

A+ Modeling Agency's lawyer

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 a. Farmer's Fortune Insurance. b. Neither side, as it is ridiculous to try to insure against insects. c. Farmer Fran. d. Cannot determine... would have to go through litigation to decide.

Farmer Fran

Standard provisions in a contract that are often listed under the heading "Miscellaneous" are called a. boilerpot. b. boilertape. c. boilerroom. d. boilerplate.

a boilerplate

What is a force majeure event? a. any finding in a contract that shows a provision was deliberately left unclear b. a disruptive, unexpected occurrence for which neither party is to blame that prevents one or both parties from complying with a contract c. any happening that fulfills one of the conditions in the contract, making it enforceable d. any action that makes the contract unprofitable for either party

a disruptive, unexpected occurrence for which neither party is to blame that prevents one or both parties from complying with a contract

Nate works as a carnival barker. His employment contract specifies that he can be fired if he "loses his voice." This is an example of a. ambiguity. b. vagueness. c. duress. d. extortion.

ambiguity

When a provision in a contract is unclear by accident, it is a case of a. ambiguity. b. condition. c. mistake. d. vagueness.

ambiguity

Which of the following is NOT one of the three ways to amend a written contract? a. by writing and signing an amendment (or rider) b. by verbally agreeing to the changes and shaking hands on the deal c. by crossing out the mistakes and writing in the corrections d. by writing a totally new contract with the correct provisions

by verbally agreeing to the changes and shaking hands on the deal

Which of the following is a standard provision frequently found in contracts? a. choice of compensation b. choice of forum c. understanding d. mediation

choice of forum

If you have an established relationship with a buyer, you can sell small tracts of land without a written contract.

false

It is unethical to use your lawyer as an excuse for a provision of a contract, such as, "My lawyer insists that I have a liquidated damages clause..."

false

Lawyers prefer to negotiate touchy subjects as they arise rather than address them at the beginning of a relationship.

false

You should hire a lawyer to review any legal papers you have to sign, especially such papers as lease agreements or car purchases.

false

An honest effort to meet both the spirit and letter of the contract is termed a. reasonable circumstances. b. good faith. c. honest representation. d. sole discretion.

good faith

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 a. rescind the contract. b. issue a covenant. c. issue a warranty. d. reform the contract.

reform the contract

Statements of fact about the past and present are called a. promises and covenants. b. damages and remedies. c. provisions and terms. d. representations and warranties.

representations and warranties