ACCT 324 Exam 1
Which of the following contracts falls within the statute of frauds? Contracts for the sale of goods totalling $400 A six-month employment contract A prenuptial agreement Contracts for lifetime employment
A prenuptial agreement Only specific types of contracts are within the scope of the statute of frauds and thus required to be evidenced by writing. They are (1) contracts whose terms prevent possible performance within one year, (2) promises made in consideration of marriage, (3) contracts for one party to pay the debt of another if the initial party fails to pay, (4) contracts related to an interest in land, and (5) contracts for the sale of goods totalling more than $500. A contract for lifetime employment may be performed within one year (if the person dies within that year), so its performance is possible within one year.
The definition of a merchant under the Uniform Commercial Code (UCC) does not include which of the following? One to whom such knowledge may be attributed due to her employment or one who holds herself out has having that knowledge or skill relating to the good A seller who holds herself out by occupation as having knowledge of the goods involved in the transaction A person who deals in goods of the kind sold in the contract A seller who sells a variety goods, including the goods that are the subject of the contract
A seller who sells a variety goods, including the goods that are the subject of the contract The Uniform Commercial Code (UCC) distinguishes between merchants and regular buyers and sellers. Section 2-104(1) defines a merchant as "a person who deals in goods of the kind, or otherwise by his occupation, holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction, or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who, by his occupation, holds himself out as having such knowledge or skill." It is important to determine if a buyer or seller is a merchant because the Uniform Commercial Code (UCC) holds merchants to a higher standard and has certain provisions that apply only to merchants.
In which of the following situations does an express ratification by a minor occur? An express ratification occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor An express ratification occurs when, after reaching the age of majority, a person goes to court in order to have the contract ratified An express ratification occurs when, after reaching the age of majority, a person takes some action consistent with the intent to ratify the contract An express ratification occurs when, after reaching the age of majority, a person enters into another contract in order to ratify the original contract.
An express ratification occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor Once a person reaches the age of majority, he or she may ratify, or legally affirm, contracts made as a minor. An express ratification occurs when, after reaching the age of majority, the person states orally or in writing that he or she intends to be bound by the contract entered into as a minor. An implied ratification occurs when, after reaching the age of majority, a person takes some action consistent with the intent to ratify the contract.
The Uniform Commercial Code (UCC) defines usage of trade as which of the following? Material adherence to contract standards Standard operating procedure for a contract of this kind Any practice that members of an industry expect to be part of their dealings Substantial performance
Any practice that members of an industry expect to be part of their dealings Uniform Commercial Code (UCC) Section 1-205(2) defines usage of trade as any practice that members of an industry expect to be part of their dealings. The UCC requires that courts consider norms in a particular trade. Sometimes, the norms for a particular trade do not permit a buyer to reject goods with minor flaws.
Which rule/doctrine would be relevant if a change in government regulation that neither party contemplated forbids the import or export of a particular item the parties had agreed would be shipped? Commercial inconvenience Commercial impossibility Commercial impracticability Commercial innocence
Commercial impracticability If a change in government regulation that neither party contemplated forbids the import or export of a particular item the parties had agreed would be shipped the doctrine of commercial impracticability is relevant.
________performance occurs when all aspects of the parties' duties under the contract are carried out perfectly. Complete Whole Perfect Material
Complete In many instances, complete performance is difficult, if not impossible, to attain. As a result, courts often require only substantial performance.
If a seller allows a buyer to take possession of the goods before deciding whether to complete the contract by making the purchase, it creates what kind of contract? Common-carrier delivery contract Simple delivery contract Conditional sales contract Goods-in-bailment contract
Conditional sales contract Conditional sales contracts are either sale-on-approval contracts or sale-or-return contracts. A contract is a sale-on-approval contract if the seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.
Which type of damages are foreseeable damages that result from special facts and circumstances arising outside a contract itself? Nominal damages Consequential damages Equitable damages Compensatory damages
Consequential damages These damages must be within the contemplation of the parties at the time the breach occurs.
_______ refers to the history of dealings between the parties involved in the present contract. Course of dealing Standard operating procedure A good faith agreement Course of performance
Course of performance In addition to its requirement on usage of trade, the UCC requires that courts consider the ideas of course of dealing and course of performance. Course of performance refers to the history of dealings between the parties involved in the present contract. Course of dealing refers to previous commercial transactions between the same parties.
How is undue influence different from duress? While contracts resulting from undue influence are void, contracts resulting from duress are valid Duress is a much more visible and active interference with free will than is undue influence While undue influence results in aleatory contracts, duress results in adhesion contracts Undue influence does not involve a dominant-subservient relationship, whereas it is an essential element in duress
Duress is a much more visible and active interference with free will than is undue influence Duress occurs when one party is forced into the agreement by the wrongful act of another. Undue influence refers to those special relationships in which one person takes advantage of a dominant position in the relationship to unfairly persuade the other person and interfere with that person's ability to make his or her own decisions.
Which of the following statements best describes the common law's mirror-image rule as it applies to the Uniform Commercial Code (UCC)? The mirror-image rule only applies if a buyer orders a customized good. Generally speaking, the common law's mirror-image rule does not apply under the Uniform Commercial Code (UCC). The mirror-image rule does not apply unless a merchant is involved in the transaction, and the value of the contract exceeds $500. The mirror-image rule always applies in contracts for the sale or lease of goods.
Generally speaking, the common law's mirror-image rule does not apply under the Uniform Commercial Code (UCC). Under the UCC, additional terms are permitted in contracts for the sale or lease of goods. Under UCC Section 2-207(1), additional terms will not negate acceptance unless acceptance is made expressly conditional on assent to the additional terms.
If the sale or lease does not address the place of delivery, the Uniform Commercial Code (UCC) has a provision that states which of the following? If the contract has an open provision for the location of the delivery, the purchase must pay additional storage charge to the seller. If the place of delivery is left blank, the goods are to be delivered at the residence of the seller. If the contract does not address the place of delivery, the goods are to be delivered at the seller's place of business. If the place of delivery is not addressed, then the courts will void the contract.
If the contract does not address the place of delivery, the goods are to be delivered at the seller's place of business. The UCC has provisions for terms of the contract that may have been left open (except for quantity). If the contract is silent about the place of delivery, the goods are to be delivered at the seller's place of business based on the terms provided by the UCC.
Under the Uniform Commercial Code (UCC) Sections 2-508 and 2A-513, sellers and lessors have the right to cure or fix the problem with nonconforming goods if they do which of the following? If the seller or lessor gives prompt notice of the intent to fix the problems with the nonconforming goods and then cures those problems within the time for the contract to be performed, the seller or lessor can cure the problem. The buyer or lessee can declare the contract is automatically void if nonconforming goods are delivered. If the buyer or lessee pays the seller the reasonable cost to cure the nonconforming goods, then the seller or lessor may cure the nonconforming goods. If the seller or lessor agrees to correct the problem within 10 days after performance is due, the UCC allows cure to take place.
If the seller or lessor gives prompt notice of the intent to fix the problems with the nonconforming goods and then cures those problems within the time for the contract to be performed, the seller or lessor can cure the problem. According to the Sections 2-508 and 2A-513 of the Uniform Commercial Code (UCC), sellers and lessors have the right to cure or fix problems with nonconforming goods. In particular, sellers and lessors can repair, adjust, or replace defective or nonconforming goods as long as they give prompt notice of the intent to cure and go ahead and cure within the contract time for performance.
Which of the following is not considered an exception to the perfect tender rule under the UCC? Is it possible for the seller/lessor to cure the defect? What if unforeseen circumstances make contract performance commercially impracticable? Does the parties' agreement address less than perfect tender? Is it possible for the buyer/lessee to delay payment?
Is it possible for the buyer/lessee to delay payment? The Uniform Commercial Code (UCC) has several exceptions to mitigate the rigidity of the perfect tender rule. These exceptions include 1) What are the norms for the particular industry [usage of trade] and/or what past dealings have the parties had with one another; 2) What does the parties' agreement say; 3) Is it possible for the seller/lessor to cure or correct the problem; 4) What if the goods have been destroyed; 5) What if the nonconformity substantially impairs the value of the goods; and 6) What if unforeseen circumstances make contract performance commercially impracticable?
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 accepted the offer because an e-mail is a reasonable means of acceptance. The agreement between Larry and Jorge will be valid but unenforceable. Larry has not accepted the offer as required by the offeror, and there is no contract. The acceptance by Larry will be presumed as an implied contract.
Larry has not accepted the offer as required by the offeror, and there is no contract. In this situation, Larry has not accepted the offer as required by the offeror, and there is no contract. An offeror has the power to control the means by which the acceptance is communicated, so if the offeror specifies that only a certain means of communication will be accepted, then only an acceptance by that means forms a valid contract.
Which damages are specified by the parties in advance and put in the contract? Liquidated Nominal Substituted Non-liquidated
Liquidated A liquidated damages provision helps to prevent a difficult court battle if the specified type of breach occurs. The parties identify these damages in what is called a liquidated or stipulated-damage clause in the contract. The damages may be specified as either a fixed amount or a formula for determining how much money is due.
Which rule says that the terms of an acceptance must reflect the terms of an offer? Transmissions rule Parole evidence rule Mailbox rule Mirror-image rule
Mirror-image rule The mirror-image rule says that the terms of the acceptance must mirror the terms of the offer. If they do not, no contract is formed. Instead, the attempted acceptance is a counteroffer.
Which of the following does not demonstrate a party's lack of contractual capacity? One of the parties is a minor. One of the parties is mentally incompetent. One of the parties refuses to accept the offer. One of the parties is intoxicated.
One of the parties refuses to accept the offer. Contractual capacity is the legal ability to enter into a binding agreement. Most adults over the age of majority have capacity; those under the age of majority, people suffering from mental illness, and intoxicated persons do not contractual capacity.
Which rule states that oral evidence of an agreement made prior to or contemporaneously with the written agreement is inadmissible when the parties intend to have a written agreement be the complete and final version of the agreement? Statute of frauds Equal dignity rule Promissory estoppel Parol evidence rule
Parol evidence rule The parol evidence rule states that oral evidence of an agreement made prior to or contemporaneously with the written agreement is inadmissible when the parties intend to have a written agreement be the complete and final version of the agreement.
Regarding the enforceability of a present promise, which of the following is an accurate statement regarding past consideration? Past consideration is sufficient consideration to support the enforceability of a present promise Past consideration is conditional consideration to support the enforceability of a present promise Past consideration is equitable consideration to support the enforceability of a present promise Past consideration is no consideration at all
Past consideration is no consideration at all Past consideration is no consideration at all. For a promise to be enforceable, a bargaining and exchange must occur. A promise cannot be based on performance that occurred before the promise was made.
Which term describes conditions that impair one party's understanding of a contract, as well as the integration of terms into a contract? Substantive unconscionability Procedural unconscionability in pari delicto Exculpatory
Procedural unconscionability Procedural unconscionability describes conditions that impair one party's understanding of a contract, as well as the integration of terms into a contract.
Which of the following is an exception to the Statute of Frauds which entails one party detrimentally relying on the contract, and that reliance being foreseeable by the other party? Admission Partial performance Promissory estoppel Fraudulent misrepresentation
Promissory estoppel is Promissory estoppel is the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract. The reliance must be reasonably foreseeable and to the detriment of the party who relied on the promise.
In obtaining cover, the buyer must do all but which of the following? Purchase substitute goods that are identical to the original goods Pay a reasonable amount for the substitute goods Demonstrate good faith in obtaining substitute goods Act without delay in purchasing the substitute goods
Purchase substitute goods that are identical to the original goods In obtaining cover, the buyer must (1) demonstrate good faith in obtaining the substitute goods, (2) pay a reasonable amount for the substitute goods, (3) act without unreasonable delay in purchasing the substitute goods, and (4) purchase goods that are reasonable substitutes.
Which remedy usually requires that the seller or lessor deliver the particular goods identified in the contract? Compensatory damages Consequential damages Liquidated damages Specific performance
Specific performance The remedy of specific performance usually requires that the seller or lessor deliver the particular goods identified in the contract. Buyers and lessees are permitted to seek the remedy of specific performance when either (1) the goods are unique or (2) a remedy at law is inadequate.
_________ 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 Contractual Conditional Absolute
Substantial
Tender of delivery requires which of the following? Tender of delivery requires the buyer/lessee to have and hold conforming goods at the disposal of the seller/lessor pending the recording of a confirmation deed to transfer title or possession of the goods. Tender of delivery requires that a seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery. Tender of delivery requires the buyer/lessee to have and hold payment for conforming goods at the disposal of the merchant thereby enabling him or her to take delivery of the goods. Tender of delivery requires the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee pending the recording of an invoice confirming the delivery that is signed by the buyer/lessee.
Tender of delivery requires that a seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery. UCC Sections 2-503(1) and 2A-508(1) state that tender of delivery requires that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery. Conforming goods are goods that conform to contract specifications.
Which of the following statements is true of the Contracts for the International Sale of Goods (CISG)? The CISG does not cover the general topics covered under the UCC, like offers, acceptances, and other contract The CISG requirements related to the statute of frauds are more restrictive than those under the UCC. The CISG allows this treaty to govern international business-to-business sales contracts. The CISG requires that all contracts for international sales be in writing even when neither party is a merchant.
The CISG allows this treaty to govern international business-to-business sales contracts In 1980, the United National Convention on Contracts for the International Sale of Goods (CISG) was offered as a treaty to govern international business-to-business sales contracts. It is important because if a problem arises with an international sale and a party to the transaction initiates litigation, the UCC does not provide guidance in the litigation; instead, the CISG preempts the UCC.
What is the United Nations Convention on Contracts for the International Sale of Goods (CISG)? The CISG is a covenant for multi-country business agreements in order to make the flow of information among nations more efficient. The CISG is an agreement between the United States and the European Union over the role of technology firms and privacy. The CISG is a contract between the United Nations and the international community to establish rules for international sales. The CISG is a treaty that countries could sign that provides legal framework for international business-to-business sales.
The CISG is a treaty that countries could sign that provides legal framework for international business-to-business sales. The United Nations Convention on Contracts for the International Sale of Goods (CISG) is a treaty that provides legal structure for international sales. The CISG is important because if a problem arises with an international sale and a party to the transaction initiates litigation, the UCC does not provide guidance in the litigation.
When goods are tendered under a contract and those goods fail in any respect to conform to the specifications in the contract, then the buyer or lessee has the right to do which of the following? The buyer/lessee may accept the conforming part of the goods and reject the nonconforming part of the goods The buyer/lessee must accept the goods that are conforming but need not pay the seller/lessor The buyer/lessee may sue for damages for breach of contract even if the seller offers to cure the defect of the nonconforming goods within the allotted time period The buyer/lessee may revoke the contract if the industry standards expect this type of failure to be part of the dealings of the kind.
The buyer/lessee may accept the conforming part of the goods and reject the nonconforming part of the goods The UCC requires that sellers and lessors tender conforming goods to the buyer or lessee. This requirement is known as the perfect tender rule. UCC Sections 2-601 and 2A-509 embrace this rule. These sections indicate that if the goods or tender of delivery of those goods fail in any respect to conform to the contract, the buyer/lessee has the right to accept the goods, reject the entire shipment, or accept part and reject part. If time for performance has not yet expired, then the buyer/lessee must allow the seller/lessor the right to cure the defect of the nonconforming goods.
In a common-carrier contract, what makes the common carrier an independent contractor, rather than an agent of the seller? The carrier controls the primary aspects of performance The carrier is paid by the seller to deliver the goods The carrier is paid by the buyer to deliver the goods The seller controls the primary aspects of performance
The carrier controls the primary aspects of performance Note that a common carrier is an independent contractor and not an agent of the seller. What makes the common carrier an independent contractor, rather than an agent, is that the carrier controls the primary aspects of performance, such as how the goods are actually delivered.
If a person who suffers from a mental illness or defect still understands the nature of the contract and his or her obligations under the contract, which of the following will result? The contract will be considered valid The contract will be considered voidable by the party who is not mentally ill The court will have to approve the contract on behalf of the mentally ill person The contract will be deemed void by the person who suffers from the mental illness or defect.
The contract will be considered valid If a person suffers from mental problems yet still understands the nature of the contract and the obligations it imposes, that person may enter into a binding, legal agreement. Persons suffering from a mental illness or deficiency may have full, limited, or no legal capacity to enter into a binding contract, depending on the nature and extent of their deficiency.
how is an offeror's intent to be bound by an agreement demonstrated? The courts determine an offeror's intent based upon his or her demonstrated acceptance of the offer when negotiations began. The courts determine an offeror's intent based upon how a reasonable person would interpret the offeror's words and actions. The courts determine an offeror's intent based upon what the offeror's belief was at the time negotiations began. The courts determine an offeror's intent based upon what that person's subjective principles are.
The courts determine an offeror's intent based upon how a reasonable person would interpret the offeror's words and actions. The first element of the offer is intent. Contracts are interpreted using an objective standard, which means the courts are concerned only with the party's outward manifestations of intent, not that person's internal thought processes. The courts interpret the parties' words and actions the way a reasonable person would interpret them.
When a minor enters into a contract, the minor has which of the following rights? The minor has a right to ratify the contract before reaching the age of majority if the adult party agrees. The minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority. The minor may disaffirm part of the contract before reaching the age of majority and then ratify the remaining provisions of the contract after reaching the age of majority. The minor has the right to disaffirm the contract only after reaching the age of majority.
The minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority. Minors have the right, until a reasonable time after reaching the age of majority, to disaffirm or void their contracts because their contracts are voidable. It is only the minor who has the right to disaffirm, never the adult with whom the minor entered into the agreement. Should a minor choose to disaffirm or ratify a contract, the minor must disaffirm or ratify the entire contract and not simply portions of the contract.
Which of the following is an exception to the perfect tender rule? The buyer or lessee may give notice of intent to render less than perfect tender The perfect tender rule has no exceptions The seller or lessor may give notice of intent to render less than perfect tender The parties may agree with a level of performance that is less than perfect
The parties may agree with a level of performance that is less than perfect The perfect tender rule does have exceptions including the terms of the parties' agreement. The parties may agree with a level of performance that is less than perfect. They could indicate, by agreement, their expectation regarding performance.
In some contract negotiations, one party makes a statement of material fact that is not true. This statement is considered negligent representation if which of the following occurs? The party could not have uncovered the truth using reasonable care. The party could have known the truth by taking extraordinary care and expense to discover or reveal it. The party purposely withheld the truth from the other party. The party could have known the truth by using reasonable care to discover or reveal it.
The party could have known the truth by using reasonable care to discover or reveal it. In some contract negotiations, one party makes a statement of material fact that he or she thinks is true. If he or she could have known the truth by using reasonable care to discover or reveal it, the statement is a negligent misrepresentation.
If the contract for the sale or lease of goods under the Uniform Commercial Code (UCC) leaves open the provision regarding payment for the goods, which of the following is correct? The buyer or lessee must make payment within 30 days of receiving the goods. The courts will void the contract because it does not have provision addressing payment. The buyer must pay an interest charge for storage of the goods until they can be properly delivered. The payment is due at the time and place at which the buyer is to receive the goods.
The payment is due at the time and place at which the buyer is to receive the goods. The UCC will allow certain terms of a contract to be left open (generally except for the quantity provision). If the contract is silent about the payment, the payment is due at the time and place at which the buyer is to receive the goods. Under the UCC, if certain contract terms are left open, the UCC provides these terms.
Which of the following statements can be inferred from the shipping term free on board (FOB)? The risk of loss lies with the common carrier until the goods are delivered to the buyer. The seller passes the title of the goods to the common carrier before the title passes to the buyer. The selling price of the goods excludes transportation costs. The seller carries the risk of loss to either the place of shipment or the place of destination.
The seller carries the risk of loss to either the place of shipment or the place of destination.
All but which of the following statements is accurate regarding an insurable interest? The seller has the sole responsibility to insure the goods against any loss from damages or destruction of the goods. Both the buyer and the seller may insure themselves against the loss from damage or destruction of the goods. It is important to determine when the insurable interest was created. Knowing the earliest time when the buyer can claim an insurable interest is a key factor to be considered.
The seller has the sole responsibility to insure the goods against any loss from damages or destruction of the goods. An insurable interest is the right to insure the goods against any risk exposure such as damage or destruction. Both the buyer and the seller can insure themselves for potential loss, in the event that the goods are damaged or destroyed at some point in the transaction. It is important to determine when the insurable interest was created and the earliest time when the buyer can claim an insurable interest in the goods, which have been damaged or destroyed.
All but which of the following is a requirement for a writing to be legally sufficient under the statute of frauds? The names of the parties to the agreement The signature of the party against whom the enforcement of the contract is sought The writing must be according to the specific form required by the statute of frauds The subject matter of the contract
The writing must be according to the specific form required by the statute of frauds The statute of frauds has no specific requirements for the form of the contract. It must, however, list the names of the parties, the consideration given, and the pertinent terms of the contract. While it is normal for both parties to sign the agreement, because the writing is offered as proof of an agreement, only the party against whom enforcement is sought needs to have signed it. Additionally, the signatures need not be at the end of the agreement, and a mark (such as an initial) is sufficient if it is intended as a signature.
Which of the following statements is true of the transfer of interests in a goods-in-bailment contract? Title of goods passes from the seller to the buyer when a document of title is endorsed or signed over to the buyer. Only the buyer can buy insurance on the goods because the seller cannot transfer physical possession of the goods. If the document of title is nonnegotiable, the risk of loss passes to the buyer simultaneously with the document of title. If the document of title is negotiable, the risk passes to the buyer on notification and acknowledgment by the custodian of the goods.
Title of goods passes from the seller to the buyer when a document of title is endorsed or signed over to the buyer. If no document of title exists, then title passes when the goods are identified to the contract and the contract is executed. An insurable interest is created when either party has title, risk of loss, or some other economic interest attached to the goods.
The purpose of the parol evidence rule is to prevent which of the following from being admitted to challenge a written agreement as being deficient in some way? To prevent evidence of subsequent oral agreements that seeks to substantially contradict the contract in its written form To prevent evidence of prior agreements that seeks to contradict the contract in its written form To allow evidence of prior oral agreements that seeks to confirm the contract in its written form To allow evidence of subsequent written agreements that seeks to confirm the contract in its written form
To prevent evidence of prior agreements that seeks to contradict the contract in its written form The purpose of the parol evidence rule is to prevent evidence that substantially contradicts the agreement in its written form. Therefore, evidence of prior agreements and negotiations, as well as contemporaneous agreements and negotiations, is typically excluded under the parol evidence rule if they attempt to alter the final written agreement. Subsequent modifications of a contract are not prohibited by the parol evidence rule.
Bilateral and unilateral contracts are best described by which of the following statements: Bilateral contracts are enforced by common law, whereas unilateral contracts are enforced by the Uniform Commercial Code (UCC). Unilateral contracts must be in writing, whereas bilateral contracts are oral. Unilateral contracts call for actions, not promises, whereas bilateral contracts involve promises in exchange for promises. Bilateral contracts are explicit contracts, and unilateral contracts are implicitly expressed.
Unilateral contracts call for actions, not promises, whereas bilateral contracts involve promises in exchange for promises. If the offeror wants a promise from the offeree to form a binding contract, the contract is a bilateral contract; hence, a bilateral contract is commonly defined as a promise in exchange for a promise. In a unilateral contract, the offeror wants the offeree to do something, not to promise to do something. A unilateral contract is a promise in exchange for an act.
In which of the following cases is parol evidence inadmissible? When a contract is deemed integrated by the courts When a contract contains ambiguous terms that significantly affect its interpretation When a contract contains obvious typographical errors When certain conditions make an otherwise valid contract void
When a contract is deemed integrated by the courts Integrated contracts are written contracts intended to be the complete and final representation of the parties' agreement. When the courts deem a contract integrated, unless an exception to the parol evidence rule applies, then parol evidence is inadmissible.
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? If the guardian ratifies the contract entered into by the person with dementia, the contract is considered valid. The contract will be voidable by the person suffering from dementia. The contract is valid. When someone has been appointed a guardian, that person's contracts are considered void.
When someone has been appointed a guardian, that person's contracts are considered void. If someone has been adjudicated insane or has a guardian appointed, then that person has no capacity to enter into contracts, and any contracts he does attempt to enter are void. The guardian has the sole legal capacity to enter into contracts on such a person's behalf.
The elements of a contract include all the following except: an agreement a legal subject matter a writing a bargained-for exchanged
a writing Four elements are necessary to form a contract: 1) agreement [which includes offer and acceptance], 2) consideration [the bargained-for exchange], 3) capacity, and 4) legal subject matter.
If the seller does not provide the goods as they were specifically described in the contract, the buyer may: accept the nonconforming goods "as is." recover punitive damages. recover compensatory damages for intentional infliction of emotional distress, provided that the seller's breach of contract constituted gross negligence or extreme recklessness as determined by a trial jury. reject the goods and prohibit any attempt on the part of the seller to cure the deficiency.
accept the nonconforming goods "as is."
The ________blank is the agreement while payment is the ________blank in an unliquidated debt. contract; consideration consideration; satisfaction accord; satisfaction satisfaction; agreement
accord; satisfaction When a debt is unliquidated, the parties may enter into an accord and satisfaction. The agreement for the creditor to accept less than he or she claims is owed is the accord. The payment of this amount is the satisfaction of the debt.
When one party gives a promise as consideration and the other party gives a(n) ________blank in consideration, a unilateral contract will result. promise writing act agreement
act In a unilateral contract (a promise for an act), one party's consideration is the promise and the other party's consideration is the act. In a bilateral contract (a promise for a promise), one party's consideration is her promise and the other party's consideration is his return promise.
When a buyer breaches a sales or lease contract before the seller has delivered the goods, Sections 2-703(a) and 2A-523(1)(c) of the Uniform Commercial Code: revoke the legal capacity of the buyer to enter into contracts. allow sellers to withhold delivery of goods. do not allow the seller to cancel the contract. do not consider the breach as a violation of contract laws.
allow sellers to withhold delivery of goods. Sometimes a buyer breaches the contract or lease before the seller has delivered the goods. For instance, the buyer or lessee might fail to pay according to the terms of the agreement. UCC Sections 2-703(a) and 2A-523(1)(c) allow sellers or lessors to withhold delivery of goods when the buyer or lessee is in breach.
Implied conditions are those conditions which ________ are not explicitly stated in the contract but are inferred from the nature and language of the contract the parties may choose to enforce before their obligations to perform under the contract arise are explicitly stated in the terms of the agreement the parties determine based upon an accord and satisfaction
are not explicitly stated in the contract but are inferred from the nature and language of the contract
A(n) ______ contract is defined as a promise by one party made in exchange for a promise by the other party unilateral implied void bilateral
bilateral A promise made in exchange for a promise is a bilateral contract. A promise made in exchange for an act forms a unilateral contract. A void contract is no contract at all.
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: abeyance. concurrence. breach. agreement.
breach 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. The UCC requires that sellers/lessors notify buyers/lessees of the cancellation and then pursue remedies available under the UCC.
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: reselling the goods. canceling the contract. filing a claim for damages in court. allowing the seller to withhold the goods.
canceling the contract. In the case of breach of a sales contract by the buyer or lessee, canceling the contract is the remedy of last resort from the UCC's perspective. The UCC wants to maintain commercial transactions and provides remedies to keep the contract in force, even when one party has breached.
Sources of contract law include: the Uniform Commercial Code and Constitutional law common law and the Uniform Commercial Code regulations and statues common law and constitutional law
common law and UCC Sources of contract law include common law and the Uniform Commercial Code. A third source of law, which has become more important with increasing globalization, is the Convention on Contracts for the International Sale of Goods (CISG).
Nathalie, the owner of a designer furniture store in New York, orders for some goods from a manufacturer based in China. The manufacturer hires the services of a shipping company to deliver the goods to Nathalie's warehouse. This scenario is an example of a ________ goods-in-bailment contract. simple delivery contract. conditional sales contract. common-carrier delivery contract.
common-carrier delivery contract If a buyer and seller execute a contract and the seller subsequently places the goods with a common carrier for delivery to the buyer, the parties have executed a common-carrier delivery contract.
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. offer reciprocity consideration agreement
consideration Consideration is what a person will receive in return for performing a contract obligation. Both parties must receive something of value. Consideration can be anything, as long as it is the product of a bargained-for exchange. Under this contract, Brittany's payment of $700 is the value Kathy receives while the computer is the value that Brittany receives.
A set of legally enforceable promises is known as an: express promise affidavit regulation contract
contract The Restatement (Second) of Contracts defines a contract as "a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty." Another way to think of a contract is as a set of legally enforceable promises.
Julio agrees to buy Sophia's computer for $1,000. However, Sophia tells Julio that she will only sell the computer to him if he pays $1,200. In this scenario, Sophia makes a(n): reverse bid collective bargain counteroffer addendum
counteroffer In this scenario, Sophia makes a counteroffer. A counteroffer is defined by the Restatement as "an offer made by an offeree to his offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer."
Under the UCC, courts will uphold modifications or limitations to remedies unless the remedies fail in their ________ practicality principal cause convenience essential purpose
essential purpose Parties to sales and lease contracts are permitted to modify or limit remedies. Courts tend to uphold these modifications or limitations to remedies unless the remedies fail in their essential purpose.
When, after reaching the age of majority, the person states orally or in writing that he or she intends to be bound by the contract entered into as a minor, there is a(n) ________ consent express ratification disaffirmance implied ratification
express ratification An express ratification occurs when, after reaching the age of majority, the person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.
Ressa sold her electric bicycle to Michael claiming that it had never been in a wreck. Actually, the bike had been in a wreck and sustained damage. This scenario is an example of: negligent misrepresentation. unconscionability. unilateral mistake. fraudulent misrepresentation.
fraudulent misrepresentation A fraudulent misrepresentation is a consciously false representation of a material fact intended to mislead the other party. It is also referred to an intentional misrepresentation. The three necessary elements to prove fraudulent misrepresentation include: 1) a false statement about a past or existing fact that is material to the contract, 2) intent to deceive the other party, and 3) justifiable reliance on the false statement by the innocent party to the agreement.
Belinda entrusts her engagement ring to a jeweler to resize. The jeweler sells the ring to Sonia in the ordinary course of business. Sonia has a ________ void title voidable title vacated title good title
good title If an owner entrusts the possession of goods to a merchant who deals in goods of that kind, the merchant can transfer all rights in the goods to a buyer in the ordinary course of business. As a result, Sonia has good title to the ring as Sonia was a buyer in the ordinary course of business.
Uniform Commercial Code (UCC) Section 2-105 defines ________ as all (tangible) things which are movable at the time of identification to the contract for sale. leases fixtures goods services
goods Uniform Commercial Code (UCC) Section 2-105 defines goods as all (tangible) things which are movable at the time of identification to the contract for sale. Items are tangible (but does not include stock certificates and copyrights as those documents represent a right and not a good) if they exist physically and are movable.
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 Vince does not know of the terminating event? If Robert and Vince are in an option contract that is still valid If Robert decides to revoke the offer made to Vince If Robert dies If Vince has begun the performance of the action necessary to accept a unilateral offer
if Robert dies An offer terminates immediately if the offeror dies or loses the legal capacity to enter into the contract, even if the offeree does not know of the terminating event. If the parties had already entered into an option contract to hold the offer open for a set period of time, however, the administrator of the offeror's estate or the guardian of the offeror must hold the offer open until it expires in accordance with the option contract.
Common law, one of the two most important sources of contract law, is derived from: regulatory law statutory law the restatement judicial decisions
judicial decisions The two most important sources of contract law are case law and the Uniform Commercial Code (UCC). The law of contracts is primarily common law. Today's law of contracts originated in judicial decisions in England, later modified by early courts in the United States.
If a court finds ________blank to a contract, it will require the parties to obey the promises they made. legal validity legal assent legal rescission legal discharge
legal assent To make business transactions smoother and more dependable, courts have developed rules about when an assent to do something is a legal assent, that is, a promise the courts will require the parties to obey the promises they made.
The recognized purpose of the statute of frauds does not include: stopping parties from entering into contracts with which they do not agree. easing contractual negotiations by requiring sufficiently reliable evidence to prove specific terms of a contract. legalizing oral agreements for the sale of land. preventing unreliable oral evidence from interfering with a contractual relationship.
legalizing oral agreements for the sale of land.
When there is no dispute over the amount of debt or existence of debt, it is referred to as a: good debt liquidated debt subordinated debt venture debt
liquidated debt In a liquidated debt, there is no dispute that money is owed or how much is owed. An unliquidated debt means the parties either disagree about whether money is owed or dispute the amount of money owed. Partial payment of a debt may or may not be valid consideration, depending on whether the debt is liquidated or unliquidated.
If a court is trying to give the seller the benefit of the bargain and the goods cannot be resold in the usual course of business, the courts might award ________blank in addition to the damages to recover the purchase price. losses avoided property loss lost profits incidental damages
lost profits In trying to give the seller or lessor the benefit of the bargain, and nothing more, courts often grant damages to recover the purchase price or lease payments due. In some cases, even lost profit will be awarded, especially if the goods cannot be resold in the usual course of business.
A ________blank is an untruthful assertion by one of the parties about a fact material to their agreement. rescission misrepresentation mistake ratification
misrepresentation Courts insist on a meeting of the minds for a contract to be valid. A misrepresentation is an untruthful assertion by one of the parties about a fact material to their agreement. It prevents the parties from having the mental agreement necessary to form a contract. It only appears that the parties agreed, so their contract lacked mutual assent.
When both parties to an agreement make an error regarding a material fact of the agreement, a(n) ________blank mistake has occurred. voidable mutual unilateral enforceable
mutual A mutual mistake is an error made by both parties to the agreement. When both parties are mistaken about a past or current material fact, either can choose to rescind the contract.
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 consequential damages nominal damages special damages compensatory damages
nominal damages In a case where no actual damages resulted from the breach of contract, the court may award the plaintiff nominal damages. The award is typically for $1 or $5, but it serves to signify that the plaintiff has been wronged by the defendant.
an offer is interpreted by the courts on a(a) ___________ standard subjective objective personal judicial
objective Offeror intent is interpreted based upon a(n) objective standard. The courts interpret a party's words and actions the way a reasonable person would interpret them. A party's subjective or hidden intent is not considered by the courts.
For an unliquidated debt, debtors cannot create an accord and satisfaction by sending the creditor a check with "paid in full" written on it even if the debtor fails to pay a lesser amount as agreed, the creditor cannot sue the debtor for payment even if the debtor pays the money agreed to, the creditor may still sue for the balance it believes is owed once the debtor pays the amount agreed on by both the parties, the debt is fully discharged
once the debtor pays the amount agreed on by both the parties, the debt is fully discharged In an unliquidated debt, once the debtor pays the amount agreed on by both the parties, the debt is fully discharged. In an unliquidated debt, the parties can settle for less than the full amount if they enter into an accord and satisfaction. Under this circumstance, the debt is fully discharged.
If a buyer decides to terminate a contract because the seller materially alters a written contract without the knowledge of the buyer, then the contract is discharged by novation. condition precedent. mutual rescission. operation of law.
operation of law. Sometimes a contract may be discharged not by anything the parties do but, rather, by operation of law. The courts wish to uphold the sanctity of contracts. Therefore, if one of the parties materially alters a written contract without the knowledge of the other party, the courts have held that such alteration allows the innocent party to be discharged from the contract.
The ________blank is a legal concept that aims to protect sales or lease contracts that the parties intended to be the final expression of their agreement. mirror image rule parol evidence rule statute of frauds CISG Treaty
parol evidence rule The UCC states that when a written agreement exists that is intended to be the final expression of the agreement, neither party can provide additional evidence that alters or contradicts the written contract. Some exceptions are allowed by the courts.
the pre-existing duty rule means that performance of a duty you are obligated to do under the law is not good consideration an illusory promise may be enforced if the promise was made before consideration was given past consideration is valid if a unilateral contract is involved the mutual exchange of promises is not enforceable.
performance of a duty you are obligated to do under the law is not good consideration According to the preexisting duty rule, performance of a duty you are obligated to do under the law is not good consideration. Performance of an existing contractual duty is also not good consideration. Consideration given before a promise is made is not good consideration under the past consideration rule.
According to the Uniform Commercial Code (UCC), parol evidence is admissible for the sake of clarification if it addresses ________blank dealings between the parties or usages of trade in the business they are operating. contemporaneous concurrent subsequent prior
prior According to the Uniform Commercial Code (UCC), parol evidence is admissible for the sake of clarification if it addresses prior dealings between the parties or usages of trade in the business they are operating.
________blank 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. a tort forbearance a crime promissory estoppel
promissory estoppel Promissory estoppel is one exception to the rule requiring consideration in a contract. Promissory estoppel 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.
___________ contracts contain multiple parts that can each be performed separately and for which separate consideration is offered. detachable dividable severable invisible
severable Severable contracts, also known as divisible contracts, contain multiple parts that can each be performed separately and for which separate consideration is offered.
Jonathan offers to sell Paulette six video poker machines. Before Paulette can accept or reject Jonathan's offer, the state legislature passes a statute that the purchase, sale, and possession of video poker machines is illegal. In this scenario, Jonathan's offer terminates due to which of the following rules? unilateral mistake assumption of risk subsequent illegality of the subject matter lapse of time
subsequent illegality of the subject matter In this scenario, the offer to sell the six video poker machines terminates due to subsequent illegality of the subject matter. If the subject matter of the offer is destroyed or becomes illegal, the offer immediately terminates.
If a buyer breaches a sales contract and the seller decides to resell the goods, the seller can recover: the difference between the original contract price and the profits made through resale. the difference between the resale price and the contract price, plus incidental damages and minus expenses saved. liquidated damages. any out-of-pocket expense incurred.
the difference between the resale price and the contract price, plus incidental damages and minus expenses saved Sellers or lessors are allowed to sell the goods to another buyer or dispose of the goods when the buyer is in breach and the goods have not yet been delivered. The seller/lessor then holds the buyer/lessee liable for any loss. UCC Section 2-706 allows the seller to recover the difference between the resale price and the contract price, plus incidental damages and minus expenses saved.
To recover damages in a breach-of-contract case, the plaintiff must demonstrate that he used reasonable efforts to minimize the damage resulting from the breach. This is referred to as the duty to compensate. the duty to liquidate. the duty to mitigate. the duty to substitute.
the duty to mitigate. Courts do not allow a nonbreaching party to allow her damages to increase when she can use reasonable efforts to mitigate, or lessen, her damages. The nonbreaching party has a duty to mitigate her damages.
A(n) ________blank mistake has occurred if the mistake is the result of an error by one party about a fact that is important in the context of a particular contract. unenforceable unilateral bilateral mutual
unilateral Mistakes may be unilateral if the mistake is the result of an error by one party about a fact that is important in the context of a particular contract. Mistakes may be mutual if the mistake is shared by both parties to the contract. Because courts are generally hesitant to interfere when only one party is mistaken, a unilateral mistake does not generally void a contract.
if an agreement is illegal, the contract is _____________ exculpatory voidable conscionable void
void When an agreement is deemed illegal, courts will label the contract is void.
A contract may be considered ________blank if courts determine that the parties have not given legal assent. discharged illusory void voidable
voidable Without legal assent, a contract may be voidable. A voidable contract can be rescinded or cancelled, resulting in the return of everything transferred under the contract to the original owner.
a revocation is effective ____________ when the offeree receives it only when orally communicated to the offeree when the offeror places it in the mailbox automatically
when the offeree receives it According to the mailbox rule, an acceptance is valid when the offeree places it in the mailbox, whereas a revocation is effective only when the offeree receives it.