BUL 3310 Unit 5,6 Quiz
Which of the following statements is true about contracts in which $1 is offered as consideration? $1 is accepted as consideration in contracts that transfer title to deeds. $1 is accepted as consideration if the value of the goods do not exceed $500.00 $1 can never support a valid contract because it cannot be an inducement for taking on a legal detriment. $1 is accepted in the business community as consideration for a signed option contract.
$1 is accepted in the business community as consideration for a signed option contract.$1 is accepted as consideration in contracts that transfer title to deeds.
Which of the following promises would be legally adequate consideration in a bilateral contract?
A promise not to sue someone on a claim that the promisor believes in good faith is valid.
American Products, a Little Rock company, has a contract to send 150 dozen widgets to a customer in Bristol England aboard the container ship Pride of New Orleans. The contract requires American Products to deliver the widgets to the ship's dock and to put them into the hands of the dock master. American Products' liability ends when the dock master takes possession of the widgets. The contract between American Products and customer would read
FAS/Pride of New Orleans
$1 is never legally adequate consideration in a contract because no one will willingly incur a legal detriment for $1.
False
A minor must pay the contract price for necessaries.
False
A plaintiff may be awarded either compensatory damages or consequential damages, but not both.
False
A thief can pass good title to a subsequent purchaser, so long as the purchaser bought in good faith, for value, and did not know that the goods were stolen.
False
An accord and satisfaction can be used to settle both liquidated and non-liquidated debts.
False
Article 2 of the Code covers the sale of land and improvements on the land.
False
Course of dealing refers to the practices of a particular industry and may be used by the courts to interpret contracts.
False
During a violent storm, Nelson saved Reggie's boat from being destroyed. Reggie was so grateful that he promised to give Nelson $100. Reggie's promise is unenforceable because it is based on moral obligation.
False
Giving up a legal right is adequate consideration for a contract governed by the Uniform Commercial Code, but not for contracts under common law.
False
If a contract is silent about payment, payment is due when the goods are identified to the contract.
False
If a unilateral mistake of fact is apparent to one party, he or she may take advantage of that knowledge and profit from the other party's ignorance.
False
If goods are sold subject to a bill of lading, title to the goods passes when the goods are in the hands of the buyer.
False
In a bilateral contract, each party must gain a legal benefit, but only one party need incur a legal detriment.
False
In a majority of states, a minor can disaffirm a contract only by returning all the property originally purchased.
False
Bob promised to pave Sue's driveway and Sue promised to pay him $5000 when the work was completed. The contract between Bob and Sue is a __________________contract.
Bilateral
Vivian offered to buy Ben's violin for $2,000 and Ben accepted. Three days later Vivian gave Ben $2,000 in cash and Ben gave Vivian possession of the violin. Which of the following sets of terms best describes the contract between Vivian and Ben?
Bilateral, express, valid and executed
Nominal consideration is another term for sham consideration.
False
Promissory estoppel is the contract doctrine that requires that accords be in writing.
False
Quasi-contract is another term for an implied-in-fact contract.
False
Sham consideration is sufficient for a unilateral contract, but not for a bilateral contract.
False
The Uniform Commercial Code governs the sale of all commercial services and goods.
False
The victim of innocent misrepresentation may sue to recover contract damages.
False
Under Article 2 a consignment is treated like a sale on approval.
False
Under freedom of contract, merchants may, by mutual consent, disclaim the obligations of good faith and due care imposed by the Code.
False
Under which of the following is a contract voidable?
One of the parties has the option to set aside the contract.
In which of the following circumstances would the remedy of rescission be used? One party to the contract is a minor who wishes to disaffirm the contract. The contract term is longer than a year The contract was based on a mistake by the parties The contract was based on fraud
One party to the contract is a minor who wishes to disaffirm the contract. The contract was based on a mistake by the parties The contract was based on fraud
Sue bought a painting from Neda, who had inherited it and was not in the business of selling art. Sue gave Neda a check and Neda tendered delivery simultaneously. Sue asked if she could pick up the painting later in the day. Through no fault of Neda's, the painting was stolen before Sue returned. The risk of loss in these circumstances
Passed to Sue on Neda's tender of delivery
Exemplary damages are also known as _________________ damages.
Punitive
Betty Buyer discovers that the pin she bought from Sally Seller is not a ruby as Sally had claimed. She believes that Sally's misrepresentation was innocent, but she wants to get her money back. The contract remedy Betty should seek is
Rescission
Sally Seller deliberately misrepresented to Bill Buyer the condition of a wood chipper she sold him. The misrepresentation materially altered the value of the machine and obscured a safety hazard. What remedies are available to Bill Buyer in these circumstances? Rescission Punitive damages Compensatory damages Discretionary damages
Rescission Punitive damages Compensatory damages
Betty Buyer discovers that the pin she bought from Sally Seller is not a ruby as Sally had claimed. She believes that Sally's misrepresentation was innocent, but she wants to get her money back. In order to get her money back, Betty will have to return the pin to Sally. This is the duty of
Restitution
Debbie, who owns an art gallery, lets regular customers take home prints and large works of art so they can "think about them" before buying. A customer who wants the print sends Debbie a check for the selling price. A customer who decides not to buy the work has 15 days to return it to Debbie. This arrangement is classified as an ____________.
Sale on approval
Under the Code, a consignment is treated like a
Sale or return
Which of the following elements is present in fraudulent misrepresentation but not in innocent misrepresentation?
Scienter
Under which of the following circumstances will cashing a check marked "paid in full" create an accord and satisfaction?
The check is for an unliquidated debt and both parties know of the dispute.
Which of the following is/are not an element of promissory estoppel? (select all answer options that are correct) The promissor must foresee that the promissee would rely on the promise. There must be an underlying enforceable bilateral contract. The promisee suffered damages as a result of reasonably relying on the promise The promissee did in fact reasonably rely on the promise.
There must be an underlying enforceable bilateral contract.
In which of the following circumstances would the remedy of rescission be used? The contract was based on fraud The contract term is longer than a year The contract was based on a mistake by the parties One party to the contract is a minor who wishes to disaffirm the contract.
The contract was based on a mistake by the parties One party to the contract is a minor who wishes to disaffirm the contract. The contract was based on fraud
Which test do courts use to decide if the contract of a person who has not been adjudicated insane can be avoided because of mental incompetence?
The court will look to see if the party understood the nature, purpose and consequences of entering into a contract at the time the contract was formed.
If goods are being sold under a negotiable document of title, such as a bill of lading, risk of loss passes to the buyer when
The document is tendered to the buyer
Which of the following statements is false about sale or return contracts?
The goods must be used as consumer goods.
Among the following, which party has a fiduciary responsibility? The owners of fee simple estates The guardian of a minor child The director of a corporation The executor of a will
The guardian of a minor child The director of a corporation The executor of a will
In an accord and satisfaction, the satisfaction is
The performance of the action called for in the substitute agreement.
An illusory promise is created when
The promise is conditional on an event happening first that is totally within the promissor's control.
An accord and satisfaction can take place only if
There are unliquidated debts based on contract or tort claims.
Cal Contractor did extensive work renovating Hailey Homeowner's kitchen. The construction work has been completely finished, but Hailey has not yet paid Cal. This is an example of a partially executed contract.
True
Courts generally cannot order specific performance when the contract is for personal services because of the Thirteenth Amendment.
True
Courts may look into the adequacy of consideration if there is evidence of fraud or undue influence by one of the parties.
True
Failure to rescind a contract within a reasonable time amounts to an affirmation of the contract.
True
In an accord and satisfaction, the accord is the new agreement.
True
Innocent misrepresentation can be the basis for the injured party to rescind the contract.
True
One method for proving that a contract has been rescinded is to tear up the contract
True
One of the elements of fraudulent misrepresentation is that the victim's reliance on the false representation was justifiable.
True
Punitive damages may be awarded to victims of fraudulent misrepresentation.
True
Rescission is the remedy that cancels the contract and returns each party to his pre-contract position.
True
Tamara left her car in a line of other cars waiting to be washed. Tamara expects to pay for the service and the car wash expects to be paid. The contract that exists between Tamara and the car wash is an implied in fact contract.
True
The Uniform Commercial Code governs contracts for the sale of goods.
True
The Uniform Commercial Code is an important source of contract law for businesses in the United States.
True
The buyer attains the right to insure the goods once the goods are identified to the contract.
True
The document issued by a common carrier evidencing its receipt of goods for shipment is a bill of lading.
True
The purpose of reformation is to correct the written contract to reflect the actual intentions of the parties.
True
To meet the element of consideration, each party to a contract must gain a legal benefit and incur a legal detriment.
True
The legal status of a contract entered into by someone who has been adjudicated insane is __________.
Void
Typically in construction contracts there will be a provision awarding damages to the buyer at "X" amount of dollars per day for each day the builder is late in completing the work. The parties to the contract agree upon this amount in advance because they know the buyer will incur added costs, or will lose profits, because of the delay. What type of damages are these contractually fixed payments?
liquidated
The person to whom an offer to form a contract is made is called the___________.
offeree
Which of the following is not classified as a good under Article 2?
A 3 month lease on a lakeside cabin.
Which of the following mistakes would result in the rescission of the contract?
A bilateral mistake of material fact
Which of the following is an unliquidated debt?
A bill from a divorce lawyer for $8,000 that is past due, interest to run at 5%. Client is actively disputing the number of hours billed and other charges.
Jack and Jill have a one year contract that calls for Jack to make 4 deliveries of flour a month to Jill's bakery. The pattern of repeated deliveries under this one contract establishes
A course of performance
Goods which are required for maintaining life or health are classified as
Necessaries
Which of the following is a requirement for a valid contract? Mutuality of signatures Consideration Offer and acceptance Legal capacity of the parties
Consideration Offer and acceptance Legal capacity of the parties
Under common law, modifications to existing contracts require ___________to be enforceable.
New consideration
Sally Seller deliberately misrepresented to Bill Buyer the condition of a wood chipper she sold him. The misrepresentation materially altered the value of the machine and obscured a safety hazard. If Bill wishes to avoid the contract, his best defense is
Fraudulent misrepresentation
Which of the following statements about nominal consideration is correct? Nominal consideration is another term for sham consideration. Nominal consideration is any small amount paid over and above the contract price for document preparation Giving your siblings a quitclaim deed for your 18 share in your family home for 1 is an example of nominal consideration. Nominal consideration will support an enforceable contract.
Giving your siblings a quitclaim deed for your 18 share in your family home for 1 is an example of nominal consideration. Nominal consideration will support an enforceable contract.
Which of the following statements about quantum meruit is correct?
It is an equitable remedy to prevent unjust enrichment when there is no contract.
Article 2A of the Code governs
Leases of goods
When there is a time is of the essence clause in a contract, the parties will normally also include in the contract a dollar amount that will be paid the innocent party each day it takes to complete the work after the contract date. This is an example of a __________________damages clause.
Liquidated
Mike, a minor, bought a car from Used Car Lot for 6,000. Two months before he turned 18, the age of majority in his state, Mike decided he didn't want the car anymore and returned it to Used Car Lot. Mike had put 50,000 miles on the car. Applying the law followed by the majority of states, please select the statement that best describes Mike's rights in these circumstances.
Mike would be entitled to get back the full 6,000 purchase price
Sam Student transferred to another college and had to leave his apartment with 5 months remaining on the lease. Landlord must try to find a suitable replacement tenant before he can sue Sam for damage because landlord has a duty to _____________damages.
Mitigate
Which of the following statements is true about modifying contracts governed by the Code? Modifications must be made in good faith No new consideration is required to modify an existing contract. Parties may agree that all modifications to an existing contract must be in writing. The Code only allows modification of contracts that do not exceed $500.00
Modifications must be made in good faith No new consideration is required to modify an existing contract. Parties may agree that all modifications to an existing contract must be in writing.
Sid Salesman sold Bea Buyer a used 2004 Camry for 8,000. The morning after the contract was signed, Sid called Bea to say that he had forgotten that the dealership would not let that Camry go for less than 9,000 so she would have to pay an additional 1,000 if she wanted the car. Is Bea liable for the extra 1,000?
No, this was a unilateral mistake of fact by Sid
After reaching the age of majority, if a party does nothing to disaffirm a contract entered into while a minor, his silence will _____________the contract.
Ratify
Beth agreed to buy Sam's home for 400,000. After both parties had signed the contract, which was prepared by the real estate agent, it was discovered that the property was listed on the contract as 1200 Elm Street instead of 200 Elm Street, the actual house number. The remedy courts use to correct mistakes like this in contracts is
Reformation
Big Equipment Company sold a tractor-scraper to Ace Paving for $125,000. Ace made a down payment of $25,000 and agreed to pay the balance to Big Equipment in monthly installments at 4% interest. In typing up the contract, some of the digits in the vehicle identification number were inadvertently transposed. Ace has stopped making its monthly payments and Big Equipment wants to sue Ace, but it must first put the correct VIN in the contract. The remedy courts use to correct contract errors like this is _______________.
Reformation
Big Oil Company has a contract with homeowner to deliver however much heating oil homeowner needs for the fall and winter seasons. This is an example of a(n) __________________contract.
Requirements
Seller, a Chicago business, sent a shipment of tractor parts to Buyer, a Detroit business, under a contract that read: "F.O.B.Chicago, Illinois." The parts were not those specified in the contract and Buyer rejected them. A few hours after Buyer notified Seller of the rejection, the parts were destroyed in a fire at Buyer's place of business. Which of the following best states the rights and duties of Buyer and Seller in this situation?
Seller has the risk of loss because the tender was non-conforming, but only to the extent that Buyer's insurance does not cover the loss.
Brown & Son's of Easton, Maryland, has a contract to sell 250 computers to Community College in Onley, Virginia. The contract reads: "F.O.B.Easton, Maryland. This is a _______________ contract.
Shipment
C.I.F. in a sales contract indicates that the price includes the cost of the goods, insurance and shipping charges.
True
A bilateral mistake of fact is grounds for rescinding the contract.
True
A contract entered into by a minor is voidable at the option of the minor.
True
A party to a contract who lacks mental capacity, but has not been adjudicated insane, is liable in quasi-contract for necessaries.
True
A party to a contract who lacks mental capacity, but has not been adjudicated insane, is liable in quasi-contract for necessaries. Group of answer choices
True
A party who seeks to rescind a contract must notify the other party in a timely fashion.
True
Article 2 of the Code has special rules that apply only to merchants.
True
Sandy bought a large air conditioner from Big Box Home Store for 525. For an additional 100, the store delivered, installed and programmed the unit. Does this sale come under Article 2 of the Code?
Yes, because the sale of goods predominates
British Textile Manufacturer entered into a contract with Cotton Broker for 2,000 bales of cotton to be shipped from India to England on the ship "Peerless, sailing from Bombay." The contract was silent about the shipping date. Buyer expected the cotton to be shipped on the Peerless that sailed from Bombay in October; seller expected to ship the cotton on the Peerless that sailed from Bombay in December. By the time the second ship arrived in England, buyer had found another supplier and refused to accept the cotton. Does manufacturer have any defenses to the breach of contract suit brought by Broker?
Yes, there was a bilateral mistake of material fact
Famous Chef told Shrimp Boat Captain: I will buy your catch if I think the shrimp are large enough." What is the status of this promise?
estompel or faith
