BLAW 321 Final Exam Study Guide

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How to disclaim a warranty?

Shipment Contract

- Requires seller to send goods to buyer, but not required to deliver to destination - Title passes to buyer at tie and place that seller delivers goods to carrier for shipment to buyer

Insurable Interest

- a buyer obtains an insurable interest and specific remedies in the goods by the identification of existing goods as goods to which the contract of sale refers

Consignment

- a delivery of possession of personal property to an agent for sale by agent

Security Interest

- an interest in personal property or fixtures that ensures payment of performance of an obligation

If Loss is placed on Buyer

- buyer is under duty to pay for goods even though he never received them

Fungible Goods

- goods of which any unit, by nature, agreement, or usage of trade, is the equivalent of any othe rlike unit

All Other Sales - Merchants (risk of loss) - EXAM

- if not a merchant, the risk of loss passes to buyer upon tender of goods - if a merchant, the risk of loss remains with the seller until received

Trial Sales

- if something happens to a good while a buyer is "testing it out", the loss remains with the seller

Right to Transfer Title

- if the seller is the rightful owner of goods, or is authorized to sell the goods for the rightful owner

Breach by the Seller (risk of loss)

- if the seller ships nonconforming goods, the risk of loss remains on seller until the buyer has accepted the goods or seller has remedied defect

Power to Transfer Title

- in some situations where a seller is unauthorized to sell the goods for the rightful owner: - you can't sell what you don't have - Good Faith Purchaser - Void Title - no title at all - Voidable title - minor/capacity - Entrusting of Goods to a Merchant

Void Title

- no title - a person claiming ownership of goods by an agreement that is void obtains no title to the goods

Voidable Title

- one acquired under circumstances that permit the former owner to rescind the transfer and revest herself with title (mistake, duress, undue influence, fraud, misrepresentation, etc. )

Good Faith Purchaser

- one who acts honestly, gives value, and takes the goods without notice or knowledge of any defect in the title of his transferor - obtains valid title from one possessing voidable title, even if they obtained it through fraud, etc.

Breach by seller (risk of loss)

- risk of loss remains on the seller until the buyer has accepted goods

Trial Sales

- sales made with the understanding that the buyer can return the goods even though they conform to contract - title and risk of loss remain with seller until buyer approves or accepts goods

If Loss is placed on Seller

- seller has no right to recover purchase price from buyer, and is usually liable to buyer for damages for non-delivery

Goods in Possession of Bailee

- seller's loss if customer hasn't received the goods - risk of loss passes to the buyer with negotiable items

Risk of Loss

- the allocation of loss between seller and buyer where the goods have been damaged, destroyed, or lost without fault of either party

Identification

- the designation of specific goods for a contract of sale

Agreement of Parties (risk of loss)

- the parties, by agreement, may shift the allocation fo risk or divide the risk between them

Sale or Return

- the risk of loss is on the buyer who has title until she revests it in the seller by returning the goods

Contracts Involving Carriers

- the seller bears risk of loss until goods delivered to carrier (shipment contracts) or until they reach the destination (destination contracts)

Physical Movement of Goods

- the title passes at the time and place where seller completes performance with reference to delivery of goods

Definition of Bulk Sales (buying a business)

- transfer is ineffective against any creditor of the transferor, unless certain requirements are met

Special Property Interest (UCC)

- under the U.C.C., the insurable interest right is extended to a buyer's interest in goods that have been identified as goods to which the contract refers. - it enables the buyer to purchase insurance protection on goods that she does not presently own, but that she will own upon delivery by seller

No Movement of the Goods

- when delivery is to be made without moving the goods, title passes 1. either upon delivery of a document of title 2. at the time and place of contracting

Passage of Title

- when the parties intend it to pass, provided the goods are in existence and have been identified - when parties do not specifically agree, the Code explains

Breach by the Buyer (risk of loss)

- where conforming goods have been identified to a contract that the buyer breaches before risk of loss has passed on to him, the seller may treat the risk of loss as resting on the buyer 'for a commercially reasonable time'

Risk of Loss

- where there is a breach

Risk of Loss in Absence of Breach

- where there is no breach, the Code places the risk of loss upon the party who is more likely to have greater control over the goods, is more likely to insure the goods, or is better able to prevent their loss

Destination Contract

-requires seller to deliver goods to a particular location - Title passes to the buyer upon tender of the goods at that destination

Sales of personal property are governed by Article ____ of the Uniform Commercial Code (UCC).

Promissory estoppel is found in Section ____ of the Restatement (Second) of Contracts.

Title

= Ownership - a title cannot pass under a contract for sale until existing goods have been identified as those which the contract refers. - Future goods cannot constitute a present sale - If the buyer rejects the goods, title revests to the seller

A buyer of a business may negotiate a __________ contract clause to keep the seller from running a competing business. A. covenant not to compete B. good faith C. contract in restraint of trade D. None of these are correct.

A commercial building construction company and Sub Shop, Inc. have a contract, which calls for the construction company to build a building with the completion by May 1. If the building is not completed by that date, the contract calls for the construction company to pay $150 per day in damages. The $150 per day is: A. liquidated damages. B. nominal damages. C. an illegal penalty. D. punitive damages.

A noncompete agreement may be held invalid, the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest without overly restricting the employee's ability to find another job. A. reasonable and necessary B. unconscionable C. exculpatory D. usurious

A small sum of damages fixed without regard to the amount loss is known as: A. nominal damages. B. out-of-pocket damages. C. inconsequential damages. D. None of these are correct.

Angelo borrows $2,000 from Maria. Maria electronically transfers Angelo the $2,000. Angelo promises to pay Maria the full amount in four $500 yearly installments of $500. Is such an agreement enforceable? A. Yes, because Maria has fully performed by making the loan. B. No, because the contract exceeds the one-year provision of the statute of frauds. C. No, because this involves the sale of goods. D. None of these answers are correct.

Assume that Jack, Hal, and Sophia enter into a valid contract for the sale of the restaurant and for the covenant not to compete for five years. After three years, Jack starts selling frozen foods in violation of the covenant not to compete. Hal and Sophia sue, and the judge feels that the time restraint in the covenant not to compete was unreasonably long. Which of the following would likely be an appropriate remedy? A. Reformation B. Quasi contract C. Rescission and restitution D. Specific performance

Assume that Jack, Hal, and Sophia enter into a written contract for the sale of the restaurant, including the building and all of its contents. Jack orally tells Hal and Sophia that he wants to keep a certain a mounted fish that is hanging on the wall of the restaurant. The contract contains an integration clause. Jack later goes to get the fish, but Hal and Sophia claim that it was part of the sale. Jack sues. What is the likely result? A. Jack cannot bring in the evidence of the oral agreement because of the parol evidence rule. B. Jack will automatically win the case based on the parol evidence rule. C. Jack could likely rescind the entire contract if Hal and Sophia do not turn over the fish. D. Jack can bring in the evidence of the oral agreement because of the parol evidence rule.

Assume that Jack, Hal, and Sophia orally agree on the sale of the restaurant for $1,000,000. The written contract incorrectly has the price term as $100,000. The contract contains an integration clause. Hal and Sophia pay $100,000, arguing that is what the contract states. Jack sues for $900,000. Which of the following is correct? A. Jack will be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because of the typographical error. B. Jack will be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because the price term is ambiguous. C. Jack will be able to bring in parol evidence of the oral terms because this is a fully integrated contract. D. Jack will not be able to bring in parol evidence of the oral terms even though this is a fully integrated contract because of the typographical error.

Courts allow a minor a certain amount of time to disaffirm a contract when he turns 18 years of age. That time period is: A. a reasonable period of time after reaching the age of majority. B. 30 days from learning of his or her right to disaffirm. C. Ten days from his 18th birthday. D. one year from the date of the agreement.

Courts of equity will not grant specific performance of contracts: A. for a personal services contract. B. for the sale of real estate. C. for the sale of the original manuscript of a rare edition book. D. All of these are correct.

George and Laura make mutual promises to marry, but unknown to Laura, George is already married to Barbara. In the state where George and Laura live, bigamy (marriage to more than one person) is illegal and makes a bigamous marriage void. If Laura sues George for damages and wins, what principle may she use? A. Excusable ignorance. B. Duress. C. Unconscionability. D. None of these answers are correct.

In the case of Merritt v. Craig, the plaintiff sued for a rescission of the contract along with: A. compensatory and punitive damages. B. lost profits. C. nominal damages. D. All of these are correct.

Jacqueline entered into an employment contract with The Umbrella Corporation that contained a covenant not to compete, as well as other provisions involving salary, a severance package, holiday compensation, and other employment-related benefits. If the court finds only the covenant not to compete illegal, what effect will such a ruling have on the remainder of the contract? A. Because this is a partially illegal contract, the remainder of the contract may be enforced. B. Because the covenant not to compete is illegal, the entire contract is illegal. C. Because this is a partially illegal contract, Jacqueline is entitled to liquidated damages on the remainder of the contract. D. None of these answers are correct.

Jayden, a U.S. citizen, contracts with a Canadian life insurance company for $100,000 dollars of coverage. The insurance company sends Jayden an e-mail, which Jayden signs, scans, and returns. Will a court entertain parol evidence on whether the parties intended for the policy to be valued in Canadian dollars or U.S. dollars? A. Yes, because the intent of the parties is uncertain. B. Yes, because of the Foreign Corrupt Practices Act. C. No, because the parties should have been more specific about the currency issue and are stuck with what they have signed. D. No, the court will look to the document to determine the parties' intent.

Mabel is 88 years old and under the court ordered legal guardianship of her daughter. One day Mabel receives a telephone call from a health insurance salesman and purchases a $400-a-month Medigap insurance policy. The contract is: A. void. B. voidable. C. valid. D. unconscionable.

Madeline, age 17, ordered a pair of diamond earrings on the installment plan. She paid $50 every month until she turned 18, the age of majority. The next day, she sold them to Samantha and disaffirmed the contract. What is the result? A. Samantha is still liable because selling the earrings amounted to a ratification. B. Samantha is not liable because earrings are not necessaries. C. Samantha is still liable because she used the earrings. D. Samantha is still liable since she had to disaffirm before her 18th birthday.

Maxine signs a contract to sell her townhouse to Jackson for $120,000. Two days later Maxine changes her mind after discovering that she could have sold the property to another buyer for an additional $50,000. Jackson sues and asks the court to have the property conveyed to him at the price of $80,000. Jackson is seeking: A. specific performance. B. liquidated damages. C. valid tender. D. punitive damages.

One issue before the court in Payroll Advance, Inc. v. Yates case was: A. whether the covenant not to compete between a check cashing company and its former employee was reasonable in scope and duration. B. whether Yates was trying to recruit clients away from Payroll. C. whether there was any consideration to Yates for signing the noncompetition provision. D. whether Yates's new employer was in competition with Payroll.

One issue before the court in the First State Bank of Sinai v. Hyland case was: A. whether the contract between Hyland's father and the Bank was void due to alcohol-related incapacity. B. whether the bank knew that Mervin Hyland was incapacitated by liquor. C. whether a person committed to alcoholism treatment is automatically incompetent. D. whether the note was discharged in Randy Hyland's bankruptcy.

Sean and John are business associates. At dinner, Sean has only one beer over the course of three hours. Sean is a light drinker and normally feels severely intoxicated after three beers. At the end of dinner, Sean and John enter into a multi-year agreement worth potentially millions of dollars. Later, if Sean attempts to void the contract on the basis of intoxication and loses, what would be the reason for it? A. Sean's slight intoxication did not destroy his capacity to contract. B. Sean's intoxication was unable to understand the nature and consequences of his actions. C. Sean was without reason or understand when entering into the contract. D. Intoxication is insufficient to void a contract.

Sherry owns an apartment building. Sherry and Robert agree that Robert will rent one of Sybil's apartments, beginning immediately, for a period of six months. Under the statute of frauds rule, does this lease need to be in writing to be enforceable? A. Yes, because it involves an interest in land. B. No, because it clearly will be performed within one year, if at all. C. Yes, because it involves a promise to pay the debt of another. D. No, because it does not involve an interest in land.

Sherry owns an apartment building. Sherry and Robert orally agree that Robert will rent one of Sybil's apartments, beginning immediately, for a period of one year. After one year, Robert seeks to rescind the rental agreement with Sherry on grounds that it did not comply with the Statute of Frauds. Will Robert be successful? A. No, both parties have fully performed under the oral contract. B. No, unless Robert invoked the proper provision of the statute of frauds. C. Yes, because this contract involved interest in land. D. None of these answers are correct.

Shirley leases Tom a defective piece of machinery that causes $50,000 in property damage and $100,000 in personal injuries. In addition to damages for loss of value and incidental damages, how much can Tom recover as consequential damages? A. $150,000. B. $100,000. C. $50,000. D. None of these answers are correct.

Veronica has not been declared incompetent by a court, but she suffers from delusions that a Martian visits her every evening at 6 p.m. to tell her that the future of the human race depended on her buying a tract of land in Lackawanna County. Today, Veronica entered a contract to purchase a large tract of land in Lackawanna County on the Martian's advice. Which of the following statements is true about the contract? A. The contract to purchase the land is voidable, because Veronica has not been adjudicated insane, and possible could still have understood the contract. B. The contract to purchase the land is valid, because the seller had no knowledge that the Martian suggested the purchase. C. The contract to purchase is void, because it was made on a Martian's advice. D. None of these answers are correct.

Vinny asks if he should force Spud to finish the job. Could Oscar get a court order requiring Spud to actually build the display? A. No, specific performance is not allowed in this case, only money damages. B. Yes, he was under contract to finish the display, so a court could order him to specifically perform. C. No, specific performance is not allowed in this case because Spud has another job. D. No, specific performance is an equitable remedy, and equitable remedies are never allowed in contract actions.

When a judge enters a very small order for damages, when the plaintiff has not sustained or cannot prove any injury or loss for a breach of contract action, she has entered an order for: A. nominal damages. B. exemplary damages. C. mitigated damages. D. compensatory damages.

When it is said that a contract made by a minor is voidable, which of the following is true? A. While still a minor, he can disaffirm the contract and return the property. B. At any time before he turns 21, he can disaffirm the contract and return the property. C. Within 72 hours of the contract a minor can disaffirm the contract. D. None of these are correct.

Which of the following is true regarding noncompliance with the statute of frauds? A. The basic legal effect under the statute of frauds and the UCC is the same. B. The statute of frauds applies to executed and executory contracts. C. A party to a contract which was unenforceable because of the statute of frauds but who relied upon the contract may not recover in restitution the benefits he conferred on the other party. D. The doctrine of promissory estoppel cannot displace the requirement of a writing under a statute of frauds.

Which of the following promises does have to be evidenced by a writing in order to be enforceable? A. Jack's agreement with Steve to sell his condominium for $150,000. B. Sarah's promise to work for Angie for ten months. C. Sam and Alicia decide to get married. D. Karen's agreement with Sandy to buy her sewing machine for $200.

Which of the following would generally be considered to be a regulatory licensing law? A. A statute requiring that doctors be licensed after finishing medical school. B. A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. C. A statute requiring plumbers to be licensed, but not establishing any standards of competence. D. A statute that requires flag makers to register with the state before selling flags.

Which of the following is/are correct with regard to conditions subsequent?

A "sale or return" contract is an example of a contract with a condition subsequent.

The Uniform Commercial Code would be applied in which of the following situations?

A contract to buy living room furniture

Which of the following is correct with regard to a contract?

A person who deposits money in a bank account has entered into a contract with the bank.

An express warranty within the meaning of the Code is created by which of the following?

A sample, description, or promise.

An express warranty within the meaning of the Code is created by which of the following?

A sample; a description; a promise.

What must a seller do to discharge her obligation to tender delivery of goods under a shipment contract?

A seller under a shipment contract is required to (1) deliver the goods to a carrier; (2) make a contract for their transporta- tion that is reasonable according to the nature of the goods and other circumstances; (3) obtain and promptly deliver or tender to the buyer any document necessary to enable the buyer to obtain possession of the goods from the carrier; and (4) promptly notify the buyer of the shipment.

Novation

A three-way agreement in which the obligor transfers all rights and duties to a third party

Which of the following is NOT always necessary in order for a valid contract to be formed?

A writing

Which of the following is an informal contract?

A written contract for the sale of a 5-acre tract of land.

One issue before the court in Vanegas v. American Energy Services case was: a. whether AES was bound by a promise to pay at-will employees 5% of the value of the sale of the company if they continued their employment after the sale. b. whether the employees who remained with AES were sufficiently compensated for their work. c. whether AES would have failed had the original employees not continued their employment. d. whether the sale of the company was contingent on the continued presence of the Vanegas and the other original employees.

BigOil promises Gasnow as many barrels of oil as they shall chose at $50 per barrel. In this case: a. BigOil has made an illusory promise. b. BigOil's promise is legally sufficient unless BigOil knows they are running out of oil. c. BigOil has made a conditional promise which is not sufficient to form consideration. d. BigOil's promise is legally inadequate and the courts will therefore not enforce it.

A. BigOil has made an illusory promise

In the case of Denney v. Reppert,did the court allow the employees of a bank to collect a reward, because they supplied information that led to the arrest and conviction of a man who robbed their bank? a. No, the employees were under a pre-existing duty to the bank and to the public. b. No, they didn't physically arrest the robber. c. Yes, the reward was offered and they had the information that was needed to identify the robber. d. Yes, the bank wants to encourage other employees to step forward in the future.

A. No, the employees were under a preexisting duty to the bank and to the public

How does an intoxicated person ratify?

Agree once they are sober and are mentally capable

Under a shipment contract, the seller is required to do which of the following?

All of the above

A "merchant" is defined as a person who

All of the above.

Quasi-contract

An obligation or contract imposed by law (a court), in the absence of an agreement, to prevent the unjust enrichment of one party

Anita, who is a tailor, agrees to sew a suit for Bryan, who promises in return to pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable.

Anita has no recourse against Bryan, because she agreed to the subjective standard.

When can a minor disaffirm a contract?

Any time during minority and a reasonable period of time after reaching majority

Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other sources.

Arnold's duty to deliver the chairs is discharged by the destruction of the factory.

A court of equity, at its discretion, may grant a(n) __________ to command the other party to refrain from doing a specific act. A. restitution. B. injunction. C. specific performance. D. All of these are correct.

A given agreement may not violate any statute but may still be so offensive to society that courts feel that enforcing the contract would be: A. fraudulent. B. contrary to public policy. C. illegal lobbying. D. unfair to merchants.

A minor may avoid or __________ a contract by any expression of an intention to repudiate the contract. A. ratify B. disaffirm C. incapacitate D. restitute

A(n) __________ is a measure designed to raise money by requiring the purchase of a license. A. exculpatory clause B. revenue license C. regulatory license D. usury statute

Amy is Tina's sister and executor of Tina's will. In administering Tina's estate, Amy recognizes that Tina's estate will not have enough funds to pay all of Tina's debts. Amy orally promises to pay Seth, one of Tina's creditors, that she will personally pay all of Tina's debts in full. Is such a promise enforceable? A. Yes, because Seth is one of Tina's creditors and deserves to be rightfully paid. B. No, such promises of an executor of a decedent's will falls under the statute of frauds. C. None of these answers are correct. D. Yes, unless Tina promised to pay Seth before her death.

Assume Jack was drunk during the contract negotiations and signing, and that the contract was voidable due to Jack's intoxication. Two years later after the signing, Jack sues to undo the contract. Which of the following would be Hal's and Sophie's best defense against this action? A. That the contract is void. B. That Jack, by waiting two years, ratified the contract. C. That Jack was voluntarily intoxicated at the time of the negotiations and signing of the contract. D. That Jack was intoxicated very often.

Bernie promises to build an office complex for Donald for $1 million by February 1. Bernie breaches the agreement by finishing construction by March 1. As a result of the breach, Donald lost $100,000 for the month lost, but saved expenses of $25,000. How much is Bernie liable for? A. $100,000 B. $75,000 C. $1 million D. Nominal damages.

Buyer and Seller have entered into a contract for the sale of several goods worth hundreds of thousands of dollars. In the contract, seller includes an "as is" warranty clause that is in extremely small print and inconspicuous. If the court finds this clause procedural unconscionable, what would be the reason? A. Such a clause is oppressive. B. Seller obscured this warranty clause. C. Such a clause is grossly unfair because it takes away any legal defenses that Buyer has. D. None of these answers are correct.

Compensatory damages are designed to place the injured party in a position as good as the one he would have been in had the other party performed, and are known as: A. mitigation damages. B. consequential damages. C. punitive damages. D. All of these are correct.

Contracts for the sale of goods priced (starting) at _____ or more must ordinarily be in writing under UCC Section 2-201. A. $50 B. $500 C. $1500 D. $1,000

Every adult is presumed to have capacity unless: A. they cannot read and write. B. it is proven that capacity is lacking or there is status incapacity. C. they understand the full legal meaning of the contract being made. D. there was a clause of the contract they did not understand.

Examples of an enforceable oral contract is/are: A. an oral promise by an executor to guarantee payment of a decedent's debt. B. an oral agreement to substitute the place of closing a land contract. C. an oral agreement to extend an employee's contract for six months to a total of two years. D. All of these are correct.

Fred operates a fledgling remodeling business and is in desperate need of a certain type of drywall. He obtains the material from Megaworks, but is charged a grossly unreasonable price and is forced to buy other material he does not need. In view of the buyer's unequal bargaining power and unreasonable terms of the contract, this may be a case of: A. discrimination. B. substantive unconscionability. C. supervening illegality. D. restraint of trade.

Marilyn sells her highly successful travel agency to Adelle. In the sales contract, Marilyn agrees never to open a travel agency in the state. Which of the following best describes this contract clause? A. Binding as fair protection. B. Unenforceable as a violation of public policy. C. Valid as a reasonable restraint on trade. D. Void as an illegal violation of a statute.

Mary is a person who experiences hallucinations and other psychotic episodes. She has been adjudicated incompetent and a guardian has been appointed to care for her. Any contracts from this point forward are: A. voidable. B. void. C. valid. D. enforceable.

On his 17th birthday, David makes a contract to purchase a moped. In a state in which the age of majority is 18, which of the following actions would be a ratification of the contract? A. One week before his 18th birthday, David telephones the seller and says, "I intend to keep my promise to you in our contract." B. Three days after his 18th birthday, David telephones the seller and says, "I intend to keep my promise to you in our contract." C. Before his birthday David behaves as though he intends to be bound by the contract, but two days after his 18th birthday, he calls the seller and says, "The deal's off." D. None of these answers are correct.

One issue before the court in Arrowhead School District No. 75, Park County, Montana v. Klyap case was: A. whether Klyap was constructively discharged from his job for the Arrowhead School District. B. whether a liquidated damages clause in an employment contract was enforceable as a reasonable forecast of the harm caused. C. whether Klyap made a good decision in changing jobs. D. whether Klyap was acting in good faith.

Ryan, a 15-year-old, negligently crashed into Crystal's car and caused extensive damage and severely injured Crystal. Which statement is correct? (p. 7) A. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages unless he has automobile liability insurance. B. Ryan cannot disaffirm liability for his negligence. C. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages because he is a minor. D. Ryan can disaffirm liability for the damage to Crystal's car and resulting damages unless he was intoxicated.

Seller agrees to sell land to Buyer for $50,000. After Buyer makes a payment of $25,000 to Seller, Seller wrongfully refuses to transfer title. If Buyer sues Seller for breach of contract and the court awards buyer $25,000, what does this figure represent? A. Foreseeability. B. Restitution. C. Injunction. D. Specific Performance.

Seller orally agrees to sell land to Buyer for $50,000. Buyer pays three monthly installments of $10,000 to Seller before Seller repudiates the oral contract, and argues that the contract is unenforceable under the statute of frauds. What remedy, if any, is buyer entitled to against Seller? A. None, the statute of frauds controls, and Buyer loses $30,000. B. Restitution. C. Injunction. D. Specific performance of the land.

Since Spud cancelled on short notice, can Oscar obtain punitive damages from him? A. Yes, unless Spud can prove that the other job was an emergency. B. No, since breaching a contract is usually held to be a business decision (not an act of moral turpitude), punitive damages are very rarely awarded in contract cases. C. Yes, if Oscar can show that Spud made more money on the other job. D. Yes, punitive damages are designed to punish, and are always available in contract disputes.

The breaching party is not liable for loss that was not __________ at the time of entering into the contract. A. mitigated B. out-of-pocket C. liquidated D. foreseeable

The court in Anderson v. McOskar Enterprises, Inc .ruled on which of the following issues? A. Whether the injury Anderson suffered stemmed from a pre-existing medical condition. B. Whether the exculpatory clause in the Curves contract released the club from liability for negligence. C. Whether Anderson was contributorily negligent in her operation of the Curves equipment. D. Whether Anderson had a medical release from her doctor to use the equipment at Curves.

The court, in ruling on Dunnam v. Burns,applied what reasoning to the matter? A. The court noted that agreements to pay a set amount, rather than an interest rate, are per se usurious. B. The court reasoned that a document that contains an absolute obligation to repay a loan together with interest in excess of the allowed amount is usurious on its face. C. The court reviewed the contract and found that Dunnam drafted the document. D. The court observed that Dunnam's default on the loan waived any objection to the usurious interest rate.

The customs and __________ or commercial activity to which the contract relates may be used to interpret the terms of a contract. A. course of dealing B. usage of trade C. course of performance D. extrinsic set of evidence

The parties may stipulate in their contract that a certain amount of __________ should be paid in case of a breach. A. nominal damages B. liquidated damages C. mitigated damages D. breach

The type of substance ingestion that could lead a court to find one lacking in capacity is: A. the person is a chronic alcoholic. B. because of mental impairment, the person does not comprehend that a contract is being made or understand its consequences. C. the person is a drug addict. D. All of these are correct.

Wendy is taking a prescribed medication which makes her drowsy and inattentive. If she enters into a contract when she is in that condition, the contract: A. would be void. B. would be voidable if, when she makes them, she is unable to comprehend the subject, nature, and consequences of the contracts. C. would be void only if the medication impaired her ability to act in a reasonable and rational way. D. would be unaffected as long as she took the medication exactly as prescribed by her doctor.

When the parties express their contract in a writing that is intended to be the complete and final expression of their rights and duties, the __________ excludes prior oral or written negotiations or agreements of the parties? A. promissory estoppel rule B. parol evidence rule C. statute of frauds D. the possibility test

__________ means contrary to the dictates of the conscience; unscrupulous or unprincipled; exceeding that which is reasonable or customary; inordinate, unjustifiable. A. Usury B. Unconscionable C. Exculpatory D. Illusory

In some situations the courts will enforce new promises to perform an obligation that originally was not enforceable. Which of the following would be that sort of promise? a. An illusory promise. b. A new promise to pay a debt barred by the statute of limitations. c. A promise to supply all of the materials a manufacturer will need for the production of a certain item for a specified period of time. d. In the majority of states, a promise by a father to pay someone who rendered emergency services to his injured son before the father had arrived at the accident scene.

B. A promise to pay a debt barred by the statue of limitations

The fact that the consideration turns out to be disappointing __________ the binding character of the contract. a. does affect b. does not affect c. sometimes affects d. None of these are correct.

B. Does not affect

Jamal negligently injures Gayle, for which Gayle may recover damages in a tort action. Jamal promises Gayle $10,000 if Gayle forbears from bring suit against him. Gayle accepts by not suing. What legal detriment, if any, has Gayle incurred in this case? a. Gayle has not incurred a legal detriment. b. Gayle promised to refrain from bring suit against Jamal. c. Gayle's injuries are the legal detriment that she suffered. d. Gayle had no legal right to sue Jamal for the injuries he caused, prior to the $10,000 payment.

B. Gayle promised to refrain from bring suit against Jamal

__________ means doing that which the promise was under no prior legal obligation to do. a. Bargained-for exchange b. Legal detriment c. Bilateral d. illusory

B. Legal Detriment

As an exception to the rule on courts inquiring as to the adequacy of the consideration, a court will take evidence to establish: a. one party clearly has the better of the deal. b. one party claims to have been defrauded. c. one party has more business experience than the other. d. one party shows a much lower price nationally-advertised on television.

B. One party claims to have been defrauded

Billy freely agrees to sell Roger a painting for $100. Billy thinks the painting is ugly and a piece of junk. Neither Billy nor Roger are art aficionados or knowledgeable about art. After the sale is made, however, Billy discovers that the painting is worth $10,000. If Billy tries to void his agreement for lack of consideration with Roger and loses, what would be the best reason under these facts? a. Billy was under no duress at the time of the sale. b. The consideration, although disproportionate, is nevertheless adequate because he was done freely. c. Billy made a unilateral mistake. d. None of these are correct.

B. The consideration, although disproportionate, is nevertheless adequate because he was done freely

Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation.

Because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any compensation. b. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages.

Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora.

Bob's obligation to return the money is quasi contractual.

The doctrine of unconscionability has evolved through its application by the courts to include:

Both (a) and (b) are correct.

Absent an agreement, where is tender of delivery due?

Buyers place of business --> residence

A __________ is an essential element for a promise or agreement to binding. An agreement without this is unenforceable and contrary to public policy. A. licensing statute B. past consideration C. legal objective D. All of these are correct.

Alfie enters into a contract to give Ezra the right of first refusal on a tract of land owned by Alfie. Alfie subsequently offers the land to Frank without first offering it to Ezra. An appropriate remedy for Ezra to seek would be: A. reformation. B. punitive damages. C. injunction. D. liquidated damages.

At time, a written contract does not correctly state the agreement already made by the parties. When this occurs, either party may seek to have the court correct the writing to state the agreement actually made. This rewriting is known as: A. specific performance. B. injunction. C. reformation. D. rescission.

Because of his winning record at another school Albert signed a contract to coach wrestling for Sigma High for a period of five years. After three years he is offered and accepts an assistant coaching position at Crosstown University. If they sue Albert, Sigma High cannot ask for which remedy? A. Payment of incidental damages. B. Payment of consequential damages. C. Specific performance of his contract. D. Payment of compensatory damages.

Buyer and Seller have entered into a contract for the sale of several goods worth hundreds of thousands of dollars. In the contract, which was prepared by Seller, Seller included a clause that stated conspicuously "If Seller sues Buyer for any and all claims related to this contract, Buyer hereby waives all available defenses in law and equity." If the court finds this clause substantively unconscionable, what would be the reason? A. This was unfair negotiation process. B. Seller obscured this waiver clause. C. Such a clause is grossly unfair because it takes away any legal defenses that Buyer has. D. None of the answers are correct.

Carl agrees to build a hotel for Jerry by December 1. Both parties agree that if Carl fails to meet his December 1 deadline, he would be obligated to pay $10,000 per day in damages beginning December 2 for each day it takes to finish the hotel past the December 1 deadline. The $10,000 per day damages represent: A. Specific Performance B. Restitution. C. Liquidated Damages. D. Punitive Damages

For the issue of capacity, a court will examine whether a party to the contract lacked contractual capacity when: A. the time set for performance of the contract. B. the time the value of the bargain becomes clear. C. the time the contract was made. D. the time the plaintiff expresses dissatisfaction with the contract terms.

If Vinny finishes the job, and it costs more money than the original contract with Spud, who is liable for the difference in cost to Oscar? A. Oscar, since he is in privity of contract with Vinny. B. Oscar, since the damages would not be mitigated. C. Spud, since Oscar is trying to mitigate his damages. D. Spud, if Oscar can prove Spud will make more money on his other job

In a __________, the parties stipulate that one shall win and the other lose depending on the outcome of an event in which their only interest is the possibility of such gain or loss? A. monopoly B. usury C. wager D. All of these are correct.

Juan sold his gas station business in San Antonio, Texas to Fred and promised Fred not to enter the gas station business in Texas for the next twenty-five years. If the court finds this agreement unreasonable and invalid, what grounds would support the court's decision. A. Unreasonable in time only. B. Unreasonable in geography only. C. Unreasonable in both time and geography. D. None of these answers are correct.

Once __________ a minor cannot avoid a contract. A. processed B. signed C. ratified D. voidable

One issue before the court in Kalas v. Cook case was: A. whether $24,599.38 was a reasonable sum of money to charge for the books and pamphlets in question. B. whether Kalas should have sold the books to mitigate the amount owed in this case. C. whether an oral contract for sale of specially manufactured goods was sufficient under the UCC. D. whether this transaction fell under the laws of the UCC.

One issue before the court in the In Re The Score Board, Inc. case was: A. whether the contract with Scoreboard supplied sufficient consideration for Bryant's autographs. B. whether the deal made for Bryant to sign autographs was a good opportunity. C. whether Kobe Bryant, by his actions, ratified a contract with Score Board after reaching the age of majority. D. whether a person playing in the NBA needed protection during the time before he reached the age of majority.

Sherry owns an apartment building. Sherry and Robert agree in writing that Robert will rent one of Sybil's apartments, beginning immediately, for a period of one year. Outside of the written contract, Sherry orally promised Robert that the apartment would have wooden floors and not carpet. Shortly after moving in, Robert discovers that only the front entrance to the apartment has wooden floors, and the remainder of the apartment contains carpet. If Robert seeks to void the rental agreement with Sherry on the grounds that Sherry committed misrepresentation by telling him that the entire apartment had wooden floors. If Sherry invokes the parol evidence rule, will she be successful? A. Yes, the rental agreement was in writing and no parol evidence regarding wooden floors may be admitted. B. Yes, Robert should have requested the wooden floors in writing. C. No, because Robert is alleging misrepresentation. D. None of these answers are correct.

Suppose that Jack, Hal, and Sophia enter in to a contract for the sale of the business. Jack was drunk at the time that the negotiations took place, and at the time of the signing of the contract. Is the contract valid? A. The contract is voidable only if Jack's intoxication was involuntary. B. The contract is void. C. The contract is valid unless Jack did not know he was entering into the contract, or lacked the mental capacity to comprehend its nature. D. The contract is voidable by any party.

Suppose that Jack, Hal, and Sophia enter into a contract for the sale of the restaurant. Hal and Sophia inventory the restaurant and find that there is a case of bald eagle meat in the refrigerator, which is illegal to possess. This was unknown to them at the time of the agreement. Which of the following is true? A. The contract would likely be voidable by Jack. B. The contract would be void since the parties are in pari delicto. C. The illegal part of the contract would be severed from the contract for the sale of the business, which would be enforced. D. The contract would be void due to illegality.

The sole hospital in a city offers a standard patient care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called: A. exculpatory. B. a usurious contract. C. an adhesion contract. D. an illegal restraint of trade.

What is the effect of slight intoxication on the capacity of a person to enter into a contract? A. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. B. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. C. Slight intoxication will not destroy one's contractual capacity. D. To make a contract voidable, a person need not be so drunk that he is totally without reason or understanding.

When a minor's guardian furnishes her with an adequate wardrobe would a new hoodie be a necessary (in the majority of states)? A. Yes, the hoodie is a necessary because it is clothing. B. Yes, it is a necessary if the minor decides she needs it. C. No, necessaries are items not provided by the guardian. D. No, the minor is not stuck with clothing of the guardian's choice.

When the __________ of the promisor's promise to pay the debt of another is to benefit the promisor, the statute of frauds is not applicable. A. promisory estoppel B. probability C. main purpose D. parol evidence

When the court ruled on Alcoa Concrete & Masonry v. Stalker Bros. what law did the court use for its ruling? A. The court based the ruling on the law of contractual interpretation. B. The court examined the matter under the laws of unjust enrichment. C. The court reviewed the matter under the case law and statutes in the state on enforcement of the contracts of unlicensed contractors. D. The court determined whether Alcoa had a construction lien on the property involved in the jobs assigned by Stalker.

When the damages sustained by the plaintiff can be measured in monetary terms, specific performance will be: A. accompany an order for monetary damages. B. ordered. C. refused. D. All of these are correct.

Which of the following is not a collateral promise? A. A mother tells the gas station to extend $1,000 worth of credit to her son over the school year and says, "If he doesn't pay, I will." B. Brett promises Denny's bank that if Denny cannot pay his bills, Brett will. C. A father tells Best Computer to deliver a laptop to his son and says, "Send me the bill. I'll pay for it." D. All of these are correct.

__________ damages are ordered in excess of actual loss and are imposed for the purpose of punishing the defendant. A. Nominal B. Consequential C. Punitive D. Compensatory

__________ is a set of oppressive or grossly unfair contract terms or exclusions. A. Procedural unconscionability B. An exculpatory clause C. Substantive unconscionability D. Tortious conduct

__________ is when money is loaned at a higher rate of interest than the law allows. A. Lotteries B. In pari dilecto C. Usury D. Adhesion

All of the following will serve as adequate consideration except? a. Forbearance to do an act. b. Performance of services. c. An illusory promise. d. A promise to perform

C. An illusory promise

A convenience store robbery has occurred. The merchant's association has offered a $2,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming they are entitled to the money. Which of the following people would not be eligible for the reward? a. A customer of the store. b. An off-duty game warden from a county other than the one where the arrest occurred. c. An on-duty sheriff's deputy in the county where the arrest occurred. d. All of these individuals would be eligible.

C. An on-duty sheriffs deputy in the county where the arrest occurred

__________ is what each party to a contract gives up to the other in making their agreement. a. Contract under seal b. Promissory estoppel c. Consideration d. None of these are correct.

C. Consideration

__________ is an unenforceable promise under the law of contract because of a lack of consideration. a. Fraud b. Mutual mistake c. Gift d. Justifiable reliance

C. Gift

Ned's father orally promises to give him a car for his twenty-first birthday. Using the rule in most states, can Ned legally enforce this promise? a. Yes, Ned can sue his father based on the promise. b. Yes, Ned can sue his promise based on the statute of frauds. c. No, a gratuitous (or gift) promise is unenforceable. d. No, Ned should have gotten the promise in writing.

C. No, a gracious (or gift) promise is unenforceable

The Acme Corporation contracts with the ToysandMoretoys Corporation to sell to ToysandMoretoys its entire production. After signing the agreement, if Acme increases its production from one shift to two shifts will ToysandMoretoys have to buy all of the doubled production? a. Yes, they take the risk that Acme will increase production. b. Yes, they are lucky to get the chance to handle the product exclusively. c. No, there are good faith limitations on output contracts. d. No, ToysandMoretoys always has the right to limit how much they buy.

C. No, there are good faith limitations on output contracts

A contract based on __________ is not enforceable. a. legal detriment b. legal benefit c. past consideration d. unequal consideration

C. Past consideration

Which of the following would indicate a shipment contract?

C.I.F.

What is required for a valid offer?

Communication, intent, definiteness

Which of the following is generally NOT a defense to a claim against a manufacturer under 402A?

Contributory negligence on the part of the plaintiff.

A minor can avoid a contract to purchase a car if: A. the car has been destroyed. B. the car has been damaged. C. he grows tired of it. D. All of these are correct.

Alma enters into a contract while drinking a highly intoxicating beverage that causes memory loss. The resultant contract is: A. always unenforceable. B. always void. C. always enforceable. D. voidable if Alma can establish she was so intoxicated she didn't understand the nature and consequences of her actions and/or was unable to act in a reasonable manner.

An injured party who rescinds a contract after having performed services may recover the reasonable value of the performance rendered as: A. foreseeability. B. certainty. C. mitigation. D. restitution.

Assume at the end of the meeting between Jack, Hal, and Sophia, they orally agree to enter into three separate contracts. One contract is for the sale of the intellectual property of the restaurant itself for $1,000,000. The second contract is for the sale of the building that the restaurant is located in for $250,000. The third contract is for the original sign that was outside the restaurant that Jack currently has in his garage, for $400. Which of these agreements violates the Statute of Frauds? A. The sale of the building and the sale of the intellectual property. B. The sale of the intellectual property and the sale of the sign. C. All of the agreements violate the Statute of Frauds. D. The sale of the building only.

Assume that a contract was entered into for the sale of the restaurant, and that the sale included the covenant not to compete. Which of the following is true? A. The contract would be void, as covenants not to compete are a restraint of trade. B. The contract would be void as covenants not to compete are only valid when they are part of a valid employment contract. C. The contract for the sale of the business would be valid, but the covenant not to compete will be void. D. The covenant not to compete must be reasonable in geographic scope to be valid.

Bertha was an alcoholic, and one weekend while she was extremely intoxicated, her son took her to the store and had her purchase an expensive computer. If Bertha wishes to rethink this contract, Bertha: A. may return the computer, but cannot get her money back. B. may at any time keep the computer, but doesn't have to pay for it as the store should have known better than to do business with an intoxicated customer. C. cannot ratify the contract it is void and without meaning. D. must sober up and ratify the contract as a whole.

Carlos orally agrees to sell his house to Andy for $50,000. Can Andy enforce this agreement in court? A. Carlos must sell the real estate to Andy because of Andy's right to specific performance applicable to sales of real estate. B. Andy can enforce the agreement to sell the house because they did not use a realtor. C. Carlos can enforce the sale of the land against Andy, but Andy cannot enforce the contract. D. Andy cannot enforce the agreement without a written contract signed by Carlos.

Cinnful Buns, Inc. entered into a contract with Darius under the terms of which Darius would receive $10,000 if he stole the trade secret recipe from the leading competitor of Cinnful Buns. Darius performed his end of the agreement by delivering the recipe. Cinnful Bunns now refuses to pay Darius for his services. Darius has this option, he: A. may recover based upon the express contract of the parties. B. may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of Cinnful. C. will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by Cinnful. D. will be unable to recover, because this is an illegal contract.

General contract provisions of a writing must: A. specify the parties to a contract. B. specify the subject matter and essential terms. C. be signed by the party to be charged or his agent. D. All of these are correct.

If the display does not get built, and the sale does not happen, can Oscar recover the $3,000 profit he is going to lose? A. No, lost profits are never allowed to be recovered because they are speculative. B. Yes, but only if Oscar can show that Spud's breach was not due to a true emergency. C. No, the profits would be consequential damages, which are not allowed in contract cases. D. Yes, if Oscar can show that the loss was a reasonably foreseeable result of the breach, and $3,000 is a good estimate of the loss.

In determining the meaning of an ambiguous contract the court will: A. ignore the issue of who drafted the contract. B. treat the parties equally in terms of strict interpretation. C. interpret the contract strictly against the person who failed to draft it. D. interpret the contract strictly against the person who drafted it.

Jan and Cindy enter into a contract unquestionably governed by the statute of frauds. The only evidence of the agreement is a letter Jan sent to Cindy confirming the deal. Which of the following may be a sufficient "signature" if Jan denies the enforceability of the contract in court? A. Jan's own, handwritten signature. B. Jan's stamped signature. C. Jan's initials. D. All of the above.

Juliet has wagered $500, which Lance, as her bookie, is holding, on a prize fight. If, before the race starts, Juliet wants to take back her money and withdraw from the transaction: A. Lance can successfully sue for breach. B. Juliet, by law, cannot withdraw from the transaction. C. Lance, by law, cannot withdraw from the transaction. D. Juliet cannot sue to recover any money because the contract to wager is illegal and unenforceable.

Nila is working hard on Sam's election campaign for the legislature. She thinks that just a few more votes could win the election, so she promises to pay her friend Daphne $50 if she will register and vote for Sam. Daphne does so, but Sam loses the election, and Nila now refuses to pay. This: A. agreement is enforceable. B. is an unconscionable contract covered by the UCC. C. is an agreement to obstruct the administration of justice. D. agreement is unenforceable and opposed to public policy.

On July 8, 2015, Mural, Inc. entered into a contract with Walls-R-Us Company. Under the contract, Mural, Inc. will provide technical support to Walls-R-Us from August 1, 2015 until August 31, 2018. Under the statute of frauds, this contract: A. requires a writing because the contract cannot be performed within one year from August 1, 2015. B. requires a writing because the contract involves intangibles. C. does not require a writing because the term of the contract is one year. D. does not require a writing because the agreement is for services, not goods.

On March 1, Jimmy, a student, received a telephone call from Peterson, Inc. offering him a job for one year beginning on May 15, after completion of the school year. According to the personnel manager, he will have to move to Texas and be ready to start work at 9:00 a.m. on May 15. Should Jimmy ask for a letter confirming the telephone conversation if he accepts the offer immediately? A. Yes, because the job offer is a collateral promise. B. Yes, because the job offer is covered by the parol evidence rule. C. No, because the job offer is for one year from May 15. D. Yes, because the job offer is for longer than one year from March 1.

Parol evidence is admissible to show: A. fraud. B. duress. C. mistake. D. All of these are correct.

The amount that could reasonably have been avoided is deducted from the amount that would otherwise be recoverable as damages. This is known as the doctrine of: A. exemplary damages. B. nominal damages. C. damages for consequential loss. D. mitigation of damages.

The court in Keser v. Chagnon examined which of the following issues? A. Whether Keser should have been more careful in documenting Chagnon's age before entering into the contract. B. Whether Chagnon damaged the Edsel during the course of his possession of the vehicle. C. Whether Keser should have insisted that someone cosign the contract with Edsel. D. Whether Chagnon ratified the contract for the purchase of the Edsel by delaying his disaffirmance of the contract.

Wendy is a worldwide recording artist and agrees to play on New Year's Eve at Roscoe's mansion on the beach. Wendy later discovers that Roscoe is a notorious gangster, and refuses to appear at the party as agreed. If Roscoe sues Wendy, what remedy is absolutely not available to Roscoe? A. Consequential Damages B. Incidental Damages C. Nominal Damages D. Specific Performance.

What are Oscar's compensatory damages in this case? A. The money he already paid Spud in advance. B. The cost to finish the job. C. Advertising expenses that he already paid. D. All of these.

What is the capacity of a person adjudicated incompetent by a court order? A. A merchant might be able to recover the fair value of any necessaries. B. The person's own contracts are void. C. The guardian may be able to ratify contracts made by the ward. D. All of these are correct.

What order did the court enter in the case of Madison Square Garden Corp., Ill. v. Carnera? A. The injured party's damages may not be reduced by mitigation for his failure to accept or seek other employment of a different or inferior kind. B. The services contracted for were unusual or extraordinary, so the injured party could not obtain injunctive relief. C. The damages in the case were recoverable only if they were foreseeable at the time of entering into the contract. D. The court entered an injunction to enforce an agreement to perform exclusive services that are unusual and extraordinary and damages were not adequate to compensate for the loss.

Which of the following is most likely to be classified as a necessary for which a minor will be held liable on a contract? A. A television. B. School supplies. C. Education. D. Food.

Which of the following would meet the signature requirement for a writing to satisfy the statute of frauds? A. Initials of both parties. B. An electronic signature. C. A printed name. D. All of these are correct.

One issue before the court in New England Rock Services, Inc. v. Empire Paving, Inc.case was: a. whether the purchase order signed to modify the contract was a sufficient writing under the statute of frauds. b. whether the NER did a poor job of bidding the job due to lack of preparation on their part. c. whether Empire was operating in good faith during the course of the conduct. d. whether the modified agreement between NER and Empire was valid and enforceable as supported by sufficient consideration.

Ordinarily, courts do not consider the __________ of the consideration given for a promise. a. legality b. assumption of the risk c. modification d. adequacy

D. Adequacy

Leo tells Nora "I promise to pay you $5,000 next year." Next year, Leo fails to pay Nora and Nora sues. Is Leo's promise enforceable? a. No, this promise is unsupported by consideration. b. No, because Nora is not undertaking anything to her legal detriment. c. No, because Leo's promise is a gratuitous promise made without consideration. d. All of these are correct.

D. All of these are correct

Alan finds Marcia's dog on the side of the road. He then takes the dog home and treats the dog's injuries. When he calls Marcia to tell her he has found the dog, she promises to reimburse Alan for the cost of treating the dog. Is Marcia's promise binding? a. Yes, because she should be grateful to him. b. Yes, because Marcia promised to pay him. c. No, because Alan is not a health care professional. d. No, because there was no bargained-for exchange.

D. No, because there was no bargained for exchange

Andrew received a bill for $500 from Jeff for a tune-up Jeff performed on Andrew's SUV. Andrew called Jeff and told him, "The car runs no better now than before the tune-up. I am sending you $200 and no more." Jeff received the $200 check which was marked "paid in full SUV repair" and cashed it. Is Andrew still liable to Jeff for the remaining $300? a. Yes, Andrew is liable for the full amount of the repair. b. Yes, only a court can order that the amount was unfair. c. No, customers can pay the amount they think is fair. d. No, if the check is marked "paid in full" and references the transaction.

D. No, if the check is marked "paid in full" and references the transaction

Which of the following can be consideration for a promise? a. Refraining from assaulting one's roommate. b. Promising to refrain from stealing from the boss. c. Refraining from using a controlled substance. d. Refraining from smoking cigarettes.

D. Refraining from smoking cigarettes

Darryl contracted with Right Builders to build an addition to his house for $25,000. After digging the foundation, Darryl decides he wants to have the house done earlier than was originally agreed. Right Builders agree, but say that it will need to charge an additional $5,000 for the job. Assuming Darryl agrees, which of the following is correct? a. Darryl will only have to pay $20,000. b. This is a contract under seal which is enforceable. c. This is the settlement of a disputed debt that requires no additional consideration on the part of Right Builders. d. This is a modification of a preexisting contract, but Right Builders has provided additional consideration since they are expediting the completion of the project.

D. This is a modification of a preexisting contract, but Right builders has provided additional consideration since they are expediting the completion of the project

In DiLorenzo v. Valve and Primer Corporation, the court considered which of the following issues? a. Whether the board resolution occurred if only DiLorenzo had documentation of it. b. Whether other companies were attempting to hire DiLorenzo away from Valve and Primer. c. Whether Valve & Primer conditioned the alleged stock option on DiLorenzo's promise to remain in its employment. d. Whether DiLorenzo supplied consideration in exchange for the stock option.

D. Whether DiLorenzo supplied consideration in exchange for the stock option

Davis Co. and Ruby Creations enter an oral contract providing that Ruby will deliver three dozen dresses to Davis at $20 per dress. The next day, Davis sent Ruby a letter signed by Davis's purchasing agent confirming the quantity and item, but not mentioning the price. Which of the following is true?

Davis is bound by the contract when its authorized agent sends the letter, but Ruby Creations is bound by the oral contract ten days after receiving the letter, unless it objects in writing within that time.

What is ratification and when can minor's ratify a contract?

Deciding if they want to stay in the contract once they reach majority, within a reasonable amount of time

Rainbow Toy Corporation places a rocket ship toy into the market. The rocket is manufactured according to specifications, but the rocket suddenly explodes after its first use. Such a defect is a:

Design Defect.

Tate enters into a contract with Smith under the terms of which Smith is to pay Tate $7,000 and Tate is to build a garage, repair a boat, and build a doghouse. If the doghouse has not yet been built, which term describes the type of contract in existence?

Executory contract

What are the types of conditions?

Express, implied, concurrent, precedent, subsequent

Rainbow Toy Corporation places a rocket ship toy into the market. The rocket is manufactured according to specifications and is a safe product, but the rocket has a tendency to char whatever surface it launches from due to intense heat coming from the rocket during launch causing property damage. If Rainbow Toy Corporation does not tell buyers about the potential to char the launching pad surface, such a defect is:

Failure to Warn Defect

Failure to Warn Defect.

Which of the following is not generally required in order to have a valid contract?

Fairness of the bargain

"I promise to pay you $100 if you will promise to fix my car next month." This is an offer for a unilateral contract.

False

A contract for the sale of a copyright is governed by Article 2 of the Uniform Commercial Code.

False

A contract to purchase stocks and bonds is governed by Article 2 of the UCC.

False

A contract to sell five acres of land is governed by Article 2 of the UCC.

False

A contract to sell life insurance is covered by Article 2 of the Uniform Commercial Code.

False

A lease is the transfer of title to goods from seller to buyer for a price.

False

A lessee under a consumer lease and a buyer under a sale of goods are provided with the same protections against unconscionability under the UCC.

False

A negotiable instrument, such as a check, is not a formal contract.

False

A quasi contract is another name for an oral contract.

False

A seller may "cure" a nonconforming tender anytime before the time for performance.

False

All written contracts are considered to be formal contracts.

False

Ann makes a material misrepresentation of fact to Brian, and based upon the misrepresentation, Brian enters into a contract. Ann now thinks that the contract is not fair to her. This contract is voidable at Ann's option.

False

Arthur says to Bob, "If you will mow my lawn, I will give you ten dollars." Bob says nothing, but he mows the lawn. No contract exists under this fact situation, because Bob did not accept Arthur's offer.

False

Common law relating to the formation of contracts has little relevance in the business world today.

False

During the twentieth century it became harder to enter into a contract as well as to get out of one.

False

If a contract does not comply with the statute of frauds, it is void.

False

If a contract is not clearly unilateral or bilateral, the courts presume that the parties intended a unilateral contract.

False

If a merchant signs a written offer to buy or sell goods, this will be irrevocable only if accompanied by consideration.

False

Leslie, the owner of a shoe store, purchased 500 Model XT-50 running shoes from her supplier, but a price was not stated in the contract. The contract is voidable at Leslie's option until the parties agree on a price.

False

Maria posted several signs in the neighborhood offering $50 for the return of her lost cat. Dave calls to get a description of the cat and tells Maria, "I'll look for your cat." A contract is formed by Dave's call to Maria.

False

Quasi contract is another name for a contract that is implied in fact.

False

The UCC modifies the common law rule by requiring additional consideration for the modification of a contract

False

The delivery terms "F.O.B. city of buyer," "ex-ship," and "no arrival, no sale" indicate that the contract is a shipment contract

False

Under a shipment contract, the seller need only deliver the goods to a carrier and make a reasonable contract for their shipment

False

Under the Code, the operation of the perfect tender rule may not be limited by agreement of the parties to the contract.

False

Which of the following is an incorrect statement concerning a buyer's right to inspect goods upon delivery?

If the contract requires payment for the goods before acceptance, payment is required before inspection and operates as an acceptance of the goods.

Which of the following is NOT included within the Code definition of merchantability?

In the case of fungible goods that they be of a quality that exceeds the description and be above average.

Strict liability

Involves a risk of serious harm to people or property, is so inherently dangerous that it cannot ever be safely undertaken

How do we calculate damages?

Loss of value -Loss avoided by injured party +Incidental damages +Consequential damages =Compensatory damages

Karen decided to sell her stair step exerciser, because she wasn't using it as much as she thought she would. Her friend Lydia bought it from Karen for $100. The first day that Lydia used the exerciser, it fell apart, injuring Lydia's ankle. In this situation:

Lydia cannot sue Karen for the warranty of merchantability because Karen is not a merchant.

Rainbow Toy Corporation places a rocket ship toy into the market, but the rocket is missing certain plastic screws that are part of the specifications of the project. Such a defect is a:

Manufacturing Defect.

__________ exists by a product failing to meet manufacturing specifications thus not made properly.

Manufacturing defect

Phil, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine:

Marge will have to pay Phil for all but the gift taxes.

Russell promises Marty $1,500 if he will completely landscape Russell's yard. Which of the following would discharge Russell's obligations to pay under this contract?

Marty doesn't plant any flowers, shrubs, or grasses.

Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the following is correct?

Meg's contractual duty is discharged due to objective impossibility.

Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and has become infested with insects. What is the consequence?

Miller is not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.

What persons have limited capacity?

Minors - voidable liable for necessaries

What are the 4 requirements for a valid and binding contract?

Mutual Assent Legality Capacity Consideration

Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire 100 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he?

No, the parties expected the hardship and provided for it in their contract

Which of the following would be considered a material breach of a contract?

Partial performance that omits some essential part of the contract. b. Delivery of 50 chairs in a contract that calls for 100 chairs. c. An intentional breach of the contract.

Mike inherited some antiques. Pat agrees to buy them. In the contract, Mike and Pat agree to value the antiques at whatever the Sotheby's representative says. It is much higher than either of them anticipated. What is the outcome?

Pat has to buy at the price set by the Sotheby representative.

How are contracts discharged?

Performance by the parties, material breach by one or both of the parties, agreement of the parties, operation of law

Article 2 of the Uniform Commercial Code deals with what type of property?

Personal

Who is mentally incompetent?

Persons under guardianship

Which of the following is a contract with a condition subsequent?

Roger bought a VCR, but he may return the VCR within ten days and get all of his money back.

Brian makes a material misrepresentation of fact regarding his horse to Rosalind while out riding one day. Later that day, Rosalind makes an offer to buy the horse. Brain accepts without correcting his earlier misrepresentation of fact.

Rosalind may avoid the contract.

What may a buyer do if tender is not perfect?

Send back all goods, keep some, keep all

What is required for the writing to be sufficient?

Specify the parties Specify the subject matter and essential terms Be signed by the party to be charged or by her agent For sale of goods: specify quantity

An example of the "course of dealing" concept that courts will use in interpreting a contract under the UCC would be:

Steven and Michelle have been involved in contracts together for over 5 years. Steven maintains the sign for Michelle's restaurant. Each time Steven sees the sign needs repair, he fixes it without need of express consent from Michelle. Michelle has always paid the bill promptly.

__________ is an offer by one party—who is ready, willing, and able to perform—to the other party to perform his obligation according to the terms of the contract.

Tender

What constitutes "tender"?

Tender of Delivery: the seller makes available to the buyer goods conforming to the contract and so notifies the buyer. Buyer is obligated to accept conforming goods. Seller is entitled to receive payment of the contract price.

What is meant by the "perfect tender rule"? Revocation of acceptance? Explain a buyer's rights under each.

The Code's perfect tender rule imposes on the seller the obligation to conform her ten- der of goods exactly to the terms of the contract. If either the tender of delivery or the goods fail in any respect to conform to the contract, the buyer may (1) reject the whole lot, (2) accept the whole lot, or (3) accept any commercial unit or units and reject the rest. The buyer may revoke acceptance of goods that do not conform to the contract if the nonconformity substantially impairs the value of the goods to him, provided that his acceptance was (1) premised on the reasonable assumption that the seller would cure the nonconformity, and it was not seasonably cured or (2) made with- out discovery of the nonconformity, and such acceptance was reasonably induced by the difficulty of discovery before acceptance or by the seller's assurances.

Which of the following is not true about auctions?

The UCC provides that if an auction sale is advertised or announced in explicit terms to be with reserve, the auctioneer may not withdraw the article put up for sale unless no bid is made within a reasonable time.

Which of the following is correct with respect to "finance leases"?

The finance lessor functions as a source of credit

Edie telephoned the office supply store and agreed to buy a dozen ink cartridges at $26 each. She then realized what a good buy this was and called the store with a request to modify the contract to read two dozen. What is the consequence?

The modified contract is unenforceable

Fred contracts to sell a certain tract of land to Maria for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price.

The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.

Karen has agreed to buy Sara's car, but the two have not agreed on the price. When there is no agreement as to price in a contract for a sale of goods, what effect does it have on the contract?

The price is a reasonable price at the time of delivery.

Which of the following contracts is covered by Article 2 of the Uniform Commercial Code?

The sale of a new car

Which of the following is true with regard to implied warranties under the Code?

They depend on the type of contract or sale entered into.

Abe is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Abe is treated at the hospital and released a day later. The hospital sends him a bill for $2,400, which Abe refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious.

This is a quasi-contractual agreement.

"Goods" for purposes of the Code are tangible, movable, personal property.

True

A noncontractual promise may be enforceable where there has been justifiable reliance on the promise.

True

A party is not excused from the duty of performance under a contract upon the nonoccurrence of a presupposed condition unless that condition was a basic assumption underlying the contract.

True

A valid contract is one that meets all of the requirements of a binding contract.

True

Albert breaches a contract with Bill in a state where the statute of limitations is six years. Seven years later Bill wants to sue. The contract is unenforceable, but it is neither void nor voidable.

True

Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and wants to get out of the contract. This contract is voidable at Betty's option.

True

Amendments to Article 2 of the UCC were promulgated in 2003 to reflect developments in the law and business practices and to accommodate electronic commerce.

True

An implied contract is as enforceable as is an express contract.

True

An implied in fact contract is formed by conduct.

True

Article 2 of the Uniform Commercial Code does not apply to the sale of services.

True

Article 2A of the UCC affords special treatment for consumer leases.

True

At common law a promise under a seal to authenticate it was effective without anything more.

True

Each party to a contract must intentionally exchange a legal benefit or incur a legal detriment as an inducement to the other party to make a return exchange.

True

General contract law governs all contracts outside the scope of the UCC.

True

If a buyer refuses a tender of nonconforming goods without informing the seller of the nature of the defect, he cannot then assert that defect as a breach of contract by the seller if the defect was curable

True

If a nonconforming installment of goods substantially impairs the value of the whole contract, then the buyer can treat the breach of the installment as a breach of the whole contract.

True

If a person who has been declared incompetent by the courts enters into an agreement, that agreement is void, because it does not meet all the requirements of a binding contract.

True

If goods that were identified when the contract was made are totally lost or damaged without fault of either party and before risk of loss passes to the buyer, the contract is avoided.

True

In a tender of delivery, the seller makes available to the buyer goods that conform to the contract

True

Larry says to Jeff, "If you will mow my lawn, I will give you fifteen dollars." Under these facts, no contract is formed until Jeff finishes mowing the lawn.

True

Marcus has a contract to purchase a new CD player. The law governing this contract is Article 2 of the UCC.

True

Mike, the owner of a yogurt shop, orders 500 quarts of yogurt from his supplier. Nothing, however, is said by either party about the price or method of payment. The supplier ships the yogurt as ordered. Since this is a contract implied in fact, Mike must pay his supplier for the yogurt.

True

Ron says to Matt, "If you design and landscape my front lawn by the time I return from Paris next month, I will pay you $5,000." Matt does not respond but has the landscaping done by the time Ron returns. This is an example of a unilateral contract.

True

Tender of performance by one party is a condition to performance by the other party.

True

The CISG governs only the formation of the contract of sales and the rights and obligations of the seller and buyer. It does not cover the validity of the contract or any of its provisions.

True

The Code addresses the "battle of the forms" problem by focusing on intent of the parties.

True

The Restatement and the UCC are both currently authoritative sources of contract law.

True

The buyer may lose the right to revoke acceptance in a C.O.D. shipment by failing to inspect the goods within a reasonable time

True

The difference between an express contract and an implied in fact contract is the manner in which assent is manifested.

True

Under a shipment contract, a seller is required to tender delivery of the goods to a carrier for delivery to the buyer.

True

Under the Code, the seller must tender all of the goods purchased under the contract in a single delivery, and payment by the buyer is due on such tender, unless the parties specify otherwise in the contract

True

Unless the parties agree otherwise, the buyer has a right to inspect the goods before payment or acceptance.

True

Where a practical alternative exists, neither seller nor buyer is excused from a sales contract on the grounds that delivery in the express manner provided in the contract is impossible.

True

Common Law vs. UCC

UCC covers sale of goods Common law governs all other contracts

Which of the following is not correct?

Unless otherwise agreed, a contract is performable in installments

Lynn, who is a tailor, agrees to sew a pair of drapes for Zach's living room. Zach promises to pay Lynn $300. Lynn completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for them.

Whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied.

Mark tells Leslie that his stereo has quadraphonic speakers because he was told that when he bought it. Leslie buys the stereo, but it does not have quadraphonic speakers. Is Mark liable for breach of warranty?

Yes, because the statement was false.

What persons do not have the capacity to enter into contracts?

]Incompetent persons: : under guardianship: void : mental illness or defect: voidable Intoxicated persons - voidable

A resulting contract is void when it is brought about by: a. fraud in the execution. b. fraud in the inducement. c. innocent misrepresentation. d. All of these are correct.

For purposes of general contract law (common law), an offer must: a. be sufficiently definite and certain. b. be made to only to one person. c. be intended by the offeror to be an offer. d. All of these are correct.

Furniture Store runs an ad in the local Sunday newspaper announcing a special Veteran's Day offer of a free Brandname chairside table to the first three veterans who come into the store on Veteran's Day. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location and its hours. Joe is a Veteran. He goes to the store on Veteran's Day, but he arrives after the hours listed in the ad and the store has closed. Joe sticks a post-it on the store door saying that he is a veteran and wants the table. Which of the following statements is correct about his offer? a. According to the court in Osprey L.L.C. v. Kelly-Moore Paint Co., Inc., Joe's sticking a the post-it on the door of the store is not the authorized means of accepting the store's offer and is not likely be considered a sufficient substitute for the ad's requirement that the offer be accepted by coming into the store because it does not ensure that the offeror will receive the acceptance at all and it does not ensure that the acceptance will be received before the offer has expired by its terms. b. According to the court in Osprey L.L.C. v. Kelly-Moore Paint Co., Inc., Joe's sticking a the post-it on the door of the store is not the authorized means of accepting the store's offer, but will likely be considered a sufficient substitute for the ad's requirement that the offer be accepted by coming into the store. c. According to the court in Lefkowitz v. Great Minneapolis Surplus Store, Inc., Joe's post-it will be considered an offer rather than an acceptance because the ad was not specific enough to be considered an offer. d. Joe will be entitled to the table as long as no more than two other veterans accepted the offer before him.

Furniture Store runs an ad in the local Sunday newspaper announcing a special sale on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. Joe goes to the store to purchase the table but sees another very similar table that is not on sale ("the regularly priced table"). He offers to buy the regularly priced table from the store for the sale price of the Brandname table. The store says that it cannot sell it at the sale price, but it can sell it for 10% off the listed price. Joe says that is too much money to spend for the regularly priced table. Joe continues to shop around. Seeing nothing he likes, he decides to buy the regularly priced table for 10% off. When he goes to pay for the table, the store charges him full price. If challenged in court, the court is most likely to: a. find that the Joe's initial rejection of the store's offer to sell the regularly price table for 10% off effectively terminated that offer; that Joe is now making an offer to purchase the regularly priced table for 10% less than the asking price; and the store is free to accept or reject Joe's offer. b. find that the store is contractually obligated to sell the table to Joe at 10% off the regular price because the store made that offer to Joe and Joe accepted the store's offer. c. find that the store effectively revoked its offer when it charged Joe full price. d. find that by going into the store to look at the advertised table, Joe accepted the store's offer to sell the Brandname table to Joe for the sale price and, therefore, Joe is contractually obligated to pay for and accept the Brandname table.

Jose offers to sell George his iPad 3 for $150 and explains that George has five days to accept. After three days, Jose accidentally drops his iPad 3 from his third-floor apartment balcony, shattering it into tiny pieces. On the fourth day, George, who does not know that the iPad was shattered, notifies Jose that he accepts the offer. Do Jose and George have a valid contract? a. No, the destruction of the iPad terminated Jose's offer. b. No, because the offer and acceptance were not in writing. c. Yes, so long as the mirror rule is fulfilled. d. Yes, an offer was made and George accepted it.

Moe is Larry's attorney. Larry is a high school dropout with a tenth-grade education and no job. Moe graduated from an elite law school and is a highly-skilled attorney. Larry recently inherited a substantial amount of money from his mother. Rather than continue to utilize his late mother's financial management company (Golden Wealth), Moe successfully persuades Larry--after hours of closed door meetings and very high-level talks about the stock market, tax law, and legal jargon--to move his money from Golden Wealth and enter into a 10-year management agreement with Stooge Wealth Management, which is owned by Moe's best friend Curly. If Larry seeks to later void his agreement with Stooge Wealth Management, what would be his winning argument? a. Moe exerted undue influence on Larry to switch from Golden Wealth to Stooge Wealth. b. Larry experienced unilateral mistake. c. Larry was under duress to enter into an agreement with Stooge Wealth Management. d. Moe and Larry experienced mutual mistake.

One issue before the court in Neugebauer v. Neugebauer case was: a. whether the real estate contract in the case should be rescinded on the grounds of undue influence. b. whether Lincoln's actions toward his mother in securing the land contract were fraudulent. c. whether the price for the land was adequate consideration. d. whether the actions of Lincoln in arranging the purchase of his mother's land were unconscionable.

Sam agrees to sell Gina a BMW automobile, both believe to be inoperable, purely for parts. The contract price is $500. Prior to the delivery of the BMW, Sam discovers that the car was simply out of fuel, runs like a dream, and refuses to deliver the automobile to Gina. The value of the operable BMW is now at $3,000. if the court allows Sam to rescind the contract, what would be the reason? a. This is a case of material mistake by both parties. b. All of these are correct. c. This is a case of unilateral mistake on Sam's part. d. Sam was under duress.

To establish fraud, the misrepresentation must have been known by the one making it to be false and must be made with an intent to deceive. That knowledge is known as: a. scienter. b. negligent misrepresentation. c. sales puffery. d. All of these are correct.

Which is NOT a correct about the UCC's "Battle of the Forms" rule? a. The UCC battle of the forms rule is what common law calls the mirror image rule. b. The UCC battle of the forms rule changes the common law's mirror image rule. c. The UCC battle of the forms rule may result in a contract with terms that are not identical to the terms included in the offer. d. What gets included in the final contract terms may depend upon whether the parties are merchants.

Who would likely be considered a merchant under the UCC with respect to the goods in question? a. An authorized Apple computer dealer selling accessories for Apple computers and Apple-related products. b. An authorized Apple computer dealer selling the old shelving in the Apple store that was used to display the Apple products before the store was redecorated. c. An authorized Apple computer dealer selling household goods at a yard sale at his home. d. All of these are correct.

Strict liability in tort imposes liability on:

a manufacturer of a defective component used in a larger product if the manufacturer of the finished product made no essential change in the component.

According to the Restatement, manifesting an intention to act or an intention to refrain from acting in a specified manner is considered to be:

a promise.

What is a counter offer?

a rejection of the original offer and the simultaneous making of a new offer

An obligation of the merchant-seller that the goods are reasonably fit for the ordinary purposes for which they are manufactured and sold, and the goods are of fair average quality is known as:

a warranty of merchantability

An obligation of the merchant-seller that the goods are reasonably fit for the ordinary purposes for which they are manufactured and sold, and the goods are of fair average quality is known as:

a warranty of merchantability.

Tort

a wrongful act or infringement of a right leading to civil legal liability

Amy agrees to buy goods from Van for a contract price of $2,000 payable on delivery. Amy repudiates the contract and refuses to pay anything. Van resells the goods in compliance with the Code for $1,700, incurring $200 in sales commissions but saving $250 in shipping costs. Van would recover from Amy: a. $250. b. $500. c. the contract price of $2,000. d. $300.

a. $250. Correct. Van is entitled to the difference between the contract price and sales price ($300), plus any incidental damages ($200), less any offsets ($250 savings in shipping cost).

ABC Machine Company sells a machine to Ebony Manufacturing Company and provides a warranty as to the machine's suitability. The machine, however, is not suitable for Ebony's purpose and causes $20,000 in damage to Ebony's property and $20,000 in personal injuries. How much can Ebony recover from ABC Machine Company? a. $40,000 in consequential damages, plus any other loss suffered. b. Only $20,000 for personal injury damages. c. Only $20,000 for the damage to Ebony's property. d. Nothing.

a. $40,000 in consequential damages, plus any other loss suffered. Correct. Ebony is entitled to recover consequential damages arising from injuries to persons and/or property resulting from the breach of any warranty.

Which of the following is a contract with a condition subsequent?

a. Adam bought an iPad but he may return the iPad within one month and get all of his money back.

A valid contract may be unenforceable for which reason(s)?

a. Failure to satisfy the Statute of Frauds b. Running of the Statute of Limitations c. Both (a) and (b)

Ken promises not to foreclose on a mortgage that he holds on an office complex that Christopher owns. In reliance on this promise, Christopher expends $200,000 to remodel the complex. Which of the following is correct with regard to Ken's promise?

a. Ken's promise not to foreclose is unsupported by consideration. b. Ken's promise is noncontractual. c. Ken's promise will be enforced against him based upon the doctrine of promissory estoppel. d. All of the above.

Which of the following will be seen as commercial impracticability?

a. Performance is rendered unjust by a supervening event not caused by her own fault.

Specific performance would be an available remedy to a buyer for which of the following goods? a. Racehorse. b. Computer. c. Car. d. Hot water heater.

a. Racehorse. Correct. A racehorse is a unique item, therefore specific performance would likely be an available remedy. See "Sue for Specific Performance 23-2g."

Promissory estoppel is a contractual doctrine that includes the following considerations:

a. The courts use the doctrine of promissory estoppel to enforce noncontractual promises. b. Under this doctrine the promisor reasonably expects that the promisee, in reliance on the promise, will be induced by the nature of the promise to take action or refrain from taking action and the promisee does so.

Manufacturer contracts to sell Dealer, a dealer in used machinery, a used machine that Dealer plans to resell and makes those intentions known to Manufacturer. After Manufacturer repudiates, Dealer is unable to obtain a similar machine elsewhere. What are Dealer's damages? a. The net profit Dealer would have made by reselling the machine. b. Incidental damages only. c. Nominal damages. d. Nothing.

a. The net profit Dealer would have made by reselling the machine. Correct. Dealer may recover any loss resulting from its requirements and needs which the Manufacturer at the time of contracting had reason to know and which the buyer could not reasonably prevent by cover or otherwise.

Contracts that are implied in law:

a. are obligations imposed by law on grounds of justice and equity. b. are intended to prevent unjust enrichment. c. do not rest upon the assent of the contracting parties. d. All of the above.

Even though all creditors have not been paid in full, a discharge under the __________ eliminates ordinary contract claims against the debtor.

a. bankruptcy law

Express contracts and implied contracts are:

a. both genuine contracts b. equally enforceable. Both (a) and (b).

Commercially reasonable charges for the care and custody of goods that a buyer has rejected are known as: a. incidental damages. b. liquidated damages. c. consequential damages. d. cover charges.

a. incidental damages. Correct. Commercially reasonable charges for the care and custody of goods that a buyer has rejected are known as incidental damages. See "Remedies of the Buyer 23-2."

Tom breached a contract he had with Jim. In addition to other remedies available, Jim may be able to recover commercially reasonable expenses incurred as a result of the breach. These expenses are: a. incidental damages. b. special damages. c. extraordinary damages. d. punitive damages.

a. incidental damages. Correct. The seller is allowed to recover incidental damages related to a breach.

The amount of liquidated damages included in a contract that would be upheld by a court: a. must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy. b. may be so high as to be punitive to the breaching party. c. may be regarded as a penalty. d. None of these are correct.

a. must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy. Correct. The amount of liquidated damages included in a contract that would be upheld by a court must be reasonable in light of the inconveniences or lack of feasibility of obtaining an adequate remedy. See "Liquidation or Limitation of Damages 23-3a."

Contract law is significant in that it is basic to other fields of law such as:

a. sales of personal property. b. commercial paper. c. secured transactions. d. All of the above.

In the case of Hochster v. De La Tour the court considered the following issue:

a. whether Hochster was allowed to treat the repudiation of the contract by De La Tour as breach of contract and immediately bring suit.

What is the mirror image rule?

acceptance must be identical to the offer not true under UCC

A(n) ____ is a contract between a promisee and a promisor by which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty.

accord

A(n) __________ is a contract by which an obligee promises to accept a stated performance in satisfaction of the obligor's existing contractual duty.

accord

Andrew owes Rachel $200 for a used television which he bought last year at Rachel's yard sale. When Andrew is unable to pay, the two agree that the debt can be paid by Andrew's typing all of Rachel's term papers for the school year. The new contract is a(n):

accord

Daniel owes Amanda $5,000 and they both agree that Daniel will mow the grass of Amanda's 10-acre field to satisfy Daniel's outstanding balance. The agreement to mow the grass represents:

accord

Express warranty

affirmation of fact or promise about the goods or a description of the goods that becomes part of the basis of the bargain

After rejection of nonperishable goods, a merchant buyer who has received no instructions from the seller within a reasonable time after notice of rejection may:

all of the above.

An effective acceptance occurs when the buyer:

all of the above.

If either the tender of delivery or the goods fail in any respect to conform to the contract, the buyer may:

all of the above.

Risk of loss

allocation of loss between seller and buyer where the goods have been damaged, destroyed, or lost without the fault of either party

Past consideration

an act done before the contract is made is not consideration "past consideration is no consideration"

William has a contract to build a new office building for Angela. The contract contains a provision requiring William to furnish a certificate of occupancy from the building inspector before Angela is required to pay. This provision is:

an express condition

Terrell asks a salesperson what size of water heater he should buy for their twenty-unit motel. If Terrell purchases a tank based on the salesperson's suggestion, the salesperson's recommendation is:

an implied warranty of fitness for a particular purpose.

warranty

an obligation of the seller to the buyer concerning title, quality, characteristics, or condition of goods

On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is a(n):

anticipatory repudiation.

A party may fulfill her contractual duty of performance and place the other party in default by all of the following except by:

assuming that the other party will not perform according to the contract.

A person is not entitled to relief from fraud, unless she can show that she: a. was unduly influenced. b. justifiably relied on the misrepresentation. c. was physically forced to comply. d. All of these are correct.

A person should not be held to an agreement he has not entered voluntarily. Accordingly, the law will not enforce any contract induced by: a. puffery. b. duress. c. mistake. d. All of these are correct.

According to general (common) contract law, the __________ must be the __________ of the offer. a. counteroffer; acceptance b. acceptance; mirror image c. acceptance; consideration d. contract; revocation

An offer for the sale of goods under the UCC: a. must include a price. b. must include the quantity. c. must be made by a merchant. d. must include the time and place of delivery.

Annie wants to buy a vehicle that will tow a camper. She gives the specific measurements and weight of the trailer to the salesman. The salesman tells her that the SUV Annie sees on the car lot would be just perfect to tow the trailer. Annie test drives the vehicle and then buys it. In this case: a. the element of scienter is missing. b. Annie was not justified in relying upon the salesman's representation that the car would tow the trailer. c. Annie has a valid cause of action for fraud. d. the salesman is in a confidential relationship with Annie.

Baxter, a plumber, wants to submit a bid on a city sewer project. He computes the cost, but mistakenly omits the cost of one item. Accordingly, he submits a bid of $430,000 to the city. The next highest bid is $675,000, and the rest of the bids are even higher. The city is happy to have such a low bid, so it accepts Baxter's bid and awards him the contract for the job, even though the city engineer is of the opinion the job cannot be done for less than $650,000. In this case: a. Baxter must perform for the agreed upon price, because he has made a unilateral mistake. b. the city was aware of Baxter's mistake. When it accepted the bid, with knowledge of Baxter's mistake, the city sought to take an unconscionable advantage of Baxter's error. c. there is a case of mutual mistake. d. All of these are correct.

Francisco is a concert violinist who is scheduled to perform at the Kennedy Center for the first time. He buys what he is told is a Stradivarius violin from a well-known, reputable dealer in quality violins, and he pays the going rate for a Stradivarius. He later learns the violin is an imitation, sold by the dealer who was trying to make quick money. In this case: a. the sale is voidable by the seller for mutual mistake. b. the dealer has committed fraud in the inducement. c. Francisco has made a unilateral mistake and cannot avoid the contract. d. the sale may be rescinded, because the dealer has made a nonfraudulent misrepresentation.

In the case of Berardi v. Meadowbrook Mall Company, the court found economic duress, such as that found renders a contract void. Is this statement correct? a. Yes, Meadowbrook took unfair advantage of Berardi to collect its debt. b. No, the court affirmed the summary judgment. c. Yes, the court ruled that there was economic duress and overturned the lower court's summary judgment. d. No, economic duress cannot occur between two people in business.

Sam agrees to sell Gina a BMW automobile, both believe to be inoperable, purely for parts. The contract price is $500. Prior to the delivery of the BMW, Sam discovers that the car was simply out of fuel, runs like a dream, and refuses to deliver the automobile to Gina. The value of the operable BMW is now at $3,000. If the court allows Sam to rescind the contract, what would be the reason? a. All of these are correct. b. This is a case of material mistake by both parties. c. Sam was under duress. d. This is a case of unilateral mistake on Sam's part.

The law very carefully scrutinizes contracts between those in a relationship of trust and confidence that is likely to permit one party to take unfair advantage of the other. Which of the following is not an example of that type of relationship? a. Agent and principal. b. Hair dresser and client. c. Parent and child. d. Doctor and patient.

The mirror image rule relates to which required element of a contract? a. The offer. b. The acceptance. c. Both the offer and the acceptance. d. Only to acceptances in contracts subject to UCC

To be effective, an offer must: a. be in a specified format. b. be communicated to the offeree c. always contain the price of a product or service offered. d. be spoken directly to the offeree.

When only one party is mistaken as to a fact or facts of the transaction, it is termed: a. negligent misrepresentation. b. unilateral mistake. c. subjective concealment. d. mutual mistake.

Which of the following would be material to the sale of a racehorse? a. The horse's coloring is chestnut. b. The horse's running time in the last race was the fastest in the circuit. c. The horse was ridden by Josh Jockey in the last race. d. All of these are correct.

In the Maroun v. Wyreless Systems, Inc. case, the court considered which of the following reason to grant summary judgment in Wyreless Systems' favor? a. Wyrless Systems properly exercised the business judgment rule. b. Wyreless Systems is not liable for duress. c. Wyreless Systems' complained-of statements by Maroun were based on future events, and thus could not be a basis for misrepresentation. d. Wyreless Systems was merely puffing its terms to Maroun.

b or c (idk)

Nick agrees to sell goods to Nancy for $100,000 due on delivery. Nancy repudiates the contract and refuses to pay Nick. Nick resells the goods in strict compliance with the UCC for $80,000, incurring incidental damages for sales commissions of $5,000, but saving $2,000 on transportation costs. What would be Nick's recovery from Nancy? a. $100,000. b. $23,000 c. $25,000 d. None of these answers are correct

b. $23,000 Correct. Nick is entitled to the difference from the resale ($20,000) plus incidental damages ($5,000) minus the savings of $2,000.

Which type of condition is more common?

b. Conditions precedent are common in contracts.

Which of the following is not a remedy available to an unpaid seller against the buyer? a. Recovery of the price. b. Cover and sue for damages. c. Recovery of incidental damages. d. Cancellation of the contract.

b. Cover and sue for damages. Correct. Cover and sue for damages is NOT a remedy available to an unpaid seller against the buyer; this is a remedy available to a buyer. See "Remedies of the Seller 23-1."

Peter, an automobile dealer, enters into a contract to sell a transport van to George for $40,000. George changes his mind about whether he needs a transport van, so he repudiates. The market value of the van is $40,000, but Peter is unable to sell as many vans as he obtains, so Peter's sales volume has decreased as a result of George's breach. What can Peter recover from George? a. Incidental Damages b. Lost profits plus incidental damages c. Nothing d. Lost profits

b. Lost profits plus incidental damages Correct. Peter is entitled to lost profits plus incidental damages.

Which of the following would not be a remedy available to the seller on account of buyer's breach? a. Stop delivery of the goods by carrier. b. Require the financially sound buyer to return the goods. c. Recover the price. d. Cancel the contract.

b. Require the financially sound buyer to return the goods. Correct. A seller may not require a financial sound buyer to return the goods. See "Remedies of the Seller 23-1."

__________ is performance that, though incomplete, does not defeat the purpose of the contract

b. Substantial performance

Which of the following is not a remedy of the buyer? a. The buyer has the right of cover and to receive damages. b. The buyer has the right to stop delivery of the goods. c. The buyer may have the right to obtain specific performance. d. The buyer may have the right to recover incidental and consequential damages.

b. The buyer has the right to stop delivery of the goods. Correct. The right to stop delivery of the goods is NOT a remedy available to the buyer. See "Remedies of the Buyer 23-2."

The fact that no time is specified in the contract means that:

b. a reasonable time for performance will be implied.

On September 15th, Annie and Bertha enter into a contract where both parties are obligated to perform on December 31. On December 1, Annie tells Bertha, "Performing the contract would be impossible for me." This statement is:

b. anticipatory repudiation.

A __________ is an event that terminates an existing duty.

b. condition subsequent

After a breach by the seller, buyer may replevy the goods after identification if: a. he acts within 30 days. b. he cannot buy replacement goods. c. the seller is insolvent. d. he cannot buy replacement goods or the seller is insolvent.

b. he cannot buy replacement goods. Correct. After a breach by the seller, buyer may replevy the goods after identification if he cannot buy replacement goods. See "Remedies of the Buyer 23-2."

On January 21, Cara wrote to Pandora Mfg. asking for shipment of 100 swimsuits on 90-day credit. In the letter, she gave references that indicated that her store was financially sound. Actually she had bills that she could not pay and hoped to turn the business around with the summer bathing suit sales. Pandora ships the suits on March 1; they are received March 15. Cara immediately puts them on display and 27 are sold by March 30 when Pandora discovers that Cara has lied. Pandora may: a. recover 73 suits plus incidental damages. b. recover 73 suits. c. recover all 100 suits provided that Pandora acts in 10 days. d. recover no suits since it's been 10 days since delivery.

b. recover 73 suits. Correct. Pandora may recover the 73 suits that have not been sold.

Raul builds Evelyn a $200,000 home according to Evelyn's specifications. Raul, however, missed two specifications, causing Evelyn to incur $25,000 in damages to fix the missed specifications. If Evelyn files a breach of contract, but the court does not allow her to forgo paying for the house, and only requires her to pay Raul $175,000, what theory will the court use to justify its order?

b. substantial performance.

Pam and Alexander enter into a contract on January 1 of this year. Pam's friend Callie tells Pam, "There is a statute that restricts the period of time within which an action may be brought." Callie's statement is:

b. true because of statute of limitations.

By operation of law one might be able to discharge their contractual obligations by:

bankruptcy

In the Carter v. Tokai Financial Services, Inc. case, the agreement was found to:

be a true finance lease.

Refusal of a tender of performance by one party to a bilateral contract will:

be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.

A contract in which both parties exchange promises is a:

bilateral contract.

Tender of conforming goods by the seller entitles him to:

both acceptance of the goods and payment of the contract price by the buyer.

Alice is browsing in a commercial art gallery when she sees a painting that she likes. Arthur, who is the manager of the gallery, tells her that in his opinion the painting is a genuine Leroy Neiman work. Based upon that representation, Alice buys the work for $5,000. At the sale, Arthur has Alice sign a receipt that includes the following language: This sale caries no warranties, including no EXPRESS or IMPLIED WARRANTIES. Alice later discovers that the painting is only a cheap copy of the original that is worth no more than $50. Arthur has:

breached an express warranty.

Shipment contract

buyer is responsible for goods once they leave the manufacturer FOB place of shipment, FAS port of shipment, CIF, C&F

Manufacturing defect

by failing to meet its own manufacturing specifications, the product is not properly made

Conditions may be classified:

by how they are imposed and by when they affect a duty of performance

Bill faxes Harry an offer at 9 a.m. on Monday and the fax arrives at Harry's office at 9:02 a.m. Monday. Because Harry is taking a vacation day on Monday, he does not read the fax until Tuesday at noon. Harry decides to accept Bill's offer and tells his assistant at 3 p.m. Tuesday to prepare an acceptance for his signature. The acceptance is placed on Harry's desk at 4:45 p.m. Tuesday. Harry signs the acceptance and gives it to his assistant to fax back to Bill at 9 a.m. Wednesday. The assistant does so immediately; however, due to malfunctioning of Bill's fax machine, Bill does not receive Harry's acceptance until Friday morning. The offer is effective at __________ and the acceptance is effective at __________. a. Tuesday noon; Friday morning b. Tuesday noon; 9 a.m. Wednesday c. 9:02 Monday; approximately 9 a.m. Wednesday d. 9 a.m. Monday; 3 p.m. Tuesday

Chase and Tyler are best friends and fellow police officers. One day, Chase came home with a brand new, top-of-the-line Ford F-150 4x4 pickup valued at $38,000 and showed it to Tyler. Tyler told Chase that he wanted a truck just like his. Jokingly, Chase says, "Sure thing, buddy. I'll sell you my new pickup for $100 and a six-pack of beer!" If Tyler seeks to accept Chase's offer, what is Chase's best defense? a. Chase was merely advertising a price to Tyler. b. Chase's offer is undervalued. c. Chase intended the offer as a joke and a reasonable person would understand it to be a joke. d. Chase's terms were open.

Debra delivers a package to Jackie and requests Jackie to sign a receipt for the package, holds out a simple sheet of paper that says "Receipt," and shows a line where Jackie is supposed to sign. The line, which appears to be at the bottom of the receipt, is actually a promissory note for a $10,000 loan. Jackie signed the line, as indicated by Debra and did not know that she was signing a note. This scenario is an example of: a. Undue Influence. b. Duress. c. Fraud in the execution. d. Fraud in the inducement.

Maggie owns a valuable show dog, which she knows is suffering from a disease only discoverable by a competent veterinarian. Maggie offers to sell this show dog to Naomi but does not inform her about the dog's condition. Naomi, who is not a veterinarian, makes a reasonable examination of the dog and concludes that the dog is in normal condition and purchases it from Maggie. If Naomi later discovers that the show dog suffers from the disease, can he have the sale set aside? a. No, because Maggie and Noami already agreed to the sale. b. No, because Naomi should have conducted a more rigorous examination of the dog. c. Yes, because the dog has a hidden defect that would not be discovered in an ordinary examination and Maggie failed to disclose it. d. None of these answers are correct.

Retail stores typically put advertisements in newspapers describing goods and stating prices. These ads are generally considered to be: a. offers only if they are made by merchants b. offers only if they are not made by merchants. c. invitations to buyers to make an offer to buy the goods described. d. firm offers.

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000. Later, Sam finds out 1970 Corvettes which are in excellent condition and have all the original parts sell for closer to $57,000. He changes his mind about selling his Corvette to Sam for $7,000. Which of the following statements about the offer is correct? a. Sam cannot revoke his offer to Bob if Sam sells cars because then his offer is a firm offer. b. Sam cannot revoke his offer to Bob because he made it via email and email is considered a writing. c. Sam can revoke his offer to Bob at any time so long as there is still an offer to revoke. d. Sam can reject his offer to Bob at any time so long as there is still an offer to reject

Sometimes the law imposes a duty of disclosure. When a fiduciary is silent, silence may constitute fraud. A fiduciary is one who: a. has the same duty of disclosure to the other party to the relationship as one who is not a fiduciary. b. must deal at arm's length with the other party to the relationship. c. is in a confidential relationship who owes a duty of trust and loyalty to another. d. All of these are correct.

Which of the following offers cannot be revoked? a. An offer to pay the high school student next door if he takes in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is prior to leaving for vacation. b. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before any mail has been delivered. c. An offer to pay the high school student next door if he will take in your mail when you go on vacation regardless of whether he promises to take in the mail, if the revocation is before your return from vacation but after he has collected your mail for all the days that you have been on vacation up until the revocation. d. None of these are correct.

Which of the following will terminate an offer? a. Rejection by the offeror. b. Subsequent illegality of the purpose but not of the subject matter of the offer. c. Destruction of the subject matter of the offer. d. Death of the offeree but not of the offeror.

CPA: Jefferson Hardware ordered 300 Ram hammers from Ajax Hardware. Ajax accepted the order in writing. On the final date allowed for delivery, Ajax discovered it did not have enough Ram hammers to fill the order. Instead, Ajax sent 300 Strong hammers. Ajax stated on the invoice that the shipment was sent only as an accommodation. Which of the following statements is correct?

c. Ajax's shipment of Strong hammers is a breach of contract.

Salvador and Jose make a contract for Salvador to manufacture five custom saddles of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The saddles are available from other sources. In this case:

c. Salvador's duty to deliver the saddles is discharged by the destruction of the factory.

CPA: With regard to a contract governed by the UCC Sales Article, which of the following statements is correct?

c. The obligations of the parties to the contract must be performed in good faith

In the case of Michael Silvestri v. Optus Software, Inc., the court held:

c. the employer won as he was allowed to conclude that the employee's efforts were unsatisfactory; an objective standard is typically applied to satisfaction clauses in employment contracts.

Intoxicated person

cannot understand the nature and consequence of actions (voidable)

What is needed to modify an UCC contract?

consideration not required to modify contract

Executory contract

contract not fully performed on both sides

Executed contract

contract that has been completely performed by both parties

Operation of law

contracts discharged due to impossibility, illegality, commercial impracticability

Implied warranty

contractual obligation imposed by operation of law and not found in the language of the sales contract

Injunction

court order prohibiting a party from doing a specific act

Specific performance

court ordering party to do the specific thing they were contracted to do, only in cases where there is a specific thing (art, land)

Parol evidence rule

courts will only look at the terms within the written contract

Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for delivery of the deed and payment of the price. In this situation:

courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony's duty to pay is conditioned upon Janice's delivery of the deed and Janice's duty to deliver the deed is conditioned upon Anthony's payment or tender of $5,000 to Janice.

A contract contains the provision, "Walter Hamilton promises to pay Faye Weeks $1,200 for a 2003 V-6 motor provided that Phelps' Garage approves the quality of the motor." This provision:

creates an express condition which must be met before Walter's duty to pay arises.

One-year provision: what is the possibility test

criterion is whether it is possible, not likely, for the agreement to be performed within one year

Betty is looking at the grocery ads in the newspaper and sees that canned tuna is on sale for 6 cents. Because this is an amazingly low price, she rushes off to the grocery store. She loads 10 cans into her cart, goes to the checkout counter and hands the cashier 60 cents. The cashier asks for $6.90 and tells her that the tuna is 69 cents per can and that the ad was a misprint. Betty demands that the tuna be sold to her for 6 cents a can. Which of the following statements about the ad is correct? a. The ad is an offer and Betty has accepted the grocer's offer; therefore, there now is a contract between the grocer and Betty for the sale of tuna in exchange for 6 cents per can. b. The ad is a contract and the store has a contractual obligation to sell the tuna to Betty for 6 cents a can. c. The ad is a firm offer made by a merchant and the grocer must sell Betty the tuna for 6 cents a can. d. The ad is an invitation for others to make offers. Betty has made an offer to buy the tuna for 6 cents a can and the grocer has rejected Betty's offer, but countered with an offer to sell it to Betty for 69 cents per can.

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Bill says he is not interested in fixing the roof. Harry then tells Bill he will still buy the house. Bill tells Harry the house is no longer for sale to Harry. Which statement is true? a. Harry's counteroffer terminated Bill's offer; however, Bill can still change his mind and accept either Harry's counteroffer or Harry's offer to buy Bill's house for $90,000. b. Bill must sell the house to Harry because Harry accepted his offer to sell the house for $90,000. c. If Bill will not sell the house to Harry for $90,000, he cannot sell the house to anyone for $90.000. d. Harry's counteroffer terminated Bill's offer, and Bill's rejection of both Harry's counteroffer ($90,000 plus fix the roof) and offer ($90,000) leave Bill free to make a new offer to sell the house to anyone he chooses, including Harry, and under any terms he chooses as long as the terms are not illegal.

Bill offers to sell his house to Harry for $90,000. Harry tells Bill he will buy the house for $90,000 if Bill will fix the roof. Which statement is true? a. Harry has made a counteroffer. If Bill does not accept the counteroffer, Harry can still accept Bill's original offer unless Bill revokes it. b. Harry has revoked Bill's offer. c. Under the UCC, Harry has accepted the offer even though his acceptance was not the mirror image of the offer. d. Harry has made a counteroffer. Unless Bill accepts the counteroffer, there is no contract.

Contracts induced by threats of __________ are not voidable, unlike threats of __________ regardless of whether the coerced party had committed an unlawful act. a. civil prosecution; criminal prosecution b. criminal prosecution; civil prosecution c. tortious conduct; civil prosecution d. None of these are correct.

Furniture Store runs an ad in the local Sunday newspaper announcing a Veteran's Day special on a Brandname chairside table. The ad states the price of the table, the dimensions, the SKU#, and what the table is made of. Other parts of the ad indicate the store's location, the hours, and a website where purchases may be made online. If Joe goes into the store sometime during the day on Veteran's day and tries to buy a Brandname chairside table, but is told the store has sold out of that particular table, according to the court in Lefkowitz v. Great Minneapolis Surplus Store, Inc.: a. the store is not likely to be in breach of contract because an ad made to the generalpublic can never be an offer. b. the store is not likely to be in breach of contract because Joe wasn't the first person to accept the offer made in its ad. c. the store is likely to be in breach of contract because the ad was an offer that Joe accepted. d. the store is not likely to be in breach of contract because the facts and circumstances regarding its ad indicate that the ad was intended to be like most ads—an invitation for the public to make an offer—and the store did not accept Joe's offer.

How do parties usually show mutual assent? a. By one party making an offer and the other party making a counteroffer. b. By one party making an offer in writing and the other party accepting in writing. c. By one party making an oral offer and the other party accepting by performing. d. By one party making an offer in words or by conduct and the other party accepting in words or by conduct.

If an offer has no stated time by which it must be accepted, when does the offer terminate? a. Never. b. After one week. c. After one month. d. After a reasonable period of time.

Mike, a 75-year-old mechanic, returned Carrie her car after fixing the brakes. Mike told Carrie: "I put some new brakes on her—she should brake with complete ease!" When Carrie drives away, she cannot stop her car and crashes into a dumpster. It is later discovered that Mike failed to reconnect one of the brake lines. There is no indication that Mike knew that he failed to reconnect the brake line. If Carrie sues Mike for fraud, and the court sides with Mike, what would be the court's reason? a. Mike's statement was not a fact. b. Carrie did not experience duress. c. Mike was puffing. d. Mike lacked scienter because he did not make the statement with the intent to deceive.

Patrick held a baseball bat to Eric's head to compel him to sign a contract advantageous to Patrick. This contract was entered under: a. improper threats. b. undue influence. c. false representation. d. physical duress.

Sam emailed Bob offering to sell him his 1970 Corvette for $7,000 and also said that he would give Bob two weeks to accept Sam's offer before he started advertising the Corvette for sale. One week later, Bob learns that Sam has sold his 1970 Corvette to Terry. Which of the following statements about the offer is correct? a. Sam's offer to Bob is not a firm offer, but he cannot sell the car to Terry until the two weeks are up. b. Terry will not have to sell the car to Bob for $7,000 if Bob wants the car if Terry paid $9,000 for the car. c. Sam's offer to Bob is a firm offer; and he must get his car back from Terry and sell it to Bob for $7,000 if Bob accepts his offer within the two weeks. d. Sam's action of selling the car to Terry is a revocation of his offer to Bob.

Sometimes a party makes misrepresentations, which if untrue, could constitute a material misrepresentation. Which of the following fits that description? a. "This is the one that I would buy." b. "This is the best tablet on the market." c. "These tires will wear like iron." d. "This car has a new engine."

Stephanie induces Wanda to purchase 100 shares in Zazzy Corporation at a price of $100 per share. Stephanie tells Wanda that she paid $150 for them the previous month. In fact Stephanie only paid $50. How can this representation of a past event be characterized? a. This is a mutual mistake of fact. b. The fact that was misrepresented was not material. c. The representation is a misrepresentation of law. d. The representation of a past event is a misrepresentation of fact.

The Jones' have always admired a house that sits on the top of a hill owned by the Smiths. Martin is a mutual friend of both the Jones and the Smiths. One day, Martin mentions to the Smiths how much the Jones would love to buy the Smith home. The Smiths say that if they sell the house, they would be happy to sell it to the Jones. Martin relays this conversation to the Jones and the Jones immediately call the Smiths to accept the Smith's offer to sell. Have Smiths made an offer to sell their home to the Jones? a. No. The Smiths did not objectively intend to make an offer because they did not clearly state they were willing to sell the house. b. No. The Smiths did not include a selling price in their conversation with Martin so the offer would fail for lack of specificity and definiteness. c. None of these are correct. d. All of these are correct.

When is there an effective acceptance of an offer to enter into a unilateral contract? a. When the offeree says he probably will do what was asked of him in the offer. b. When the offeree begins to do what was asked of him in the offer. c. When the offeree has substantially but not fully performed what was asked of him in the offer. d. When the offeree has fully performed what was asked of him in the offer.

Which of the following offers cannot be revoked? a. Any offer by a merchant under the UCC. b. Any offer that is in writing that promises to leave the offer open for three months or less. c. Any offer that is in writing, signed, and promises to leave the offer open whether it is made by a merchant or not. d. All of these are incorrect.

Which of the following, if any, are requisites for fraud in the execution? a. False representation as to the very nature of the contract. b. Signing party does not know the character or essential terms of the contract. c. Renders the transaction void. d. All of these are correct.

__________ is an intentional misrepresentation of material fact by one party to the other, who consents to enter into a contract in justifiable reliance on the misrepresentation. Fraud in the inducement renders the contract __________ by the defrauded party. a. Silence; void b. Fraud by concealment; void c. Fraud in the execution; voidable d. Fraud in the inducement; voidable

Which of the following is correct with respect to consequential damages under the Code? a. Consequential damages include damages for destruction of a warehouse caused by the explosion of nonconforming goods. b. Consequential damages include damages for lost profits from a contract to resell goods which the seller never delivers. c. Particular needs of the buyer need to be made known to the seller before the seller can be held responsible for consequential damages relating to those needs. d. All of these are correct.

d. All of these are correct. Correct. All of these are true with respect to consequential damages under the Code. See "Remedies of the Buyer 23-2."

The buyer's incidental damages resulting from the seller's breach include: a. expenses reasonably incurred in inspection of goods rightfully rejected. b. any commercially reasonable charges or commissions in connection with obtaining cover. c. any reasonable expenses connected to the delay. d. All of these are correct.

d. All of these are correct. Correct. Buyer's incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection of goods rightfully rejected, any commercially reasonable charges or commissions in connection with obtaining cover, and any reasonable expenses connected to the delay. See "Remedies of the Buyer 23-2."

An aggrieved seller may: a. withhold delivery. b. resell or recover damages for non-acceptance or recover the price. c. cancel the contract. d. All of these are correct.

d. All of these are correct. Correct. Withholding delivery, reselling or recovering damages for non-acceptance or recovering the price, and cancelling the contract are all remedies available to an aggrieved seller. See "Remedies of the Seller 23-1."

Andrew, a painter, has repudiated its contract to sell 50 of his custom paintings to an art gallery. What recourse does the art gallery have under the circumstances? a. It can seek a security interest in the paintings. b. It must await the seller's performance. c. It can recover punitive damages. d. It can seek specific performance.

d. It can seek specific performance. Correct. Specific performance is an equitable remedy available when monetary damages or other legal remedies are inadequate.

Manufacturer contracts to sell Dealer, a dealer in used machinery, a used machine for $10,000 that Dealer plans to resell and makes those intentions known to Manufacturer. Under the contract, Manufacturer was to deliver the machine by July 1, but repudiates the contract on June 1. By reasonable efforts, Dealer is able to obtain a similar machine from Machine Company for $12,000 in time by the July 1 delivery. Dealer fails to do so, losing $5,000 in profit that it would have made from the resale. What are Dealer's damages? a. Nothing. b. $2,000, the difference between the $10,000 original sales price and the $12,000 new machine that could have been purchased by cover. c. $5,000 net profit it would have made from reselling the machine. d. Nominal damages.

d. Nominal damages. Correct. Dealer may recover the difference in price, which it may have reasonably purchased by cover.

Perry is building his house and orders a hot water heater from Jones Co. to be installed by them. The hot water heater they sent has a 45-gallon capacity, but Perry had ordered a 60-gallon capacity. Jones cannot provide a 60-gallon heater for two months, so Perry cancels the contract and gets a heater from another company. Jones Co. says it must be allowed to install the heater. What result? a. Perry can cancel the whole contract, but he is then limited in his recovery of damages. b. Jones wins; Perry can only cancel if installation is also delayed two months. c. Jones wins; Perry can only cancel the portion of the contract regarding the goods. d. Perry wins since the contract breach concerns the whole contract.

d. Perry wins since the contract breach concerns the whole contract. Correct. Perry wins since the contract breach concerns the whole contract.

Wilma has an insurance policy on the contents of her apartment, which requires that she notify the insurance company within 60 days of any loss before she is eligible to receive payment for her loss. The notification requirement is:

d. a condition precedent.

Where, after a contract is made, a party's principal purpose is substantially frustrated without his fault by the occurrence of an event whose nonoccurrence was a basic assumption on which the contract was made, his remaining duties can be discharged by:

d. frustration of purpose.

Jose is a race car driver and contracted with Peter to race Peter's car in an upcoming car race. The night before the race, Peter's car caught fire, was severely charred, and was inoperable. What concept would allow Jose to be excused from performing under the contract?

d. impossibility.

The case,Christy v. Pilkinton, is in the textbook to establish which of the following:

d. subjective impossibility does not discharge the contractual duty of the party.

Promissory estoppel

doctrine enforcing some non-contractual promises courts will enforce the promise in order to avoid injustice

When is acceptance effective?

effective upon dispatch (unless offer provides otherwise)

Conditions

event whose occurrence or nonoccurrence affects a duty or performance

A(n) ____ contract is one in which the parties have manifested their agreement by oral or written language, or both.

express

Failure to warn

failure to provide adequate warnings of possible danger or to provide appropriate directions for use of a product

Magnuson-Moss Warranty Act

federal statute protecting purchasers of consumer goods by providing that warranty information be clear and useful

A(n) __________ is a special type of lease transaction generally involving three parties instead of two.

finance lease

The Code has made certain offers irrevocable without the offeree's giving any consideration for the promise to keep the offer open. These offers are known as:

firm offers.

In the case of Pittsley v. Houser, the court:

found the "predominant factor" test was the better, more prudent rule

A warranty may rise out of all of the following except:

from a disclaimer.

Unless one of the parties contractually assumes the risk, the ____ discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible.

frustration of purpose doctrine

Is the non-breaching party entitled to punitive damages in a breach of contract action?

generally not recoverable for breach of contract only allowed in criminal law

A promise against public policy:

has no legal remedy available for breach.

What is good faith?

honesty in fact and the observance of reasonable commercial standards of fair dealing

Under what circumstances may a buyer revoke acceptance?

if the nonconformity substantially impairs the value of the goods to him, provided that his acceptance was (1) premised on the reasonable assumption that the seller would cure the nonconformity, and it was not seasonably cured or (2) made with- out discovery of the nonconformity, and such acceptance was reasonably induced by the difficulty of discovery before acceptance or by the seller's assurances.

Modification of UCC contracts

if the resulting contract is within the statute of frauds, then the modification must be in writing

Leslie purchased 100 flower pots from a local merchant. Warranties which are not included in her sales contract, but exist by "operation of law," are the:

implied warranties

Leslie purchased 100 flower pots from a local merchant. Warranties which are not included in her sales contract, but exist by "operation of law," are the:

implied warranties.

Consideration

inducement to enter into a contract (legal sufficiency and bargained for exchange)

Mitigation of damages

injured party may not recover damages for loss he could have avoided by reasonable efforts

Under a destination contract, the seller must do all of the following except:

inspect the goods upon arrival at the specified destination to ensure that they are conforming.

One of the changes in contract law between the nineteenth century and the twentieth century is that in more recent times:

intended third-party beneficiaries may sue in their own right.

How can an offer be terminated?

lapse of time, revocation (exceptions), rejection, counteroffer, death of incompetency, destruction of subject matter, illegality

Regulatory license

licensing statute that is intended to protect the public against unqualified persons; an unlicensed person may not recover for services she has performed

Revenue license

licensing statute that seeks to raise money; an unlicensed person may recover for services he has performed

What effect if a minor misrepresents their age?

majority view says minors can disaffirm the contract

Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the roof, saying that he has a headache and doesn't want to listen to pounding. The next day, Henry still has a headache and he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to allow them to work. After four weeks of this, Ace:

may be discharged, but Henry is not.

Warranty of title

may be excluded or modified by specific language

Fraud in the execution

misrepresentation that deceives the other party as to the nature of the document (void) aka signing a paper and its secretly a contract

What is the primary remedy for breach of contract?

monetary damages

What are buyer's rights regarding inspection of goods?

must be completed within a reasonable amount of time for cure by seller

What is meant by a contract that falls within the statute of frauds?

must be in writing

Misrepresentation

negligent: made without due care (voidable) innocent: made without knowledge of its falsity, but with due care (voidable)

Matt tells Ron that the snow boots he is selling are capable of protection at temperatures of 20° below zero. Ron orders a pair for his trip to Greenland. The first night's temperature goes down to 27 below. Ron suffers frostbite on all of his toes. Ron then sues for breach of warranty. The result is:

no breach, because Matt's statement was correct.

What effect does an advertisement have?

not an offer, just an invitation to make an offer

A(n) ____ is a substituted contract that involves an agreement among three parties to substitute a new promisee in place of an existing promisee, or to replace an existing promisor with a new one.

novation

A(n) __________ is a substituted contract that involved an agreement among three parties to substitute a new promise for the existing promise or to replace the existing promisor with a new one.

novation

What is a firm offer?

offer made by a merchant requiring the contract to stay open for 3 months without consideration

What is an "option"

offeree gives consideration in exchange for the offeror's promise to keep the offer open

When is a party entitled to an equitable remedy?

only allowed when there is no adequate remedy at law

Buyer's performance obligations

pay the money

Material breach

percentage complete, degree of benefit, good faith

The Code greatly alters the common law doctrine of material breach by adopting what is known as the:

perfect tender rule

Seller's performance obligations

perfect tender, inspection of goods, rejection of goods, cure by the seller

In most contracts, discharge takes place by:

performance

Any property other than an interest in real property is:

personal property.

What is a non-competition clause? What is required to prove it is not an illegal restraint of free trade?

prevents people from going into competition with a competitor unreasonable restraints of trade are not enforceable

Bilateral contract

promise for a promise

Unilateral contract

promise in exchange for an act

Pre-existing duty

promise to do something you already have to do

A person who makes a promise is a(n):

promisor.

An obligation imposed by law where there has been no agreement or expression of assent by word or act on the part of either party involved is a(n):

quasi contract.

How long does an offer stay open?

reasonable amount of time unless otherwise discussed

What are liquidated damages?

reasonable damages agreed to in advance by the parties to a contract

Anticipatory repudiation

refusal to perform before performance is due treated as a breach, allowing the other party to bring suit immediately

Acceptance of the goods precludes a buyer from:

rejecting the goods.

What is the effect of an illegal agreement?

renders the contract void

What is needed to modify a common law contract?

requires new consideration

Restitution

restoration of the injured party to the position she was in before the contract was madd

Which of the following generally is not grounds for discharge of a contract by operation of law?

running of the statute of limitations

What contracts need a writing under the statute of frauds?

sale of goods over $500, sale of land, contracts over a year, executor-administrator, marriage, suretyship

According to the UCC, an enforceable agreement involving the transfer of title of goods from a seller to a buyer for a price is called a(n):

sale.

Leo owes Nora $1,000 and they both agree that Leo will mow the grass of Nora's 10-acre field in satisfaction of the debt. Leo's performance of mowing the grass is:

satisfaction

Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be a(n):

satisfaction.

Destination contract

seller is responsible for goods until they reach the buyer's location FOB place of destination, exship, no arrival no sale

Fraud in the inducement

shown by: false representation, fact, materiality, knowledge of falsity and intention to deceive, or justifiable reliance (voidable)

settlement of a disputed debt (unliquidated)

smaller payment of money to discharge a disputed debt, constitutes sufficient consideration

settlement of an undisputed debt (liquidated)

smaller payment to discharge an undisputed debt, does not constitute sufficient consideration, can still sue

Caroline signs a contract to work as a sales rep for Incellmed Corporation for a period of two years. This contract is governed by:

state common law.

Contracts are governed primarily by:

state common law.

Undue influence

taking unfair advantage off a person by reason of a dominant position based on a confidential relationship (voidable)

If the goods contracted for are partially destroyed before risk of loss has passed to the buyer:

the contract is voidable at the buyer's option

The buyer must reject nonconforming goods under the perfect tender rule except where:

the parties agree to limit the buyer's right to reject nonconforming goods.

Design defect

the product, though made as designed, is dangerous because the design is inadequate

Whether an implied warranty arises out of the circumstances under which the parties enter into a contract may depend on:

the type of contract entered into, the seller's merchant or non-merchant status, applicability of other statutes.

Whether an implied warranty arises out of the circumstances under which the parties enter into a contract may depend on:

the type of contract entered into; the seller's merchant or non-merchant status; applicability of other statutes.

What are necessities?

those that reasonably supply a person's needs, minor is liable for the reasonable value of necessary items

Transfer of title

title passes when the parties intend it to pass, when the parties do not specifically agree, the Code provides rules to determine when title passes

A "sale" of goods happens when:

title to the goods is passed

Contract law:

today usually recognizes contractual obligations whenever the parties manifest an intent to be bound.

A and B enter into a contract on January 1 of this year. A's friend C tells A, "The law generally restricts the time within which an action can be brought by either party to a contract." C's statement is:

true, because of statutes of limitation.

The case of Construction Associates, Inc. v. Fargo Water Equipment Co. illustrates the doctrine of:

unconscionability.

Substantial performace

under common law, does not need to be perfect performance, "good enough"

Perfect tender rule

under the UCC, performance of contracts for the sale of goods must be perfect

Mistake

understanding that is not in accord with existing fact voidable when a mutual mistake

Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. This is best described as a(n):

unilateral contract.

Lee has been declared incompetent by the court and is under the care of his sister. Without his sister's knowledge, Lee rents the 30,000-seat civic center for his birthday party. Lee's contract to rent the civic center is best described as a:

void contract.

Steven intentionally makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is:

voidable.

What generally happens when we enter into a gambling agreement?

wagers are prohibited where their only interest is gain/loss "games of chance"

Implied warranty fitness for particular purpose

warranty by any seller that goods are reasonably "fit for a particular purpose" and the buyer "relied on the seller's skill and judgement to furnish suitable goods"

Implied warranty of merchantability

warranty by merchant seller that the goods are reasonably "fit for the ordinary purpose for which they are made" and "are of fair, average quality"

When is the offer effective?

when received

Eric bought a new snowmobile from the North Pole Manufacturing Company. After buying the machine, Eric then modified the spark plugs and a few other things in order to soup it up. In February, just after a snowfall, Eric was driving the snowmobile, when it tipped over, trapping him beneath it. His leg was severely burned. Eric now wants to sue North Pole for strict liability in tort. Eric:

will likely lose the suit, because the machine has been altered since its manufacture.

When can a buyer reject goods?

within a reasonable amount of time

Duress

wrongful or unlawful act or threat that overcomes the free will of a party (physical - void, threat - voidable)

One-year provision: when is the one year calculated?

year runs from the time the agreement is made

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