BUS LAW Practice Questions

A contract for the sale of a copyright is governed by Article 2 of the UCC

False

Chad has offered to take Miles into his accounting firm as a partner upon payment of $5,000 cash. In response, Miles 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." In this case a. any indefinite provisions in the contract between Chad and Miles will be supplied by Article 2 of the UCC b. Miles has rejected the terms of the original offer, but there is still a contract c. Miles has made a counteroffer, hence there is no contract d. Chad is a merchant making a firm offer under Article 2 of the UCC. Hence there is a contract.

c. Miles has made a counteroffer, hence there is no contract

Destruction of the subject matter has what effect on the offer? a. The offer is merely delayed under the "Hardship Rule: b. The offer is delayed until additional subject matter can be located c. The offer is terminated d. This creates an impossibility of fact that does not terminate the offer

c. The offer is terminated

Assume an offeree mails a rejection to the offeror on November 1. This rejection arrives at the offeror's place of business on November 5. In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6. Which of the following statements correctly describes the situation? a. There was no contract because the acceptance was mailed more than three days subsequent to rejection b. There was a contract since the acceptance was mailed prior to the time the rejection was received c. There was no contract because when an acceptance follows a prior rejection, the first communication to be received by the offeror is the effective one. d. there was no contract because the rejection was mailed first

c. There was no contract because when an acceptance follows a prior rejection, the first communication to be received by the offeror is the effective one.

Which of the following is NOT always necessary in order for a valid contract to be formed? a. mutual assent b. competent parties c. a writing d. legality of purpose

c. a writing

The UCC provides that if a court as a matter of law finds a contract for the sale of goods or a clause of such a contract to have been unconscionable at the time it was made, the court may: a. enforce the part of the contract that is not unconscionable b. refuse to enforce the contract c. all of these d. limit the applications of an unconscionable clause in order to avoid an unconscionable result

c. all of these

Blake tries to sell his classic car to Victoria for $12,000. Blake tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Blake really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Blake's statement, which of the following correctly states the situation? a. Blake's statements amount to puffing only b. blake's statements are actionable only if negligently made c. blake's statements provide grounds to set the contract aside d. blake's statements amount to fraud in the execution

c. blake's statements provide grounds to set the contract aside

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. a. was a valid contract that should be enforced by the law b. can be voided based upon fraud in the execution c. can be voided based upon fraud in the inducement d. can be voided based upon mistake as to the identity of the subject matter

c. can be voided based upon fraud in the inducement

If untrue, which of the following would probably by considered a misrepresentation of a material fact? a. "this is the one that i think is the best buy" b. these tires will wear like new" c. "this is the best computer on the market" d. "this car has new brakes"

d. "this car has new brakes"

Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement? a. "in my opinion, this is the best buy for the money" b. "this car has a new radiator" c. a statement of judgment of value, such as "this is the best car in town for the money" d. "this style of jacket is going to be the most popular style next year"

b. "this car has a new radiator"

Contract law is significant in that it is basic to other fields of law such as: a. secured transactions b. All of these c. sales of personal property d. commercial paper

b. All of these

Reilley wants to open a McHenry Roast Chicken franchise in her hometown of Machester. Arden, a representative of McHenry, told Reilley, "if you will buy a lot and build a building in river city, we will give you a franchise." Reilley bought the lot and built the building as instructed, only to discover that McHenry had awarded the franchise to someone else. McHenry claims no liability to Reilley since there was no consideration. Which statement is most accurate: a. McHenry is liable to Reilley since adequate consideration is given by both parties b. McHenry is liable to Reilley based on the concept of promissory estoppel c. McHenry is not liable to Reilley since there is no consideration d. McHenry is not liable to Reilley since there is past consideration

b. McHenry is liable to Reilley based on the concept of promissory estoppel

Brian makes a material misrepresentation of fact regarding his horse to Rosalind while out riding one day. Later that day, Rosalind makes an offer to buy the horse. Brain accepts without correcting his earlier misrepresentation of fact. In this case, a. neither Brian nor Rosalind may avoid the contract b. Rosalind may avoid the contract c. Brian may avoid the contract d. either or both Brian or Rosalind may avoid the contract

b. Rosalind may avoid the contract

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

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

Which of the following is correct with regard to enforceable restraint of trade? a. a typical restraint is a covenant not to compete b. all of these c. the restraint should be no more extensive than is required to protect a specified property interest d. restraints typically arise in connection with the sale of business

b. all of these

Which of the following gratuitous promises is/are enforceable by statute? a. A good faith contract modification in a contract for the sale of goods b. all of these are enforceable by statute c. a renunciation of a claim in written waiver that is signed and delivered by the aggrieved party when the contract involves a sale of goods d. a written offer signed by a merchant to buy or sell goods that assures it will be kept open for one month

b. all of these are enforceable by statute

A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called: a. a usurious contract b. an adhesion contract c. an illegal restraint of trade d. exculpatory

b. an adhesion contract

Malaki has a contract to purchase a new smartphone. The law governing this contract is Article 2 of the UCC

True

The UCC Battle of the Forms rule: a. All of these b. may yield different results depending on whether the parties are merchants c. may result in formation of a contract different from the terms of the offer d. changes the mirror image rule

a. All of these

A bank robbery has occured, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible? a. an off-duty deputy sheriff from a country other than the one where the arrest occurred b. none of these are eligible c. an on-duty sheriff's duty in the country where the arrest occured d. the employees of the bank

a. an off-duty deputy sheriff from a country other than the one where the arrest occurred

Jill contracted to purchase Kevin's automobile under the belief that she could sell it at a profit to Linda, but after Jill bought the car, she found out that Linda isn't interested in buying it. Jill: a. cannot void the contract with kevin b. can rescind the agreement with kevin c. could rescind the agreement with kevin if she was mistaken in her estimate of the value of the auto d. can sue linda for detrimental reliance

a. cannot void the contract with kevin

A promise against public policy: a. has no legal remedy available for breach b. must be in writing to be enforceable c. is enforceable if the parties have capacity and mutual assent and they exchange consideration d. can be contractual

a. has no legal remedy available for breach

Jason's mother would like him to go to college, so in June he enrolls at State University. He also quits his job and tells his mother his plans to continue taking classes. His mother says, "I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485. Which of the following is true regarding his mother's promise? a. it is unenforceable, because Jason had already enrolled in school and there is no consideration b. it is enforceable, because Jason returned to college c. it is enforceable, because Jason is giving up the right to do something else d. it is unenforceable, because it is a unilateral contract

a. it is unenforceable, because Jason had already enrolled in school and there is no consideration

Barbara, a wealthy widow, promises the pastor of her church that she will donate $20,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $80,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. a. the doctrine of promissory estoppel can be applied b. the promise to pay $20,000 is a promise to give a gift and is therefore not enforceable c. under the Restatement, Barbara's promise is enforceable only if it is in writing d. Barbara's promise is not enforceable because the church did not give consideration

a. the doctrine of promissory estoppel can be applied

Steven intentionally makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is: a. Voidable b. executed c. void d. unenforceable

a. voidable

R&R, Inc. entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000 if he stole trade secrets from the leading competitor of R&R. Scott performed his end of the agreement by delivering the trade secrets. R&R now refuses to pay Scott for his services. a. will be unable to recover, because this is an illegal contract b. may recover based upon the express contract of the parties c. will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by R&R d. may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of R&R

a. will be unable to recover, because this is an illegal contract

Which of the following would be considered a valid and legally enforceable agreement? a. an agreement under which arthur agrees to pay barbara $3,000 to disparage the product of arthur's competitor b. an agreement by a car salesman to not sell automobiles or automobile parts in Marin Country for a period of one year after terminating his employment c. an agreement to pay a legislator to vote for a particular bill d. an agreement by the seller of a service station not to enter the service station business in ohio for a period of 30 years after the sale of his business

b. an agreement by a car salesman to not sell automobiles or automobile parts in Marin Country for a period of one year after terminating his employment

Non-compete agreements drafted for employees of Internet companies: a. are irrelevant b. are subject to larger geographic restrictions that for other types of companies c. are interpreted no differently in terms of standards of reasonableness than are agreements for other types of companies d. are subject to longer periods of reasonable duration

b. are subject to larger geographic restrictions that for other types of companies

Which of the following results in a void, rather than voidable, agreement? a. Undue influence b. fraud in the execution c. fraud in the inducement d. duress by improper threat

b. fraud in the execution

Humberto writes to Stan asking if Stan will buy his cultivator for $600. Humberto's question: a. if answered in the affirmative by Stan, creates a contract b. indicates merely a willingness to enter into a negotiation rather than a willingness to enter into a contract c. is subject to the mirror image rule d. is a definite and certain offer communicated to an offeree

b. indicates merely a willingness to enter into a negotiation rather than a willingness to enter into a contract

To be effective, notice of revocation of an offer: a. must be communicated directly to the offeree before offeree has accepted b. may be communicated indirectly to the offeree through a third person c. must be dispatched before the offeree accepts; when notice actually reaches the offeree is not important d. is not addressed in the Restatement

b. may be communicated indirectly to the offeree through a third person

Custom sales and rentals uses a four-page contract with important contract terms buried in the fine print. This is an example of: a. substantive unconscionability b. procedural unconscionability c. a reasonable, legal business practice d. a Blue Law

b. procedural unconscionability

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. a. William is under a pre-existing moral duty to perform at the orginally agreed-upon price b. the parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000 c. William is in breach of contract. John need not pay any additional money d. the substitute contract is binding under the UCC because there is payment of additional money

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

The UCC provides that a merchant is bound to keep a written offer open for a stated period but no longer than: a. two months b. three months c. a reasonable time d. ten days

b. three months

One of the changes in contract law between the nineteenth century and the twentieth century is that in more recent times: a. contract damages are viewed more narrowly and equitable remedies are no longer available b. privity of contract is required c. intended third-party beneficiaries may sue in their own right d. contractual liability, once assumed, can rarely be escaped

c. intended third-party beneficiaries may sue in their own right

The requirment of legally sufficient consideration a. is the same as the requirement of adequacy of consideration b. means the subject matter than the parties agree to exchange has to have the same value c. is that the parties have agreed to an exchange and it imposed a legal detriment upon the promisee or conferred a legal benefit upon the promisor d. has nothing to do with the legal value of what is exchanged

c. is that the parties have agreed to an exchange and it imposed a legal detriment upon the promisee or conferred a legal benefit upon the promisor

A(n) is a measure designed to protect the public from unqualified practitioners a. exculpatory clause b. revenue license c. regulatory license d. usury statute

c. regulatory license

A purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs is a(n) ____ contract. a. illusory b. exclusive dealing c. requirements d. outputs

c. requirements

Which of the following need NOT be proved in order to establish the defense of economic duress? a. the circumstances permitted no other alternative b. that the circumstances leading up to the contract were the result of coercive threats or acts of the opposite party c. that one party explicitly made an economic threat d. that one side involuntarily accepted the terms of another

c. that one party explicitly made an economic threat

Hannah, as a joke, offers to sell her violin to Mike. Her statement would have legal effect if: a. Hannah's intent, determined subjectively, is to enter a contract b. Hannah's intent, determined objectively, is not to enter a contract c. the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts d. Mike did not, but should have realized that Hannah was not serious

c. the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts

Leonard offers to sell his diamond ring to Emily. Diane overhears the offer and says, "I accept the offer." a. this is a valid acceptance b. this is an invitation seeking offers and not an offer c. the offer had not been communicated to the offeree d. Diane cannot accept the offer, because it wasn't made to her

d. Diane cannot accept the offer, because it wasn't made to her

Ava says to Donell, "if i decide to buy a tablet next month, i will buy it from you" this is an example of: a. the pre-existing duty rule b. good consideration c. past consideration d. an illusory promise

d. an illusory promise

Contracts induced by threats of ____ are voidable, regardless of whether the coerced party has committed an unlawful act. a. civil prosecution b. tortious conduct c. physical force d. criminal prosecution

d. criminal prosecution

Sam wants to sell his Golden Retriever to Jordan. Sam tells Jordan that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). Jordan relies on these statements and purchases the bird dog. The buyer has most probably been a victim of: a. duress b. fraud in the execution c. undue influence d. fraud in the inducement

d. fraud in the inducement

Abe is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Abe is treated at the hospital and released a day later. The hospital sends him a bill for $2,400, which Abe refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious. Abe: a. has entered into a unilateral contract with the hospital and therefore will have to pay the bill b. has entered into an implied in fact contract with the hospital c. and the hospital have entered into a bilateral contract, the terms of which require that he pay the bill d. has a quai-contractual agreement with the hospital

d. has a quai-contractual agreement with the hospital

Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works. If she wants to quit her job and go to work for another travel agency, it is likely that: a. if the period of time of the agreement is under five years, it will be upheld by the court b. a court would uphold these restrictions c. a court would rule the restrictions invalid unless her work is done predominantly online d. is no trade secrets are involved, and she has no domain over customers, a court would rule the restrictions to be invalid

d. is no trade secrets are involved, and she has no domain over customers, a court would rule the restrictions to be invalid

A misrepresentation is material of: a. it changes the price paid by the buyer b. all of these c. it is made knowingly d. it would likely induce a reasonable person to enter into a transaction

d. it would likely induce a reasonable person to enter into a transaction

Shirley 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. Because Shirley failed to notify the station of her intention to supply the information before actually doing so, she has not accepted the offer b. Shirley cannot collect the money unless the offer was specifically made to her by the station c. Shirley was just doing her duty as a citizen and has no right to the payment of any money d. the offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Shirley has accepted

d. the offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Shirley has accepted