Quiz 4

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Omega Corp. owned a factory that was encumbered by a mortgage securing Omega's note to Eagle Bank. Omega sold the factory to Spear, Inc., which assumed the mortgage note. Later, Spear defaulted on the note, which had an outstanding balance of $15,000. To recover the outstanding balance, Eagle: A) May sue Spear only after suing Omega. B) May sue either Spear or Omega. C) Must sue both Spear and Omega. D) Must sue Spear first and then proceed against Omega for any deficiency.

B) May sue either Spear or Omega.

Which of the following statements is true of e-mail contracts? A) All e-mail contracts are enforceable even if they don't meet the requirements of a traditional contract. B) All e-mail contracts require consideration, capacity, and lawful object. C) All E-mail contracts are exempted from the requirements of the Statute of Frauds. D) Several e-mails cannot be integrated to determine the parties' agreement.

B) All e-mail contracts require consideration, capacity, and lawful object.

Wilcox Co. contracted with Ace Painters, Inc., for Ace to paint Wilcox's warehouse. Ace, without advising Wilcox, assigned the contract to pure Painting Corp. Pure failed to paint Wilcox's warehouse in accordance with the contract specifications. The contract between Ace and Wilcox was silent with regard to a party's right to assign or delegate. Which of the following statements is true? A) Ace remained liable to Wilcox despite Ace's assignment of the contract to Pure. B) Ace would not be liable to Wilcox if Ace had notified Wilcox of the assignment. C) Ace's duty to paint Wilcox's warehouse was nondelegable. D) Ace's delegation of the duty to paint Wilcox's warehouse was a breach of the contract.

A) Ace remained liable to Wilcox despite Ace's assignment of the contract to Pure.

1. Which of the following is a measure of compensatory damages likely tjo be applied in a majority of jurisdictions? A) The seller of land breaches a contract. The buyer recovers the difference between the market price and the contract price. B) The seller of textbooks contracts to deliver 100 books at $20 each. When the seller fails to deliver, buyer pays $25 each to another seller. Damages are $2,500. C) A company agrees to construct a pool. Before work begins, the owner breaches. Damages are equal to the contract price. D) A company agrees to construct a tennis court but abandons work when the project is one-third complete. The damages are the full value of the completed tennis court

A) The seller of land breaches a contract. The buyer recovers the difference between the market price and the contract price.

Johnson and Harris entered into an agreement in which Johnson was to build a drainage canal for Harris. The contract contained a clause providing that either party's sole remedy under the contract was arbitration. If either Johnson or Harris breaches the contract, which is the effect of the arbitration clause? A) Required arbitration is not enforceable because everyone is entitled to use the court system. B) The clause is enforceable as the parties' sole remedy. C) Any decision of an arbitrator must be reviewed by a court befor the decision can be specifically enforced. D) The clause is void as against public policy.

B) The clause is enforceable as the parties' sole remedy.

Which of the following acts regulates spam e-mail on the Internet? A) Anticybersquatting Consumer Protection Act. B) Uniform Computer Information Transactions Act (UCITA). C) Controlling the Assault of Non-Solicited Pornography and Marketing Act (CANSPAM Act). D) Communications Decency Act.

C) Controlling the Assault of Non-Solicited Pornography and Marketing Act (CANSPAM Act).

On May 25, 2016, Smith contracted with Jackson to repair Smith's cabin cruiser. The work was to begin on May 31, 2016. On May 26, 2016, the boat, while docked at Smith's pier, was destroyed by arson. Which of the following statements is true with regard to the contract? A) Smith would not be liable to Jackson because of mutual mistake. B) Smith would be liable to Jackson for the profit Jackson would have made under the contract. C) Jackson would not be liable to Smith because performance by the parties would be impossible. D) Jackson would be liable to repair another boat owned by Smith.

C) Jackson would not be liable to Smith because performance by the parties would be impossible.

Allied is indebted to Ferco. A contract between Bell and Allied provides that Bell is to purchase certain goods from Allied and pay the purchase price directly to Ferco until Allied's obligation is satisfied. Without justification, Bell failed to pay Ferco, and Ferco sued Bell. Ferco will: A) Not prevail, because Ferco lacked privity of contract with either Bell or Allied. B) Not prevail, because Ferco did not give any consideration to Bell. C) Prevail, because Ferco was an intended beneficiary of the contract between Allied and Bell. D) Prevail, provided Ferco was aware of the contract between Bell and Allied at the time the contract was entered into.

C) Prevail, because Ferco was an intended beneficiary of the contract between Allied and Bell.

Yost contract with Egan for Yost to buy certain real property. If the contract is otherwise silent, Yost's rights under the contract are: A) Assignable only with Egan's consent. B) Nonassignable because they are personal to Yost. C) Nonassignable as a matter of law. D) Generally assignable.

D) Generally assignable.

Whether a breach is material is vital for determining the rights and duties of the parties to a contract. A breach is usually deemed not to be material and will not discharge the nonbreacher when the: A) Breach is intentional but minor. B) Contract specifies that the time is of the essence and performance is delayed. C) Cost to correct the breach is substantial in relation to the contract price. D) Injured party receives substantially all of the benefits reasonably anticipated.

D) Injured party receives substantially all of the benefits reasonably anticipated.

As a part of downsizing, Richmond and Sons fired an employee before his employment contract lapsed. Is the employee obliged to mitigate damages? Explain.

If a contract has been breached, the law places a duty on the innocent nonbreaching party to make reasonable efforts to mitigate the resulting damages. The extent of mitigation of damages required depends on the type of contract involved. If an employer breaches an employment contract, the employee owes a duty to mitigate damages by trying to find substitute employment. The employee is only required to accept comparable employment. The courts consider such factors as compensation, rank, status, job description, and geographical location in determining the comparability of jobs.


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