BLAW 301 Exam 1

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. The sales contract: A) is a valid contract that should be enforced by law, because neither party knew the exact nature of the stone at the time of the sale. B) can be voided based upon fraud in the execution C) can be voided based upon fraudulent misrepresentation D) can be voided based upon mistake as to the identity of the subject matter

A) is a valid contract that should be enforced by law, because neither party knew the exact nature of the stone at the time of the sale.

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract? A) Yes, since the acceptance was received before the rejection. B) No, because the rejection was effective upon dispatch. C) No, because the rejection terminated the offer. D) Yes, because the acceptance is always effective upon dispatch.

A) Yes, since the acceptance was received before the rejection.

Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints apartment. Which choice does not describe the situation? A) bilateral contract B) a quasi contract C) an implied in fact contract D) a unilateral contract

A) bilateral contract

An ethical decision-making approach that relies on a central authority or set of rules, such as the Koran or the Bible, is: A) ethical fundamentalism B) ethical relativism C) rule utilitarianism D) act utilitarianism

A) ethical fundamentalism

Which of the following results in a void, rather than voidable, agreement? A) Duress by improper threat B) Fraud in the execution C) Fraud in the inducement D) Undue influence

B) Fraud in the execution

If Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora: A) Bob is under no obligation to return the money. B) Bob is under a contractual obligation to return the money. C) Bob's obligation to return the money is quasi-contractual. D) Bob's obligation to return the money is implied in fact.

C) Bob's obligation to return the money is quasi-contractual.

A _________________ is the refusal to accept an offer. A) revocation B) counteroffer C) rejection D) statutory irrevocability

C) rejection

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. He has been offered a two-year graduate fellowship, but he will not be able to pay the loan back if he accepts the fellowship. The bank manager tells Sam that if he pays $3,000 now, they will forgive the loan. Should Sam accept the offer? A) no, because the bank can still sue for the remaining $2,000 B) no, because the manager's promise is not binding on the bank C) yes, because the early payment of the loan is consideration that makes the bank's promise binding D) yes, because the bank must do whatever the manager says

C) yes, because the early payment of the loan is consideration that makes the bank's promise binding

True or False: A illusory promise is consideration for a return promise.

False

True or False: An acceptance that contains terms different from or additional to those in the offer receives the same treatment under the common law and under the UCC.

False

True or False: Article 2 of the UCC lack relevance in modern society because it, including its amendments, does not provide rules related to electronic commerce.

False

True or False: Attorney Geraldine advises her client, Rick, to enter a contract, which ultimately would have benefited Geraldine but not Rick. The test of whether the contract, if entered, is voidable based on undue influence is whether Geraldine's advice would have dominated the thinking of an ordinary, reasonable person rather than whether it dominated Rick's mind or emotions.

False

True or False: In the case of Lefokowitz v. Great Minneapolis Surplus Store Inc., the court decided that the store's advertisement was not a valid offer to enter into a contract but was merely an invitation to make an offer.

False

True or False: Laws passed by Congress are the supreme law of the land in the United States and take precedence over other sources of law.

False

True or False: Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

False

True or False: Once a court has decided a case, the priniciple of stare decisis precludes correction of erroneous decisions.

False

True or False: Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

False

True or False: Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable.

False

True or False: Silence can never be an acceptance.

False

True or False: Ty threatened to have Lisa's father prosecuted for embezzlement unless Lisa signed a contract to pay Ty 12 monthly payments of $500 each to purchase his car. Lisa cannot avoid the contract based on duress since the threat was toward Lisa's father rather than Lisa herself.

False

True or False: A judge deciding a common law case must look for guidance to similar cases previously decided by that court or superior courts.

True

True or False: An acceptance is generally effective upon dispatch.

True

True or False: Article 2 of the Uniform Commercial Code does not apply to the sale of services.

True

True or False: Ethical issues in business settings include corporate governance, whistle-blowing, shareholder voting, and management's duties to shareholders.

True

True or False: Ethics can be defined broadly as the study of what is good or right for human beings.

True

True or False: Hal holds a gun to Irving's head and tells him to sign the contract. Irving signs the contract, because he fears for his personal safety. The contract is void, because it was entered into under duress.

True

True or False: In a bilateral contract, if one party is not bound, neither party is bound.

True

True or False: In the case of Denney v. Reppert the court allowed the employees of a bank to collect a reward because they supplied information that led to the arrest and conviction of a bank robber.

True

True or False: James promises to pay Brooke $2,500 if she does not sue him for negligently injuring her in a bicycle accident. If Brooke does not sue, James's promise to pay is binding because it is supported by consideration.

True

True or False: The Constitution provides that federal statutes are paramount to state constitutions and statutes.

True

True or False: The final arbiter as to the constitutionality of laws passed by Congress or by the legislature of a state is the Supreme Court of the United States.

True

True or False: The legal effect of a usurious loan varies from state to state.

True

True or False: Under common law, ma modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract can be modified without new consideration.

True

Arnold has offered to take Bob into his accounting firm as a partner upon payment of $5,000 cash. In response, Bob says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership." A) Bob has made a counteroffer and hence there is no contract B) Bob has rejected the terms of the original offer, but there is still a contract. C) Under Article 2 of the UCC, Arnold is a merchant making a firm offer. Hence there is no contract. D) Any indefinite provisions in the contract between Arnold and Bob will be supplied by Article 2 of the UCC

A) Bob has made a counteroffer and hence there is no contract

William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. What is the result? A) the parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000. B) the agreement for $4,000 is binding because of provisions of the UCC C) William is in breach of contract, John need not pay any additional money D) William is under a pre-existing moral duty to perform at the originally agreed-upon price.

A) the parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.

Quasi contracts are used to provide a remedy when the parties enter into a: A) void contract. B) implied in fact contract. C) situation in which promissory estoppel applies. D) All of the above.

A) void contract.

James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed: A) when Brenda tells James she will buy the boat. B) when Brenda gets the money from the credit union. C) when Brenda applies for the loan at the credit union. D) only when James gets the $3,000.

A) when Brenda tells James she will buy the boat.

Charlene hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information and the suspect is then arrested and convicted. In this case: A) Charlene cannot collect the money unless the offer was specifically made to her by the station. B) The offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Charlene has accepted. C) Because Charlene failed to notify the station of her intention to supply the information before actually doing so, she has not accepted their offer. D) Charlene was just doing her duty as a citizen and has no right to the payment of any money.

B) The offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Charlene has accepted.

Which of the following would generally be considered to be a revenue-raising licensing law? A) a statute requiring that doctors be licensed B) a statute requiring that salespeople be licensed, but not establishing any educational or training requirements C) a statute requiring public school teachers to be licensed D) a statute that requires insurance agents to pass a test before selling insurance in a state

B) a statute requiring that salespeople be licensed, but not establishing any educational or training requirements

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. In this case, Elmer: A) has made a firm offer to Fred which cannot be revoked B) can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open C) must keep the offer open, because this is an option contract D) cannot, because of promissory estoppel, revoke his offer to Fred

B) can revoke his offer at any time before Fred accepts it, because there is no consideration to keep it open

Scienter is a legal term which means: A) that a buyer has justifiably relied upon the seller's representation B) that the seller had knowledge that his statements were false and the statements were made with the intention to deceive C) sales puffery D) all of these

B) that the seller had knowledge that his statements were false and the statements were made with the intention to deceive

A factor demanding the ethical and social responsibility of business is: A) the "invisible hand" of competition B) the sheer size and power of individual corporations C) the fact that self-regulation has been effective in achieving social goals. D) great amounts of wealth and economic power are controlled by a small number of shareholders who own and exercise tight control over a large number of corporations

B) the sheer size and power of individual corporations

A _____________________ is a law establishing a maximum rate of permissable interest for which a lender and borrower of money may contract. A) wager B) usury statute C) Sunday statute D) none of these

B) usury statute

Albert read ElectroCorp's ad in the local newspaper advertising a music system for $89. Albert rushed to the store to buy the system only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the music system. A) The ad is a firm offer by the merchant, and the music system must be sold for $89. B) The ad is a contract and the store must abide by terms stated in the contract. The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him. D) Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus sales tax.

D) Albert is merely making an offer to ElectroCorp to buy the music system for $89 plus sales tax.

The doctrine of promissory estoppel: A) is a doctrine enforcing noncontractual promises. B) includes as a requirement within the doctrine that there has been justifiable reliance on the promise C) a doctrine relying on justice and not contractual rights D) all of these

D) all of these

Carlos owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as part of the transaction agrees not to engage in the same business anywhere within the state for a period of four years. The agreement: A) is reasonable B) is unreasonable C) unduly interferes with the interests of the public D) two of these

D) two of these