Business Law Exam 3
Which of the following would be considered to be a misrepresentation of a material fact for purpose of establishing fraud in the inducement?
"This care has a new radiator"
Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finished the dress (with ruffles), Georgia must pay:
$60, since the modified agreement is supported by additional consideration
Which of the following is correct with regard to conditions subsequent?
A "sale or return" contract is an example of a contract with a condition subsequent.
Permissible lender's expenses, which would not be considered in determining the rate of interest under usury statutes, include all but which of the following?
A charge to the borrower of $500 to investigate the borrower's credit, when it actually cost the lender $75
In which of the following situations is there a third party incidental beneficiary who would be unable to enforce the agreement?
A doctor, when an automobile accident policy states that the insurance company will reimburse the insured for medical expenses incurred as a result of an automobile accident.
Which of the following would generally be considered to be a revenue-raising licensing law?
A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.
Adam wants to buy a six-passenger car. The salesman tells him that the two-set sports car Adam sees on the car lot would be just perfect for six people. Adam test drives the car and then buys it.
Adam was not justified in relying upon the salesman's representation that the car would seat six people.
Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 100-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home.
Al is in violation of the sale agreement
Ratification can occur in which of the following ways?
All of the above Through express language As implied from conduct Through failure to make a timely disaffirmance
Theresa has a contract to teach eighth grade at Washington Middle School. She decided she could make more money writing a book, so she wants to assign her teaching contract to her friend, Stephanie, who is also a licensed teacher.
All of the above are correct If effective, this would be both an assignment and a delegation. The duties which Theresa wants to delegate are personal in nature. If the school district agrees to accept Stephanie's services, a novation would occur, which would relieve Theresa of her obligation to the school district.
Which of the following is true with regard to an exculpatory clause?
All of the above are true. An exculpatory clause excuses one party from liability for her own tortuous conduct. Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. An exculpatory clause may be unenforceable for unconscionably.
An express condition is usually preceded by which of the following terms?
All of the above. While. After. Provided that.
When contract terms prohibiting the assignment of rights exist, most courts will:
All of the above. strictly construe them interpret a general term prohibiting assignments as a mere promise not to assign award the obligor a right to damages for the breach of terms forbidding the assignment.
Which of the following would always be considered to be contrary to public policy?
An agreement to pay someone to make false statements about a competitor's product
Which of the following involved an invalid assignment that a court would not enforce?
An assignment of an automobile liability insurance policy accompanied by the delivery of the policy.
________________ is a provision excusing one party from liability.
An exculpatory clause
Which of the following will often not constitute valid consideration?
An illusory promise
A bank robbery has occurred, and the banker's association has offered a $1,000 rewards 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?
An off-duty deputy sheriff from a county other than the one where the arrest occured
Sam, a shopkeeper, die unexpectedly at the age of 46. His lifelong business associate, Paul, is appointed the administrator of the estate. Same had a personal debt of $8,000 which he owed to Art's appliance Store. Paul says to Art, "If there isn't enough money in the estate, I'll personally see that the bill is paid." Which of the following is correct?
An oral statement such as this is not enforceable because it is within the statute of frauds
Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation.
Both (b) and (c) above are correct. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages. Jim may wait until June 1 to see if Kevin will perform his contractual duties and, if he does not, there is a material breach.
Cheryl, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $500 when the dress arrives. Before the dress arrives, Cheryl decides that the dress is too expensive, and now sh wishes to cancel the order.
Cheryl may disaffirm this executory contract because, while clothing in general is classified as a necessary, a new prom formal would probably not be classified as a necessary.
Which of the following is correct with regard to duress?
Duress by improper threats is the most common form of duress
Which of the following results in a void contract?
Duress by physical force.
A misrepresentation is material if:
Either (a) or (b). a)it would likely induce a reasonable person to enter into a transaction b)the maker knows it would likely induce the other party to enter into the transaction
In determining the meaning of a contract, which of the following will have first priority?
Express terms
A bargain by a candidate for public office to make a certain appointment following the election is legal
False
A condition subsequent is a much more frequent occurrence than a condition precedent.
False
A novation is an agreement between two parties to have one substitute for the other in a contract.
False
A person who owes a duty under a contract is an obligee
False
An agreement for an illegal substance will be enforced by the courts if all other elements of the contract are present
False
An agreement to pay a public officer something extra for performing his official duty is enforceable.
False
Bill is currently enrolled in law school, expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempted to sue Tom. Bill has a legal right to enforce the agreement.
False
Contractual incapacity excuses a minor from an obligation to pay for necessaries.
False
Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding because there is a bargained-for-exchange.
False
Donee beneficiaries and incidental beneficiaries are called intended beneficiaries
False
Emancipated minors have no ability to avoid contracts based upon their minority
False
For misrepresentation to be fraudulent, it need not be material
False
Fraud in the execution is a fairly common occurrence and involved defrauding a person as to the very nature of the contract.
False
Fraud in the inducement will render an agreement void.
False
In general, a minor may only disaffirm a contract after he has reached the age of majority.
False
In order to be sufficient, an agreement required to be written under the statute of frauds must be signed at the bottom and notarized.
False
Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence.
False
Natalie, age 17, rented a power washer and while using the machine, she negligently damaged it beyond repair. Under the majority view, the rental company can successfully sue Natalie for damages on a tort theory of negligence since it is well settled that minors are liable for their torts.
False
Oswald applied for a loan from Pointe Lenders. Pointe's reasonable cost of checking Oswald's credit will be considered as part of the financing charge when determining whether Pointe's rate of interest exceeds that allowable under the usury statute.
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 of these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.
False
Ratification makes a contract void from the beginning
False
Robert and John entered into a bilateral contract and Robert has fully performed. Their mutual rescission of the contract is binding at common law.
False
Sixteen-year-old Todd's parents provide adequate food, lodging, and clothing for him, but he sees a sweater he wants and purchases it. In all states, the sweater is considered a necessary since it is an item of clothing.
False
The State Opera Company has a contract with a famous tenor to perform in its production. If the tenor chooses, he may delegate his duties under the contract to an equally well-known tenor.
False
The purpose of the statute of frauds is to prevent the performance of oral contracts.
False
The statute of frauds has to do with fraud in the inducement of a contract
False
The word "parol" literally means release.
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
Under the common law, a modification of a preexisting contract must be supported by mutual consideration, under the Code, a contract can be modified without new consideration.
False
Under the common law, payment of a lesser sum of money than is owed in consideration of a promise to discharge a fully matured, undisputed debt is legally sufficient to support the promise of discharge.
False
Where parties to a failed agreement are in pari delicto, a court will provide a remedy to the injured party.
False
An executor personally promises to pay the debts of the decedent's widow. Under what circumstances would the creditor need to have a writing in order to enforce this promise?
If the promise is made to the creditor
Fourteen-year-old Marsha bought $120 worth of video games and DVDs at a local store, using her own money. Her parents insisted that she return the items and get her money back. Which of the following is true?
In a majority of jurisdictions, Marsha may her her money back even if she cannot return the merchandise
Jason's mother would like him to go to college, so in June he enrolls at the local university. He also quits his job and tells his mother his plans to take classes. His mother says, "I'm so happy 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?
It is unenforceable, because Jason had already enrolled in school when she made the statement that she wanted to pay for his books, and there is no consideration.
Jan promises Eli $4,000 for on of his original paintings on the condition that she receives $1 million from her mother's will.
Jan's promise is legally sufficient unless Jan knows she cannot inherit $1 million
Jill contracts to purchase Kevin's automobile under the belief that she can well it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it.
Jill cannot void the contract
Nell gives Big Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances at a promotion. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true?
Legally, Nell can neither get the money back nor force Al to do as he promised.
Which of the following promises does not have to be evidenced by a writing or be in proper electronic form in order to be enforceable?
Mindy's agreement with Susan to buy her bike for $400.
A contract was made for 125 bales of cotton to arrive on a ship named peerless from Bombay. Unbeknownst to either part to the contract, there were two ships names "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for bread of contract.
No contract exists due to mistake in meaning of terms
Robert Briscoe is 17 years old. He lies to Bouyers Auto about his age in order to induce them to sell him a new pickup truck. Bouyers fall for this lie and sells him the pickup. Under the prevailing view, which of the following is correct?
Robert may disaffirm and get his money back.
Steve purchases a four-wheel drive truck from Belk Auto Sales. Steve is only 17 years of age. He wrecks the vehicle and attempts to disaffirm the contract and have Belk repay him all that he has paid. In the majority of jurisdictions, what would happen?
Steve may simply return the vehicle and get his money
Which of the following is untrue with regard to the interpretation of contracts?
Technical terms will always be given technical meaning and language that has a commonly accepted meaning is always interpreted in accordance with that meaning.
Anita owes Brad $75,000. Brad signs a written statement granting Carl a gratuitous assignment of his rights from Anita. Brad delivers the signed statement to Carl before he dies.
The delivery of the statement makes the assignment irrevocable.
Andria, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Wood who agrees to testify on behalf of Andria's client at the trial. In return for Dr. Wood's testimony, Andria agrees to pay Dr. Wood $10,000 if they win the case, and $5,000 if they lose. Dr. Wood agrees. The agreement between Andria and Dr. Wood is unenforceable.
True
At common law, a minor was a person who was under the age of twenty-one years.
True
At the marriage of her daughter, Lorna is given papers to sign, which the catering company says are the invoiced for the good, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud of execution.
True
B&B, Inc. pays an attorney to draft and lobby for a bill which will greatly lessen B&B's tax liability to the state and federal governments. B&B gives the attorney $20,000 in cash to pay legislators for taking the time to listen to him. This is an agreement which is a violation of public policy.
True
Belinda has a household insurance policy, which requires that she notify the insurance company within 30 days of any loss before she is eligible to receive payment for her loss. The notification requirement is a condition precedent to the insurance company's obligation to perform, even though the notification must occur subsequent to the loss.
True
Clara types a letter to David setting forth the terms of their contract that falls within the statute of frauds. At the end of the letter, she types her name but does not sign her signature to it. If David wants to use the letter to satisfy the writing requirement, he may do so.
True
E-Sign was enacted by Congress in 2000 and makes electronic records and signatures valid and enforceable across the United States for many types of transactions in or effecting interstate or foreign commerce.
True
If a person is unable to understand the nature and effect of entering into a contract, he or she can avoid it.
True
If a person with a mental condition that impairs her ability to act in a reasonable manner enters a contract that is grossly unfair, the contract is voidable.
True
In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor
True
In some states, the vesting of a third party's rights occurs only when the third party learns of the contract and assents to it.
True
Intoxicated persons are liable in quasi contract for necessaries purchased during their incapacity.
True
James promised 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
Jessica at the age of 15 entered into a contract to sell five acres of land to her uncle. She may disaffirm this contract at any time before reaching her majority.
True
Joe is mentally impaired from the effects of a prescribed medication. If he makes a contract while under this impairment, the contract would be voidable if he cannot comprehend the subject of the contract, its nature, and its probable consequences, even if the other party does not know or have reason to know of his mental condition.
True
Marie owes Nathan $900 and the parties agree that Marie will paint Nathan's house in satisfaction of the debt. The debt is not discharged until Marie performs the substituted agreement by painting Nathan's house.
True
Marlene owes Bailey $750 due June 1. Bailey assigns the debt to Greg on May 1, but neither Bailey nor Greg informs Marlene. On June, Marlene pays Bailey. Marlene is fully discharged from her obligation.
True
Michael is 17 years old and earns extra money by repairing cars. Nathan, who is 21, brings his car to Michael for repairs, and Michael ruins the brake system of the car because of his inexperience. If Nathan sues Michael for negligence in performing the auto repair contract, in most states Michael will have no liability, because of tort of negligence and the auto repair contract are connected.
True
Most types of contracts are valid without being written.
True
Ratification does need to be express; it may be implied from the minor's conduct.
True
Sally goes away to college at 17, lives on her own and pays her own rent and electric bills. If she makes a contract to buy a television set, in most jurisdictions, she may assert her minority status and set aside the contract.
True
Sandy's private secretary promises not to disclose the contents of a letter she typed if Sandy will giver her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day.
True
Seventeen-year-old Teresa wants to dis-affirm her student loan agreements. In most states, she will not be allowed to do so.
True
Some states require the lender to forfeit two or three times the amount of usurious interest charged.
True
Specific lender usury statues rather than the general usury statue generally apply to real estate mortgages and small consumer loans
True
The UCC permits an oral agreement for the sale of goods to be enforced against a party who admits to the contract in court, even though the statute of frauds requires the agreement in writing
True
The UCC provides that a contract for the sale of goods can be effectively modified without new consideration, provided the modification is made in good faith.
True
The computation of time under the one-year provision of the statute of frauds starts when the agreement is made, not when the performance is to begin.
True
The contracts of a person who is adjudicated insane and placed in care of a guardian are void.
True
The courts readily enforce a covenant not to compete during the period of employment
True
The delegation of a duty still leaves the delegator responsible for the performance of the duty
True
The doctrine of necessaries applies in the same way to minors and mental incompetents.
True
The legal effect of a usurious loan varies from state to state.
True
The main purpose doctrine is a court-developed exception to the suretyship provision.
True
The minority of states require that the minor, when effecting a disaffirmance of the contract, pay at least a reasonable amount for the use of property or the amount bu which the property depreciated while in the hands of a minor.
True
The obligor need not receive notice for an assignment to be valid
True
The part performance exception to the land contract provision of the statute of frauds in many states requires both that the transferee has paid a portion of the purchase price and has either taken possession of the real estate or has started to make valuable improvements on it.
True
The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.
True
The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend. The band cannot assign its rights and delegate its duties under this contract.
True
The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time by injunction.
True
Tom's bank is threatening to repossess his car. Tom's mother notifies the bank that she promises to pay the bank if Tom defaults on the loan. This promise must be in writing to be enforceable.
True
UCC Article 9 requires certain assignments to be in writing
True
Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.
True
When the rights under a contract are highly personal, they are not assignable.
True
Where a stipulation in restraint of trade is part of the sale of a business, it may be valid if the restrain is within reasonable limitations to protect the business's goodwill.
True
Wilmer and Grace have an executory contract for the sale of some goods. Wilmer files for bankruptcy and is then discharged by the bankruptcy court. Wilmer has no obligation to perform under the contract with Grace.
True
Which of the following is correct with regard to consideration?
Two of the above, (a) and (b) are correct. In a unilateral contract, a promise is exchanged for an act or forbearance to act. In a bilateral contract, there is an exchange of promises.
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.
Two of the above, (b) and (c) The agreement is unreasonable. The agreement unduly interferes with the interests of the public.
Barbara, a wealthy widow, promises the pastor of her church that she will donate $30,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $60,000 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.
Under the Restatement of Contracts, Barbara's promise is enforceable.
Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?
Unenforceable as a violation of public policy
Rebecca sees a pair of beautiful silver shoes in a store window. She goes in and tells the shopkeeper, "If I am asked to the prom, I will buy those shoes. Please hold them for me." If the shopkeeper signs a note that says, "Will hold for Rebecca silver shoes, style 1028, size 8," will he have to honor that promise?
Yes, and there is a condition precedent to the contract of sale.
Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month. If Robbie does, is there a binding contract?
Yes, because Robbie gave up a legal right
On March 1, Tammy, a student, received a telephone call from Watterson, Inc. offering her a job for one year beginning June 15, after completion of the school year. According to the personal manager, she will have to move to California and be ready to start work at 8:00 a.m. on June 15. Should Tammy ask for a letter confirming the telephone conversation if she accepts the offer immediately?
Yes, because the job offer is for one year longer than one year for March 1.
Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see in another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract?
Yes, it is likely to be enforceable during employment
Would a letter written after the execution of a contract and which contained agreements different from those in the written contract be admissible under the parol evidence rule?
Yes, it would be admissible, because it is subsequent to the written agreement.
In the Lesher v. Strid case, the court held that:
a mutual mistake of fact renders a contract voidable by the adversely affected party if the mistake is so fundamental that it frustrates the purpose of the contract
The parol evidence rule is:
a rule of substantive law
Steven owes Theresa $100 for a used computer which he bought last year at Theresa's garage sale. The two agree that the debt can be paid by Steven's shoveling Theresa's driveway from January through March. The new contract is an:
accord
The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called:
an adhesion contract
Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:
an illusory promise
Stark enters into a contract with a contractor to build a large shopping mall in River City. Donner will greatly benefit from this contract since his convenience store is adjacent to the mall. Donner in this instance is:
an incidental beneficiary
An undisputed debt is:
an obligation that is not as to its existence or amount
On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform in December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is:
anticipatory repudiation
In the case of Speelman v. Pascal, the court held that:
assignments of rights to sums that are expected to become due to the assignor are enforceable.
Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl. This is an:
illegal wagering agreement.
Rose is working hard on Arlin's mayoral campaign. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 if she will register and vote for Arlin. Violet does so, but Arlin loses the election, and Rose now refuses to pay. Rose's agreement to pay Violet:
is unenforceable and opposed to public property
Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the intentional or reckless fault or negligence of our employees. Send packages at your own risk." Mary read this clause but sends her watch back to the manufacturer to be repaired anyway. The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy. Mary is:
likely to collect from DP because it attempted to excuse intentional and reckless behavior.
Melody, age 17, makes a contract with Seung, who is an adult. Melody:
may exercise the power of avoidance, called disaffirmance, while still a minor, and thereby be released from any liability on the contract
Sean has a right against Tanner and assigns it for value to Megan. Later Sean gives Tanner a release. Megan:
may recover damages from Sean for breach of an implied warranty
When both parties misunderstand their manifestation of mutual assent, it is termed:
mutual mistake
Joanne, a minor, sold her laptop computer to Bruce, an adult. Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor. Under the Uniform Commercial Code, Joanne may:
not avoid her contract with Bruce and may not recover her laptop
A _____ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee
novation
The Code greatly alters the common law doctrine of material breach by adopting what is known as the:
perfect tender rule
The principle illustrated in the Christy v. Pilkinton case is:
subjective impossibility does not discharge the contractual duty of the party
John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of:
substantive unconscionability
In the Pacific Custom Pools, Inc. v. Turner Construction Company case, the court found:
that the purpose of the relevant licensing law was to protect the public from incompetence and dishonesty in those who provide building and construction services.
In the Zelnick v. Adams case, the Supreme Court of Virginia found:
the case must be remanded for further proceedings, including the taking of evidence on the issue of the factual determination of necessity under all of the circumstances.
An arm's length transaction is one in which:
the parties are acting in their own self interest
Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health salesman and purchases a $400-a-month Medigap insurance policy. This contract is:
void
Rorzex, Inc. entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Roezex. Denzil performed his end of the agreement by delivering the trade secrets. Rozex now refuses to pay Denzil for his services. Denzil:
will be unable to recover, because this is an illegal contract
The definition of "discharge by breach" is:
wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party.
An obligor may assert rights of set off arising out of entirely separate matters that he might have against the assignor, as long as the matters arose before he has notice of the assignment
True
An unauthorized alteration of ANY of the material terms in a written contract discharges the entire contract.
True
William agrees to drill a well up to a 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 agree-upon amount.
The parties have agreed to a substitute contract which discharges the original contract.
Fred contracts to sell a certain tract of land to Mary for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price.
The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.
Which of the following would not be enforceable without additional consideration?
The settlement of an undisputed debt.
Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Bob wasn't sure as to the nature of the stone, but told Albert 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.
This contract can be voided based upon mistake to the identity of the subject matter
Carl and Ron are both engaged in road construction work. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Ron has bid on both jobs. Ron is awarded both contracts. Carl now wants to sue Ron for breach of contract.
This is an agreement in violation of public policy that will not be enforced by the courts.
A condition, as used in the law of contracts, is an event whose happening or nonhappening affects a duty of performance under contract.
True
A covenant not to compete is a type of restraint of trade that courts today will enforce under certain circumstances
True
A disaffirmance must come either during a minor's minority or within a reasonable time after he reaches majority.
True
A gratuitous assignment is revocable by the assignor.
True
A gratuitous promise is a promise made without consideration.
True
A mental condition that impairs a person's ability to act in a reasonable manner is one type of mental incompetence.
True
A modification of a preexisting contract occurs when the parties agree to change one or more of its terms
True
A significant impediment to e-commerce has been the questionable enforceability of contracts entered into through electronic means, such as the Internet or e-mail, because of the writing requirements under contract and sales law.
True
After an assignment, only the assignee has a right to the obligor's performance.
True
After the coronation of Edwards VII was postponed and parties who had entered into contracts in anticipation of the event filed numerous suits, the doctrine of frustration of purpose evolved.
True
An accord and satisfaction discharges the original debt
True
An exculpatory clause attempts to excuse one from liability for her own tortious conduct
True
Ben and Kate had been negotiating Ben's employment contract in conversations over the phone for a couple of weeks. Finally, they agreed on some contract terms. Kate offered to create a draft of the contract for Ben to read over. On the same day Ben was fired from his job. Afraid he would be unemployed, Ben signed Kate's draft without reading it. In this example Ben:
cannot avoid the contract because of economic duress or failure to read.
Under the UCC, a _____ is a sequence of previous conduct between the parties to an agreement which may be fairly regarded as establishing a common basis of understanding for interpreting their conduct under the contract
course of dealing
Contracts induced by threats of ______ are voidable, regardless of whether the coerced party has committed an unlawful act.
criminal prosecution
The exercise of the power to avoid a contract is known as:
disaffirmance
Professor Doright has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Professor Doright's mother is a:
donee beneficiary
In the Berardi v. Meadowbrook Mall Company care, the court found:
economic duress must leave the plaintiff no reasonable alternative but to acquiesce to the terms of the contract
