Finance Exam 3

When a party to a contract does not perform as required, there is:

A breach of contract

Partners in a partnership owe each other:

A fiduciary duty

In a breach of contract case, compensatory damages are damages that:

Allow the party suffering the breach to recover costs incurred by relying on the promise of the other party

To create a limited liability company, creators must file:

Articles of organization

A board of directors' fiduciary duty of loyalty requires that:

Directors place the interests of the corporation before their own interests

Filing for bankruptcy under Chapter 7 of the bankruptcy code results in a _______ of debts

Discharge

The owner of a lost dog posts notices that she will pay $200 for its return. Someone who does not know about the reward finds the dog and returns it. The owner:

Does not have to pay the reward because the offer was not communicated to the person who found the dog

If Scott makes a non-binding promise to Lee and then fails to fulfill it:

Lee cannot expect contract law to provide a remedy

In the divorce agreement between Ted and Alice, Alice agreed to assume the debt on Ted's credit card. The credit card company agrees to this arrangement. This is an example of:

Novation

The Uniform Commercial Code (UCC) was designed to:

Promote uniformity of the laws relating to commercial sales of goods

Len agrees to sell Doug some choice ocean-front property. If Len later refuses to convey the land, Doug may sue for:

Specific performance

A potential drawback of sole proprietorships and partnerships is that the parties involved have:

Unlimited liability

An unconscionable contract is:

A contract so unfair to an innocent party that the courts, in equity, will not enforce it

A sole proprietorship comes into existence when:

A person begins to do business for herself

Someone who files for bankruptcy under Chapter 13 files:

A plan for payment of creditors over five years

Many states now allow groups of doctors in practice together to form a particular legal entity allowed by a statute called:

A professional corporation

"Bozo, if you wash my car I will pay you $10." Bozo says nothing but washes the car later that day. There is what may be called:

A unilateral contract

Elements of a contract include all of the following except:

All of the other choices are elements.

You pay $300 for the right to be the only buyer a seller will deal with for ten days for a piece of property that us for sale for $250,000. This is:

Called an option contract

In common law, an offer that has unclear major terms, or is missing important terms:

Cannot be the basis for a contract

_________ is something of value or something bargained for in exchange for a promise

Consideration

Which form of business incurs double taxation?

Corporation

If a contract for the sale of goods does not specify where goods are to be delivered, the UCC presumes that:

Delivery to the buyer's place of business

Tracy drinks beer at a bar, then goes to a car dealer and orders a new car. Tracy later claims he was drunk and should not have to buy the car. This:

Depends if Tracy could show he was mentally incapacitated after a few beers, in which case he would not be held to the contract.

Roberta says "Susan, I will sell you my car for $5,000." Susan says, "I'll give you $4,500." Roberta says "No." Later Susan calls Roberta and says, "I have $5,000 and want the car." Roberta:

Does not have to sell the car due to the counteroffer, which terminated the original offer

A(n) _______ is created by a seller's promise or guarantee as to the quality, safety, performance, or durability of goods being sold

Express warranty

Article 2 of the UCC covers the sale of:

Goods

Twenty years after you leave for college you are rich and famous. Your college calls on you for a $10 million gift to renovate a classroom building and name the building in your honor. You tell them you will be glad to give the gift because you learned so much and that is why you are successful. A year later the building is renovated and the college asks for the money. You decide to spend it on a new jet and tell the college to get stuffed. You:

Have to pay the money under the rule of promissory estoppel

When a court "pierces the corporate veil" it:

Holds shareholders personally liable for corporate debts

Ads are usually considered:

Implied contracts

When both parties to an agreement are mistake as to material fact, the contract:

May be voidable

When a breach of contract occurs, the non-breaching party is required to:

Mitigate her losses

A offers B $100,000 for his farm, and they sign an agreement for the sale. Before the money is paid, A finds out that the market value of the farm is only $55,000. A:

Must pay $100,000; the contract is valid

Without consideration:

Neither party can enforce the promise or agreement

Miller needs to paint his metal workshop. He tells the paint store what he needs and says he's concerned about peeling. The seller recommends Pitts, which the company advertises is good for such use. If Miller buys Pitts based on the recommendation, and it peels right away, with respect to fitness for a particular use, there is:

No breach of implied warranty; there were not written warranty terms

You leave your poodle at a new grooming shop and tell them to wash the dog-a $30 service. They do that and also paint the poodle's nails and tie ribbons in his hair-these services are an extra $10. You pay them for the wash. What about the extra $10 service?

No contract existed for these services, no extra payment

A court award of $1.00 in damages would be called:

Nominal

Gary and Sue start a consulting firm. They are co-owners of it and have joint control over its operation and the right to share in its profits. Their organization is most likely a:

Partnership

Which of the following statements about a corporation is true? Corporations are not entitled to constitutionally protected:

Privilege against self-incrimination

When the party who breaches a contract has behaved maliciously and committed a tort, the court may want to discourage such behavior in the future by imposing what damages besides regular damages?

Punitive

Filing for bankruptcy under Chapter 11 of the bankruptcy code results in a _______ of debts

Reorganization

According the UCC's statute of frauds all:

Sales of goods worth more than $500 must be in writing

The owners of a corporation are called:

Shareholders

Contract law is primarily:

State common law

Today a corporation must be created according to:

State law

A 16-year-old goes to a used car dealership and pays $2,000 cash to buy a car off the lot.

The 16-year-old can bring the car back the next day and demand his money back (less damages) because the contract is voidable.

If a North Carolina firm contracts to buy toys from China, and the contract does not specify which law applies, in case of dispute, which law will apply:

The CISG

________ is an offeree's expression of assent or agreement to the terms of an offer

Understanding

Smith, who lives in your apartment building, drives you crazy. You agree to give Ratzo $5,000 if he gets rid of Smith for you. After disposing of her, Ratzo returns for his money. You refuse to pay. Ratzo sues you; the court holds the contract is:

Unenforceable because it involves an unlawful act

An offeror can terminate an offer by:

Withdrawing it