Business Law Exam 3 Review
Suzy Anders enters into an oral contract to purchase a tract of land from Bill Hermes. The land is considered worthless, but Anders feels that she has discovered a possible usage that would drastically increase the value of the land. To assure herself of the potential value of the land, Anders orally hires an attorney to investigate the title and records associated with the land in question. Before gaining any information from her attorney, Anders orally contracts with a builder to construct a huge building on the site. Because of the size of the project, a completion time is difficult to predict. Anders now discovers that the land is indeed useless, a fact that she obtains through information from her attorney. Anders now refuses to honor her contracts with Hermes, her attorney, and the builder. Must Anders honor her contractual agreements?
All contracts concerning the sale of land must be evidenced by a writing to be enforceable. The purchase agreement that Anders made with Hermes was oral, and it concerned the purchase of land. The initial oral contract is, therefore, unenforceable under the statute of frauds. When Anders hired an attorney to investigate the property, it was a collateral agreement not directly concerned with real property per se and thus not subject to a statute of frauds application. A construction project concerning the completion of a building must be evidenced by a writing under the statute of frauds because real property is involved. If this hurdle could be overcome, the length of time to conclude the project is only an issue if it would be impossible to complete within a year.
John, a 17-year-old, purchased a ping-pong table and four new ping-pong paddles. A week after he turned 18, John tried to return the ping-pong paddles. He told the seller that he had decided to keep the table. Can John avoid the contract in this way?
John may avoid the contract only by returning both the ping-pong paddles and the table. To avoid a contract, a minor must disaffirm the entire contract. The minor cannot ratify or affirm part of a voidable contract and avoid or disaffirm the rest. The entire contract must either be ratified or avoided.
John received a promotion at work and felt new clothes would be necessary in the new position. John went to a local store and charged three ties on his charge account at a cost of $60 each. Bill, a friend of John's, saw a sidewalk vendor selling ties at a cost of three for $10 and bought three at that price. The friends compared purchases that night and found that they had purchased identical ties. John became enraged and said that he would not pay the charge-account bill because the ties were clearly not worth $60 each. Bill indicated that he would testify on John's behalf if litigation ensued. What would be the probable outcome of the lawsuit?
John will lose the case because John received three ties, the consideration for which he bargained. Courts generally do not get involved in determining the relative adequacy of the consideration exchanged.
On April 15, Morgan sent a letter to Clark offering to sell her business to Clark for $200,000. The offer stated that it would expire on May 1. On April 30, Morgan sent another letter to Clark that stated that she was withdrawing the offer. Clark received that letter on May 1. Also on April 30, Clark sent a letter to Morgan accepting the offer. Morgan received that letter of acceptance on May 1. Morgan refused to sell the business to Clark, claiming that no contract had been formed. Clark brought suit to enforce the contract against Morgan. Based on what you have learned in this chapter, decide the probable outcome of the case.
Judgment would be for Clark. Per the mailbox rule, a valid contract was formed on April 30 when Clark mailed the letter of acceptance without being aware of Morgan's attempted revocation. The revocation by Morgan was not effective, since it was not received by Clark until the day after the contract was formed
When Gordon told Hanson that he was considering selling his house, Hanson offered to buy it. Gordon and Hanson entered into a contract in which Hanson paid Gordon $1,000 in cash for the right to buy Gordon's house for $150,000 in the event Gordon decided to sell it. Two weeks later, Jones offered Gordon $200,000 for his house, and Gordon agreed to sell it to her for that amount. Hanson sued Gordon to force Gordon to sell the house to him for $150,000, rather than to Jones for $200,000. Identify the probable result of the action. What type of contract, if any, was entered into between Gordon and Hanson?
Judgment would be for Hanson. Gordon and Hanson entered into a first-refusal contract providing that if Gordon decided to sell his house to anyone, Hanson would have an option to buy it for $150,000. Hanson's right to buy the house arose at the time Gordon decided to sell his house to Jones. Gordon breached his contract with Hanson by not offering to sell Hanson the house and instead entering into an agreement with Jones.
Jones and Clark entered into a written contract for the purchase of an apartment building by Clark. The contract was carefully drafted to set forth the agreement of the parties. It was signed by both parties. Clark subsequently claimed that the contract did not cover all the terms included in the written and oral agreements that the parties had made during their prior negotiations. Jones claimed that the parol evidence rule barred proof of all of their prior agreements. Which claim would be upheld in court?
Judgment would be for Jones. The parol evidence rule applies to both oral and written agreements or other statements made prior to the execution of the written contract. It provides that such agreements may not be admitted to modify or contradict the terms of a written contract that is complete on its face. The contract was carefully drafted in an attempt to set forth the agreement between Jones and Clark and appeared to cover all of the essential terms of the transaction. Thus, the contract is complete on its face, and the parol evidence rule bars proof of all prior agreements, both written and oral.
Mary offered to sell Mike several pieces of rare Chinese art at a very good price because they were duplicates in her own collection. Mike could not accept the offer at that time, but he did give Mary $500 in return for her promise to keep her offer open for three (3) weeks. Mike returned with the agreed-upon balance two weeks later to find that Mary already had sold the pieces she had offered to sell to him. Mary explained that she had been able to get a better price from another buyer. She offered to return Mike's $500 and insisted that this was all she was obligated to do. Is Mary right?
Mary is incorrect. By offering and accepting consideration, Mike and Mary had entered into an option contract. Mary was obligated to honor her offer to Mike for the three-week period-that is, she gave him the option to purchase at the agreed-upon price.
Louise owned a house next to Robert's house. Robert made a contract with Midcity Painters to paint his house. The painters arrived to paint Robert's house, but mistakenly painted Louise's house. She saw the painters at work and made no comment. Later, Midcity Painters sent Louise a bill for painting her house. She claimed that she was not liable because she had not made any contract with them. Is this a valid defense?
No. Although Louise did not enter into an actual contract for the painting of her house, this does not necessarily mean that she is not required to make any payment. She received a benefit, the painting of her house, with the knowledge that she was not legally entitled to it because she had no contract. Louise has therefore been unjustly enriched, and she is under a duty to pay the painters for the reasonable value of their services. As Louise had no contractual duty to pay for the painting, her duty to pay is quasi-contractual.
An agreement between Jim and his 18-year-old daughter, Betty, provides that he will give her $25,000 if she does not marry until after her 22nd birthday. One month after reaching the age of 22, Betty, still unmarried, claims the $25,000. Jim refuses to pay, claiming that the agreement was illegal. Is Jim correct?
No. Judgment will be for Betty. It is the policy of the law to encourage marriage. Thus, a contract that prohibits marriage under all circumstances or places broad or general restrictions on marriage generally would be held void as contrary to public policy. However, contracts that place reasonable restrictions on marriage generally will be held valid. In this case, the restriction that Betty not marry until she is 22 is reasonable and, therefore, is valid. Thus, Betty is entitled to the $25,000 in accordance with the terms of the binding contract between her and her father.
A young stockbroker was rather overwhelmed by a flood of new clients. Assunta, one of his clients, had purchased XYZ Corp. stock through the broker at a price of $35 per share. The price had gone down to $29 by the time Assunta telephoned the broker. Assunta told the broker that she wanted to sell the stock if it went below $30 and inquired as to the price. The broker did not check the price, but thinking it could not have fallen below the $30 threshold, simply reassured Assunta that it was still "in the low 30s." Marta, Assunta's cousin, also had purchased XYZ stock at $35 per share and made a similar call to the broker and received the same response. Marta, however, coincidentally saw the price on a stock ticker tape when she hung up and realized the broker had made an error. Both Assunta and Marta held the stock and did not sell. Later that same day, the stock price fell an additional $7 per share. Facing sizable losses, both Assunta and Martha decided to sue for fraud when Marta told Assunta of the broker's misstatement. Discuss the probable outcome of the lawsuits.
The broker's reckless disregard for the truth constituted fraud in the case of Assunta, because it was a material misstatement of fact that was relied upon causing damages. Marta, however, will not be successful, because she did not rely on the misstatement and knew that it was false.
Art and Mary were good friends who went through high school and college together. Art eventually became a college philosophy professor and Mary went into the business world. Mary became a senior vice-president of a management firm and learned many of the company's trade secrets. Both Art and Mary signed one-year contracts with their respective employers. The contracts contained clauses that provided that they would not compete against their former employers for a period of one year after leaving their jobs. The area covered by the restrictions for both Art and Mary was a radius of 500 miles from the place of employment. Both Art and Mary resigned and within two months took other jobs. Art went to work for another college 50 miles away, teaching philosophy. Mary took a job 75 miles from her former employment. Her new position was similar to her former job. The former employers sued to enforce the anticompetitive covenants in the original contracts. Discuss the probable outcome of the lawsuits.
The case against Art, the professor, will likely fail because the restrictive covenant is not necessary to protect the interest of the former employer. It is doubtful that a philosophy professor would be inflicting any harm on the former employer by teaching elsewhere. The lawsuit against Mary probably will be successful because she knew trade secrets. She held a high position in her former company, and her competition could cause it harm. The restriction appears reasonable.
Dave Tompkins was up late one night watching a television campaign for a charitable organization. The organization was seeking donations in order to construct a new building that would serve as the organization's headquarters. One of Tomkins' favorite performers appeared to promote the campaign, and this prompted Dave to telephone in a pledge. Tomkins pledged $10,000 to the charity and, feeling good about his action, finally went to sleep. The next morning, Tomkins regretted making the pledge because its enforcement would cause great personal financial hardship. Will the charity be able to legally enforce the pledge Tomkins made? If so, why might the charity choose not to enforce a lawful pledge?
Tomkins probably is bound by his pledge to the charitable organization. Charitable subscriptions by which individuals make pledges to finance the construction of a college building, a church, or another structure for charitable purposes are binding to the extent that the donor should have reasonably realized that the charity was relying on the promise in undertaking the building program. Some states do require proof that the charity has relied on the subscription. For the purpose of maintaining favorable public relations, a charitable group might choose not enforce its rights to claim payment of a pledge in this situation. What individual would look kindly on a charity that would take voluntary donors to court to force payment?
A customer requested a price from a carpenter on a teak cabinet to be built according to the buyer's specifications. Because teak wood is difficult to obtain, the customer agreed to pay the cost of the wood plus $175 and the carpenter agreed to build it. Which of the following is correct? a. Although the price is somewhat unclear, the parties have entered into a contract. b. This is an agreement to agree, and is not binding. c. This agreement fails for indefiniteness. d. The carpenter is bound by the agreement, but not the customer.
a. Although the price is somewhat unclear, the parties have entered into a contract.
The Martin family owned a home that was badly in need of repair. Mrs. Martin worked outside the home and Mr. Martin took care of the household responsibilities and cared for the two young Martin children. One day, Mrs. Martin left for work and a home repair crew drove up and began to put aluminum siding on the Martin house. Mr. Martin telephoned his wife, told her, and inquired about whether she had hired the workers. When the Martins realized that they never had ordered this work done, Mr. Martin sneaked out the back with the children. He later met his wife at work and they returned home for dinner. By that time, the entire front of the house had been aluminum-sided. The foreman asked, "Mr. and Mrs. Wolf, how do you like the job?" The Martins replied that they loved the job, but the Wolfs lived next door. When it became clear that the repair crew had made an error, the foreman insisted that the Martins had to pay. a. Decide the case, and explain the reason(s) for your decision. b. Decide the case, assuming that the Martins were away on vacation when the improvements were made, and then returned home to discover the improvements.
a. Because it was clear that the workers would be seeking payment for the work and had made an error, the Martins had the obligation to stop the work or be responsible for payment. This is a quasi-contractual obligation imposed by the law to prevent one party from being unjustly enriched at the expense of another. The Martins are obligated to pay for the reasonable value of the improvements. b. If the Martins were unaware of the fact that the improvements were being made, it is unlikely that a judge would order them to pay for the improvements. In this scenario, because the Martins would have had no opportunity to stop the work from being performed, the Martins would not be unjustly enriched.
Which of the following is not a necessary element of promissory estoppel? a. The promisor and the promisee must engage in a bargained-for exchange. b. The promisor must intend or should reasonably expect that the promisee will rely on the promise. c. The promisee must in fact rely on the promise in some definite and substantial manner. d. Enforcement of the promise is the only way to avoid injustice.
a. The promisor and the promisee must engage in a bargained-for exchange.
When money is loaned at a greater rate of interest than is allowed by law, __________ is committed. a. Usury b. credit misfeasance c. petty theft d. credit malfeasance
a. Usury
Under the Uniform Commercial Code (UCC), a firm offer applies to: a. a written, signed offer by a merchant to buy or sell goods. b. an unwritten but definite offer to buy or sell goods. c. a written, signed offer by anyone to buy or sell goods. d. an unlimited, stipulated period of time.
a. a written, signed offer by a merchant to buy or sell goods.
When an insurance policy is ambiguous, the policy is interpreted: a. against the insurer. b. in favor of the insurer. c. according to the dictionary meaning of the words. d. according to the meaning of the words in the insurance industry.
a. against the insurer.
Parol evidence generally is admissible to explain: a. ambiguous terms. b. why signatures are missing. c. why a contract was not performed. d. implied terms.
a. ambiguous terms.
The parol evidence rule: a. applies to complete written contracts. b. prevents proof of fraud. c. applies to incomplete contracts. d. is not designed to preserve the integrity of written contracts.
a. applies to complete written contracts.
In a bilateral contract, each party will be a promisor and, therefore, each party will: a. be an obligor. b. be able to avoid the contract. c. not be in privity of contract. d. be an agent for the other side.
a. be an obligor.
An oral contract containing a promise by an executor to pay estate debts from estate funds is: a. binding. b. voidable by the executor or administrator. c. enforceable against the executor only if the executor signs written proof of the agreement. d. enforceable against the other contracting party only if that party signs a written agreement.
a. binding.
The defense of noncompliance may be raised: a. by the parties to the oral contract. b. by third parties such as an insurance company or the IRS. c. both a. and b. d. neither a. nor b.
a. by the parties to the oral contract.
Negotiable instruments are: a. formal contracts. b. informal contracts. c. option contracts. d. first-refusal agreements.
a. formal contracts.
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: a. good-faith adjustment. b. bribe. c. compensatory allowance. d. relief payment.
a. good-faith adjustment.
The Uniform Commercial Code contains a statute of frauds rule relating to sales of personal property, specifically: a. goods. b. chattel paper. c. real property. d. none of the above.
a. goods.
An agreement not to compete is enforceable: a. in the sale of a business. b. between competitors. c. in contracts for the sale of goods. d. in contracts for the sale of securities.
a. in the sale of a business.
For a bilateral contract to be enforceable there must be: a. mutuality of obligation. b. an illusory promise. c. forbearance. d. adequacy of consideration.
a. mutuality of obligation.
Ordinarily, a promise to perform an existing legal obligation is: a. not consideration. b. binding if the promisor promises to perform with extra care. c. binding if the promisor promises to perform to suit the personal satisfaction of the promisee. d. binding if the promisee would experience substantial loss due to breach of the promise.
a. not consideration.
The promisor in a contract may also be called the: a. obligor. b. grantor c. obligee d. grantee
a. obligor.
The willingness of an offeror to enter into a contractual agreement regarding a particular subject is expressed by a(n): a. offer. b. acceptance. c. contract. d. agreement.
a. offer.
Private lotteries, which generally are held to be illegal, involve three elements: a. prize, chance, and consideration. b. return, skill, and wager. c. prize, skill, and consideration. d. attractive return, minimal involvement, and skill.
a. prize, chance, and consideration.
An obligation to pay for the reasonable value of services rendered when there is no contract would be called: a. quasi-contractual. b. quasi-enforceable. c. semi-lawful. d. valid.
a. quasi-contractual.
A minor cannot avoid a contract that has been: a. ratified. b. signed. c. processed. d. disallowed by the court.
a. ratified.
A contract of record is also referred to as a: a. recognizance. b. reconnaissance. c. recording contract. d. none of the above.
a. recognizance.
A contract is interpreted to give effect to: a. the intent of the parties. b. what the court believes is a fair contract. c. what the defendant thought the contract meant. d. what will be best for the economic life of the community.
a. the intent of the parties.
The subject matter of a contract may relate to: a. the performance of personal services. b. the construction of a house. c. the transfer of ownership of property. d. all of the above.
a. the performance of personal services.
An oral contract can be enforced when it relates to: a. the purchase of a television set for $200. b. the sale of an interest in land for $400. c. managing a factory for five years. d. a promise to answer for the debt of another.
a. the purchase of a television set for $200.
The key time for determining whether a party lacked contractual capacity is: a. the time the contract was made. b. the time the value of the bargain becomes clear. c. the time set for performance of the contract. d. the time the plaintiff expresses dissatisfaction with the contract terms.
a. the time the contract was made.
An offer of a reward for the arrest and conviction of a criminal is an example of a: a. unilateral contract. b. bilateral contract. c. quasi contract. d. formal contract.
a. unilateral contract.
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? a. A's offer of $100 was open and accepted by B, thereby forming a contract. b. B's counteroffer of $135 terminated A's offer of $100. c. B's statement, "$135" was a negotiating statement that did not terminate A's original offer of $100. d. A's offer of $100 was irrevocable.
b. B's counteroffer of $135 terminated A's offer of $100.
When a minor avoids a contract to purchase a car: a. the parents of the minor are liable for the purchase price. b. a relative who cosigned the contract is liable for the purchase price. c. a friend to whom the minor loaned the car is liable for the purchase price. d. the automobile insurance company is liable for the purchase price.
b. a relative who cosigned the contract is liable for the purchase price.
Examples of illusory promises include: a. cancellation provisions. b. apparent promises. c. conditional obligations. d. real obligations.
b. apparent promises.
An agreement is not binding when: a. one party makes a mistake regarding a material fact. b. both parties make a mistake regarding a material fact. c. one party makes a mistake of law. d. all of the above.
b. both parties make a mistake regarding a material fact.
When a person has performed services under an oral contract that cannot be enforced because of the statute of frauds, such person: a. can recover the agreed payment for the services because a refusal to make payment would be a breach of the contract. b. can recover the reasonable value of the services because there is a quasi-contractual duty to pay for the benefit received from such services. c. cannot recover the value of the services because they were rendered under a unilateral mistake of law. d. can have the party receiving the services arrested for obtaining property by false pretenses.
b. can recover the reasonable value of the services because there is a quasi-contractual duty to pay for the benefit received from such services.
An agreement to slander a third person would not be enforceable because slander is a(n): a. crime. b. civil wrong. c. infringement of privacy. d. assault.
b. civil wrong.
An agreement to restrain trade may be void on the grounds that it is: a. fraudulent. b. contrary to public policy. c. illegal lobbying. d. unfair to merchants.
b. contrary to public policy.
A contract under which one or both parties have not yet fully performed is termed a(n): a. void agreement. b. executory contract. c. executive contract. d. executed contract.
b. executory contract.
I believe that I own a very valuable vase. I tell you this information and state that I will sell it to you for $800. I sell the vase to you, and you later find out that the vase is worth only $200. Fraud: a. has occurred. b. has not occurred. c. can always be based upon a statement of opinion or value. d. none of the above.
b. has not occurred.
A contract based on a mutual mistake in judgment is: a. voidable by the adversely affected party. b. not voidable by the adversely affected party. c. void ab initio. d. none of the above.
b. not voidable by the adversely affected party.
A counteroffer is a(n): a. acceptance of the original offer. b. rejection of the original offer. c. acceptance of the original offer and an invitation to further negotiate. d. a revocation of the original offer.
b. rejection of the original offer.
An implied contract is shown by: a. a writing. b. the acts and conduct of the parties. c. statements made in open court. d. an exchange of oral promises.
b. the acts and conduct of the parties.
Consideration is: a. the concern shown by the other contracting party. b. what is demanded by the promisor as the price for the promise. c. a stated number of dollars. d. the concern of both contracting parties for the protection of the environment.
b. what is demanded by the promisor as the price for the promise.
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. a. without reserve b. with reserve c. without preserve d. with preserve
b. with reserve
Will the law enforce every promise? a. Yes, in all cases. b. Yes, with or without consideration. c. Generally yes, if consideration is given for the promise. d. Yes, but only if there is no consideration.
c. Generally yes, if consideration is given for the promise.
Jack sells Jim a used car that Jack falsely described as having been driven only 12,000 miles. Fraud has occurred if: a. Jim bought the car solely because of its color. b. Jim knew that the mileage was more than 12,000 miles. c. Jim relied upon Jack's statement. d. Jack is a merchant.
c. Jim relied upon Jack's statement.
A person lacks contractual capacity if: a. the person is a chronic alcoholic. b. the person is a drug addict. c. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences. d. all of the above.
c. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences.
A contract requires: a. an offer. b. an acceptance. c. both an offer and an acceptance. d. an agreement manifested by the written or spoken words of the parties.
c. both an offer and an acceptance.
An executory contract is: a. void if neither party has performed. b. voidable. c. entered into but not fully performed. d. always unilateral in nature.
c. entered into but not fully performed.
If no termination date is specified for an offer, the offer will remain open: a. for one year. b. for six months. c. for a reasonable period of time. d. until someone accepts the offer.
c. for a reasonable period of time.
If an offeree dies before the offer has been accepted, the offer: a. may be rejected by the surviving spouse of the offeree. b. may be accepted by the surviving spouse of the offeree. c. is automatically revoked by the death of the offeree. d. may be accepted by the guardian appointed for any minor children of the offeree.
c. is automatically revoked by the death of the offeree.
A cancellation provision: a. makes a promise illusory. b. gives a person a free way out. c. is limited to the terms set forth by the provision. d. none of the above.
c. is limited to the terms set forth by the provision.
Public policy: a. can be precisely defined b. is frequently used by the courts as a reason to invalidate contracts c. is protections from that which violates any established interest of society d. all of the above
c. is protections from that which violates any established interest of society
When a debtor tender a check stating "paid in full" and the creditor cashes the check, the debt: a. is always discharged. b. may be discharged if it is a liquidated debt. c. may be discharged if it is a unliquidated debt. d. is never discharged.
c. may be discharged if it is a unliquidated debt.
In interpreting an ambiguous contract, one part of the contract: a. must be viewed in isolation. b. must be viewed as a condition. c. must be viewed in connection with the rest of the contract. d. must be viewed as indicating joint and several liability.
c. must be viewed in connection with the rest of the contract.
An agreement arises when one person, the __________, makes an offer and the other person to whom the offer is made, the __________, accepts. a. grantor; grantee b. grantee; grantor c. offeror; offeree d. offeree; offeror
c. offeror; offeree
Courts will consider the adequacy of the consideration when: a. one party clearly has the better of the deal. b. one party has more business experience than the other. c. one party claims to have been defrauded. d. one party shows a much lower price nationally-advertised on television.
c. one party claims to have been defrauded.
A bilateral contract consists of a: a. promise for an act. b. promise for refraining from acting. c. promise for a promise. d. promise to contract.
c. promise for a promise.
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, a. no contract is formed, since the offeror will undoubtedly receive the dispatched acceptance after the deadline for acceptance. b. a contract is formed, but the contract is voidable at the election of the offeror. c. the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed. d. the acceptance is timely and a contract is formed, but only if the offeror actually receives the acceptance by the deadline specified for acceptance.
c. the acceptance is timely and a contract is formed, even though the offeror actually receives the acceptance well after the specified date has passed.
An oral contract to sell a house is binding if: a. the agreement is witnessed by a member of the clergy. b. there is a tape recording of the agreement. c. the buyer paid the price and received the deed of conveyance. d. the seller is a merchant.
c. the buyer paid the price and received the deed of conveyance.
Which party to an illegal agreement may get relief from the court? a. Plaintiff b. Defendant c. the less-guilty party, when public interest is advanced by granting relief d. a doctor who was unlicensed at the time of the making of an agreement for the provision of medical services, but who later obtained a proper license
c. the less-guilty party, when public interest is advanced by granting relief
A promise to pay a debt must be in writing if: a. the debt is for more than $500. b. the debt is now due and payable. c. the promise is to pay the debt of another. d. the debt owed is the promisor's.
c. the promise is to pay the debt of another.
The plaintiff in a quasi-contractual action can recover: a. lost profits. b. damages for mental distress. c. the reasonable value of the benefit conferred upon the defendant. d. for all the damages sustained.
c. the reasonable value of the benefit conferred upon the defendant.
A contract that is deemed to be too harsh or oppressive to one of the contracting parties may be unenforceable under the concept of: a. unilateral influence. b. bilateral influence. c. unconscionability. d. conscionability.
c. unconscionability.
Contractual capacity is the ability to: a. read and write. b. sign a written contract. c. understand that a contract is being made and to understand its general nature. d. understand the legal meaning of the contract being made.
c. understand that a contract is being made and to understand its general nature.
Agreements that are illegal are: a. enforceable if one party acted in good faith. b. voidable by one of the parties. c. void. d. voidable by either party.
c. void.
A legally binding agreement that can be rejected at the option of one of the parties is called a(n): a. void agreement. b. revoked contract. c. voidable contract. d. optional agreement.
c. voidable contract.
Which of the following is not illegal? a. an office football "pool" with a cash entry fee and cash prize b. a raffle with an entry fee to win a car c. a "giveaway" to every tenth person who buys meat at a butcher shop d. a "giveaway" to every tenth person entering a department store
d. a "giveaway" to every tenth person entering a department store
In general, an acceptance occurs when: a. a particular form of words is stated to the offeror. b. a particular mode of expression is made to the offeror. c. the offeree reserves the right to reject the offer. d. a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.
d. a clear expression of the offeree's agreement to be bound by the terms of the offer occurs.
The maximum amount of time that a minor has to disaffirm a contract is: a. one year from the date of the agreement. b. 30 days from learning of his or her right to disaffirm. c. the age of majority. d. a reasonable period of time after reaching the age of majority.
d. a reasonable period of time after reaching the age of majority.
If an offeree accepts an offer before it is effectively revoked: a. a void contract is formed. b. a voidable contract is formed. c. an unenforceable contract is formed. d. a valid contract is formed.
d. a valid contract is formed.
A contract is: a. a binding agreement. b. an agreement creating an obligation. c. an agreement that creates enforceable duties and obligations. d. all of the above.
d. all of the above.
A party to a contract may be: a. an individual. b. a partnership. c. a corporation. d. all of the above.
d. all of the above.
A writing that satisfies the requirement of a writing under the statute of frauds could be evidenced by: a. a note. b. a memorandum. c. a contract. d. all of the above.
d. all of the above.
An apparently voluntary agreement may in fact not be voluntary if: a. undue influence is present. b. physical duress is present. c. economic duress is present. d. all of the above.
d. all of the above.
Parol evidence may be admitted to show that a provision was omitted as the result of: a. fraud. b. accident. c. mistake. d. all of the above.
d. all of the above.
The parol evidence rule does not prohibit proof that: a. the contract was thereafter modified. b. conduct exists that violates the law. c. the written contract is not a binding agreement. d. all of the above.
d. all of the above.
The elements of a contract include all of the following except: a. an agreement. b. two or more competent parties. c. consideration. d. an illegal purpose.
d. an illegal purpose.
At an auction sale, each bid is: a. a counteroffer to the auctioneer's offer of the merchandise. b. an acceptance of the auctioneer's offer. c. an invitation to negotiate. d. an offer.
d. an offer.
Under the __________approach, consideration is defined as a benefit received by the promisor or a detriment incurred by the promisee. a. pro-con b. I win, you lose c. gain-loss d. benefit-detriment
d. benefit-detriment
Dealing honestly, reasonably, and in good faith: a. is implied in every contract for services. b. is implied in every contract for the sale of goods. c. is an expressed obligation in every contract. d. both a and b.
d. both a and b.
A contract in which one party agrees to purchase goods from another contingent upon the purchaser's ability to locate suitable financing is said to: a. be illegal. b. result from undue influence. c. contain a waiver. d. contain a conditional promise.
d. contain a conditional promise.
The writing required by the statute of frauds in the case of a contract for the sale of land must: a. be addressed to the other party to the contract. b. be made with the intent to create a writing to satisfy the statute of frauds. c. be signed at the end of the writing. d. describe the land to be sold.
d. describe the land to be sold.
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. a. concomitant b. conditional c. formal d. first
d. first
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. a. unliquidated b. superfluous c. non-superfluous d. liquidated
d. liquidated
A minor cannot avoid a contract to purchase a car if the: a. car has been destroyed. b. car has been damaged. c. car is used for non-commercial purposes. d. minor is able to return the car but does not do so.
d. minor is able to return the car but does not do so.
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: a. binding if the promise is in writing. b. binding, since the promise is made by a non-merchant. c. binding, since the promise is made to a merchant. d. ordinarily not binding on the promisor.
d. ordinarily not binding on the promisor.
The main thrust of the quasi contract is to: a. encourage the making of written contracts. b. prevent enrichment. c. compensate those who voluntarily help others. d. prevent unjust enrichment.
d. prevent unjust enrichment.
A(n) __________ contract is a contract to buy all requirements of the buyer from the seller. a. output b. essentials c. necessaries d. requirements
d. requirements
The standard statute of frauds: a. requires full disclosure in the case of consumer sales on credit. b. requires a seller of real estate to obtain a broker's license. c. specifies the punishment of perjury. d. requires that a contract for the sale of land be evidenced by a writing.
d. requires that a contract for the sale of land be evidenced by a writing.
The validity of a contract is not affected by: a. the effect of the contract on the community. b. unconscionability. c. the absence of good faith. d. the fact that the contract turned out to be a bad bargain for one of the parties.
d. the fact that the contract turned out to be a bad bargain for one of the parties.
The obligation of a cosigner is discharged by: a. the minority status of one of the parties. b. the majority status of one of the parties. c. the court's declaration of the contract's provision of necessaries. d. the payment of the debt.
d. the payment of the debt.
