BLAW 2
When a party to an agreement owes a duty to perform and fails to fulfill her obligation, she has __________ the contract.
Breached
In terms of contractual capacity, the age of majority is a(n) __________.
Bright-line rule
If the parties have formed a valid contract, the legal analysis then turns to the issue of __________.
Enforceability
Based on a handshake, Tommy has agreed to purchase Jeff's classic 1965 Mustang for $27,000. Is this agreement legally enforceable?
No, because the contract is for the sale of a good for $500 or more.
Which of the following is true regarding specific performance?
One of the most common circumstances in which it is awarded is in real estate contracts. Specific performance is available as a remedy only when the subject matter of the contract is sufficiently unique that money damages are inadequate. Therefore, specific performance is rarely available in a sale of goods case unless the goods are rare or distinctive enough that the buyer cannot reasonably be expected to locate the goods anywhere else. One of the most common circumstances in which specific performance is awarded is in real estate contracts. Most courts consider each parcel of land to be sufficiently unique to trigger specific performance as a remedy.
If contracting parties perform their obligations completely, this is known as __________.
Perfect Performance
A condition __________ requires that an event must occur before performance under a contract is due.
Precedent
Which of the following provides that the acceptance of an offer is generally effective upon dispatch of the acceptance when sent in a commercially reasonable manner, and not when the acceptance is received by the offeror?
The mailbox rule
Suppose that Katrina Yang, owner of IT Home & Office, Inc. (a computer retail store), e-mails computer hardware wholesaler Macro-Hardware, Inc. as follows: "I am interested in purchasing 10 new tablet computers. Please contact me about the price and delivery terms regarding the tablets." Which of the following is true regarding the facts of this case?
This is an invitation to negotiate
A contract is a legally enforceable promise or set of promises.
True
Equitable relief comes primarily in the form of specific performance, injunctive relief, or reformation.
True
Which of the following subjects of a contract breach would most likely result in a court order of specific performance?
a 19th century coin collection
Mutual assent is typically referred to as __________.
a meeting of the minds
A speed limit of 55 miles per hour is an example of a(n) __________.
bright-line rule
A substitute agreement __________.
immediately discharges any obligations under the original contract
For most contracts, the remedy at law will be __________.
money damages
Which of the following is recognized as duress?
threats of a violent act
The defense of __________ gives legal relief to a party who has been induced to enter into a contract through the improper pressure of a trusted relationship.
undue influence
What type of damages compensate the nonbreaching party for foreseeable indirect losses not covered by compensatory damages?
Consequential
What type of damages compensate the nonbreaching party for foreseeable indirect losses not covered by compensatory damages?
Consequential Consequential damages compensate the nonbreaching party for foreseeable indirect losses not covered by compensatory damages.
Which element of a valid contract requires both sides to obtain something of value and to give up something of value?
Consideration The consideration element of a valid contract requires both sides to obtain something of value (legal benefit) and to give up something of value (legal detriment).
A condition subsequent requires that an event must occur before performance under a contract is due.
False
A valid contract has four basic required elements: unilateral assent, consideration, legality of purpose, and capacity.
False
Consideration is a legal doctrine used by courts to protect parties who may lack the ability to understand the terms of an agreement.
False Capacity is a legal doctrine used by courts to protect parties who may lack the ability to understand the terms of an agreement. In other words, before a party can be legally bound to a contract, he must have the capacity to understand and appreciate contract terms.
Legalese is characterized by short, simple sentences written in an active voice.
False Legalese is characterized by long, complex sentences written in a passive voice with many embedded clauses that employ obscure archaic terms such as "hereby," "sayeth," or "witnesseth."
When a party to an agreement owes a duty to perform and fails to fulfill her obligation, she has ratified the contract.
False When a party to an agreement owes a duty to perform and fails to fulfill her obligation, she has breached the contract. In cases where the breach is material, it is called a total breach and the nonbreaching party is entitled to either suspend performance or be discharged from his obligations completely.
When one party uses unequivocal language to repudiate a contract, the other party may __________.
File suit immediatly
Timothy, age 17, purchased a necklace for his girlfriend, Bouakham. He bought the necklace on a three-year installment credit plan from Heart-Shaped Box Jewelers, Inc. After Timothy turned 18, he continued to make installment payments on the necklace according to the terms of his credit plan. What is the likely legal outcome if Timothy seeks to end his contract with Heart-Shaped Box Jewelers, Inc.?
Heart-Shaped Box Jewelers, Inc. will prevail, since Timothy ratified the contract.
Some promises do not support a bargained-for exchange and will not support contractual consideration. Such promises are called __________.
Illusory promises
What are the four basic required elements of a valid contract?
Mutual assent, consideration, legality of purpose, and capacity
When may contracting parties be discharged through operation of law?
The contract is unilaterally altered by a party.
Even if the required elements of a contract are present, the contract must still be the product of genuine assent in order for it to be legally enforceable.
True
If neither party has fully performed, the parties may agree to cancel the contract. This cancellation is known as rescission.
True
Modern courts have held that repudiation occurs when one party makes a definite statement of her intent not to perform.
True
Only the party or parties for whom the offer is intended has/have the power of acceptance and may accept.
True
The law imposes an obligation on the parties in a contract to take appropriate steps to avoid incurring damages and losses.
True
In a contract claim, money damages are primarily limited to __________.
compensatory damages, consequential damages, restitution, and liquidated damages
In terms of contractual capacity, deciding whether an adult is intoxicated is a(n) __________.
open-ended standard
In terms of contractual capacity, deciding whether an adult is lucid is a(n) __________.
open-ended standard
A condition __________ requires that an event must occur before performance under a contract is due.
precedent
Equitable relief comes primarily in the form of __________.
specific performance, injunctive relief, or reformation
Equitable relief comes primarily in the form of __________.
specific performance, injunctive relief, or reformation Although the usual remedy for a breach of contract is money damages, there are some instances when money damages are insufficient to compensate the nonbreaching party or when one party was unjustly enriched at the other party's expense. In these cases, a court may grant equitable relief. This relief comes primarily in the form of (1) specific performance, (2) injunctive relief, or (3) reformation.
The Americans with Disabilities Act (ADA) requires employers to "reasonably accommodate" disabled employees who are "otherwise qualified" to work, unless the employer would experience an "undue hardship" in so doing. The ADA itself does not specifically define what a reasonable accommodation is, what a disability is, what it means for a worker to be otherwise qualified, or what it means for an employer to experience an undue hardship. The ADA is an example of a(n) __________.
Open-ended standard Item23 1/1points awarded ItemScored eBook Item 23 The Americans with Disabilities Act (ADA) requires employers to "reasonably accommodate" disabled employees who are "otherwise qualified" to work, unless the employer would experience an "undue hardship" in so doing. The ADA itself does not specifically define what a reasonable accommodation is, what a disability is, what it means for a worker to be otherwise qualified, or what it means for an employer to experience an undue hardship. The ADA is an example of a(n) __________. Multiple Choice open-ended standard Correct bright-line rule subjective standard arbitrary and capricious regulation Explanation Broadly speaking, open-ended standards are more flexible and less clear-cut than bright-line rules because standards provide a greater range of choice or discretion. Since the Americans with Disabilities Act (ADA) does not specifically define what a reasonable accommodation is, what a disability is, what it means for a worker to be otherwise qualified, or what it means for an employer to experience an undue hardship, it is an example of an open-ended standard.
Frustration of purpose may be used to discharge an obligation if, after the parties enter into an agreement:
a party's principal purpose is substantially frustrated without her fault; some event occurs, when the nonoccurrence of the event was a central assumption of both parties when entering into the contract; and the parties have not otherwise agreed on who bears the risk of such an occurrence.
Most advertisements appearing in the mass media, in store windows, or in display cases are __________.
an invitation for the consumer to make an offer to the seller to purchase the goods at a specified price.
Typically, contracting parties reach mutual assent using a combination of __________.
an offer and an acceptance
Suppose that on December 15, 2020, Manager Yang enters into an agreement with Consultant Anderson to provide operation-consulting services for a period of six months to commence on January 2, 2021. On December 20, 2020, Manager Yang is instructed by upper management to cut costs, so he contacts Consultant Anderson the same day by the following e-mail: "Dear Consultant Anderson: We don't require your services. Sorry.—Manager Yang." As of December 20, 2020, Manager Yang has __________ the contract with Consultant Anderson.
anticipatorily repudiated
In terms of contractual capacity, the age of majority is a(n) __________.
bright-line rule
In a contract claim, money damages are primarily limited to __________.
compensatory damages, consequential damages, restitution, and liquidated damages In a contract claim, money damages are primarily limited to compensatory damages, consequential damages, restitution, and liquidated damages.
Modern courts have held that repudiation occurs in which of the following ways?
An action by the promisor that renders her contract performance impossible
Which of the following is true of strategically qualified attorneys?
They play an active role in helping a businessperson translate the important terms of a deal into the legal terms in a contract.
A lack of genuine assent occurs in cases of __________.
Duress A lack of genuine assent occurs in cases of: (1) misrepresentation; (2) fraud; (3) duress; (4) undue influence; and (5) unconscionability. If any of these five "consent defects" are present, there is no genuine assent and the contract may not be enforceable.
In Waters v. Min Ltd., an appellate court allowed one party to avoid a contract in which she signed over an annuity insurance contract with an immediate value in excess of $150,000 in exchange for a check for $50,000. (The fully annuitized value of the contract would have been over $530,000.) On what basis did the appellate court refuse to enforce the agreement?
Unconscionability The defense of unconscionability gives a court the tools to refuse to enforce a contract where the consideration is grossly unequal. In Waters v. Min Ltd., the court ruled that although there was a written contract the met the elements required under the law, the disparity of value in the exchange, along with other circumstances such as drug dependence and lack of legal advice, was "too hard of a bargain for a court (to enforce)."
For most contracts, the remedy at law will be specific performance awarded by the court to the nonbreaching party.
False
The broad underlying requirement of an enforceable contract is unilateral consent.
False
Nominal consideration is any type of consideration that is expressed as a financial number (for example, $10,000). Group starts
False Contracts may be based on nominal consideration, that is, consideration that is stated in a written contract even though it is not actually exchanged. Most courts have held that the consideration requirement is still met even if the nominal amount is never actually paid so long as the amount is truly nominal (such as $1).
When one party uses unequivocal language to repudiate a contract, the other party may __________.
File Suit immediately When one party uses unequivocal language to repudiate a contract, there is no question that the other party may file suit immediately.
In terms of intoxication as a defense to contract liability, courts use a(n) __________ standard to determine whether __________ that the intoxicated person had sufficient capacity to enter into the agreement.
objective; a reasonable person would have believed
When encountering a situation in which one party is claiming impossibility of performance, the impossibility must be __________ rather than __________ in order for the obligation to be discharged.
objective; subjective After the parties have entered an agreement, the contemplated performance of the obligations may become impossible and, therefore, may be subject to discharge. When encountering a situation in which one party is claiming impossibility of performance, the impossibility must be objective (a reasonable person would consider the obligation impossible to perform) rather than subjective (one party decides unilaterally that performance is impossible) in order for the obligation to be discharged.
When encountering a situation in which one party is claiming impossibility of performance, the impossibility must be __________ rather than __________ in order for the obligation to be discharged.
objective;subjective
A novation is a(n) __________ agreement that involves a substitute __________ rather than a substitute __________.
substitute; third party; promise
From a practical perspective, the main difference between misrepresentation and fraudulent misrepresentation is __________.
the legal remedy available to the innocent party From a practical perspective, the main difference between misrepresentation and fraudulent misrepresentation is the legal remedy available to the innocent party. In cases of misrepresentation, the innocent party has only limited relief in terms of money damages because recovery in most states is limited to actual out-of-pocket damages. In cases of fraudulent misrepresentation, most states classify the contract as void and the innocent party is generally entitled to recover money damages for any losses incurred, plus additional damages for such things as loss of future profits. Some states go so far as to allow an award of treble damages, which are three times the amount of actual damages.
Suppose that Tamara offers to paint Jamal's house next week for $8,000, and Jamal attempts to accept for $7,500. Under the common law:
there is no contract between Tamara and Jamal due to a violation of the mirror image rule. Under the common law, the offeree's response operates as an acceptance only if it is the precise mirror image of the offer. If the response conflicts with the original offer even slightly, the original offer is terminated and the new offer is substituted. This principle is called the mirror image rule. In the subject case, Jamal's proposed price terminates Tamara's proposed price. Jamal has made a counteroffer, and Tamara has the privilege of accepting his offer, rejecting it, or proposing different terms.
Jeffrey and Alexa have entered into a contract for the sale of his classic 1968 Camaro for $20,000. Their contract is based on an exchange of words rather than a writing. This contract is __________ due to the __________.
unenforceable; statute of frauds
Jeffrey and Alexa have entered into a contract for the sale of his classic 1968 Camaro for $20,000. Their contract is based on an exchange of words rather than a writing. This contract is __________ due to the __________.
unenforceable; statute of frauds Some contracts are not enforceable unless they are in writing and satisfy a rule called the statute of frauds. The Uniform Commercial Code (UCC) statute of frauds requires a written and signed contract when the sale of goods is worth more than $500. In the subject case, the statute of frauds prohibits enforcement of the agreement between Jeffrey and Alexa, since it involves the sale of a car (a good) worth more than $500.
In order for a burdensome contract obligation to be discharged due to impracticability, the burden must be both __________ and __________.
unforeseeable; extreme
In general, a contract with a minor is:
voidable at the election of the minor.
The contract provision "This Agreement and the benefits and advantages herein contained are personal to the Member and shall not be sold, assigned or transferred by the Member" is an example of __________.
Legalese
The contract provision "This Agreement and the benefits and advantages herein contained are personal to the Member and shall not be sold, assigned or transferred by the Member" is an example of __________.
Legalese Legalese is characterized by long, complex sentences written in a passive voice with many embedded clauses that employ obscure archaic terms such as ?hereby,? sayeth,? or ?witnesseth.? The subject provision would be clearer if it simply said ?Membership is not transferable.?
For most contracts, the remedy at law will be __________.
Money damages
Which of the following is a legal doctrine use by courts to protect parties who may lack the ability to understand the terms of an agreement?
Capacity
If the parties have formed a valid contract, the legal analysis then turns to the issue of __________.
Enforceability If the parties have formed a valid contract, the legal analysis then turns to the issue of enforceability. A contract is of little use if it is not enforceable in a court of law, so business firms must ensure that their contracts are not only properly formed but also legally enforceable.
Suppose that Ciera rear-ends Dianne's car while Dianne is sitting at a stop light. Dianne claims that her injuries resulting from her accident are substantial, and she demands that Ciera pay her $50,000. Ciera initially offers merely to pay Dianne's medical expenses ($9,760), but she eventually offers to pay $25,000 in return for Dianne's execution of a settlement agreement. As part of the settlement agreement, Dianne must promise not to sue Ciera for her injuries. If the parties consent to the settlement agreement, Dianne's promise not to sue is what type of consideration?
Forbearance Forbearance is refraining from doing something that one has every legal right to do. In the subject case, if Dianne agrees not to sue Ciera, she is giving up her right to pursue civil litigation against Ciera in return for the $25,000 settlement amount. Forbearance is valuable consideration.
Every contract is premised on the notion of __________ dealing.
Good faith
Timothy, age 17, purchased a necklace for his girlfriend, Bouakham. He bought the necklace on a three-year installment credit plan from Heart-Shaped Box Jewelers, Inc. After Timothy turned 18, he continued to make installment payments on the necklace according to the terms of his credit plan. What is the likely legal outcome if Timothy seeks to end his contract with Heart-Shaped Box Jewelers, Inc.?
Heart-Shaped Box Jewelers, Inc. will prevail, since Timothy ratified the contract. In order to legally bind himself to an unperformed contract, the minor must ratify the contract upon reaching the age of majority (upon reaching his 18th birthday). Ratification includes any act that indicates that the minor intends to be bound by his promise; it can be expressed orally, in writing, or it can be implied. Ratification by implication occurs when the minor, after reaching majority, performs the contract (or begins performance)—for example, a minor obligated to repay a loan makes an installment payment after reaching majority. In the instant case, after he turned 18, Timothy continued to make installment payments on the necklace according to the terms of his credit plan. Timothy ratified his contract with Heart-Shaped Box Jewelers, Inc.
A court order to refrain from performing a particular act is known as __________.
Injunctive relief
Suppose that Farmer McDonald offers to sell his John Deere tractor to Luke for $10,000. Farmer McDonald dies, and Luke would like to accept his offer. Can he?
No
Suppose that Farmer McDonald offers to sell his John Deere tractor to Luke for $10,000. Farmer McDonald dies, and Luke would like to accept his offer. Can he?
No If the offeror or the offeree either dies or becomes incapacitated before acceptance, the offer automatically terminates. When Farmer McDonald died, his offer died.
Jason Rutigliano is the owner of Holy Donuts, Inc. in Pittsburgh, Pennsylvania. Rutigliano agrees to pay Officer Kelley $100 per month in return for Kelley's promise to focus his daily patrol on downtown Oak Street, where Rutigliano's store is located (Officer Kelley's normal patrol area includes, but is not limited to, downtown Oak Street). Is the agreement between Rutigliano and Kelley legally enforceable?
No, due to the preexisting duty rule
Jody and Roberto had a written agreement for the sale of a 2017 Porsche Cayenne for $40,000. When the actual purchase date arrived, Jody (the buyer) came to pick up the car from Roberto (the seller) and demanded that Roberto include in the sale an extra set of four expensive wheels worth $6,000. Jody claims that the wheels were part of the $40,000 purchase price, but Roberto disagrees. The written contract says nothing about the extra set of wheels. Jody sues Roberto for breach of contract, and at trial, he seeks to introduce a note handwritten and signed by Roberto to Jody dated one week before the actual date of the contract, indicating "Extra set of four Cayenne wheels to Jody—Value--$6,000—included in contract price." Will the trial court judge likely allow the jury to hear this evidence?
No, since it violates the parol evidence rule.
The first step in determining whether a valid offer exists is analyzing the offeror's __________.
Objective intent The first step in determining whether a valid offer exists is analyzing the offeror's objective intent when making the offer. Courts use the parties' words and actions to decide whether a reasonable person would conclude that the offeror is serious in her intent to contract.
When Bavarian Motor Works (BMW), a German company, opened a production facility in Spartanburg, South Carolina in 1994, a number of its existing suppliers (particularly of component parts) opened facilities there as well. Both BMW and its suppliers depend on each other for their business success, and they have developed strong business relationships over many years. The many contracts that BMW and its suppliers enter into each year are known as __________ contracts.
Relational Some business relationships are long term and create strong interdependencies between the contracting parties. These relationships are likely to yield relational contracts. Due to the parties? stronger interdependence, relational contracts tend to place a higher value on ethical business norms such as trust, loyalty, reputation, and reciprocity.
Which of the following are the three ways in which an offer may be terminated by action of the parties?
Revocation, rejection, and a counteroffer An offer may be terminated by action of the parties in one of three ways: (1) revocation, where the offeror revokes (withdraws) the offer prior to acceptance; (2) rejection, where the offeree rejects the offer; and (3) counteroffer, where the offeree rejects the original offer and proposes a new offer with different terms.
Which of the following is true regarding the amount and type of consideration?
So long as some bargained-for exchange between the parties is contemplated, the contract will be deemed enforceable.
Thomas, an attorney, enters into a contract of representation with Cybil to represent her in a probate matter. Which body of law applies to this contract?
State common law Contracts can be categorized according to the applicable source of law. For example, contracts for services or real estate are governed by state common law and are referred to as common law contracts. In the subject case, the contract of representation between attorney Thomas and client Cybil is a services contract and is therefore governed by state common law.
Which of the following laws limits government interference with contracts and says that "No State shall...pass any...Law impairing the Obligation of Contracts?"
The US Constitution The United States Constitution reflects the important status of contracts in American society. For example, Article 1, Section 10 of the Constitution limits government interference with contracts and says that "No State shall...pass any...Law impairing the Obligation of Contracts."
What typically happens if a contract contains an ambiguous term?
The ambiguity is construed by the court against the interest of the side that drafted the agreement.
Suppose that the minimum wage in North Carolina is $7.25 per hour. (North Carolina recognizes the minimum wage established by federal law, and has not established a higher state minimum wage). Noah, a 18-year-old cook at Cheap Eats, LLC, a Greensboro, North Carolina restaurant, has agreed to work for his employer for $6.75 per hour. (He lives at home with his parents, has minimal expenses, and is just looking for something to occupy his time more than earn income). This agreement is:
Void As a general rule, a contract that violates a statute is unlawful and void and thus will not be enforced by the courts. If a statute (state or federal) declares that a specific type of contract is prohibited, such a contract is absolutely void. For example, minimum wage laws restrict a person's freedom to contract for a lower wage. In the subject case, the contract between Noah and Cheap Eats, LLC is automatically void, since it violates federal minimum wage law.
Timothy contracts with Howard Construction Company to build him a new house for $350,000. In the contract, there is a provision indicating that Timothy must obtain "suitable financing" (defined by the contract as a 3.75 percent annual percentage rate of interest or lower interest rate, for the entire purchase price of the home) before his obligation to purchase the house arises. The "suitable financing" provision in this contract is known as __________.
a condition precedent
Some promises do not support a bargained-for exchange and will not support contractual consideration. Such promises are called __________.
illusory promises Even if a legal detriment is suffered by one party, that alone does not satisfy the consideration requirement. The bargained-for exchange aspect of consideration primarily distinguishes contracts from illusory promises. Some promises do not support a bargained-for exchange and will not support contractual consideration. Such promises are called illusory promises.
Legalese is characterized by __________, __________ sentences written in a __________ voice.
long; complex; passive
