Ch 11 BLAW
25. The measure of compensatory damages does not vary by type of contract. a. True b. False
ANSWER: False
3. The first element of proving fraud is to show that the innocent party is not easily fooled. a. True b. False
ANSWER: False
9. As a general rule, any duty can be delegated. a. True b. False
ANSWER: True
52. East Bay Café orders seafood from Fresh Catch Company. Fresh places the goods at East's disposal. Fresh's performance under the contract is a. conditional. b. complete. c. material. d. substantial.
ANSWER: b
39. Car Lot's salesperson Dick offers to sell Ernie, who is twenty years old, a car. Dick intentionally misrepresents the vehicle's use and repairs. In reliance, Ernie buys the car. To prove fraud, Ernie does not have to show that a. Dick intentionally deceived Ernie. b. Dick misrepresented material facts. c. Ernie is under twenty-one. d. Ernie justifiably relied on Dick's misrepresentations.
ANSWER: c
59. Soto contracts to buy an oven from Restaurant Appliances Inc. for $5,000, but the seller fails to deliver. Soto buys a similar oven from another dealer for $6,500. Soto's measure of damages is a. $5,000. b. $1,500. c. $1,500, plus any additional expense to obtain the oven. d. $6,500.
ANSWER: c
12. A seller who places goods at the disposal of a buyer has tendered delivery but cannot yet demand payment. a. True b. False
ANSWER: False
13. A buyer who offers to pay for goods has tendered payment but cannot yet demand delivery. a. True b. False
ANSWER: False
19. An accord and its satisfaction do not discharge an original contractual obligation. a. True b. False
ANSWER: False
2. If contracting parties attach materially different meanings to a contract word or term subject to more than one reasonable interpretation, the contract is void. a. True b. False
ANSWER: False
21. Performance becomes commercially impracticable when a foreseeable, added burden of performing increases the cost slightly. a. True b. False
ANSWER: False
22. In contract law, damages compensate for harm suffered as a result of another's wrongful act, not for the loss of a bargain. a. True b. False
ANSWER: False
23. The standard measure of compensatory damages is the value of the breaching party's actual performance. a. True b. False
ANSWER: False
24. Expenses incurred because of a breach of contract to obtain performance from another source are not recoverable in a suit for breach. a. True b. False
ANSWER: False
29. A seller cannot avoid the risk of liability for consequential damages by limiting the buyer's remedies in their contract. a. True b. False
ANSWER: False
30. In most states, a person whose employment is wrongfully terminated has no duty to take a similar job if one is available. a. True b. False
ANSWER: False
33. A court will grant specific performance as a remedy only when the legal remedy is adequate. a. True b. False
ANSWER: False
35. A covenant not to compete imposed as part of a sale of an ongoing business will be enforced even if the restrictions are unreasonable. a. True b. False
ANSWER: False
7. A threat to exercise a legal right to sue someone ordinarily constitutes duress. a. True b. False
ANSWER: False
8. A bank's sale of its right to receive payment on a loan to a third party is a transfer but not an assignment. a. True b. False
ANSWER: False
1. A party who can show that he or she did not genuinely agree to the terms of a contract can still choose to carry out the deal. a. True b. False
ANSWER: True
10. When the performance of a contract depends on the personal skill of the obligor, a delegation of the duty is prohibited. a. True b. False
ANSWER: True
11. If a condition to a lease for university housing that the tenant must be a student is not satisfied, then the landlord's obligations under the lease are discharged. a. True b. False
ANSWER: True
14. Under a construction contract that requires a builder to meet certain specifications, complete performance is required to avoid material breach. a. True b. False
ANSWER: True
15. A party who in good faith performs substantially all of the terms of a contract can enforce the contract against the other party. a. True b. False
ANSWER: True
16. If performance of a contract is not substantial, there is a material breach, which excuses the innocent, non-breaching party from performance. a. True b. False
ANSWER: True
17. Any contract can be discharged by agreement of the parties. a. True b. False
ANSWER: True
18. For mutual rescission of a contract to take place, the parties must make another agreement that satisfies the legal requirements for a contract. a. True b. False
ANSWER: True
20. Contractual obligations will be discharged when the specific subject matter of the contract is destroyed. a. True b. False
ANSWER: True
26. When a buyer breaches a contract for a sale of land, the seller can recover the difference between the contract price and the market price of the land. a. True b. False
ANSWER: True
27. When both an owner and a contractor breach a construction contract, a court will attempt to strike a fair balance in awarding damages. a. True b. False
ANSWER: True
28. When a seller breaches a contract for a sale of goods, knowing the buyer plans to resell the goods, the buyer can recover the lost profits from the planned resale. a. True b. False
ANSWER: True
31. The failure of one party to perform under a contract entitles the other party to rescind the contract. a. True b. False
ANSWER: True
32. Restitution may be available in situations when damages cannot be proved or are difficult to prove. a. True b. False
ANSWER: True
34. When a contract mistakenly specifies a crane instead of a forklift, a court could reform the contract to reflect the parties' original intent as to the equipment. a. True b. False
ANSWER: True
4. For purposes of fraudulent misrepresentation, scienter clearly exists if a party asserting a fact knows it is not as stated. a. True b. False
ANSWER: True
5. Because of the potential for punitive damages, plaintiffs are likely to include a claim for fraudulent misrepresentation in their contract disputes. a. True b. False
ANSWER: True
6. Persuasion that induces a person to act according to the will of a dominant party is undue influence. a. True b. False
ANSWER: True
36. At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is a. still liable on the bid. b. not liable on the bid because he underestimated the cost of repairs. c. not liable on the bid because the auctioneer misrepresented the value. d. not liable on the bid because the need for repair is not a material fact.
ANSWER: a
43. Bill and Charlene enter into a contract for the clearing, plowing, and preparing of Charlene's 100-acre tract for which she agrees to pay $1,000. Bill transfers his duty under this contract to Dewey. With respect to the duties under the original contract, this transfer a. does not relieve Bill of the potential obligation to perform. b. extinguishes Bill's obligation to perform. c. is an invalid transfer of a non-transferable obligation. d. requires a special form to constitute a valid transfer.
ANSWER: a
47. Don enters into a contract to buy Ezra's office building for a certain price subject to an appraiser's evaluation of the structure's condition. If the appraiser deems the condition to be substandard, the parties' obligations will be a. discharged. b. breached. c. altered. d. performed.
ANSWER: a
48. State University provides housing on campus and in some adjacent off-campus neighborhoods. To lease a university house or apartment, a person must be a student at State. This requirement is a. a condition. b. a novation. c. a breach of contract. d. an operation of law.
ANSWER: a
50. Bottling Company enters into a contract with Chug's Brewery to provide certain bottling and delivery services. Before Bottling starts to work, the market price rises for the fuel for glass ovens. Bottling tells Chug's that due to the added cost it will not perform their deal. Bottling's contractual obligation to Chug's is a. breached. b. discharged. c. rescinded. d. suspended.
ANSWER: a
51. Debt Collection Service enters into a contract to employ Emma as a billing manager for two years. During the first year, Emma is often absent without explanation and when present fails to adequately do her job. This a. discharges the employer from the contract. b. has no effect on the employer's performance. c. changes the employer's duties under the contract. d. suspends the employer's duty to perform.
ANSWER: a
57. Baez is employed by Credit Agency Inc. On the termination of Baez's position, Credit Agency pays Baez $10,000 to agree not to disclose the employer's confidential information. Later, Baez sells the information to Debt Records LLC for $100,000. In a suit for breach, Credit Agency is most likely to recover a. $10,000 from Baez. b. $110,000 from Baez. c. $100,000 from Debt Records. d. all future profits from Debt Records.
ANSWER: a
64. Home Furnishing Store's contract for a sale of its appliances provides that the only remedy for breach is replacement, repair, or refund of the purchase price. With respect to this provision, on a customer's suit for breach, a court is most likely to a. enforce it. b. reform it. c. refuse to enforce it. d. reallocate the risk expressed in it.
ANSWER: a
66. Daisy enters into a contract with Evan for the construction of a Fast Food Café, according to a certain schedule. The parties perform some preparatory steps, but Evan materially and willfully fails to begin work on the specified date. To rescind the contract, Daisy must show that the parties can a. be restored to the status quo. b. realize at least some of the benefit of their bargain. c. obtain a reasonable exchange of values for the preparatory steps. d. profit from the partial performance.
ANSWER: a
40. Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide, when in reality he has never been in the canyon. Most likely, Beryl a. could exert duress to obtain a new guide. b. can rescind the deal based on fraudulent misrepresentation. c. might recover damages for the mistake. d. must comply with the contract because the representation is an opinion.
ANSWER: b
42. Music Masters Inc. enters into a contract to pay Nagi for a dozen original songs. Nagi transfers the right to payment under the contract to Omni Artists. After the transfer, Nagi's contract right to the payment is a. unaffected. b. extinguished. c. conditional. d. secondary.
ANSWER: b
45. Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Bagel Café in exchange for her payment of a debt that Lyle owes to New Credit Corporation. Under this contract, the intended beneficiary is a. Miranda. b. New Credit. c. Lyle. d. any customer of Miranda's.
ANSWER: b
46. Apps LLC enters into a contract with Birk, the chief executive officer of Corporate Sales Inc., to create an app for the firm. To fulfill the contract, Apps hires Dave as a student intern. With respect to the app contract, Dave is a. an intended beneficiary. b. an incidental beneficiary. c. a promisee. d. a promisor.
ANSWER: b
49. Sara enters into a contract to sell her condo to Ted for a certain price on a specific day. On that day, Sara unconditionally offers to perform. Sara's offer a. conditions Ted's promise to pay for the property. b. constitutes tender of performance. c. excuses the parties' performance under the contract. d. suspends the parties' contractual obligations.
ANSWER: b
54. Rene contracts with Scot to pay him $5,000 for repairs to Rene's lake cabin. After Scot performs, Rene tells him that she cannot pay him in full immediately. They sign an agreement in which Rene promises to pay $2,500 now instead of $5,000 later. This is a. a mutual agreement to rescind. b. an accord and satisfaction. c. a novation. d. specific performance.
ANSWER: b
62. Ochre holds one ton of perishable fruit in storage for Produce Corporation. If Produce does not pay for the storage, under the doctrine of mitigation of damages, Ochre is held to a duty to a. continue to store the fruit until Produce pays. b. do whatever is reasonable to minimize the damages. c. dispose of the fruit immediately. d. set an example to deter similar misconduct in the future.
ANSWER: b
67. Jill enters into a contract to buy a certain office building from Kim. At the closing, Kim refuses to transfer title. In a suit for breach, Jill should seek specific performance to a. return the parties to the positions they occupied before the contract. b. obtain the exact bargain promised in the contract. c. reform the contract to reflect the parties' true intentions. d. make the terms reasonable and enforce the contract as reformed.
ANSWER: b
68. Reese contracts to sell her Spicy Pizza restaurant to Titian. As part of the deal, Reese agrees not to open a competing business within a hundred-mile radius for ten years. Reese later sues Titian, alleging that the agreement is illegal. To enforce the covenant not to compete, the court will most likely a. award damages for Reese's complete compliance with the terms. b. reform the contract to make the distance and time limits reasonable. c. rescind the contract and require restitution. d. order specific performance.
ANSWER: b
69. Steel Mill Inc. agrees to deliver a certain quantity of steel to T-Bar Framing Corporation. The agreement states that delivery is to be within "9" days, although the parties intend "90" days. The seller cannot convince the buyer to amend the contract. The most appropriate remedy is a. damages. b. reformation. c. rescission. d. specific performance.
ANSWER: b
37. Data Inc. offers to provide certain services to Enterprise LLC, but mistakenly transposes some of the digits in the price so that $15,400 appears in the offer as $14,500. Enterprise accepts the written offer. Enterprise's best argument in favor of enforcement of the contract is that a. a bilateral mistake does not afford relief from a contract. b. a mistake of value does not afford relief from a contract. c. a unilateral mistake does not afford relief from a contract. d. the price was below the prices of comparable services.
ANSWER: c
41. In entering into a contract with Marc for the sale of a cold storage warehouse, Nan fails to reveal the fact that the freezers do not consistently maintain a proper temperature. Most likely, this is fraudulent misrepresentation if a. Nan is not aware of the fact. b. the fact concerns the value or quality of the freezers. c. the fact is a serious defect known to Nan but not to Marc. d. any of the choices.
ANSWER: c
55. Leah and Mason are parties to a contract for the sale of Mason's day care facility to Leah. Before the deal closes, they agree to substitute Nell for Leah as a party to the deal. This does not require a. the existence of a previous, valid obligation. b. agreement by all the parties to a new contract. c. performance of the original contract by all of the parties. d. a new, valid contract.
ANSWER: c
56. Repair Service enters into a contract to fix washing machines in Soapy Suds Company's coin-operated laundries. Repair breaches the contract. Soapy is awarded compensatory damages. The purpose is to a. establish, as a matter of principle, that Repair acted wrongfully. b. provide Soapy with funds for a loss beyond the contract. c. provide Soapy with funds for its loss of the bargain. d. punish Repair and deter others from similar acts.
ANSWER: c
58. Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a similar job with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover a. $4,500. b. $3,500. c. $1,000. d. $0.
ANSWER: c
60. Fez enters into a contract to buy 350 acres from Grain Farm to cultivate hops and open a brewery. Fez fails to make the purchase. Grain Farm's remedy is most likely a. the amount that Fez expected to invest in the brewery. b. a percentage of Fez's unrealized profit. c. the difference between the contract and market prices of the land. d. nothing—Grain Farm still owns the land.
ANSWER: c
61. Restore Inc. contracts to resurface the pools at Swim Park by June 1. Restore knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Restore finishes the job June 15. In a suit for breach, Swim Park can recover a. the cost of new pools. b. the difference between the contract and market prices for the work. c. the loss of profit from the delayed opening. d. nothing—the work is done.
ANSWER: c
63. Metro Holdings Inc. contracts to sell a commercial parking garage to New Property LLC. The contract provides that if Metro does not close the deal by a certain date, it must pay the buyer one-half of the value of the property. This provision is not enforceable if it is a. meant to pay for additional work in the event of damage. b. a reasonable estimate of the loss on the breach. c. designed to penalize Metro. d. intended to quickly provide cash to New Property.
ANSWER: c
65. Shuster's lease of retail premises from Thurgood requires Shuster to pay certain fees, subject to the landlord's proof of the correct amount. Thurgood overcharges Shuster for the fees, without explanation. Most likely, the tenant can rescind the lease a. after paying the overcharge. b. by finding a new tenant for the premises. c. with prompt notice. d. under no circumstances.
ANSWER: c
38. Big Dig LLC makes an offer to perform an excavation and related tasks for Commercial Development Corporation, but due to a substantial mathematical mistake, significantly underprices the work. Commercial accepts the offer. Data Big's best defense against enforcement of the contract is that Commercial knew a. a bilateral mistake supports the cancellation of a contract. b. a mistake of value supports the cancellation of a contract. c. a unilateral mistake supports the cancellation of a contract. d. the price was below the prices of comparable services.
ANSWER: d
44. Ilene, an accountant, and Jerry enter into a contract under which Ilene agrees to perform audits for Jerry's Plastics Company. Ilene can delegate the duty to perform the audits to a. any reputable accountant. b. any accountant working at Ilene's firm. c. any accountant performing other financial services for Jerry. d. no other party.
ANSWER: d
53. Inez hires Josh to paint her portrait to her satisfaction for $4,000. When Josh finishes the portrait, Inez announces that she is not satisfied with it. Inez a. must pay Josh the contract price. b. must pay Josh half of the contract price as a compromise. c. must pay Josh only the cost of his materials. d. does not have to pay Josh.
ANSWER: d
70. Erma enters into a contract to buy a tract of lakefront property from Forest Acres to build and sell a residential development. Forest Acres fails to close the sale. Erma's remedy is most likely a. the amount that Erma invested in the project to the date of the closing. b. nothing—Forest Acres still owns the land. c. the difference between the contract and market prices of the land. d. specific performance.
ANSWER: d