Test 3

​In which of the following cases is a contract between A and B binding?

A makes a mistake of material fact, and the mistake is unknown by B.

Arthur made a bid at an auction by calling out the amount of $250. The auctioneer acknowledged Arthur's bid. There were no higher bids, and before the fall of the auctioneer's hammer, Arthur announced that he was withdrawing the bid. The auctioneer said that it was too late for Arthur to withdraw his bid, because the bid had already been acknowledged. What is the result?

Arthur's bid is an ordinary offer that can be revoked.

A said to B, "I'll give you $100 for that bracelet." B replied, "$135." A said, "No thanks." B then said that B accepted the $100, but A was no longer interested and said there was no contract. B insists there is a contract. Result?

B's counteroffer of $135 terminated A's offer of $100.

An agreement not to compete is enforceable:

In the sale of a business

Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if:

Jim relied upon Jack's statement.

Judy, a widow, just sold a piece of property. She will live off that money during her retirement. Judy dotes on her son, Chris, who asks her to invest her money in his restaurant, which is faltering. He tells her that if she does not lend him the money she will never see him again. She is afraid of being alone and agrees to his request, but soon changes her mind and asks for her money back. Chris claims they have formed a binding contract. What is your conclusion?

The contract is voidable based on undue influence.

Which of the following is not a necessary element of promissory estoppel?

The promisor and the promisee must engage in a bargained-for exchange.

Which of the following is not illegal?

a "giveaway" to every tenth person entering a department store

When an offer has been accepted:

a binding agreement probably is formed

In general, an acceptance occurs when:

a clear expression of the offeree's agreement to be bound by the terms of the offer occurs

​Marquez agrees to buy Dale's pickup truck so he can pull his trailer. Both Marquez and Dale believe that the truck is big enough to do the job. After they complete the deal, Marquez finds that the truck is not strong enough to handle the trailer. The contract between Marquez and Dale can be rescinded because of:

a mutual mistake

All of the following agreements represent an unreasonable restraint of trade except:

a valid restrictive covenant.

Consideration is not required in:

agreements to modify contracts for the sale of goods.

An apparently voluntary agreement may in fact not be voluntary if:

all of the above

What damages are recoverable in a case of promissory estoppel?

an amount necessary to restore the promisee to the position he or she would have been in had the promisee not relied on the promise

​At an auction sale, each bid is:

an offer

​​In a bilateral contract, each party will be a promisor and, therefore, each party will:

be an obligor

An agreement is not binding when:

both parties make a mistake regarding a material fact

An agreement to restrain trade may be void on the grounds that it is:

contrary to public policy

An executory contract is:

entered into but not fully performed.

In the sale of a business, all the following elements are necessary to create an enforceable noncompete clause, except:

estimated value of the seller's business

A contract under which one or both parties have not yet fully performed is termed a(n):

executory contract

​​A right of __________ refusal is the right of a party to meet the terms of a proposed contract before it is executed, such as a real estate purchase agreement.

first

​If no termination date is specified for an offer, the offer will remain open:

for a reasonable period of time.

An agreement to pay reasonable additional compensation to a contractor for the performance of a pre-existing contract when the contractor faces extraordinary circumstances caused by unforeseen difficulties is called a:

good-faith adjustment.

If an offeree dies before the offer has been accepted, the offer:

is automatically revoked by the death of the offeree.

Public policy:

is protections from that which violates any established interest of society

The failure to have a license will not render agreements void if the license:

is readily obtainable by payment of a fee.

The rule that doing or promising to do what one is already legally bound to do is not consideration applies to a part payment made in satisfaction of a(n) __________ debt.

liquidated

When a debtor tenders a check stating "paid in full" and the creditor cashes the check, the debt:

may be discharged if it is a unliquidated debt.

A finding of undue influence would most likely not occur in a contract between:

neighbor and neighbor.

Ordinarily, a promise to perform an existing legal obligation is:

not consideration

A landowner's promise to pay a contractor a bonus to complete construction of a building according to the terms of a pre-existing contract between the landowner and the contractor is:

ordinarily not binding on the promisor.

Private lotteries, which generally are held to be illegal, involve three elements:

prize, chance, and consideration

​A bilateral contract consists of a:

promise for a promise

All of the following statements refer to an element of fraud except:

the defendant desired to obtain a financial benefit.

An offer is terminated upon rejection by the offeree unless:

the offeror renews the offer.

​The obligation of a cosigner is discharged by:

the payment of the debt.

Which of the following is not consideration for a present promise?

the promise to pay one"s child support obligation, consistent with a pre-existing court order.

​The plaintiff in a quasi-contractual action can recover:

the reasonable value of the benefit conferred upon the defendant.

An offer of a reward for the arrest and conviction of a criminal is an example of a:

unilateral contract

When money is loaned at a greater rate of interest than is allowed by law, __________ is committed.

usury

In an employment contract, agreements not to compete are:

valid, if the restriction is reasonable and necessary for the protection of the former employer

Assume Harvey buys a bull from Mike for the purpose of breeding, and Mike was aware of Harvey's purpose in purchasing the bull. Later, the bull was discovered to be sterile, although at the time of sale both Harvey and Mike believed the bull was not sterile. The contract is:

voidable based on bilateral mistake.

​In an auction __________, the auctioneer takes bids as agent for the seller with the understanding that no contract is formed until the seller accepts the transaction.

with reserve

The effect of the making of a partial payment to satisfy an admitted debt is an example of the rule that:

​doing what one is already under a legal obligation to do is not consideration

​If an offer requires that acceptance be communicated by a specific date and the acceptance is properly dispatched by the offeree on the final date,

​the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed.

A legally binding agreement that can be rejected at the option of one of the parties is called a(n):

​voidable contract

​The main thrust of the quasi contract is to:

​​prevent unjust enrichment

​An obligation to pay for the reasonable value of services rendered when there is no contract would be called:

​​quasi-contractual