Commercial Law Quiz Questions (14,15,16,20,24)

What has occurred if the original parties to a contract and a third party all agree that the third party will replace one of the original parties and that the original party will then be discharged from his or her obligations under the contract?

A novation

Which of the following conditions must be present of an offer to have a legal effect?

Definite and certain terms

A valid offer includes:

offers communicated by the offeror to the offeree's agent.

if an agreement is illegal, the contract is ________.

void

When is a contract voidable?

When the contract is entered into by a minor

When parties agree that a debt is owed and the amount of that debt, then that debt is considered to be:

Liquidated

Which damages are specified by the parties in advance and put in the contract?

Liquidated

Which type of damages are identified before the breach of contract occurs?

Liquidated damages

Which remedy usually requires that the seller or lessor deliver the particular goods identified in the contract?

Specific performance

_______________ performance occurs when nearly all of the terms of the agreement have been completed, the obligor has made a good faith effort to complete all of the terms of the agreement, and no "willful departure" from the terms of the agreement has occurred.

Substantial

Wanda purchases a motorcycle form her friend, Leslie. She pays Leslie $8,000. Later, Wanda realizes that the motorcycle is worth less than $4,000. if Wanda plans to sue Leslie, Which of the following statements applies?

Wanda cannot sue Leslie because the court seldom considers adequacy of consideration.

if someone suffering from dementia has been appointed a guardian, which of the following is true regarding that person's ability to enter into a contract?

When someone has been appointed a guardian, that person's contracts are considered void.

if the parties have not negotiated the liquidated damages in the contract, the UCC allows a nonbreaching seller to claim against a breaching buyer __________ or $500, whichever is less, as liquidated damages.

20 percent of the purchase price.

According to the Uniform Commercial Code (UCC), the remedy of last resort available to sellers and lessors in the case of breach of a sales contract is:

Canceling the contract

Which of the following is a future event that terminates the obligations of the parties to a contract when it occurs?

Condition subsequent

Robert makes Vince an offer to sell him his Rolex if Vince paints Robert's house by Friday. Which of the following conditions would terminate Robert's offer, even if Vice does not know of the terminating event?

If Robert dies

_______ occurs when a mental or physical prevents a natural person form being able to enter into a legally binding contract.

Incapacity

Jorge offers to build Larry a garage for $20,000. The offer stated that acceptance in person was required. Within a reasonable time. Larry e-mailed Jorge his acceptance. Which of the following statements is true about this situation?

Larry has not accepted the offer as required by the offeror, and there is no contract.

Formation of a contract begins when the party initiating the contract, called the __________, makes an offer to another party, called the ____________.

Offeror: offeree

Which term describes conditions that impair one party's understanding of a contract, as well as the integration of terms into a contract?

Procedural unconscionability

________ occurs when one party makes a promise knowing the other party will reasonably rely on it, the other party does reasonably rely on it, and the only way to avoid injustice is to enforce the promise.

Promissory estoppel

Covenants not to compete in conjunction with the sale of a business are generally enforceable if which of the following conditions are met?

Provided that covenant not to compete is reasonable with regard time and location, the covenant will be enforceable.

Which of the following must occur when nonbreaching buyers or lessees obtain specific performance under the Uniform Commercial Code (UCC)?

The seller or lessons must deliver the goods identified in the contract.

At an auction, it the seller is treated as making an offer to accept the highest bid, then the auction is ________.

Without reserve

Belinda mails Harold an offer on March 2nd. Harold receives the offer on March 4th and immediately mails a rejection. On March 5th, Harold changes this mind and mails Belinda an acceptance. Belinda receives the acceptance on March 6th and the rejection on March 7th. is there a contract?

Yes, the acceptance is effective when mailed on March 5th.

An 'accord and satisfaction" is not enforceable if _______ is involved.

a liquidated debt

The_______ is the agreement while payment is the ________ in an unliquidated debt.

accord: satisfaction

When one party gives a promise as consideration and the other party gives a(n) _______- in consideration, a unilateral contract will result.

act

_____________ performance occurs when all aspects of the parties' duties under the contract are carried out perfectly.

complete.

Preforming________ that is not required by a contract for an additional amount of money is valid consideration given in exchange for the additional amount of money.

extra work

Tate agrees that he owes a creditor $20,000, as the creditor claims. Tate explains to the creditor that he can only pay the bank $12,000 as full payment toward the money he owes. The Creditor agrees to accept $12,000 from him. The following month, Tate receives a bill claiming that he still owes the creditor $8,000. Which of the following statements is true of this scenario?

if Tate does not agree to pay the remaining $8,000, the creditor may sue Tate for the balance it believes is owed.

For an unliquidated debt.

once the debtor pays the amount agreed on by both the parties, the debt is fully discharged.

When a court can void the illegal part of an agreement and enforce the rest if the terms represent the main purpose of the original agreement, it is a(n) _______ contract

severable

To recover damages in a breach-of-contract case, the plaintiff must demonstrate that he used reasonable efforts to minimize the damage resulting form the breach. This is referred to as

the duty to mitigate

The term________ refers to the fact that the agreement in question is so unfair that it is void of conscience.

unconscionable

UCC Sections 2-703(f) and 2A-523(1)(a) allow a seller or lessor to cancel the contract if the buyer or lessee is in.

Breach.

Under the Uniform Commercial Code (UCC), which of the following statements is true of the remedies available to buyer and lessees when a seller or lessor breaches a sales contract.

Buyers or lessees are allowed to accept nonconforming goods and then seek monetary damages to give them the benefit of the bargain.

Suppose that Brittany agrees to purchase Kathy's computer for $700. Brittany's payment of $700 is the ______ that Kathy will receive for her computer.

Consideration

Which of the following statements is incorrect concerning contracts made by intoxicated persons?

Courts tend to allow the intoxicated person to disaffirm the contract if disaffirmance occurs within one month after the person becomes sober.

When courts grant damages to a nonbreaching seller to recover the purchase price from the breaching buyer, the court is typically granting the seller the right to _______.

Get the benefit of the bargain

Money damages are also known as ____________ damages while remedies that result in nonmonetary damages are known as____________________.

Legal; equitable

Which rule says that the terms of an acceptance must reflect the terms of an offer?

Mirror-image rule

All but which of the following are situations in which a contract may be discharged by operation of law?

Novation

Legal capacity is:

The mental ability of a person to understand his or her rights and obligations under a contract and comply with the terms.

All but which of the following demonstrate an acceptance by the offeree?

The offeree makes a new offer to the offeror to continue negotiations which ultimately leads to a contract.

Which type of damages are foreseeable damages that result from special facts and circumstances arising outside a contract itself?

Consequential damages

Under the UCC, courts will uphold modifications or limitations to remedies unless the remedies fail in their_________.

Essential purpose

In obtaining cover, the buyer must do all but which of the following?

Purchase substitute goods that are identical to the original goods.

If a plaintiff has no actual damages from a breach of contract but the plaintiff has been wronged by the defendant, the court may award

nominal damages

If nothing is stated to the contrary in the terms of an auction, an auction is presumed to be ______, which means that the seller is merely expressing intent to receive offers.

with reserve