Contracts

Which of the following is a condition subsequent?

"I promise to do X if I succeed in getting a loan."

Sam, a plumber, entered into a contract for $75,000 with Orr, Inc., to perform certain plumbing services in a building owned by Orr. After Sam had satisfactorily performed the work, Orr discovered that Sam had violated the state licensing statute by failing to obtain a plumbing license. As a result, Orr refused to pay Sam. The licensing statute was enacted merely to raise revenue for the state. An independent appraisal of Sam's work indicated that the building's fair market value increased by $70,000 as a result of Sam's work. The cost of the materials that Sam supplied was worth $35,000. If Sam sues Orr, Sam will be entitled to recover:

$75,000

What is the usual UCC time limitation for claiming breach of express and implied warranty after the seller offers the defective goods to the buyer?

4 years

Which of the following contracts is not covered by the statute of frauds?

A contract for the sale of goods for a price of $400.

Jack went to the ABC Casino to gamble. ABC offers its customers one free spin of the Million Dollar Wheel if they fill out an application form. Jack filled out the form, spun the Million Dollar Wheel, and won. However, now ABC refuses to pay, claiming that because Jack did not purchase his chance at the Million Dollar Wheel, Jack gave no consideration and therefore, no contract was formed. Identify the accurate statement.

A contract was formed because filling out an application can constitute legal consideration.

Which of the following actions is considered to reflect a counteroffer?

A demand for additional terms

Which of the following is most likely to be considered a sale of goods to which the UCC applies?

A gas station sells a new battery for a car.

Which of the following is not an element of promissory estoppel?

A written contract

Which of the following occurs when a buyer, after having a reasonable opportunity to inspect the goods, either indicates that he will take them or fails to reject them?

Acceptance of goods

What does the term "grumbling acceptance" mean?

Accepting an offer while complaining about the terms

Tina and Tom are co-workers at Acme Corporation. As night custodians, they work together cleaning the Acme office building at night when the building is empty. Tom regularly makes sexual advances toward Tina that distress her. However, Tina has never complained about Tom's conduct to her supervisor, Mary, who only works during the day. Which of the following statements is most accurate?

Acme Corporation may defend that it did not know about Tom's harassment of Tina.

Which of the following is not a category of illegal agreements?

Agreements to bring more profit to one party than the other

Ms. White lost her puppy. She advertises a reward of $50 for the return of her puppy. What is the contractual nature of Ms. White's advertisement?

An offer for a unilateral contract

Which of the following is the first step in the contract formation process?

An offer in definite terms

_____ is the plaintiff's voluntary consent to a known danger.

Assumption of risk

Beth has just turned 17 years of age. She entered into a contract with ABC Corp. for the purchase of a used car, with full payment of $5,000 due in 30 days. This car is necessary for Beth to use as transportation to her job, which she needs in order to pay tuition at the university where she is a freshman. Beth's parents have refused to help her pay for college. Three days later, Beth changes her mind; she now wants to return the car because she has learned that it is worth only $4,000, which is in fact the reasonable value of this car. Assuming the car is legally classified as a "necessary" and Beth does not pay, and ABC Corp. sues, the outcome of this lawsuit will be that:

Beth must pay 4,000

Reggie went to the Napa Valley Harvest Festival, when he stopped at Tracy's booth where she was selling paintings of vineyards. Reggie admired a painting of vineyards, which did not appear to be for sale. Reggie said to Tracy, "I will give you $200 if you give me that painting right now." Tracy said nothing in response, but she gave Reggie the painting, and Reggie gave her $200 in cash. This is an example of a contract that is now:

Bilateral and executed

Aaron promises to sell his boat to Matt, and Matt promises to buy it from Aaron. What type of contract is this?

Bilateral contract

A contract must be between parties who have _____ to contract.

Capacity

Catherine decided to have lunch at Tom's, one of the most popular restaurants in town. She ordered soup before her main course. The soup served to Catherine contained a maggot floating about in it. Fortunately, she noticed this before she ate it. She sued Tom's for negligence. The most likely result will be:

Catherine will not win since she did not sustain any damages.

Ann wants to download Adobe Acrobat software from the Internet. Prior to downloading, a standardized online contract appears on the screen that requires her to click on an icon indicating agreement, before she can proceed in the program. Such contracts are called:

Clickwrap contracts

A ______ occurs when the contract calls for the parties to perform at the same time.

Concurrent condition

A(n) ______ is a future, uncertain event that creates or extinguishes a duty of performance.

Condition

An uncertain future event, the occurrence of which is necessary for the existence of a contractual obligation is called:

Condition precedent.

A _______ is a future, uncertain event that discharges the duty to perform.

Consequent subsequent

In a case where a merchant mistakenly sells a good that was entrusted to it, under what theory can the entruster sue for damages?

Conversion

The effort by legislatures to cap monetary damages in civil cases is called what?

Criminal reform

The appointment of another person to perform a duty under a contract is called a(n):

Delegation

_____ is a wrongful coercion that induces a person to enter or modify a contract.

Duress

What is a provision in a contract that purports to relieve the defendant of a duty of care he would otherwise owe to the plaintiff called?

Exculpatory clause

A contract is _____ when all of the parties have fully performed their contractual duties.

Executed

If the delivery term of the contract is _____, the place at which the goods originate, the seller is obligated to deliver to the carrier goods that conform to the contract and are properly prepared for shipment to the buyer, and the seller must make a reasonable contract for transportation of the goods on behalf of the buyer.

FOB

Mr. Green creates a unilateral contract with his nephew, Paul. Mr. Green promises to buy Paul a laptop if he gets accepted to college. In order for Paul to accept this contract what must he do?

Get accepted to college

Which of the following is NOT a basic element of a contract?

Goods

John offers to sell Stacy a car, and Stacy sends an email accepting John's offer. When he receives the email, John calls Stacy and tells her that she can "pick up the car any time." That night, the car is destroyed when a tree falls on it during a storm. Which of the following statements is true?

If John is an accountant, Stacy must bear the loss.

Sigmund enters into a contract with Carl. The terms are that Sigmund will purchase all the gasoline that he wants to purchase in 2011 at a price of $2.50 per gallon, and Carl agrees to sell on those terms. This is an example of a(n):

Illusionary contract

A(n) _____ is created by operation of law rather than the seller's express statements.

Implied warranty

Palmer goes to a truck dealership and asks for a truck capable of handling a 5000-pound load. He makes it clear that it is up to the salesman to select an appropriate truck. Without saying anything about the truck's load-carrying capacity, the salesman selects a certain truck for Palmer. Relying on the salesman's choice, Palmer buys the truck in question. However, the truck can only handle a 2500-pound load. Palmer wants to sue the dealership because he did not get the truck he desired. Which of the following product liability theories gives Palmer his best chance of recovery?

Implied warranty of fitness

Advertisements for the sale of goods at specific prices are considered to be:

Invitation to offer

The UCC differs from the common law of contracts in that the UCC:

Is less concerned with technical rules

What legal effect does death or insanity of the offeror have on the offer?

It terminates the offer automatically.

Joe is going on a "survival hike" in the desert. He goes to a sporting goods store, describes the hike, and asks the salesman to select suitable hiking boots for him. The boots the salesman suggests are well made and are appropriate for normal hiking, but are not suitable for Joe's plans. Relying on the salesman's selection, Joe buys the boots. After he suffers personal injury because the boots prove inadequate for the survival hike, Joe sues the store. Joe can recover under:

Joe cannot sue for breach because it was his responsibility to select the boots.

What does the term "caveat emptor" mean?

Let the buyer beware

Damages that are agreed upon at the time the contract is entered into are called _____.

Liqudated damages

Which of the following is the reason why the UCC distinguishes between merchants and nonmerchants?

Merchants tend to have more bargaining power and can take advantage of buyers.

Which of the following is an example of noneconomic damages from a tort case?

Money loss from non-performance of one party

The term for when both parties to a contract are mistaken about the same fact is called?

Mutual mistake

Abe took his bicycle to a bicycle shop for repair. By mistake, a sales clerk sold Abe's bike to Leon. This was a sale in the ordinary course of business; neither the clerk nor Leon was aware that the bike belonged to Abe. Can Abe recover his bike from Leon?

No, because Abe entrusted his bike to the bike shop.

Ahmed, a lawyer, sold his car to Carlos. Has an implied warranty of merchantability been created by this transaction?

No, because Ahmed is not a merchant.

Milner Developers proposed an offer to Henry Wright, an independent contractor, offering to hire him for their next project. They offered him a certain rate and specified the contract details along with describing the stipulated mode of acceptance but received no response. Wright responded to the offer with a quote for a higher amount than that mentioned by Milner Developers. Do the two parties have a binding contract?

No, because Wright's letter was a counteroffer to the original offer.

John promised the other co-owners of the ship Sea Fairy that he would insure the ship for an upcoming voyage. However, John fails to insure the ship. The ship is shipwrecked in a turbulent sea. The co-owners sue John for breach of contract. Will they succeed?

No, because it was a purely gratuitous promise.

Helen worked for ABC Motors for 25 years. The president of ABC said to her: "In consideration of your past service for 25 years, I promise to give you a new car next week." However, he did not give the car. Is this promise legally enforceable?

No, legal consideration is absent.

Can a local businessman pay a police officer $50 a week to watch his business more closely?

No, public officials cannot give consideration on duties they are already supposed to perform.

Which of the following constrains the employee from divulging or using certain information gained during his employment?

Nondisclosure agreement

The ____ has the power to bind the person who makes an offer simply by accepting the offer.

Offeree

The term for a person who makes an offer is called?

Offeror

When can the offeror effectively revoke his/her offer?

Only before an effective acceptance.

Maple Interiors, located in Boston, contracted to sell and ship sofas to Peach Furniture, located in Atlanta. The contract stated that the goods were to be shipped "F.O.B. Boston, via XYZ railroad." Maple delivered the sofas to XYZ railroad. They were shipped from Boston but never seen again. Both Peach and Maple assumed that the other party had the risk of loss, so neither had obtained insurance. Who must bear this loss?

Peach must bear the loss because the risk passed to it after the sofas were delivered to XYZ railroad.

Phil decided to rescue Bobo, the dancing bear, from a traveling circus that was closing its business. Although Bobo was a well-behaved grizzly bear, Phil took great care to make sure that Bobo would not escape from his yard by reinforcing the yard's fence with steel and padlocking the gate. One day, without notice, Bobo rushed the fence, knocked the padlock off the gate, and escaped from Phil's yard. Bobo lunged at a young child in the neighborhood, injuring him. Based on these facts:

Phil will be liable, regardless of the steps that he took to secure the yard.

Which of the following is not a defense to a product liability suit?

Product misuse

Which damages are awarded to punish the defendant?

Punative

A(n) ______ contract is one in which one person agrees to pay the debt or obligation that a second person owes to a third person if the second person fails to perform.

Quasi

You are walking down a street and you pass by a beer brewery. A barrel rolls out of a third story window and injures you. You have no idea how this accident occurred, and you will have difficulty proving that the brewery was at fault. What legal theory will serve you best if you sue the brewery?

Res ipsa loquitur

The buyer usually can inspect goods before payment except:

Shipped COD

Joe sells his business to Shirley. During the negotiations, Joe negligently tells Shirley that the business has earned a profit for the last five years. In reality, the business operated at a loss for each of those years. However, Shirley did not hear Joe's misstatement. Shirley cannot rescind the contract because:

Shirley did not actually rely on Joe's misstatement.

Smith and Benson make an oral contract for the sale of land at a price of $500,000. After paying Smith $400,000 of the purchase price, Benson takes possession of the land. One month later, Smith wants to boot Benson off the land. His argument is that the parties' oral agreement is unenforceable under the statute of frauds. Which of the following is most correct?

Smith is incorrect, because Benson paid part of the purchase price and took possession.

Ashley says to Ford, "I'd like to buy your house," and Ford responds, "You've got a deal." This exchange lacks _____.

Spcificity

When the offeror, as the master of the offer, specifies the precise time, place, and manner in which acceptance must be communicated, it is termed as a(n) _____.

Stipulation

A legal theory that imposes liability even if the defendant acts with all reasonable care and caution is called:

Strict Liability

All workers' compensation systems allow injured employees to recover under ______, thus removing any need to prove employer negligence.

Strict Liability

Joe buys watermelon seeds from a seed manufacturer's catalog. The catalog describes the seed Joe buys as "top quality." Joe strongly relies upon this statement in making the purchase. The seeds turn out to be worthless, and Joe sues the manufacturer for breach of express warranty. You are the attorney representing the manufacturer. Which of the following is your best argument for escaping liability?

That the basis-of-the-bargain requirement was not met.

Which of the following must a person prove to rescind a contract if the misrepresentation was innocent?

That the fact was material

Judith George makes an offer to sell a plot of land using a normal letter and states no authorized means by which the offeree, Helga Holmes, must respond if she accepts. If Helga accepts the offer using a normal letter, which of the following is true?

The acceptance is effective upon dispatch.

One day, Jon, an employee of the bank, carelessly left a rake next to the sidewalk when he went to lunch. Deb, a customer of the bank, stepped on the rake as she walked next to the sidewalk and was injured. Which statement is most likely correct?

The bank is liable for Deb's injuries.

Linda wanted to replace the old carpet in her home. She entered into a contract with Carpet Co., for the purchase and installation of a new carpet. The price of the carpet was $3,000 and the cost of the labor to install the carpet was $150. Later, Linda became dissatisfied with this transaction and now wants to sue Carpet Co. Linda wants to apply the contract rules of the UCC, but Carpet Co., wants to apply the contract rules of the common law. Which source of law should govern this case?

The contract rules of the UCC apply, because the predominant purpose of the contract was for the sale of goods.

Under the product liability theory of strict liability as expressed in the Restatement (Second) of Torts, what is an essential fact that must be present if strict liability may be used in a lawsuit as the basis for recovery?

The product must be unreasonably dangerous.

Mr. Yellow delivers a stack of newspapers to Mr. Green's store to see if he wants them. A note attached indicates the stack of papers is $50. Mr. Green, without communicating an acceptance, sold the entire stack of papers to his customers. What is the status of the agreement between Mr. Yellow and Mr. Green?

There is a contract because Mr. Green implied acceptance by his action

Kyle sent Tara a letter offering to sell Tara his car. Tara left the letter on her desk, where her roommate, Maggie, saw it. After reading the letter, Maggie wrote to Kyle and stated that she (Maggie) wanted to accept Kyle's offer. Which of the following is true?

There is no contract between Kyle and Maggie because Kyle did not communicate the offer to Maggie.

Tracy, aged 12, is named the sole inheritor of her family mansion, which is valued to be worth millions. She has disaffirmed the agreement on the advice of her uncle and guardian Pete. This automatically transfers the title to the latter. Which of the following statements is true of the case?

Tracy cannot disaffirm until she has reached majority.

_____ is generally taken to mean the absence of meaningful choice together with terms unreasonably advantageous to one of the parties.

Unconscionability

Jerry owns a parcel of land. Nate, one of Jerry's closest friends and an attorney, persuaded Jerry to sell the land to Nate at a price substantially below fair market value. At the time Jerry sold the land, he was resting in a nursing home recovering from a serious illness. If Jerry desires to set aside the sale, which of the following causes of action is most likely to be successful?

Undue influence

Pancake House, a local breakfast diner, issues "frequent buyer" cards to its customers and stamps the card each time a customer buys a stack of pancakes. Pancake House promises to give any customer a free stack of pancakes if the customer buys 10 stacks of pancakes and has his "frequent buyer" card stamped 10 times. This is an example of a(n) ______ contract.

Unilateral contract

When a court says that an agreement is illegal, it most likely means that the agreement:

Violates public policy

Which of the following contracts are agreements that create no legal obligations and for which no remedy is given?

Void contracts

Contracts that are induced by misrepresentation are considered:

Voidable

Wayne and Mia are friends in Idaho, where gambling is illegal and they are aware of it. Wayne and Mia bet $1,000 on which day Paradise Creek will flood its banks. They have no financial interest in Paradise Creek. Wayne wins this bet. Mia pays Wayne the $1,000, but later that day, regrets it and sues Wayne to get her $1,000 back. The court would probably rule in favor of:

Wayne, since the court will "leave the parties where it finds them" in cases like this.

Which of the following factors will be most important in determining if an express warranty has been created?

Whether the promises became part of the basis of the bargain.

On Thursday, Trista Dylan receives a letter from Charlie Holmes offering to sell her a diamond ring and stating that: "if you choose to accept, you must do so prior to 2:00 p.m. tomorrow." Trista had a telegram of acceptance dispatched well before 2:00 p.m. on Friday but it is delivered to Charlie's home at 2:15 p.m. Do Trista and Charlie have a binding contract?Yes, because Trista dispatched the telegram prior to 2:00 p.m.

Yes, because Trista dispatched the telegram prior to 2:00 p.m.

James entered into a contract to sell his house to Mikhael. James knows that the house has a bad termite infestation that significantly reduces the value of the house. However, the topic of termites never came up and James did not volunteer any information about the termites. Mikhael is not aware of the termite problem. Under the law of most states, has legal misrepresentation occurred here?

Yes, because a seller must always inform a buyer about defects that are not obvious.

Ron was employed by Mass Co. in 1970. At that time, he was given an employee handbook that described the particular steps that had to be taken before an employee could be fired. Later, in 2000, Mass published a new handbook by which all workers' statuses were changed to at-will employees. Mass then fired Ron. Ron claimed he was terminated without cause and was not afforded procedures described in the 1970 handbook, such as an appeal or review of the decision. He sued Mass under breach of contract based upon the 1970 employee handbook. Will he succeed?

Yes, because the modifications in 2000 were not by mutual consent and for consideration.

To qualify as a contract, a set of promises must be based on a voluntary agreement, which is made up of an offer and a(n) _____ of that offer.

acceptance

Consideration can be a(n) _____ in the case of a unilateral contract.

act

The statute of frauds requires that:

all contracts involving fraud must be void.

In 17th-century England, before the enactment of the Statute of Frauds in 1677, a legal rule:

allowed both parties to a lawsuit and third-party witnesses to testify.

Contracts are typically between one party and:

another private party

Noncompete clauses in contracts:

are always enforced under the doctrine of "freedom of contract."

People who engage in abnormally dangerous activities:

are liable even if they are not negligent.

Offers that fail to provide a specific time for acceptance are:

are valid for a reasonable time.

With regard to an assignment, the person to whom the right has been transferred is called the:

assignee

The transfer of a right under a contract is called a(n):

assignment

The most important requirement of goods regarding their merchantability is that they must:

be fit for the ordinary purposes for which they are used.

Bobby goes to Sammy's Electronics to buy a CD player. In testing one model, Bobby notices that the "scan" function does not allow scanning once a CD is playing. Bobby purchases the model despite this without mentioning the defect to Sammy. Bobby takes the CD player to his office where he uses it for three months before deciding that he wants to return it. Under these circumstances:

bobby has accepted the CD player

An important difference between duress and undue influence is that:

duress is wrongful coercion, while undue influence is unfair persuasion.

For the consideration requirement in contracts to be met:

each party must give consideration.

A(n) _____ clause is a provision in a contract that purports to relieve one of the parties from tort liability.

exculpatory

Statements made in an advertisement may create what kind of warranty?

express

In the case of a merchant, _____ means honesty in fact as well as the observance of reasonable commercial standards of fair dealing in the trade.

good faith

To satisfy the consideration requirement to form a contract, the consideration exchanged by the parties must:

have legal value.

Under the common law, an offer for a unilateral contract:

is accepted by making the promise requested by the offer.

A contract that cannot be performed within one year from the day on which it comes into existence:

is within the statute of frauds.

A fact is considered to be material in a misrepresentation case when:

it plays a significant role in inducing a person to enter into a contract.

On May 1, Dix and Wilk entered into an oral agreement by which Dix agreed to purchase a small parcel of land from Wilk for $450. Dix paid Wilk $100 as a deposit. The following day, Wilk received another offer to purchase the land for $650, the fair market value. Wilk immediately notified Dix that he would not sell the land for $450. If Dix sues Wilk for specific performance, Dix will:

lose, because the agreement was not in writing and signed by Wilk.

Toby, an Ohio real estate broker, misrepresented to Allen that he was licensed in Michigan under Michigan's statute regulating real estate brokers. Allen signed a standard form listing contract agreeing to pay Toby a 6% commission for selling Allen's home in Michigan. Toby sold Allen's home. Under the circumstances, Allen is:

not liable to Toby for any amount because Toby violated the Michigan licensing requirements.

Todd is a licensed real estate broker in Ohio. One of Todd's largest clients, Sun Corp., contracted in writing with Todd to find a purchaser for its plant in New York and agreed to pay him a 6% commission if he was successful. Todd located a buyer who purchased the plant. Unknown to Todd, New York has a real estate broker's licensing statute which is regulatory in nature, intended to protect the public against unqualified persons. Todd violated the licensing statute by failing to obtain a New York license. If Sun refuses to pay Todd any commission and Todd brings an action against Sun, he will be entitled to recover:

nothing

An obligor:

owes a duty to perform under a contract.

In determining whether an offeree accepted an offer, the court is looking for the same _____ on the part of the offeree that it found on the part of the offeror.

present intent to contract

Jack is Martha's boss. They are lifeguards working for the City of Miami. Jack is very interested in developing a romantic relationship with Martha. However, Martha is not attracted to Jack. His attention is unwelcome to her. Jack tells Martha that if she will engage in sexual relations with him, he will give her the highest employee evaluation possible, and she will get a raise. This is an example of:

quid pro quo sexual harassment.

Once an assignment occurs, the assignee acquires:

same rights as the assignor had prior to assignment.

In order to satisfy the statute of frauds, the parties' writing must be:

signed by both parties

Agnes, a waitress at a restaurant, suffers severe anxiety attacks when business gets really busy at her job. As a result, she is a very ineffective waitress when the restaurant is crowded. For this reason, she is fired. Maybe her employer could have assigned Agnes to shifts when the restaurant is not busy, but this would have irritated the other waitresses, caused significant scheduling difficulties, and appreciably increased expenses. If Agnes sues the restaurant under the Americans with Disabilities Act (ADA), the restaurant's best argument would be:

that accommodating Agnes would cause the restaurant undue hardship.

Goods are being sold by Anne in Seattle and shipped by ABC Railroad to Brian in Portland, Oregon. In this situation, the term "FOB Seattle" means that the risk of loss passes from the seller to the buyer when:

the goods are delivered to ABC Railroad in Seattle.

The common law placed the risk of loss on _____ at the time of the loss.

the party that had technical title

In a "mixed" contract for the sale of both goods and services, the court will apply the contract rules of the UCC or of the common law, depending on whether:

the predominant purpose of the contract is goods or services.

Under the doctrine of _____, courts would refuse to grant the equitable remedy of specific performance for breach of a contract if they found the contract to be oppressively unfair.

unconscionability

The implied warranty of fitness for a particular purpose is violated when the goods are:

unfit for any use

A contract that fails to comply with the statute of frauds is generally:

unforceable

An oral contract that is covered by the statute of frauds is:

unforceable

Normally, an illegal contract is:

unforceable

Johnny LaRue sells men's jackets to men's clothing stores, including Melonville Man. Melonville Man orders a selection of men's jackets from LaRue's catalog, asking that LaRue select an assortment of goods for the buyer. LaRue takes advantage of this opportunity to get rid of the odd-sized jackets and those in pastel colors that are no longer popular. LaRue:

violated the good faith requirement under sales contracts.

A contract where formation was induced by duress is an example of a contract that is:

voidable

Bill is 25 years old. His uncle promised in writing to pay him $2,000 if Bill would refrain from drinking alcohol for one year. Bill refrained from drinking alcohol for one year. However, his uncle now refuses to pay Bill as they agreed. The uncle claims that because Bill suffered no detriment by refraining from alcohol, his non-drinking does not constitute legal consideration, and, therefore, no contract was formed. If Bill sues his uncle, Bill will:

win because Bill had a legal right to drink alcohol.