Legal and Social Exam #2 Quiz Questions

d)

Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes gives Joe's Filling Station $700 to apply to her gas bill. Joe has been so kind to let her charge the gas she needed for her car over the past year. The bankruptcy trustee appointed to the case a) can cancel the payment to Joe as a fraudulent transfer. b) cannot cancel the payment to Joe because it is payment for an existing debt. c) cannot cancel the payment to Joe because he is not an insider. d) can cancel the payment to Joe as a voidable preference.

b)

Al contracted to sell his house to Bev. Subsequently, they both changed their minds and decided to cancel the contract. The contract between Al and Bev is discharged by a) full performance b) agreement c) accord and satisfaction d) novation

d)

If Jane persuades Linda to buy her horse by telling Linda that the horse runs "like the wind" Jane's statement is a) fraud b) reckless misrepresentation c) unilateral mistake d) puffery

A)

If repossessed collateral is sold or otherwise disposed of by the creditor, then the time, place, manner, and method of disposal must be A) commercially reasonable. B) scheduled with the debtor so that the debtor is able to attend. C) court ordered. D) perfected.

C)

In a "mixed contract," one involving a sale of both goods and services, the court will A. apply the UCC to the provisions of the contract involving the sale of goods and the common law to the provisions involving the sale of services. B. apply the lex mercatoria to the contract. C. first determine the dominant purpose of the contract. If the sale of goods dominates the contract, then the court will apply the law of the UCC, Article 2. If the sale of services dominates the contract, the court will apply the common law. D. apply UCC Article 2A.

c)

In a non-compete agreement the term "ancillary" means a) both parties must have a stake in the outcome b) the agreement is harmless to the general public c) the non-compete agreement must be part of a larger agreement d) the non-compete agreement is unfair to the employee, but not the employer

B)

In a voluntary petition, a claim of exemptions lists A) the names and addresses of all creditors. B) all assets that the debtor is entitled to keep. C) the debtor's job, income, and expenses. D) the debtor's assets and debts.

D)

In contract law, capacity is best defined as A. a benefit which must be bargained for between the parties. B. one person's compliance with the offer made by another. C. a promise in exchange for performance by another party. D. the legal ability of a party to enter into a contract.

c)

In which of the following cases is the predominant purpose the sale of goods? a) Juanita goes to her dentist to have a cavity filled; while there, she buys a tube of whitening toothpaste the dentist sells at the front desk. b) Anderson makes an appointment with his stockbroker to purchase 100 shares of Microsoft stock. c) Millicent purchases ten bags of gravel from a landscaping company; an employee carries them to her truck and loads them for her. d) Thomas purchases a membership to a health club; his membership entitles him to a free bottle of water with every visit.

B)

Noah tells Ivy he is willing to sell his comic book collection to her for $100. Ivy says no, she would rather save her money to buy a new cell phone. What just happened? A.) Termination by expiration B.) Termination by rejection C.) Termination by revocation D.) Termination by operation of law

a)

The Tavern's secret recipe for its pizza sauce would be considered a) a trade secret, and an employment non-compete clause would be enforceable to protect it b) a trade secret, but an employee non-compete clause would NOT be enforceable to protect it c) just a secrete recipe and not something that Tavern could protect in a non-compete clause d) an exculpatory clause and not enforceable

a)

Tina and Leroy have a contract for the sale of a vinyl record album. Tina the seller, breaches the contract. A court will be most likely to order specific performance if there are _______ identical copies of the record album available for sale a) 2 b) 2,000 c) 20,000 d) 200,000

b)

Which of the following events would have the best chance of excusing performance of a contract bases on commercial impracticability a) the price of a raw material increases slightly so that the contract will not be as profitable b) an unforeseeable trade embargo causes prices to triple c) the promisor of personal services dies d) the subject matter of the contract is destroyed

a) consideration

What element of a contract refers to both parties receiving some measurable benefit? a) consideration b) capacity c) consent d) legality

C)

What type of contract is a possible remedy for an injured plaintiff in a case with no valid contract, when the plaintiff can show benefit to the defendant, reasonable expectation of payment, and unjust enrichment? A.) an express contract B.) an implied contract C.) a quasi-contract D.) a unilateral contract

d)

When Myrtle comes home from work one evening, she finds that her yard has been mowed and trimmed. Later, a man comes to collect for the yard work done. Myrtle refuses to pay for the work since she has never seen the man before and did not hire him to do her yard work. Which is correct? a) This is an implied, unilateral contract and she must pay the price requested b) This is an express, voidable contract that either party may avoid c) The court would order Myrtle to pay reasonable value of the yard work because of the benefit that occurred d) Myrtle would not have to pay for the yard work

d)

When a debtor no longer has an obligation to pay a debt, that debt has been a) terminated. b) revoked. c) completed. d) discharged.

d)

When courts consider economic duress, they consider all the following except a) relative bargaining power b) financial distress c) legitimate business purpose d) relative size of the contract

b)

Which article of the UCC covers the sale of goods? a) Article 1 b) Article 2 c) Article 3 d) Article 4

d)

Which is an example of a priority claim? a) alimony b) income tax c) child support d) All of these are correct.

c)

Which of the following contracts requires a writing under the UCC, Article 2? a) Jeremy, a full-time student, sold his snow blower to a friend for $450. b) Kayla, a full-time student, purchased a used computer from Office Plus for $300. c) A toy manufacturer contracted to sell dolls valued at $10,000 to a department store. d) Tobias Department Store contracted to sell Jenny a $400 doll.

c)

A contract clause which specifies the amount of damages to be paid in the event of a breach is called a) a covenant of damages clause b) a reliance interest of damages clause c) a liquidated damages clause d) an incidental damages clause

c)

A contract most likely will be declared unconscionable if a) it allows for an extremely high rate of interest to be charged b) it contains a cancellation clause c) it is oppressive and one-sided d) it is signed by a minor for an item of luxury

B)

A trustee can void any transfer that meets all of the following requirements EXCEPT A) if the transfer was to a creditor of the debtor. B) if the pre-petition payment was made in the ordinary course. C) if the transfer was used to pay an existing debt. D) if the debtor's liabilities exceeded assets at the time of the transfer.

a)

ABC Siding, Inc. manufactures aluminum siding. ABC enters into a contract to deliver siding to Slippery Siding, Ltd., a retailer of aluminum siding. The written agreement insists that all modifications to the agreement be in writing and signed by both parties. This prohibition against oral modifications is a) valid regardless of whether the clause is signed separately. b) invalid unless the clause is signed separately by Slippery Siding, Ltd. c) invalid unless the clause is signed separately by ABC Siding, Inc. d) invalid unless new consideration is supplied by the parties when the modification agreement is made.

c)

An agreement in which parties intend to form a valid bargain but a court declares that some rule of law prevents enforcing it is called a) a void agreement b) a voidable agreement c) an unenforceable agreement d) a quasi-contract

C)

An express contract A.) Must be in writing B.) May be inferred by the conduct of the parties involved. C.) Has both parties setting forth their intentions. D.) Is not valid in many states.

a)

An unconscionable contract is one that a court refuses to enforce because of a) fundamental unfairness b) illegality c) its limit to free trade d) overt vagueness

A) Chapter 7

Andy's business is not able to pay its debts, and the prospects for its finances to improve are slim. Andy decides not to continue the business. In this case, Andy should file a voluntary petition for which type of bankruptcy? A) Chapter 7. B) Chapter 11. C) Chapter 13. D) Chapter 12.

c)

By definition, a sale under Article 2 of the UCC requires a) that the parties involved be merchants. b) that the product involved be goods, services, or a mixture; that the sale be between or among merchants; and that the sale take place in the normal course of business for that industry. c) that title to the goods pass between the seller and the buyer and that a price be paid for the goods. d) that the product involved be an item that can be sold or leased.

b)

Brahma entered into an oral agreement to sell 50 jet skis to Summer Sports. Brahma delivered 20 of the skis on May 1st. On June 1st Summer Sports notified Brahmas that it would not honor the agreement. Which is correct a) the contract is void since it was oral b) the contract is enforceable for 20 jet skis c) the contract is enforceable for the 50 jet skis d) the contract is obsolete

a)

Carlos is hired to paint a house for $700. Before he starts, the woman who hired Carlos tells him she does not want the job done after all. Carlos finds another house-painting job that afternoon, but its pay is only $500. If Carlos sues the woman for damages and is awarded $200, that amount is an example of a) direct damages b) nominal damages c) consequential damages d) incidental damages

d)

Chapter 7 bankruptcy is also known as a) reorganization. b) reaffirmation. c) voluntary bankruptcy. d) straight bankruptcy.

B)

Christine agrees to marry Barry after he tells her he will buy her a brand-new Rolls Royce within a year of their marriage. After they are wed, Barry refuses to give her the car. What will happen if Christine sues Barry? A.) She will win because of the "one-year rule." B.) She will lose because a promise made in consideration of marriage must be in writing. C.) She will win because a spouse is legally required to keep the promises made to his/her partner. D.) She will lose because Barry's promise of a car is a collateral promise, which must be in writin

a)

Collector Carl displays his beer can collection at the local swap meet. Mary sees the collection and is interested in buying it. Carl says he will sell the collection for 1500. Mary says she really likes the collection but is only willing to pay 1000. Which is true? a) Mary's counteroffer terminates Carl's offer of 1500 b) If Carl rejects MAry's counteroffer, she can still accept Carl's offer of 1500 c) Neither offer is valid. Who would ever pay that much? d) Mary's offer is an option contract and she cannot revoke the offer

a)

Courts may award damages called "quantum meruit" which means a) as much as he deserves b) to the letter of the law c) let the buyer beware d) something for something

d)

Emation Inc hires Marvin to steal trade secrets from one of its competitors for 10000. Marvin demands half of the money up front. Emation pays Marvin 5,000, but Marvin decides not to pursue theft of the trade secrets. Emation sues Marvin for the return of the 5000. What will the court do with this contract? a) the court will order Marvin to return the 5000 b) the court will order Marvin to return the 5000 with investment c) the court will order Marvin to obtain the trade secrets d) the court will not do anything to help emation get its money back

c)

Debts that cannot be discharged in bankruptcy include all EXCEPT a) money owed for alimony. b) income taxes for 3 years prior to filing. c) money owed to utility companies. d) money obtained fraudulently.

c)

Does the statement, "The sale of goods will not be enforceable unless there is some writing, signed by the defendant indicating that the parties reached an agreement" accurately reflects the UCC's basic rule? a) No. It should also state that the contract must be signed by both parties, not just the defendant b) No. It should state that the contract must require all of the terms of the agreement to be in writing c) No. It should state that the contract must be for the sale of goods of $500 or more d) Yes. The wording accurately reflects the UCC's basic rule

a)

Donna defaulted on her loan owed to Second State Savings and Loan. The loan was secured with Donna's car. Donna used the car for personal and family reasons. Which statement is correct? a) Second State may take Donna's car without a court order if this can be done without a breach of the peace. b) Second State may take Donna's car without a court order even if it means a breach of the peace. c) Second State may not take Donna's car because it is a consumer good. d) Second State may not take Donna's car because perfection was automatic.

b)

Florence borrows $1,500 from Fremont, leaving her gold necklace with Fremont as collateral. Two weeks earlier, Florence had borrowed $1,000 from Corner Bank. Florence signed a security agreement and a financing statement giving Corner Bank a security interest in the same gold necklace. The financing statement is filed in the appropriate location. If Florence defaults on both loans, which creditor has the superior rights to the necklace? a) Fremont, because his loan was the first to attach. b) Fremont, because possession takes priority over filing. c) Corner Bank, because Fremont did not perfect his interest. d) Corner Bank, because Fremont did not have a written security agreement.

B)

Forever Yours, Inc. has a secured and perfected security interest in Sally's big-screen TV. On the filing date of Sally's Chapter 7 petition, the balance of the debt owed to Forever Yours is $2,000. The value of the TV is estimated at $1,500. This means that Forever Yours A) is secured for the entire debt, $2,000. B) is unsecured for $500, the excess of the debt over the value of the TV. C) has a high priority claim of $500. This means that Forever Yours, Inc. will be allowed $500 worth of other unsecured property before other unsecured creditors get anything. D) is unsecured for the entire debt.

a)

Grand Lighting Co. has filed a petition for voluntary bankruptcy under Chapter 7 of the Code. Which of the following will prohibit creditors from collecting debts that Grand Lighting incurred before the petition was filed? a) an automatic stay b) a proof of claim c) a voluntary petition d) a discharge statement

d)

HArry agrees to pay 100 to rent a rooftop spot in downtown Seattle to watch the festivities. The festivities were unexpectedly canceled because of concern over a terrorist attack. Harry is a) obligated to pay the 100 b) not obligated to pay under the commercial impracticability doctrine c) not obligated to pay under the force majeure docterine d) not obligated to pay under the frustration of purpose doctrine

B)

Hiram is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely A. attached the security agreement. B. defaulted on the security agreement. C. terminated the security agreement. D. perfected the security agreement.

d)

Jackie hires Charles to lay new carpet in her bedroom. Charles does such a bad job, that the only way to fix the carpet is to start over and relay the carpet. Which of the following best describes this situation a) This is a substantial performance. Jackie must still pay something to Charles b) This is a material breach. Jackie must still pay something to Charles c) This is substantial performance. Jackie owes nothing to Charles d) This is a material breach. Jackie owes nothing to Charles

b)

Jamie offered to buy Kevin's bike. Jamie is the a) offeree b) offeror c) mortgagor d) trustee

b)

Jennifer has offered to sell her laptop for 500 to Jack. She tells Jack that the computer is only six months old, but in fact, it is 3 years old, and Jennifer wants to unload the lemon. Jack agrees to buy the computer based on Jennifer's representation. This contract is a) void agreement because of the fraud involved b) voidable contract, one that Jack can void c) voidable contract, because it is unilateral d) void contract because of the UCC

D)

John owns a thoroughbred horse named Prince Charming that just ran in the Kentucky Derby. Prince Charming came in last, much to John's frustration and embarrassment. John exclaims in a loud voice, "I'm selling that horse to the first person who hands me $100 bucks!" John has: A.) made an offer to anyone within hearing distance and will be bound by his offer to the first person who produces $100. B.) Made a firm offer and will be bound by his offer for a reasonable period of time. C.) make an acceptance to the first person who can produce $100. D.) not made an offer because under the circumstance a reasonable person would not conclude that John had intent to make an offer.

a)

Judith is a CPA with an excellent reputation and client base. She sells her tax preparation business to Shawn, and the sales contract includes a non-compete clause restricting Judith from opening a similar business for one year within a 10 mile radius of her former office. If she opens a tax preparation office five miles away after one year, a court would a) grant an injunction barring her from operating the new office b) order confiscation of all of her new clients files and turn them over to shawn c) Refuse to become involved as the non-compete clause was illegal d) refuse to enforce the non-compete clause, as it is unreasonable regarding time and geographic area

b)

Kathleen filed for voluntary bankruptcy, and the automatic stay went into effect. The automatic stay a) acts to automatically discharge Kathleen's debts. b) prohibits creditors from collecting debts against Kathleen that arose before she filed bankruptcy. c) stops only secured creditors from taking any act to collect, assess, or recover a claim against Kathleen that arose before she filed bankruptcy. d) stops creditors from trying to collect from Kathleen, but it does not stop them from filing lawsuits against her.

C)

Larry has the largest pizza business in the city. He learns that Henry is thinking of opening a competing pizza and pasta delivery business. Larry gives Henry $25,000 to not open his proposed business in the same city. Which statement is correct? A. The contract is voidable at Larry's option. B. The contract is void for lack of consideration. C. The contract is illegal and void. D. The contract is enforceable.

c)

Long's Department Store contracted to buy 1,000 drop-waist velour dresses in heather gray from Durham. Subsequently, Durham called and asked to ship mink-colored dresses instead of heather gray. Long agreed, in writing, to the change. Which statement is correct? a) The modification is not enforceable since there was no consideration for the change. b) The modification is not enforceable since the parties are merchants. c) The modification is enforceable. d) Whether the modification is enforceable depends on the gap-filler rule.

A)

M & E contracted to sell 500 music stands to Coda, Inc. M & E shipped the stands in accordance with the agreement. Coda paid for the stands as promised. The contract between M & E and Coda is discharged by A. full performance. B. agreement. C. rescission. D. accord and satisfaction.

b)

Madison purchased several 50-pound bags of mulch at the local gardening store. An employee carries the bags of mulch to Madison's truck and loads them into the back for her. Will Article 2 of the UCC govern the contract in this situation? a) No, this is a mixed contract because Madison is paying for both goods and labor b) Yes, because the primary purpose of this contract is the sale of goods c) No, this is an express contract because both parties explicitly state their intentions d) Yes, because Article 2 of the UCC governs all bilateral contracts

D)

Mike made the following offer to Mick: "I will pay you $500 if you agree to paint my house." Mick replied that he would. At this point the contract is an A) executed, bilateral, expressed contract B) executory, bilateral, implied-in-law contract C) executed, unilateral expressed contract D) executory, bilateral, expressed contract

d)

Mohammed suffers a substantial financial loss when Olson Company breaches a contract. Under the statute of limitations, to receive damages Mohammed must file suit against Olson within a) one year b) two years c) five years d) It depends on the state where he lives

C)

Mulligan Domestics Co. breached a contract by refusing to accept its order for 60 bolts of fabric from Wellington Mills, although the fabric met the contract specifications. In this situation, Wellington Mills A. has no remedies under the UCC. B. may resell the fabric to someone else and, if it sues Mulligan, Wellington Mills will be awarded the full contract price. C. may choose not to resell the fabric and settle for the difference between the contract price and the market value. D. would be awarded consequential damages by most courts.

B)

On April 10, Amy agreed to buy a riding lawn mower from Mowers Plus, signing a promissory note and security agreement giving Mowers Plus a security interest in the mower. On April 15, Amy took delivery of the mower. On May 1, Mowers Plus filed a financing statement. Which of the following is correct? A) Despite the agreement, Mowers Plus could not create a security interest in the mower since it is a consumer good. B) Mowers Plus has attachment of a security interest in Amy's mower. C)Mowers Plus completed the attachment of a security interest in the mower when it filed the financing statement on May 1. D) The security interest has not attached, but attachment is unimportant to enforceability of a security interest.

d)

Patty is a poor college student struggling to work and keep up with her studies. Fred, her uncle, promises to pay Patty support of 200 per month for the next six months. Although Fred didn't ask her to, she quits her current job in order to devote full time to her studies for the next six months. Fred makes one payment and then stops with no explanation. If Patty sues what is the result a) Fred would win, as he did not ask Patty to quit her job b) Patty would win, as a contract was formed when Fred promised to pay her the support c) Fred would win, as family members cannot sue each other for breach of oral promise d) Patty may win under the doctrine of promissory estoppel

C)

Police Officer Paul apprehends a wanted criminal and then demands the $10,000 reward offered by Crime Stoppers. Which of the following statements is true? A.) Police officer Paul is not entitled to the reward because past consideration is never valid consideration. B.) Police Officer Paul is entitled to the reward because he puts his life on the line every day. C.) Police Officer Paul is not entitled to the reward because he was under preexisting duty to make the arrest. D.) Police Officer Paul is not entitled to the reward but may have an argument under promissory estoppel.

b)

Sasha, who is mentally infirmed, contracts to purchase a piano for 2500 in 60 months install payments. Six months later she tries to void the contract on the grounds of mental impairment. A court will a) normally void the contract without requiring anything further on Sasha's part b) normally void the contract but will require Sasha to return the piano c) ordinally not void the contract unless Sasha had a court-appointed guardian at the time she entered into the contract d) not void the contract unless Sasha agrees to have the court appoint a guardian for her

c)

Seth told the salesperson at Outdoor Times that he wanted the sleeping bag that was advertised in the Sunday paper, one that would be comfortable if the temperature drops to 10 degrees. The salesperson told Seth they were sold out, but were two other styles that would meet his needs and were the same price. Seth insisted he wanted the advertised bag and threatened to sue for breach of contact. Which is true? a) Outdoor Times is guilty of bait and swap b) Seth will prevail in this case, as Outdoor Times is responsible for having sufficient stock advertised c) Seth will not prevail, as the advertisement was simply a request for offers d) Outdoor Times must provide Seth with a raincheck, ensuring he can buy the same bag at the sales price at a later date

c)

Specific performance is always available in a) agreements involving farm goods b) agreements involving vehicles c) real estate contracts d) employment contracts

a)

Specific performance may be available for the breach of a contract to sell a) an original painting b) 20 shares of Walmart stock c) a Nintendo Wii video game system d) a 2007 Mustang in mint condition

A)

The Uniform Electronic Transmission Act (UETA) A.) declares that a contract or signature may not be denied enforceability just because it is in electronic form. B.) declares that e-signatures are invalid. C.) creates a safe cyberspace environment in which business communications cannot be intercepted or fraudulently altered. D.) has only been adopted in a handful of states.

d)

The basic distinction between an executory contract and an executed contract is that a) one is enforceable, the other is not b) only one promise is involved in an executory contract c) one is legal, the other is not d) all parties have fulfilled their obligations in an executed contract

c)

The concept that expectation interest is designed to put the injured party in the position they would have been in had both sides performed their obligation is found in a) Bi-Economy Market v. Harleysville Co of NY b) Hadley v. Basendale c) Hawkins v. McGee d) None of these

d)

The goal of expectation interest is to a) serve as a penalty for breaching a contract b) award damages under the UCC when the sale of goods is subject of the contract c) put the non-breaching party in the position it would have been in had the contract never been formed d) put the non-breaching party in the position it would have been in if the contract hadn't been breached

b)

The initial term for which a financing statement will be effective is a) one year b) five years c) ten years d) two years

D)

The intent of the offeror to extend an offer to the offeree is generally determined by reference to: A.) The beliefs of the offeror. B.) the subjective intention of the offeror. C.) the assumption of the offeror. D.) the words and conduct of the offense.

B)

UCC Section 2-204 provides three important rules that enable parties to make a contract quickly and informally. Which of the following is NOT one of these rules? A) The parties may make a contract in any manner sufficient to show that they reached an agreement. B) A writing sufficient under the Statute of Frauds may be a simple memo, a letter, or informal note, but need not itself be a contract. C) The UCC will enforce a deal even though it is difficult to say exactly when it was formed. D) A court may enforce a bargain even though one or more terms were left open.

a)

Under the federal Bankruptcy Code, the exemption amount for the debtor's personal residence is a) $23,675. b) $55,200. c) unlimited. d) $125,000.

c)

Vince has begun forgetting things and is becoming very difficult to get along with. He is 85, has been ill and is very fond of his housekeeper Annie. He gives a deed to Annie for all of his real property. At Vince's death, his children, who get only his photograph albums according to the will, ask that the deed be set aside and the land be put back in the estate for purposes of division among all the children. What will the probable result in this case? a) Since Vince was 85 he was probably incompetent and the court would rule for the children b) Clearly Annie used her position of dominance to persuade Vince to deed her the property, and it will be set aside c) Unless the children can prove that Vince was unable to understand what he was doing, or that Annie used her position to improperly influence Vince, Annie can keep the property d) Annie will not be able to keep the property since she is not a family member

C)

Walter enters into a dentist office and points to a damaged tooth. The dentist, Matt, treats the tooth. If Walter refuses to pay and Matt sued A) Walter would win since there was no contract B) Walter would win because of the UCC C) Matt would win, this is an implied contract D) Matt would win in quantum merit

a)

Wedney, Inc. has a purchase money security interest in one of Yoro Chicken's meat processing machines. Wedney filed a financing statement on the day the machine was delivered, perfecting its interest. Great State Bank already had a security interest in the machine. Which party has superior priority rights in the meat processing machine? a) Wedney. A PMSI in collateral other than inventory takes priority over a conflicting security interest if the PMSI is perfected at the time the debtor receives the collateral or within 20 days after he receives it. b) Great State Bank, since it had an earlier security interest. c) The party who is first to repossess the collateral has priority rights. d) The creditors have equal priority.

A)

Wedney, Inc. sold a meat processing machine to Yoro Chickens, taking a security interest in the machine. Yoro Chickens defaulted on the loan. Wedney repossessed the machine. Wedney would like to retain the machine to use as a model. Which of the following statements is correct? A) Wedney must notify the debtor that it intends to retain the machine and give Yoro 20 days to object. B) By taking possession, Wedney automatically foreclosed on the collateral. Wedney has valid title and need do nothing else.Since the machine is equipment, Wedney cannot retain the machine. C) Wedney must dispose of the collateral in a commercially reasonable manner. D) Wedney can retain the machine but must pay Yoro the surplus, the difference between the fair market value of the machine and the amount of the debt.

D)

What are the two most common settings for legitimate non-compete agreements? A. real estate purchase and employment relationship B. sale of a business and real estate purchase C. real estate purchase and insurance purchase D. sale of a business and employment relationship

d)

Which of the following is NOT a true statement about fraud? a) The plaintiff must prove that the defendant has knowledge of the falsity of their statement b) It is necessary for the plaintiff to show that they have suffered some type of detriment because of their reasonable reliance on the defendant's false statement c) The defendant made the statement with the intent to induce the plaintiff to enter into the contract d) The plaintiff must show that although the defendant acted in good faith, the statement was material because the defendant expected the plaintiff to rely on it and enter into the contract

B)

Which of the following is NOT required to establish promissory estoppel? A.) A promise made by the defendant B.) A promise made by the plaintiff in response to the defendant's promise C.) reliance on the defendant's promise D.) All of these are required.

C)

Which of the following is TRUE regarding an open price term? A. It makes the contract unenforceable. B. The price may be fixed by the seller. C. The price is the "reasonable" price at the time of delivery. D. The price is set by the buyer.

a)

Which of the following is an example of an implied contract? a) Alberto visits his physician to be treated for a sinus infection. They do not discuss payment, but the following week Alberto receives a bill from his physician for services rendered b) Midori offers to sell a necklace to Patricia for 50, Patricia agrees to pay 50 c) Amy tells her neighbor Tom "If you rake my leaves, I will bake you brownies" Tom accepts d) Miguel wants to purchase his first home. When he found the perfect place, he signed a contract for purchase and closed on the home within a month

b)

Which of the following is an example of incidental damages you might be awarded if you are wrongfully terminated from your job? a) the costs of psychological counseling b) the costs of mailing resumes to prospective employers c) the costs of a new wardrobe for future interviews d) the costs of cosmetic surgery

b)

Which of the following oral contracts may be enforceable? a) Nathan owes 1000 in back rent to his landlord. Miranda tells Nathan not to worry about it, and will pay the debt b) Kenny orally agrees to purchase 5000 pencils that the ABC Pencil Company stamps with the words "Kenny is the Greatest" c) Mrs. Washington calls the grocery store to place an order for a lot of items. Ten minutes later, before the store has a chance to put it together, she cancels her order d) all of the above

b)

Which of the following statements concerning a Chapter 11 reorganization plan is true? a) A reorganization plan will be confirmed by the court only if a majority of each class of creditors votes in favor of the plan. b) A reorganization plan can be confirmed by the court over objections of some creditors if the court determines that the plan is feasible and fair. c) Only the bankruptcy court has the authority to confirm or reject the reorganization plan. Creditors do not have a right to vote on the plan. d) A reorganization plan binds only the debtor and not the creditors.

d)

Which of the following statements concerning liquidated damages is NOT TRUE a) a liquidated damages clause will be enforced if when the contract was made, it was difficult to estimate actual damages b) the amount of liquidated damages must be a reasonable estimation of the actual harm resulting from a breach c) nominal damages are not the same thing as liquidated damages d) liquidated damages are enforceable even if the amount is considered to be a penalty on the breaching party

A)

Which of the following would represent a unilateral offer? A) I will pay $50 if you mow my lawn B) I will pay you $50 if you promise to trim that tree C) I will pay you $50 for your CD player D) I will pay you $50 for your backpack

d)

Which of the following would suffice for a signature on a writing under the Statutes of Frauds? a) a stamped signature b) a handwritten signature c) a name keyed at the bottom of an email d) Any of these would suffice. Judges define signature very broadly

d)

Who is responsible for gathering the bankrupt's assets and dividing them among creditors? a) the executor b) the state court c) the creditors' committee d) the trustee

B)

Who operates the business and develops a plan of reorganization in Chapter 11 bankruptcies? A) the trustee B) the debtor in possession C) the state courts D) the creditors' committee

All of the following parties had a hand in creating the UCC except a) the U.S. Senate. b) the American Law Institute. c) the National Conference of Commissioners on Uniform State Laws. d) None of these are correct.

a)

Betty's BBQ orally contracts with Denny's Design House for 10,000 matchbooks at the price of 10 cents per matchbook. The matchbooks are to be embossed with a logo to be designed by Denny's Design promoting Betty's BBQ. Price, payment terms, and delivery terms are agreed upon between the parties. Denny's Design creates the logo, gets Betty's BBQ's approval of the design, and begins applying the logo on the matchbook covers. Denny's Design has almost finished the order when Betty's BBQ calls to say it has decided to make the eatery a smoke-free restaurant and cancels the order. Denny's Design sues, but Betty's BBQ states that the agreement is unenforceable under the Statute of Frauds. Who wins? a) Denny's Design House wins. This situation falls under an exception to the Statute of Frauds. b) Denny's Design House wins. This is a service contract for design of a logo. Therefore, the UCC, including the Statute of Frauds provisions of Article 2, does not apply. c) Betty's BBQ wins. This is a contract for $1,000. The Statute of Frauds requires all sales contracts in excess of $500 be in writing. d) Betty's BBQ wins. The Statute of Frauds only applies to merchants. Betty's BBQ is not a merchant in this instance because it intended to give the matchbooks away and not sell them.

a)

Farmer Elvin is holding 200 pounds of potatoes in storage for Chef Noble but Chef Noble has breached the contract by failing to pay for the potatoes. If Farmer Elvin sells the potatoes to a local diner to make potato soup and salad, then this action would be considered a(n) a) reasonable mitigation of damages. b) attempt to maximize damages. c) attempt to realize an unwarranted profit. d) attempt at reformation.

a)

If Edmund and Kaylin have a writing mistakenly showing a sale and purchase of goods for $10,000 when the price should have been $1,000, a court will most likely a) enforce the agreement, relying on oral testimony to determine the correct price. b) only enforce the agreement as written. c) not hear the case unless both parties are merchants. d) not enforce the agreement since the writing did not reflect a meeting of the minds of the parties.

a)

Marty, a 16-year-old, contracts with Cream-of-the-Crop Cycles to buy an $8,000 motorcycle. Marty agrees to make monthly payments until the purchase price plus interest is paid in full. Which of the following is correct? a) The contract is voidable by Marty. b) The contract is void as soon as it is made. c) The contract is voidable by Cream-of-the-Crop Cycles. d) The contract is voidable by either Marty or Cream-of-the-Crop Cycles.

a)

Ramona has received a discharge in bankruptcy, but wants to reaffirm a debt to her sister. To be valid, the reaffirmation a) will be scrutinized by the court to make sure her sister has not unfairly pressured Ramona. b) will be automatically disallowed because allowing Ramona to promise to pay a discharged debt would be contrary to the goals of the bankruptcy proceedings. c) will be automatically allowed if Ramona voluntarily chooses to make it. d) must clearly disclose that Ramona has the right to rescind at any time since the debt was already discharged.

a)

The Grand Performance Hall is in the process of remodeling and is scheduled to open for business after being closed for 50 years. As part of the remodeling, it is installing a new sound system. The sound system is to be installed by Sound Systems, Inc. on or before April 10. Opening night of the hall is May 1. The contract states that "time is of the essence" because of the opening-night deadline. Sound Systems has some financial difficulties and doesn't deliver the system until April 20. Grand Hall refuses to accept it, and Sound Systems sues. What will be the result? a) Grand Hall wins; the contract date was strictly enforceable. b) Sound Systems wins; the contract was substantially performed. c) Grand Hall wins; there was commercial frustration. d) Sound Systems wins; there was a true impossibility.

a)

The correct order of payment of claims from the debtor's estate would be a) secured claims, priority claims, unsecured claims. b) secured claims, unsecured claims, priority claims. c) priority claims, secured claims, unsecured claims. d) priority claims, unsecured claims, secured claims.

a)

Vicki entered into a written contract to buy a car from Valley Motors. During the negotiations, the sales representative said that the car had a two-year full warranty. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." The written contract did not include a warranty. Two months after Vicki took delivery of the car, she discovered that the transmission needed to be replaced. Vicki claimed that it was covered by the full warranty. Will Vicki be able to present evidence as to the sales representative's statements concerning the warranty? a) No. The parol evidence rule will most likely exclude any evidence of the discussion of the warranty. b) Yes. The leading object rule will allow evidence as to the discussion of the warranty. c) Yes. The evidence is needed because the contract is ambiguous. d) No, because the contract was fully executed.

a)

Vicki entered into a written contract to buy a car from Valley Motors. The written contract included a provision that stated, "This writing is the full and final expression of the parties' agreement; anything said before signing or while signing is irrelevant." This is a) an integration clause. b) a Statute of Frauds clause. c) parol evidence. d) an exculpatory clause.

a)

Which of the following types of contracts cannot be either contradicted or supplemented by evidence of prior agreements or expressions? a) integrated contracts b) incomplete contracts c) ambiguous contracts d) implied contracts

a)

Abby hires a contractor to make repairs on her house. Before the repairs are finished, Abby dies. Her good friend Clay is appointed executor of Abby's estate. Clay orally promised that if the estate could not pay the repair bill, he would pay it even though he does not live in the house and has no entitlement under Abby's estate. If the contractor's bill does not get paid, who can the contractor collect from, if anyone? a) The contractor can collect from either the estate or Clay. b) The contractor can collect from the estate only. c) The contractor can collect from Clay only. d) The contractor must collect from the estate first, and then collect any deficiency from Clay.

b)

Country Bank, located in Indiana, loaned Chmelik $5,000 and obtained a security interest in a copyright Chmelik owns. Chmelik lives in Illinois, but works in Indiana. In order to perfect its interest, Country Bank files a financing statement in Indiana. The financing statement provides Chmelik's correct name, his business address, and a reasonable description of the copyright used as collateral. Is the financing statement sufficient? a) Yes, it meets the UCC requirements for contents and filing. b) No, if the debtor is an individual, the secured party must file in the state of the debtor's principal residence, which in this case would be Illinois. c) No, the secured party needed to file a financing statement in both Indiana and Illinois. d) No, a security interest cannot be attached to a copyright.

b)

Jun-seo owes $20,000 in unsecured claims to 15 different creditors, and he has generally not been paying debts that are due. Two of Jun-seo's creditors want to force him into bankruptcy by filing an involuntary petition; the other creditors do not agree. Which of the following statements is correct about this situation? a) An involuntary petition cannot be filed because Jun-seo is not that deeply in debt. b) An involuntary petition cannot be filed because not enough creditors want to force Jun-seo into bankruptcy. c) An involuntary petition can be filed because Jun-seo is not making his payments in a timely way. d) An involuntary petition can be filed because any one of Jun-seo's creditors can force him into bankruptcy.

b)

Mark's home had burned to the ground. When he met with his insurance adjuster, she accused him of burning down the house and said she would have him criminally prosecuted if he didn't settle the claim for much less than the house was worth. Mark agreed to the settlement. If he changes his mind, he can probably rescind the settlement on the basis of a) fraud. b) duress. c) undue influence. d) mistake.

b)

Ron operates a garbage pickup business. He contracts to pick up garbage from an apartment complex for the next 52 weeks at a price of $150 per week. Unexpectedly, the landfill center where Ron takes the garbage to dispose of it, files for bankruptcy. As a result, Ron must travel an additional 100 miles to the nearest landfill center, turning Ron's expected profit into a loss of $40 per week. Ron's best argument in support of his petition to be discharged from the contract is a) the mail box rule. b) commercial impracticability. c) frustration of purpose. d) true impossibility.

b)

The courts will find an implied contract when a) justice demands it. b) conduct of the parties indicates they intended an agreement. c) there is promissory estoppel. d) there is undue influence.

b)

A court is unlikely to enforce the non-compete agreement Kelly and Amber signed because of which of the following clauses? a) Kelly agrees not to work for a competitor for two years. b) Kelly agrees not to work for a competitor within a 10-mile radius of Amber's business. c) Kelly agrees to go into a completely different line of work than Amber. d) All of these are correct.

c)

A form stating the name of an unsecured creditor and the amount of the claim against the debtor is called a(n) a) order for relief. b) automatic stay. c) proof of claim. d) reaffirmation form.

c)

In the historic case of Hamer v. Sidway, the nephew a) lost, as the Court found there was no consideration. b) lost, as the uncle was dead. c) won, as the Court found there was consideration. d) won, as there was a completed gift.

c)

In which case would true impossibility NOT apply? a) Nelson contracted with a local restaurant to supply 10,000 pounds of potatoes, but a tornado tore through his field, completely destroying it. b) A record company contracted with Darlene to produce a CD of traditional folk ballads; unfortunately, Darlene died before recording began. c) Reed agrees to purchase an expensive piece of jewelry for $25,000; a week later, he tells the jeweler that he simply does not have that kind of money. d) None of these are correct.

c)

Larson entered Forrester's Auto Mart to purchase a used car. Larson found a vehicle with a sales price of $11,000. After Forrester answered all of Larson's questions, Forrester and Larson agreed to a sale. As Larson was leaving to get the money to pay for the car, Forrester told Larson that he thought Robert Redford formerly owned the car. Larson later learned that Robert Redford had never owned the car. If Larson seeks to rescind the deal based on Forrester's statement, Larson will a) win because he relied on the misrepresentation. b) win because there was a misrepresentation of a material fact. c) lose because he will not be able to prove reliance on the misrepresentation. d) lose because Forrester made a unilateral mistake.

c)

Link negligently ran his car into John, causing $50,000 in injuries. Link was intoxicated at the time of the accident. Can Link discharge this debt in bankruptcy? a) Yes, claims based on negligence are dischargeable. b) Yes, as long as he didn't intend to hit John's car. c) No, such claims are not dischargeable in bankruptcy. d) No, because Link breached a fiduciary duty.

c)

Miles purchased a lawnmower with an attached warning that said, "The manufacturer is not responsible in the case of an injury caused by the lawnmower." If Miles is injured because of a defect in the mower and sues the lawnmower manufacturer, he will most likely a) lose, as he agreed to not hold the lawnmower manufacturer liable. b) lose, as he assumed the risk. c) win, as this warning would be unenforceable. d) win, as all lawnmower manufacturers are strictly liable.

c)

Ralph is a professional football player. He signs a valid contract with the Jets. Later, the Giants offer him more money, so he signs a contract with them. If the Jets sue Ralph, what would the most likely result be? a) The court will order Ralph to play with the Jets. b) The court will order Ralph to play with the Jets, but Ralph is entitled to be paid the amount he negotiated under the Giants contract. c) The court will issue a preliminary injunction barring Ralph from playing with any team other than the Jets during the course of the lawsuit. d) The court will order Ralph to pay compensatory damages in the amount of the difference between the two contracts.

c)

Statutes of limitations a) define how much money the injured party can sue for under a breach of contract claim. b) define whether there has been substantial performance of a contract or a material breach. c) limit the time in which an injured party may sue. d) only apply to the sale of goods. There is no statute of limitations on a service contract.

c)

What is the "gap period"? a) the period between the time a debtor files for bankruptcy and the time that he is granted discharge b) the period of time that creditors must wait to be paid once a plan of payment is approved c) the period between the time that a creditor files for an involuntary petition and the court issues the order for relief d) the period between the time a debtor files for bankruptcy and the time that the plan of payment is approved

c)

Creditors of Northern Hydraulics file an involuntary bankruptcy petition against the company, and the petition is approved. What is true of Northern Hydraulics? a) Northern Hydraulics has at least $10,425 in debts. b) There are at least 12 creditors. c) A custodian has automatically been appointed. d) It must make all the filings necessary under a voluntary petition.

d)

Jerry offers to shovel the snow from Ben's driveway for $35. Ben replies "OK." This is an example of a) an implied, unilateral contract. b) an express, unilateral contract. c) an implied, bilateral contract. d) an express, bilateral contract.

d)

Linda agrees to buy Missy's Greyhound race dog for $2,000. Linda is to deliver the money and take possession of the dog the next morning. That night, running his best race ever, the dog runs away from Missy, never to be seen again. What will be the outcome in this case? a) Linda must give $2,000 for the dog, but only if the dog was insured. b) Linda must give $2,000 for the dog, but only if Missy can find a replacement dog within a reasonable time. c) Missy must find another dog for Linda or pay her $2,000. d) Linda does not have to pay for the dog; the contract duties are discharged.

d)

Newt, a gun dealer, offers to sell a rare civil war musket to Rush, another dealer, for "$15,000, insurance and shipping paid by buyer." Rush responds, "I accept. Insurance and shipping costs divided equally between seller and buyer." The parties a) do not have a contract since the acceptance violated the mirror image rule. b) do not have a contract since Rush's response was a counteroffer. c) have a contract, and in the majority of states, the terms of the offeree control. d) have a contract, and in the majority of states, the different terms will cancel each other out.

d)