ACCT 324 exam

______ occurs when a party to a contract unjustifiably fails to substantially perform his obligations under the contract.

material breach

An "accord and satisfaction" is not enforceable if ______ is involved.

a liquidated debt

Under the UCC, courts will uphold modifications or limitations to remedies unless the remedies fail in their ________.

essential purpose

A(n) ________ damages clause in a contract is one that identifies a remedy before a breach occurs.

liquidated

If the parties dispute either the existence of a debt or the amount of a debt, that debt is called a(n) ________ debt.

unliquidated

If an agreement is illegal, the contract is _______.

void

f the parties have not negotiated the liquidated damages in the contract, the UCC allows a nonbreaching seller to claim against a breaching buyer ________ or $500, whichever is less, as liquidated damages.

20% of the purchase price

Which of the following requires that each party performs for the other at the same time?

concurrent condition

Belinda mails Harold an offer on March 2nd. Harold receives the offer on March 4th and immediately mails a rejection. On March 5th, Harold changes his mind and mails Belinda an acceptance. Belinda receives the acceptance on March 6th and the rejection on March 7th. Is there a contract?

Yes, the acceptance is effective when mailed on March 5th.

In which of the following situations does an express ratification by a minor occur?

An express ratification occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.

In most states, a minor does not have the right to affirm which of the following contracts?

Car purchase contract

Juan, Dwayne, and Sonia are co-workers. Juan overhears Dwayne's offer to sell an antique car to Sonia for $15,000. Under these circumstances,

Juan makes a new offer to Dwayne when he offers to buy the car for $15,000.

Regarding the enforceability of a present promise, which of the following is an accurate statement regarding past consideration?

Past consideration is no consideration at all.

In obtaining cover, the buyer must do all but which of the following?

Purchase substitute goods that are identical to the original goods

To justify recovery based on a quasi-contract, a plaintiff must prove all but which of the following elements?

The defendant would be enriched by receiving the benefit that was the result of a unilateral mistake on behalf of the plaintiff.

When a minor enters into a contract, the minor has which of the following rights?

The minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority.

when is a contract voidable?

When the contract is entered into by a minor

What has occurred if the original parties to a contract and a third party all agree that the third party will replace one of the original parties and that the original party will then be discharged from his or her obligations under the contract?

a novation

Consideration can be anything, as long as it is the product of a(n):

bargained-for exchange

According to the Uniform Commercial Code (UCC), the remedy of last resort available to sellers and lessors in the case of breach of a sales contract is:

canceling the contract

_______ performance occurs when all aspects of the parties' duties under the contract are carried out perfectly.

complete

Performing ________ that is not required by a contract for an additional amount of money is valid consideration given in exchange for the additional amount of money.

extra work

_______ occurs when a mental or physical defect prevents a natural person from being able to enter into a legally binding contract.

incapacity

When parties agree that a debt is owed and the amount of that debt, then that debt is considered to be:

liquidated

Which damages are specified by the parties in advance and put in the contract?

liquidated

Which type of damages are identified before the breach of contract occurs?

liquidated damages

which rule says that the terms of an acceptance must reflect the terms of an offer?

mirror-image rule

Formation of a contract begins when the party initiating the contract, called the ________, makes an offer to another party, called the ________.

offeror; offeree

f a buyer decides to terminate a contract because the seller materially alters a written contract without the knowledge of the buyer, then the contract is discharged by

operation of law

George is planning to buy Karl's car for $10,000. He gives Karl $1,000 to keep the offer open for 30 days. Karl will deduct the $1,000 from the price of the car if George purchases the car within the 30 days. If George does not buy the car during that time, Karl will keep the $1,000 and may then offer the car to someone else. Which of the following contracts does this scenario best illustrate?

option contract

When a court can void the illegal part of an agreement and enforce the rest if the terms represent the main purpose of the original agreement, it is a(n) ______ contract.

severable

In a(n) ________ debt, the parties either disagree about whether money is owed or dispute the amount.

unliquidated

at an auction, if the seller is treated as making an offer to accept the highest bid, then the auction is

without reserve

Which of the following statements is incorrect concerning contracts made by intoxicated persons?

Courts tend to allow the intoxicated person to disaffirm the contract if disaffirmance occurs within one month after the person becomes sober.

Jorge offers to build Larry a garage for $30,000. the offer stated that acceptance in person was required. within a reasonable time, Larry emailed Jorge his acceptance. Which of the following statements is true about this situation?

Larry has not accepted the offer as required by the offeror, and there is no contract

If a nonbreaching buyer seeks the remedy of "cover," the buyer must establish all but which of the following?

The buyer must purchase goods identical to the goods specified in the contract.

If a person who suffers from a mental illness or defect still understands the nature of the contract and his or her obligations under the contract, which of the following will result?

The contract will be considered valid.

How is an offeror's intent to be bound by an agreement demonstrated?

The courts determine an offeror's intent based upon how a reasonable person would interpret the offeror's words and actions

When one party gives a promise as consideration and the other party gives a(n) _______ in consideration, a unilateral contract will result.

act

Sonya, an event planner, had agreed to use the rare Juliet rose for Juliet's engagement party. However, due to an embargo against the country from where the flowers were to be imported, Sonya could not fulfill her promise. In this scenario, the contract between Sonia and Juliet may be discharged on the basis of

commercial impracticability

Julio has been offered a job at a firm on the condition that he graduates by April. This condition is known as a _____.

condition precedent

Suppose that Brittany agrees to purchase Kathy's computer for $700. Brittany's payment of $700 is the _______ that Kathy will receive for her computer.

consideration

Which of the following conditions must be present for an offer to have a legal effect?

definite and certain terms

When courts grant damages to a nonbreaching seller to recover the purchase price from the breaching buyer, the court is typically granting the seller the right to _______.

get the benefit of the bargain

a valid offer includes

offers communicated by the offeror to the offeree's agent

The preexisting duty rule means that

performance of a duty you are obligated to do under the law is not good consideration.

_____ performance occurs when nearly all of the terms of the agreement have been completed, the obligor has made a good faith effort to complete all of the terms of the agreement, and no "willful departure" from the terms of the agreement has occurred.

substantial

legal capacity is:

the mental ability of a person to understand his or her rights and obligations under a contract and comply with the terms.