Business Law - Ch. 11-15
15.11 _____ conditions are understood to be part of the contract A) Implied B) Expressed C) Concurrent D) Mutual E) Negotiable
A) Implied
13.13 Which of the following is true in oral rescission? A) Insufficiently written contracts governed by the Statute of Frauds are unenforceable B) For a fully performed contract unenforceable under the Statute of Frauds, some restitution will be available C) If a title has already passed to the buyer under a written agreement that satisfies the statute, the contract cannot be rescinded D) If there has been a material change of position in reliance on the contract, oral agreements to rescind are enforceable E) Contracts governed by the Statute of Frauds cannot be modified orally if the resulting contract, taken as a whole, falls outside the statute
A) Insufficiently written contracts governed by the Statute of Frauds are unenforceable
11.18 On May 1, 1999; Alex promises to sell his bike to Jerry for $400 on May 20, 1999. On May 10, due to an emergency, Jerry offers to pay $900, if Alex can sell hose bike on May 11. Alex sells his bike on May 11, but Jerry refuses to pay $900 in return, to which Alex files suit in the court on May 15, 2005. The court dismisses the case due to which of the following reasons? A) Running of statute of limitations B) Voidable duties C) Promissory estoppel D) Alleged breach of contract E) Moral obligation
A) Runny of statute of limitations
11.11 Which of the following is true for a valid consideration? A) The detriment need not be an actual detriment B) A detriment to the promise can only confer a tangible benefit on the promisor C) The promisee cannot agree to forego something, without that something being given to the promisor D) Legal consideration can be a promise irrespective of evens that may never happen E) The detriment is never a benefit to the promisee
A) The detriment need not be an actual detriment
13.19 According to the rule of interpretation, which of the following is true? A) Writing is interpreted as a whole, without undue attention to one clause B) Courts prefer the items in the order listed: course of dealing, usage of trade, express terms, and course of performance C) If an amount is given in words and figures that differ, the figures control D) Typing controls over writing: writing controls over printed forms E) Written contracts guarantee escape from disputes and litigation
A) Writing is interpreted as a whole, without undue attention to one clause
12.15 A contract presented to the offeree to take or leave without bargaining is known as a(n) _____ A) contract of adhesion B) aleatory contract C) personal contract D) conditional contract E) unilateral contract
A) contract of adhesion
12.16 According to the blue pencil rule, _____ A) courts can delete from the non-compete agreement only that part that is unreasonable and enforce the remainder B) every contract by which anyone is restrained from engaging in a lawful profession is to that extent void C) an order directing a person to stop what he should not do would be issued D) courts may refuse unconscionable contracts E) a court may find the contract divisible and enforce only the parts that are not unconscionable
A) courts can delete from the non-compete agreement only that part that is unreasonable and enforce the remainder
14.18 A creditor beneficiary is ____ A) one to whom the promisor agrees to pay a debt of the promisee B) one who has no rights C) an intended beneficiary D) the recipient of a gift promise E) one who is not the intended beneficiary
A) one to whom the promisor agrees to pay a debt of the promisee
12.17 Which of the following is true about unconscionable contracts? A) A term is substantially unconscionable if it is imposed upon the weaker party because of the inconspicuous print B) "Unconscionable" is not defined in the Restatement or the UCC C) Procedural unconscionability arises where the affected terms deprive a party of any real remedy for breach D) Courts find unconscionable contracts in the context of commercial transactions rather than consumer transactions E) In the case of consumer transactions, the assumption is that the parties tend to be sophisticated businesspeople, able to look out for their own contract interests
B) "Unconscionable" is not defined in the Restatement or the UCC
11.16 Billy contracts to build Harry a house for $100,000. While laying the foundation, Billy unexpectedly discovers that the area is prone to lightning, to avoid which a lightning rod has to be installed. To ensure that Billy does not delay, Harry agrees to pay $50,000 more than originally agreed. In this unforeseen difficulty arising after the contract is made, in which of the following ways can Billy claim the remaining amount? A) After The house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $100. Harry has no obligation because he only made an illusory promise. B) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $45,000. The problem may be resolved by an accord and satisfaction C) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Harry gives a check of $100,100 to billy, which is encashed by him D) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000 and an old bike from Harry E) After the house is constructed, Harry refuses to make the extra payment. After persistent bargaining, Billy agrees to settle for $90,000, if Harry tutored Billy's son
B) After the house is constructed, Harry refuses to make the extra payment. The lightning rod costs Billy $45,000. The problem may be resolved by an accord and satisfaction
11.13 Identify the legally insufficient consideration A) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens suit, to which Alex promises to pay just $100 in exchange for Tom's promise to release him from the remainder of the amount B) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens to sue him, to which Alex promises to pay an interest of 2 percent whenever he gets his debtors to repay him C) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 1, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount D) Alex promised to pay $1,000 to Tom for his car, due March 1. On February 27, Tom pays only $400 in exchange for Tom's promise to release him from the remainder of the amount E) Alex promised to pay $1,000 to Tom for his car, due March 1. On March 18, Tom pays only $400 and takes Alex to the carnival
B) Alex promised to pay Tom for his car in four installments of $1,000 each. He fails to pay these installments. Tom threatens to sue him, to which Alex promises to pay an interest of 2 percent whenever he gets his debtors to repay him
12.12 Which of the following is made illegal according to common law? A) Gambling contracts B) Sale of business C) Sunday contracts D) Usury E) Licensing contracts
B) Sale of business
13.20 Which of the following led the court to decide upon its judgment in the Wilson Floors Co v. Scotia Park, Ltd., and Unit, Inc. case? A) The project Unit fell behind in making payments to Wilson for its completed work in the spring of 1973 B) The bank had induced Wilson to remain on the job and rely on its credit for future payments C) Foreclosing on the mortgage and hiring a new contractor would have resulted in higher costs D) The bank had no contractual duty to Wilson despite its oral guarantee according to the Statute of Frauds E) The bank representative had merely advised the subcontractors that adequate funds would be available to complete the job
B) The bank had induced Wilson to remain on the job and rely on its credit for future payments
14.20 What is vesting of rights? A) Surrender by a party of legal rights otherwise available to him or her B) The time at which the benefit of a contract is fixed in the beneficiary C) An assignee taking equal rights as his assignor D) The right or duty of a particular person to perform or receive contract duties or benefits E) A new contract substituting for an old one, or a new party to a contract replacing a former party
B) The time at which the benefit of a contract is fixed in the beneficiary
15.14 Nathan agrees to maintain the Jones' garden for as long as the original gardener, Deb, is away on vacation. This is an example of _____ A) termination of Deb's services B) a condition subsequent C) cancellation of Nathan's services D) a concurrent condition E) an implied condition
B) a condition subsequent
15.16 When an obligor is discharged upon delivery of the writing or upon occurrence of a condition, _____ is said to have taken place. A) a substituted agreement B) a release C) accord and satisfaction D) novation E) an implied condition
B) a release
15.13 A condition that terminates an already existing duty of performance is known as a(n) _____. A) concurrent condition B) condition subsequent C) implied condition D) express condition E) mutual recission
B) condition subsequent
13.15 A contract term stating that the written agreement contains the parties' full understanding and intent is known as _____ A) integrated contract B) merger clause C) main purpose doctrine D) reformation E) non-disclosure clause
B) merger clause
11.14 Rony takes his car to a car repair workshop to get it repaired. The cost of the repair has not been discussed beforehand in detail, although the cost in the nearby areas is normally around $1,000. After the repair, Rony and the mechanic agree on a bill of $800. Which of the following statements is correct? A) A week after the repair, the mechanic sues Rony for a bill of $1,000 B) After the repair, the mechanic agrees to give a discount of 10 percent. A week later, the mechanic sues Rony for a bill of $280 C) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encased by the mechanic. A week later, the mechanic sues Rony for a bill of $700 D) When Rony reaches home, the car's battery blows up due to an extra fitting made by the mechanic. Rony pays the mechanic just $100 E) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encased by the mechanic. A week later, the mechanic sues Rony for a bill of $800
C) A week after the repair, Rony sends a check of $100 marked "payment in full," which is encased by the mechanic. A week later, the mechanic sues Rony for a bill of $700
15.20 _____ comes into play when circumstances make the value of one party's performance virtually worthless to the other A) Impossibility B) Impracticability C) Frustration of purpose D) Termination E) Cancellation
C) Frustration of purpose
11.19 Which of the following promises is enforceable without consideration according to statutory law? A) Promissory estoppel B) Revival of promise barred by statute of limitations C) International contracts D) Voidable duties E) Moral obligation
C) International contracts
12.11 Since 1890, with the enactment of this act, the law of restraint of trade has been absorbed by federal and state antitrust statutes A) The Clayton Antitrust Act B) The Robinson-Patman Act C) The Sherman Act D) The Federal Trade Commission Act E) The Hart-Scott-Rodin Antitrust Improvements Act
C) The Sherman Act
12.20 Which of the following led the court to its final decision in the Bovard v. American Horse Enterprises case? A) The corporation was not engaged in jewelry production B) Bovard had recovered the corporate machinery through self-help C) The consideration for the contract was contrary to the policy of express law D) policy against manufacture of drug paraphernalia was explicit in the statute E) The parties were not in pari delicto
C) The consideration for the contract was contrary to the policy of express law
13.18 The usage of trade is a _____ A) pattern of behavior between parties showing how they intend their relationship to work B) systematic and uniform conduct in which parties engage after they enter into a contract C) customary way of doing business that may be used to inform the parties' contractual intentions D) promise to pay a debt which need not be in writing if the promisor was motivated by a desire for advantage or benefit E) contract term stating that the written agreement contains the parties' full understanding and intent
C) customary way of doing business that may be used to inform the parties' contractual intentions
14.19 An incidental beneficiary is: A) the intended beneficiary B) the donee beneficiary C) one who has no rights D) the creditor beneficiary E) one who promises to pay the debt
C) one who has no rights
15.18 Mary is obliged to deliver a parcel to Tony. But it is agreed between the two that Sheila will deliver the parcel to Tony instead of Mary. This is an example of discharge by _____. A) material breach B) waiver C) substituted agreement D) release E) accord and satisfaction
C) substituted agreement
14.13 A personal right can be defined as: A) surrender by a party of legal rights otherwise available to him or her B) the relationship of the immediate parties to a contract C) the duty of a particular person to perform or receive contract duties or benefits D) a new contract substituting for an old one, or a new party to a contract replacing a former party E) a contract for household or domestic purposes, not commercial purposes
C) the duty of a particular person to perform or receive contract duties or benefits
12.18 Which of the following bargains does the court consider illegal? A) Partially illegality B) Party not equally at fault C) Excusable ignorance D) Contracts interfering with family relations E) Party withdrawing before performance
D) Contracts interfering with family relations
15.19 _____ is said to exist when there is a radical departure from the circumstances that the parties reasonably contemplated would exist at the time they entered into the contract A) Cancellation B) Impossibility C) Termination D) Impracticability E) Frustration of purpose
D) Impracticability
13.14 Which of the following is true with regard to the parol evidence rule? A) It applies only to the oral discussions that do not make it into the final written agreement B) The rule has no bearing on events that have transpired before the contract in dispute was signed C) The rule is concerned only about agreements reached subsequently that may alter the terms of an existing contracts D) It does not negate all prior agreements or statements E) The rule applies only in cases where the parties never intended the written contract to be their full understanding and intend it to be partly oral
D) It does not negate all prior agreements or statements
12.13 Which of the following would be considered a reasonable restraint-of-trade? A) Ginny promises Tibbs that she would never sell the car that he sold to her B) Timothy sells a cafe to Ron and promises not to open a competing cafe for the next five years C) Julie gets a job in a hotel, which requires her to sign a bond that prevents her from working in any other hotel for a period of one year until resignation D) Libby sells her pet store to Nina and promises not to open a competing pet store in town for one year E) Rose threatens to fire his housekeeper if he does not show up for work Christians Eve
D) Libby sells her pet store to Nina and promises not to open a competing pet store in town for one year
11.20 In Gross v. Diehl Specialties Intern., Inc., which of the following led to the final judgement made by the court? A) The owner sold the company to the Diehl enterprises B) The company had declined severely in 1983 and 1984 C) The plaintiff was terminated by the defendant D) The 1982 contract was not the operative contract because there existed no consideration for it E) The promise to carry out an already existing contractual duty does not constitute consideration
D) The 1982 contract was not the operative contract because there existed no consideration for it
14.15 Who is a delegatee? A) An obligator who delegates a duty B) The one who performs under a contract C) The one who is witness to the assignment. D) The one to whom the delegation is made E) The one to whom the contract is transferred
D) The one to whom the delegation is made
11.12 Which of the following considerations is legally insufficient? A) Tony bought a book for $100, Ruby offers to buy it for $10 B) Tony bought a book for $100. He offers to sell it for free if Ruby helps him in shifting to his new house C) Tony bought a book for $1,000. Ruby offers to buy it for $2,000 if it does not rain the next day D) Tony bought a book for $100. He offers to sell it to Ruby for free if she helps him befriend the new girl in their lane E) Tony bought a book for $1,000. He offers to sell it to Ruby for $10 if she quits drinking
D) Tony bought a book for $100. He offers to sell it to Ruby for free if she helps him befriend the new girl in their lane
15.17 If a landlady accepts late payment by a tenant without objection, what means of discharge is she implementing? A) Novation B) Accord and satisfaction C) Substituted agreement D) Waiver E) Release
D) Waiver
13.16 An integrated contract is _____ A) something that has to happen before the obligation to perform the contract ripens B) a promise ancillary to an original promise C) a customary way of doing business that may be used to inform the parties' contractual intentions D) a contract that comprehends the parties' full understanding E) an agreement after marriage between spouses concerning division or ownership of their property
D) a contract that comprehends the parties' full understanding
14.16 Naomi sells her car to Jack, who assumes her mortgage. Naomi, in other words, has delegated the duty to pay the bank to Jack. This contract is called: A) a consumer transaction B) a privity C) vesting of rights D) a novation E) an assignor's warranties
D) a novation
11.15 An unforeseen difficulty arising after a contract is made may be resolved by a(n) _____ A) composition agreement B) promissory estoppel with detrimental reliance C) needs contract D) accord and satisfaction E) reservation of rights
D) accord and satisfaction
12.14 A judicial order directing someone to stop doing what he or she should not do is a(n) _____ A) restitution B) restraint C) exculpatory clause D) injunction E) novation
D) injunction
15.12 A concurrent condition arises when: A) it terminates an already existing duty of performance B) it makes a difference to the promises when the promisor acts on time C) it is unexpressed but understood to be part of the contract D) the duty to perform the contract is simultaneous E) the condition is stated in words in the contract, orally or written
D) the duty to perform the contract is simultaneous
14.11 The surrender by a party of legal rights otherwise available to him or her is: A) a delegator's duty B) a personal right C) privity D) waiver of defenses E) vesting of rights
D) waiver of defenses
14.14 What is an assignor's warranty? A) The right or duty of a particular person to perform or receive contract duties or benefits; cannot be assigned B) A new contract substituting for an old one, or a new party to a contract replacing a former party C) The relationship of the immediate parties to a contract, a "private" relationship, as between a retailer and a customer D) The passing or delivering by one person to another of the duty to perform a contract E) Promises, express or implied, made by an assignor to the assignee about merits of the assignment
E) Promises, express or implied, made by an assignor to the assignee about merits of the assignment
13.11 Which of the following is an exception to the UCC's Statute of Frauds requirement? A) Main purpose exception B) Part performance doctrine C) Possibility test D) Agreements of executor or administrator E) The admissions exception
E) The admissions exception
13.12 According to the common law, which of the following would make a written contract incomplete? A) The words need not appear in a formal document so long as it is signed by both the parties B) The essential terms of promises to be performed must be written out; all details need not be C) If an essential term is missing, it cannot be enforced, unless it can be inferred by rule of law D) The parties must be name in the writing in a manner sufficient to identify them E) The consideration for the promise need not be stated in writing, even if it has already been given
E) The consideration for the promise need not be stated in writing, even if it has already been given
15.15 It is said that 'time is of essences' when: A) the promisor refuses to fulfill the promised act in time B) the delay in time taken to fulfill the act results in financial loss to the promisor C) the promisee refuses to owe the promisor the value of the assignment D) an event terminates an existing duty of performance E) the promisee is affected by whether he promisor acts on time or not
E) the promisee is affected by whether he promisor acts on time or not
14.17 Persons are said to lack privity when: A) the right or duty of a particular person to perform or receive contract duties or benefits cannot be assigned B) they cannot pay money to receive another's executory contractual benefits C) an assignee cannot take greater rights than his assignor had D) they are not party to a contact which they were intended to benefits from E) they are not party to a contract and cannot enforce its terms
E) they are not party to a contract and cannot enforce its terms
11.2 A legal consideration always has to be certain True or False
False
11.3 Because the consideration on option contracts is nominal, its recital in the written instrument is usually a mere formality, and it is frequently paid True or False
False
11.5 Suppose a man offers to pay $100 to his neighbor, if the neighbor promises not to dump his garbage in his backyard. The man has a legal obligation to pay his neighbor True or False
False
11.6 If a promisor gives an illusory promise, a contract is formed True or False
False
11.7 An exclusive dealing agreement is one where a person can pay his creditors on a pro-rata basis True or False
False
11.9 A case of bankruptcy automatically negates all contracts True or False
False
12.4 With the spread of anti-tax enthusiasms over the last 30-some years, all kinds of gambling have been legalized and regulated True or False
False
12.8 Since 1890, with the enactment of the Clayton Act, the law of restraint of trade has been absorbed by federal and state antitrust statutes True or False
False
12.9 An agreement signed by Lowry, the president of an automobile company, not to work for any competitors during the term of his employment in the company is unlawful according to restraint of trade True or False
False
13.6 The UCC provides that an oral contract for goods in excess of $350 will be upheld if payment has already been made and accepted True or False
False
13.7 If an agreement contains several promises, the unenforceability of one does not necessarily render the others unenforceable True or False
False
13.9 Integrated contract is a customary way of doing business that may be used to inform parties' contractual intentions True or False
False
14.10 When the promisee is not indebted to the third person but intends for him or her to have the benefit of the promisor's performance, the third person is a creditor beneficiary True or False
False
14.3 Under the Uniform Commercial Code, any assignments of rights in excess of $1,000 must be in writing True or False
False
14.5 Contract rights are always assignable True or False
False
14.8 Most duties in a contract are almost never expressly delegated True or False
False
14.9 Personal services are delegable True or False
False
15.1 Under Uniform Commercial Code Section 2-106(4), a party that ends a contract breached by the other party is said to have effected a termination True or False
False
15.5 Implied conditions are stated in words in the contract, orally or written True or False
False
15.7 The promise of a landowner to transfer title to the purchaser and the purchaser to tender payment to the seller is a condition subsequent. True or False
False
15.8 If, as often occurs, a contract is not performed exactly on time, failure to do so is a material breach. True or False
False
11.17 A railroad company offers to purchase as much iron as its board of directors might order from an iron producer. After two months, the iron producer sues the railroad saying that they had not purchased any iron thus far from them. The railroad is not legally bound to give compensation to the iron producer. Under which clause can the railroad justify its stand? A) Illusory promise B) Preexisting duty C) Past consideration D) Section 2-209 of UCC E) Accord and satisfaction
Not B
12.19 An exculpatory clause will generally be held valid if _____ A) the agreement involves a business generally thought suitable for public regulation B) the party seeking exculpating is performing a business of great importance to the public C) the party purports to be performing the service to just anybody who comes along D) the parties are dealing at arms' length, able to bargain about the contract E) the property of the purchaser is placed under control of the seller, independent of his negligence
Not E
13.17 Under Section 2-202 of the UCC, _____ A) a course of performance is defined as "a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct" B) a usage of dealing is "any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question" C) a purpose agreement for a factory's monthly output is a course of performance D) a course of dealing is the conduct of a party in response to a contract that calls for repeated action E) an undertaking to wash a neighbor's car weekly is a course of dealing
Not a or b
11.1 A promise made which saves the parties from incurring losses is a legal detriment. True or False
True
11.10 In case a party is making a promise to another nation, is can be enforceable without consideration True or False
True
11.4 An unforeseen difficulty arising after a contract is made may by resolved by an accord and satisfaction True or False
True
11.8 If a plaintiff files a suit for claim of a contract after seven years, his claim will be dismissed, regardless of its merits True or False
True
12.1 Restitution will be allowed if party has to pay a penalty which is disproportionate in relation to the contravention of public policy involved True or False
True
12.10 Under the blue-pencil rule, a court can delete from the agreement only that part that is unreasonable to compete thenceforth True or False
True
12.2 Suppose Tom and Harry bet on the FIFA world and Harry loses. Harry has the right to recover his money before it is paid out to Tom True or False
True
12.3 If a contract is illegal, a promisee who has already performed under the contract can neither obtain performance of the act for which he bargained nor recover the money he paid or the value of the performance he made True or False
True
12.5 The first statewide blue law was enacted in the United States in 1788 True or False
True
12.6 In Marquette v. First Omaha Service Corp., the Supreme Court ruled in favor of the national bank on the basis of usury True or False
True
12.7 Failure to hold a regulatory license bars recovery, but the absence of a revenue or registration does not. True or False
True
13.1 The Statute of Frauds is legislative intrusion into the common law of contracts True or False
True
13.10 The parol evidence rule does not prevent a showing that a fact stated in a contract is untrue True or False
True
13.2 For an agreement to be covered by the statute, there must have been an obligation before the decedent's death True or False
True
13.3 According to the part performance doctrine, acts taken in reliance are not necessary partial performances True or False
True
13.4 In an oral contract to sell a land, the buyer has paid the purchase price. However, if the seller refuses to transfer title, the buyer may recover the purchase price. True or False
True
13.5 If an oral agreement is made to be performed within one year and if there is even a slight chance of carrying out the agreement completely within one year, the oral agreement would be enforceable True or False
True
13.8 A contract that remains wholly executory, even though enforceable because in writing, may be rescinded orally in most states True or False
True
14.1 An oblige is one who has the right to receive a contract benefit True or False
True
14.2 To effect an assignment, the assignor must make known his intention to transfer the rights to the third person True or False
True
14.4 Problems of acceptance of an assignment normally arise only when the assignor intends the assignment as a gift True or False
True
14.6 A right that will arise from a future contract cannot be the subject of a present assignment True or False
True
14.7 A delegation is the transfer to a third party of the duty to perform under a contract True or False
True
15.10 A waiver is whereby a party voluntarily gives up a right she has under a contract but doesn't give up the entire right to performance by the other side True or False
True
15.2 Under the Uniform Commercial Code, there is no such thing as substantial performance True or False
True
15.3 When a promisor announces before the time his performance is due that he will not perform, he is said to have committed an anticipatory breach True or False
True
15.4 If an obliges makes a demand of reasonable assurance and no adequate assurances are forthcoming, the obligee may assume that the obligor will commit an anticipatory breach True or False
True
15.6 A condition precedent is a term in a contract (express or implied) that requires performance only in the event something else happens first. True or False
True
15.9 Parties are free to agree to almost any contract they want, and they are free to agree to end the contract whenever they want True or False
True
