GBL 385 Exam 2 [MSU-Prof. Ross]

The Bedrock Motel wants to install a Water Heater for their twenty unit motel. The salesperson at Bedrock Water Heater Sales and Installation Company ("BWHSIC"), tells the Motel which model to buy. If the Bedrock Motel buys that model Water Heater from BWHSIC based on the salesperson‟s suggestion, the salesperson‟s recommendation is A. an express warranty of merchantability regarding the water heater B. an implied warranty of fitness for a particular purpose. C. no warranty, but only a statement of opinion. D. an implied warranty of title regarding the water heater

B. an implied warranty of fitness for a particular purpose.

​Judy, a widow, just sold a piece of property. She will live off that money during her retirement. Judy dotes on her son, Chris, who asks her to invest her money in his restaurant, which is faltering. He tells her that if she does not lend him the money she will never see him again. She is afraid of being alone and agrees to his request, but soon changes her mind and asks for her money back. Chris claims they have formed a binding contract. What is your conclusion? ​a. The contract is voidable based on duress. ​b. The contract is valid because it was a unilateral mistake. ​c. The contract is voidable based on undue influence. ​d. The contract is voidable based on fraud.

​c. The contract is voidable based on undue influence.

Marquez agrees to buy Dale's pickup truck so he can pull his trailer. Both Marquez and Dale believe that the truck is big enough to do the job. After they complete the deal, Marquez finds that the truck is not strong enough to handle the trailer. The contract between Marquez and Dale can be rescinded because of: ​a. a unilateral mistake. ​b. a defective acceptance. ​c. a mutual mistake. ​d. negligent misrepresentation.

​c. a mutual mistake.

​The remedy of specific performance will most likely be granted in the case of a(n): ​a. employment contract. ​b. contract to buy shares of publicly-traded stock. ​c. contract for the sale of a business. ​d. contract for the sale of Florida oranges.

​c. contract for the sale of a business.

​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 provision stipulating the amount of money damages to be paid in the event of default or breach of contract is known as a __________ damages clause. ​a. nominal ​b. contract ​c. liquidated ​d. breach

​c. liquidated

​A finding of undue influence would most likely not occur in a contract between: a. parent and child.​ ​b. attorney and client. ​c. neighbor and neighbor. ​d. guardian and ward

​c. neighbor and neighbor.

​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.

​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.

​In most bilateral contracts, the performances of the parties are __________. ​a. conditions precedent ​b. conditions subsequent ​c. recurrent conditions ​d. concurrent conditions

​d. concurrent conditions

A change of law discharges a contract if the new law:​ ​a. requires a license and none was required before. ​b. requires the use of fireproof materials. ​c. requires the use of antipollution devices. ​d. prohibits the act called for by the contract

​d. prohibits the act called for by the contract

​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

An offer to perform is known as a(n) __________.​ ​a. rendering ​b. offering ​c. tinder ​d. tender

​d. tender

Even if a contract appears legal on its face, it may be unenforceable if: a. the illegal contract has not been performed. b. the contract has been partially performed. ​c. the contract has been fully performed. ​d. the contract has an illegal purpose.

​d. the contract has an illegal purpose.

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 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.

Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. This is best described as: a. a unilateral contract. b. a quasi contract. c. an implied in fact contract. d. a bilateral contract.

a. a unilateral contract.

​Under the _______, acceptance of an offer takes place when a properly addressed postage paid mail acceptance is placed in the hands of US Postal Service. ​a. mailbox rule ​b. mail carrier rule ​c. dispatch rule ​d. acceptance by mail rule

a. mailbox rule

One element involved in the determination of unconscionability is: a. the comparative bargaining power of the parties. b. the opportunity to make a contract for better terms with someone else. c. the course of the economy after the contract is made. d. whether a loss will be sustained by performance of the contract.

a. the comparative bargaining power of the parties.

Bart stops at the corner gas station to buy a pack of gum on the way to school every morning. Rather than wait in line behind people buying gasoline, Bart usually just picks up the pack of gum, and waves it to the clerk behind the counter while leaving the exact amount (cost of gum plus tax) on the counter. Bark nods at the clerk and the clerk nods back in agreement. This is an example of how the conduct of a party can result in an implied contract. A. True B. False

a. true

James offers to sell his fishing boat to Brenda for $3,000. Brenda says she will apply for a loan and will buy the boat within a week. A contract is formed: a. when Brenda tells James she will buy the boat. b. when Brenda gets the money from the credit union. c. when Brenda applies for the loan at the credit union. d. only when James gets the $3,000.

a. when Brenda tells James she will buy the boat.

The implied warranty of merchantability applies to food. Merchantable food would include which of the following? a) An apple with a razor blade tucked into it b) Chowder with properly cooked small clams and diced pieces of high quality potatoes in it c) A hamburger with a piece of bone in it the size of a quarter d) None of the above e) (a), (b), and (c)

b) Chowder with properly cooked small clams and diced pieces of high quality potatoes in it

In the Harris case, the Court held a) the arbitration provision of the Blockbuster contract was enforceable b) the arbitration provision of the Blockbuster contract was illusory and unenforceable c) all arbitration provisions are valid d) all arbitration provisions are void ab initio

b) the arbitration provision of the Blockbuster contract was illusory and unenforceable

Brian makes a material misrepresentation of fact regarding his horse to Rosalind while out riding one day. Later that day, Rosalind makes an offer to buy the horse which Brian accepts, without correcting his earlier misrepresentation of fact. In this case: a. Brian may avoid the contract. b. Rosalind may avoid the contract. c. either or both Brian or Rosalind may avoid the contract. d. neither Brian nor Rosalind may avoid the contract.

b. Rosalind may avoid the contract.

Which of the following contracts is covered by Article 2 of the Uniform Commercial Code? a. The sale of a house. b. The sale of a new car. c. An employment agreement. d. A sale of automobile insurance.

b. The sale of a new car.

Tim mails an offer to Brian on June 15. Brian receives the offer on June 16. Tim mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18. Brian receives the revocation on June 19. Tim receives the letter of acceptance on June 20. Was a contract formed? a. Yes, on June 16. b. Yes, on June 18. c. Yes, on June 20. d. No, the offer was revoked before acceptance

b. Yes, on June 18.

An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as: a. an output contract. b. a requirements contract. c. a firm offer. d. promissory estoppel.

b. a requirements contract.

The concept of consideration in contract law includes: a. that each party to a contract must unintentionally exchange a legal benefit. b. an inducement to each party to make a return exchange. c. that each party takes out an insurance bond if the possibility of damages is above $500. d. All of these.

b. an inducement to each party to make a return exchange.

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.

Steven makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is: a. void. b. voidable. c. executed. d. unenforceable.

b. voidable.

​Which is not a correct statement concerning rescission of a contract? ​a. The breach must be material. ​b. The injured party who rescinds may recover money paid under the contract. ​c. The contract remains in effect after the rescission. ​d. Rescission is the undoing of the contract

c. The contract remains in effect after the rescission.

Fred the Farmer orders one hundred sacks of cattle feed from Organic Nutrient Livestock Feed, Inc. Each sack is stamped with the phrase "Twenty Five percent protein." This is a. puffery. b. a warranty of title. c. an express warranty. d. an implied warranty. e. a sample warranty

c. an express warranty.

​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. the person is a minor.

c. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences.

This Sony Limited Warranty a) Disclaims the Warranty of Merchantability b) Disclaims the Warranty of Fitness for a Particular Purpose c) Disclaims all express warranties d) (a) and (b) e) (b) and (c) f) (a), (b) and (c) g) None of the above

d) (a) and (b)

Hal promises not to foreclose on a mortgage that he holds on an office complex that Christopher owns. In reliance on this promise, Christopher spends $200,000 to remodel the complex. Which of the following is correct with regard to Hal's promise? a. Hal's promise not to foreclose is unsupported by consideration. b. Hal's promise is noncontractual. c. Hal's promise may be enforced against him based upon the doctrine of promissory estoppel. d. All of these.

d. All of these.

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

All of the following are types of contracts that might be unenforceable as contrary to public policy except: a. a contract that is contrary to the protection of the public welfare, health, or safety b. a contract that is contrary to the protection of the person c. a contract that is contrary to the protection of recognized social institutions d. a contract that does not harm the public good

d. a contract that does not harm the public good

The death or disability of a party to a contract discharges the contract when:​ ​a. personal services requiring peculiar skill are involved. ​b. the payment of money is involved. ​c. a house is to be painted. ​d. all of these.

​a. personal services requiring peculiar skill are involved.

​The failure to act or perform in the manner called for by a contract is a: ​a. waiver. ​b. breach. ​c. forbearance. ​d. reservation of right.

​b. breach.

​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.

Which of the following promises does not have to be in writing in order to be enforceable? A. Pebbles agreement with Bam Bam to buy his bike for $ 99.00 B. Mr. Slate's agreement with Barney to sell him a condominium for $ 50,000 C. Dad's promise to the credit union that he will make payments on his son's truck D. Fred's promise to work for Mr. Slate for a two-year period.

A. Pebbles agreement with Bam Bam to buy his bike for $ 99.00

Fred purchases a new set of tires for his vehicle. He informs Harvey Firestone, who owns the Firestone tire company that manufacturers, sells, installs, and repairs tires, (i.e., a vendor who specializes in such goods), that he intends to use it in snowy conditions. The tires do not provide sufficient grip in snow, and his vehicle meets with an accident. Which of the following statements is true of this scenario? A. Harvey Firestone cannot be held liable as Fred voluntarily assumed the risk of driving in snowy conditions. B. Harvey Firestone is liable as he breached an implied warranty of fitness for a particular purpose. C. Harvey Firestone is liable on the basis of negligent design. D. Harvey Firestone cannot be held liable if an express warranty was not issued with the product.

B. Harvey Firestone is liable as he breached an implied warranty of fitness for a particular purpose.

________ is a warranty that automatically arises out of a transaction. A. Express warranty B. Implied warranty C. Impact warranty D. Limited warranty

B. Implied warranty

Peter, Stewie's father, promises to give Stewie a car for his twenty-first birthday. A. Stewie can legally enforce this promise because it created a moral obligation. B. The car is a gift and not an agreement subject to enforcement by a court C. Because a car is viewed as tangible goods, the contract in this case is governed by Article 2 of the UCC. D. None of the above

B. The car is a gift and not an agreement subject to enforcement by a court

________ is a warranty that is clearly stated by the seller or manufacturer. A. Implied warranty B. Impact warranty C. Limited warranty D. Express warranty

D. Express warranty