Econ Review 2

Which of the following is a condition subsequent? A. "I promise to do X if I succeed in getting a loan." B. "I promise to do X on the condition that the Cubs win the World Series." C. "I promise to do X unless Al Gore is elected President in 2000." D. "I promise to do X assuming that inflation stays below 3% in 1997."

"I promise to do X unless Al Gore is elected President in 2000."

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 denied paying any money to 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 which Sam supplied was $35,000. If Sam sues Orr, Sam will be entitled to recover: A. nothing. B. $35,000. C. $70,000. D. $75,000.

$75,000

Which of the following is most likely to constitute undue influence? A. A firm demanding more in terms of pricing by withholding essential supplies. B. A clergyman using a parishioner's emotional susceptibility to get the parishioner to contract with the clergyman. C. Threatening to commence a frivolous criminal prosecution against someone, in order to get them to contract with you. D. Grabbing someone's hand and forcing them to sign on a contract you have prepared.

A clergyman using a parishioner's emotional susceptibility to get the parishioner to contract with the clergyman.

30. Which of the following characterizes the traditional rule regarding a minor who misrepresents his/her age? A. He/she can be prosecuted for such an offense. B. An adult can file a tort of deceit against such a minor. C. An adult can seek compensation for any losses caused by such a minor. D. A minor's right to disaffirm is valid in such a case.

A minor's right to disaffirm is valid in such a case.

Which of the following is covered by the statute of frauds? A. A real estate mortgage B. A $300 contract for the sale of pencils C. A contract that can be performed within a week D. A $100 VCR repair

A real estate mortgage

What types of transactions are governed by the Uniform Commercial Form? A. Contracts for the Sale of Goods B. Contracts for services C. Contracts for the sale of land D. Any commercial contract, whether for goods, services or land

A. Contracts for the Sale of Goods

The transfer of a right under a contract is called a(n): A. assignment. B. delegation. C. affidavit. D. bilateral contract.

Assignment

Someone who attempts to recover for breach of contract: A. can recover only for those losses that he can prove with reasonable certainty. B. can recover for all consequences of the breach, whether foreseeable or not. C. can only do so for consequential damages. D. has no duty to mitigate (or minimize) damages.

Can recover only for those losses that he can prove with reasonable certainty

Which form of damages is intended to give the victim of the breach of contract the "benefit of the bargain"? A. Compensatory B. Punitive C. Nominal D. Liquidated

Compensatory

An uncertain future event, the occurrence of which is necessary for the existence of a contractual obligation is called: A. a condition precedent. B. a condition subsequent. C. a concurrent condition. D. a constructive condition.

Condition precedent

The appointment of another person to perform a duty under a contract is called a(n): A. assignment. B. delegation. C. affidavit. D. bilateral contract.

Delegation

The right of minors to avoid a contract as a means of protecting themselves against their own improvidence and against overreaching by adults is called: A. emancipation. B. ratification. C. adjudication. D. disaffirmance.

Disaffirmance

_____ is a wrongful coercion that induces a person to enter or modify a contract. A. Deceit B. Mistake C. Fraud D. Duress

Duress

In order for the consideration requirement in contracts to be met: A. the consideration given by each party must be of roughly equal value. B. each party must give consideration. C. the consideration must have monetary value. D. the consideration must consist of some form of property.

Each party must give consideration. The requirement of consideration means that a promisee must pay the price that the promisor asked to gain the right to enforce the promisor's promise. So, if the promisor did not ask for anything in exchange for making him/her promise or if what the promisor asked for did not have legal value, his/her promise is not enforceable against him/her because it is not supported by consideration.

Which of the following was NOT taken into account by classical law in assessing contracts? A. Fraud B. Duress C. Misrepresentation D. Fairness

Fairness

Courts look at parties outward manifestations of intent as a requirement to enforce a contract. This is called the subjective standard of intent. True or False

False Object standard of intent

Where an offer stipulates a certain means of acceptance, the offer's acceptance is effective upon dispatch even if it uses means other than those specified in the offer. True or False

False An improperly dispatched acceptance or one that was sent by some means of communication that was nonauthorized would be effective only when received

Generally, the age of majority for contracting purposes is 21 years. True or False

False At common law, the age of majority was 21. However, the ratification in 1971 of the Twenty-sixth Amendment to the Constitution giving 18-year-olds the right to vote stimulated a trend toward reducing the age of majority.

Anti-assignment clauses in contracts are not enforceable. True or False

False Contract right may be nonassignable because the original contract expressly forbids assignment; such antiassignment clauses in contracts are generally enforceable.

In order to satisfy the writing requirement of the statute of frauds, both parties must sign the writing. True or False

False Most states require only a memorandum of the parties' agreement; they do not require that the entire contract be in writing or that it be signed.

When the surrounding facts and circumstances indicate that an agreement has in fact been reached, a (n) __________, has been created. A. Implied contract B. Quasi-contract C. Void contract D. Unenforceable

Implied 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 Wilk would not sell the land for $450. If Dix sues Wilk for specific performance, Dix will: A. prevail, because the amount of the contract was less than $500. B. prevail, because there was part performance. C. lose, because the fair market value of the land is over $500. D. lose, because the agreement was not in writing and signed by Wilk.

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

20. Which of the following would indicate a rejection under the mirror image rule? A. Inquiry regarding terms B. Material changes to offer C. Grumbling acceptance D. Present intent to accept

Material changes to offer Under the mirror image rule, only significant material changes between an offer and an acceptance would indicate an implied rejection of the offer.

23. Consideration can be a(n) _____ in the case of a bilateral contract. A. act B. promise C. exchange D. gift

Promise

Helga owns an insurance business in Idaho. Her clients are all Idaho residents. She later sells her business to Carlos. As part of the deal, the contract contains a non-compete clause that prevents Helga from operating an insurance business anywhere in Idaho, Washington or Oregon for a period of five years. Six months after this sale, Helga opens an insurance business in Oregon. If Carlos seeks to enforce the non-compete agreement against Helga, will he probably be successful? A. Yes, because this agreement is reasonable. B. Yes, because the clause is not imposing an undue hardship. C. No, because this agreement is not reasonable. D. No, because the agreements is not yet converted into a treaty.

No, because this agreement is not reasonable.

When can the offeror effectively revoke his/her offer? A. Only after an effective acceptance. B. Only before an effective acceptance. C. Only before payment for goods or services has been made. D. Only before the parties have completed their obligations under the contract.

Only before an effective acceptance

Sue wanted to purchase a car. She went to "Honest Bob's" used car sales. She was interested in a classic 1956 Jaguar XK 140 Roadster. Bob told her "this is a great car-it runs like a dream, it is a sweet ride." Bob's statements are legally considered to be: A. opinion statements. B. material representations. C. innocent misrepresentations. D. fraudulent, if they are false.

Opinion statements

A(n) _____ is a separate contract in which an offeror agrees not to revoke her offer for a stated time in exchange for some valuable consideration. A. offer B. option C. bid D. advertisement

Option

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. A. present intent to contract B. inquiry regarding terms C. subjective standard D. silent acceptance

Present intent to contract In determining whether an offeree accepted an offer, the court is looking for the same present intent to contract on the part of the offeree that it found on the part of the offeror.

A written agreement was signed by two parties and it was intended to be their entire agreement. The parol evidence rule will prevent the admission of evidence that is offered to: A. prove the existence of a contemporaneous oral agreement that modifies the contract. B. prove the existence of a subsequent oral agreement that modifies the contract. C. explain the meaning of an ambiguity in the written contract. D. establish that fraud had been committed in the formation of the contract.

Prove the existence of a contemporaneous oral agreement that modifies the contract.

If a statute is considered to be _____, the purpose of the legislation is to protect the public against dishonest or incompetent practitioners. A. regulatory B. enforceable C. adhesive D. ancillary

Regulatory

17. In general, the mailbox rule is beneficial to: A. the offeror B. the offeree C. the courts D. third-party beneficiaries

The offeree

In order for a unilateral mistake to make a contract voidable, either the non mistaken party must have caused or had reason to know of the mistake, or enforcement of the contract must be unconscionable. True or False

True A unilateral mistake can be reason for making a contract voidable provided it is proved that the nonmistaken party caused or had reason to know of the mistake or it would be unconscionable to enforce the contract.

John promises to pay Robert $100 per week, in exchange for Robert's promise not to beat John up. There is no consideration for John's promise. True or False

True Every member of society has a duty to obey the law and refrain from committing crimes or torts. Therefore, a promisee's promise not to commit such an act can never be consideration.

The essence of a contract is that it is a legally enforceable promise or set of promises True or False

True When a set of promises has the status of contract, a person injured by a breach of that contract is entitled to call on the government (courts) to force the breaching party to honor the contract

An exculpatory clause is a provision in a contract that purports to relieve one of the parties from tort liability. True or False

True An exculpatory clause (often called a "release" or "liability waiver") is a provision in a contract that purports to relieve one of the parties from tort liability.

When a person owes an unconditional duty to another, then he/she must perform it unless the performance is excused True or False

True In the performance stage of a contract, when a party's duty is unconditional, he has the duty to perform unless his performance is excused

When a court says that an agreement is illegal, it most likely means that the agreement: A. has not mentioned a time period for which the agreement is valid. B. does not identify the parties involved in the agreement. C. is related to buying and selling of trade secrets. D. violates public policy.

Violates public policy

A contract in which one or more parties have the legal right to cancel their obligations under the contract is called: A. A void contract B. Valid contract C. Voidable contract D. Unenforceable contract

Voidable contract

When is the revocation of an offer effective? A. When received by the offeror B. When received by the offeree C. When sent by the offeree D. When sent by the offeror

When received by the offeree

18. 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 only at 2:15 p.m. Do Trista and Charlie have a binding contract? A. No, because Trista's purported acceptance was delayed. B. Yes, because Trista dispatched the telegram prior to 2:00 p.m. C. No, because Trista's use of a telegram was not stipulated in the offer. D. Yes, unless Charlie is not home to receive the telegram. According to the mailbox rule, properly addressed and dispatched acceptances can become effective when they are dispatched, even if they are lost and never received by the offeror.

Yes, because Trista dispatched the telegram prior to 2:00 p.m. According to the mailbox rule, properly addressed and dispatched acceptances can become effective when they are dispatched, even if they are lost and never received by the offeror.

James has 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? A. No, because James made no statement that was false. B. No, because a seller does not have a duty to reveal all faults. C. Yes, because a seller must always inform a buyer about defects that are not obvious. D. Yes, because James is concealing the termite infestation from Mikhael.

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

Betty, age 16, buys a car and wrecks it one week later. She takes it back to the seller and demands all her money back. According to the traditional rule, is she entitled to get all her money back? A. Yes, regardless of the condition of the car, because this was a void contract. B. Yes, regardless of the condition of the car, because this was a voidable contract. C. No, she is entitled to no remedy in this situation. D. No, she is entitled to get some money back but less the value of the damage to the car.

Yes, regardless of the condition of the car, because this was a voidable contract.

Offers that fail to provide a specific time for acceptance: A. are considered to be illegal. B. are valid for a reasonable period for time. C. are valid but unenforceable. D. can be used to penalize the offeror.

are valid for a reasonable period for time

Calvin tells Sara that he will sell her his car for $5,000. Sara agrees. The exchange is to take place in 10 days. The contract between Calvin and Sara is now: A. unilateral, executory, and valid. B. bilateral, executed, and voidable. C. bilateral, executory, and express. D. bilateral, executory, and implied.

bilateral, executory, and express. Bilateral contracts-Both parties have exchanged promises and the contract is formed when the promise is exchanged Executory- Contracts that have been completed Express- All the terms and conditions have been agreed upon by the parties

Melanie owes $250 to Jessica. Jessica gifts the right to receive the money from Melanie to her daughter Kelly in writing. This assignment is: A. unenforceable since a beneficiary modification is prohibited. B. enforceable despite the lack of consideration. C. unenforceable because contractual rights cannot be assigned. D. enforceable because the gift is made in writing.

enforceable despite the lack of consideration

Daniel is a senior at State University. Brian, Daniel's father, is concerned about Daniel's study habits, given that Daniel spends most of his evenings at the campus pub instead of the library. Brian promises Daniel that he will send him on an expense-paid trip to Europe after his graduation if Daniel spends at least five evenings a week studying in the campus library for the remainder of his senior year. After returning home from his graduation, Daniel asks Brian about the European trip. Brian replies, "Your education was your reward. I don't owe you a trip to Europe." Brian is: A. correct; Daniel has already gained the benefit of the bargain. B. correct; Daniel did not give anything of legal value. C. incorrect; Brian owes Daniel a trip to Europe because Daniel's acts are consideration. D. incorrect, but only if Daniel's acts are adequate consideration for such an expensive trip.

incorrect; Brian owes Daniel a trip to Europe because Daniel's acts are consideration.

22.Daniel owes Casey a debt, the amount of which is subject to a good faith dispute. The parties agree to settle the debt, with Daniel promising to pay Casey $15,000 and Casey promising to release Daniel on a $25,000 debt. The settlement agreement: A. is supported by consideration. B. lacks consideration because Casey is not giving Daniel any legal value. C. lacks consideration because Daniel is promising to perform a preexisting legal obligation. D. is binding under UCC section 2-209 even though there is no consideration.

is supported by consideration

Damages that are agreed upon at the time the contract is entered into are called _____. A. compensatory damages B. consequential damages C. liquidated damages D. mitigated damages

liquidated damages

The statute of frauds requires that: A. some contracts be evidenced by a writing. B. all contracts involving fraud must be void. C. all three-party contracts be collateral ones. D. there can be no secondary debts in a contract.

some contracts be evidenced by a writing