Business Law Chapter 9-13 Test (Test #2)14

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Chad has offered to take Miles into his accounting firm as a partner upon payment of $5,000 cash. In response, Miles says, "I'll give you $3,000 cash now and I will pay you the remainder in two months after I see whether things are working out as a partnership." a. Miles has made a counteroffer; hence there is no contract. b. Miles has rejected the terms of the original offer, but there is still a contract. c. Chad is a merchant making a firm offer under Article 2 of the UCC. Hence there is a contract. d. Any indefinite provisions in the contract between Chad and Miles will be supplied by Article 2 of the UCC.

Custom Sales and Rentals uses a four-page contract with important contract terms buried in the fine print. This is an example of: a. procedural unconscionability. b. a reasonable, legal business practice. c. a "Blue law." d. substantive unconscionability.

Destruction of the subject matter has what effect on the offer? a. The offer is terminated. b. The offer is delayed until additional subject matter can be located. c. This creates an impossibility of fact that does not terminate the offer. d. The offer is merely delayed under the "Hardship Rule."

Elvis makes an offer to Miguel, but before Miguel can accept, the state supreme court decides a case that makes the offer illegal. What is the effect of the court decision on the offer? a. The court decision automatically terminates the offer. b. The court decision has no effect on the offer. c. The court decision acts as a condition on the offer. d. The court decision acts as a rejection of the offer by the offeree.

For an offer to be valid, which of the following elements must be present? a. The offeree must have knowledge of the offer. b. The offeree must have first-hand knowledge of the offer. c. The offer must be communicated by the offeror. d. The offer must be communicated by words.

Hannah, as a joke, offers to sell her violin to Mike. Her statement would have legal effect if: a. the intended jest is so successful that Mike as a reasonable person under the circumstances believes the joke is an offer and he accepts. b. Hannah's intent, determined subjectively, is to enter a contract. c. Hannah's intent, determined objectively, is not to enter a contract. d. Mike did not, but should have realized that Hannah was not serious. e. Both (c) and (d).

Harold purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective and a dispute arose as to the amount due and owing under the contract. Harold refuses to pay the $800 and Isaac is threatening to sue. Which of the following is correct with regard to this transaction? a. If Isaac agrees to accept $600 to settle the dispute and Harold agrees to pay that amount, the agreement is enforceable. b. If Isaac agrees to accept $600 to settle the dispute and Harold pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. c. Harold is under a pre-existing legal obligation to pay the $800. d. Two of the above, (b) and (c).

Howard ordered an aluminum storm door for $249.99. Before it was delivered, the same store from which he ordered the door ran an ad in the paper for the same storm door at $179.99. Howard called the store and demanded the advertised price. They say okay. a. Howard must pay $179.99. b. Howard must pay $249.99. c. There is no contract. d. There is a contract for the reasonable value of the door.

Stewart entered into a contract with Will to have Will build a 10-unit apartment complex on Elm Street in Randolph County. Unknown to both parties, this land had recently been rezoned and only single-unit dwellings can be constructed. a. This is a mistake of law. b. This is a mutual mistake of fact. c. Stewart is obligated to buy land elsewhere and have the complex constructed on property zoned for apartments. d. Will is liable to Stewart since Will is a contractor.

The Rogers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the Thompsons, decided to sell and called Mr. Rogers. Before he could get back in touch with Mr. Thompson, Mr. Rogers suffered a heart attack and died. Mr. Rogers' adult daughter, to whom the Thompsons had not spoken, still wants the house. a. She may not accept since the offer is terminated. b. She may not accept because she does not have the capacity. c. She may accept since the contract offer is assignable. d. She may accept since the offer cannot be revoked without notice.

The requirement of legally sufficient consideration: a. is that the parties have agreed to an exchange and it imposed a legal detriment upon the promisee or conferred a legal benefit upon the promisor. b. has nothing to do with the value of what is exchanged. c. means the subject matter that the parties agree to exchange has to have the same value. d. is the same as the requirement of adequacy of consideration.

The way parties usually show mutual assent is by: a. an offer by words or conduct and an acceptance by words or conduct. b. a proposal in words and an acceptance in words. c. an act exchanged for an act. d. an offer and a counteroffer.

Tommy's parents died in a plane crash and he went to live with his guardian, Aunt Rose. Rose had a very small house and did not have a separate bedroom and bath for 12-year-old Tommy. She and Tommy decided to use some of his inheritance to pay for an addition to the house. He had some shares of stock transferred into Rose's name so that she could sell them when the money was due to be paid. The stock transfers are: a. presumed voidable unless Rose can show no unfair advantage was taken. b. presumed valid unless it can be proven that Tommy was taken advantage of. c. null and void because of undue influence. d. presumed void because of duress.

Under which of the following circumstances would a court be likely to enforce an illegal contract? a. Under certain circumstances in which the aggrieved party was unaware of the illegality b. Where, although the contract is unconscionable, there is only procedural unconscionability c. Where the agreement is with an unlicensed attorney d. A court will never enforce an illegal contract.

Wes, who is an art collector, offered to buy a print from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. That day it discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract? a. Yes, since the acceptance was received before the rejection b. No, because the rejection was effective upon dispatch c. No, because the rejection terminated the offer d. Yes, because the acceptance is always effective upon dispatch

Which of the following are the two basic elements to consideration? a. Bargained-for exchange and legal sufficiency. b. Legal detriment and legal benefit. c. Legal sufficiency and legal adequacy. d. Promise and forbearance.

Which of the following is enforceable without consideration? a. A new promise to pay a debt barred by the statute of limitations. b. An illusory promise. 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.

Which of the following is enforceable without consideration? a. A new promise to pay a debt barred by the statute of limitations. b. An illusory promise. c. Under the common law, a promise made to satisfy a preexisting moral obligation. d. A promise by a father to pay someone for rendering emergency services to his injured son before the father had arrived at the accident scene.

implied-in-fact contract

A contract in which the agreement of the parties is inferred from their conduct.

executed contract

A contract that has been fully performed by all of the parties.

executory contract

A contract that has yet to be fully performed.

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

A contract to buy living room furniture

remedy for promissory estoppel

A court will enforce the promise to the extent necessary to avoid injustice.

requirements of a quasi contract

A court will impose a quasi contract when: (1) The plaintiff confers a benefit upon the defendant. (2) The defendant knows or appreciates the benefit. (3) The defendant's retention of the benefit is inequitable.

Defective Acceptances

A defective does not create a contract. After the offer has expired, it cannot be accepted. However,a late or defective accpetance does manifest a willingness on the part of the offeree to enter into a contract and therefore constitutes a new offer.

How does the UCC Battle of the Forms provision vary from the common law mirror image rule?

A definite expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed upon, unless acceptance is expressly made conditional on assent to the additional or different terms.

promissory estoppel

A doctrine enforcing some non-contractual promises.

breach

A failure to properly perform a contractual obligation.

Assumption of Risk of Mistake

A party who has undertaken to bear the risk of a mistake will not be able to avoid the contract, even though the mistake (which may be either mutual or unilateral) would have otherwise permitted the party to do so. This allocation of risk may occur by agreement of the parties. For instance, a ship at sea may be sold "lost or not lost." In such case the buyer is liable whether the ship was lost or not lost at the time the contract was made. There is no mistake; instead, there is a conscious allocation of risk.

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.

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

requirements of promissory estoppel

A promise made under circumstances that should lead the promisor reasonably to expect that the promise would induce the promisee to take definite and substantial action, and the promisee does take such action.

Which of the following would most likely be enforceable?

A substitute agreement to settle an undisputed debt.

Define a substituted contract and explain how it affects an agreement

A substituted contract results when the parties to a contract mutually agree to rescind their original contract and enter into a new one. The rescission is binding in that each party, giving up his rights under the original contract, has provided consideration to the other, as long as each party still has rights under the original contract. Where the rescission and new agreement are simultaneous, the effect is the same as a contractual modification.

Define Statute of Limitations

A time restriction on how late you can file a lawsuit from the date of the incident

Quasi

"as if" is not a contract at all but based in restitution. similar to breach of contract.

Discuss the concept of adequacy of consideration

Adequacy of consideration is not required where parties have freely agreed to the exchange. The items or actions that the parties agree to exchange do not need to have the same value. The requirement of legal sufficiency of consideration is not at all concerned with whether the bargain was good or bad or whether one party received disproportionately more or less than what he gave or promised in exchange. Courts will not invalidate a contract for absence of adequate consideration unless the purported consideration is clearly without any value.

Express contract

Agreement of parties that is expressed in words either in writing or orally

How does one distinguish between an offer and an invitation seeking offers?

An offer is an indication of willingness to enter into a contract. It is a definite undertaking or proposal made by one person to another indicating a willingness to enter into a contract. Invitations seeking offers are merely indications of willingness to be offered something. They lack intent to enter a contract. There is no contract involved until an offer has been made and accepted.

Rejection

An offeree is at liberty to accept or reject the offer as he sees fit. If he decides not to accept it, he is not required to reject it formally but may simply wait until the offer terminates by lapse of time... This is also an offer manifested by the offeree of his unwillingness to accept.

Explain how output and requirements contracts differ from illusory promises.

An output contract is an agreement of a seller to sell its entire production to a particular buyer. A requirements contract is an agreement to purchase from a particular seller all the materials of a particular kind that the purchaser needs. These contracts are not illusory. Illusory promises are words of promise that make performance entirely optional with the purported promisor.

Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosalene's promise to pay more money.

Actionable fraud would be likely to be based on falsity of: a. a car owner's statement that, "This car is the best buy you will find." b. a realtor's statement that, "The contractor used 25-year warranted shingles on the roof." c. an art dealer's statement that, "This painting will increase in value." d. a stockbroker's statement that, "This stock should double in price within six months."

Alice offers to sell her computer, monitor, and printer to Bradley for $300. Bradley says he will accept provided that Alice includes her word processing software. What is the status of their discussions? a. There is a valid contract for the computer, the monitor, the printer, and the software. b. There is no contract, because Bradley has made a counteroffer. c. There is no contract, because the time for delivery has not been decided. d. There is no contract, because the offer has been revoked by the offeror.

An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as: a. a firm offer. b. a requirement contract. c. promissory estoppel. d. an output contract.

An agreement of a seller to supply a buyer with all of the buyer's requirements for certain goods is known as: a. an output contract. b. a requirements contract. c. a firm offer. d. promissory estoppel.

An offer under Article 2 of the UCC that is irrevocable even though no consideration is given to keep it open is known as a(n): a. option. b. firm offer. c. requirements contract. d. output contract.

An offer, made by a merchant under the UCC, that is irrevocable even though no consideration is given to keep it open is known as a(n): a. option b. firm offer c. requirements contract d. output contract

Archie bets his friend Jerry $100 that the Packers will win the next Super Bowl. This is an: a. unconscionable contract and therefore illegal. b. illegal wagering agreement. c. agreement to obstruct justice and therefore illegal. d. illegal restraint of trade.

Arthur mails an offer to Brian on June 15. Brian receives the offer on June 16. Arthur mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18, and Arthur receives the acceptance on June 20. Brian receives the revocation on June 19. Was a contract formed? a. Yes, on June 16. b. Yes, on June 18 c. Yes, on June 20 d. No, the offer was revoked before acceptance.

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.

Bart sends Carla an offer by express mail. Carla receives it at 10 a.m. on Tuesday. At 11 a.m. on Tuesday, Carla delivers an acceptance to Federal Express, but due to an error, the letter is not sent out by the company until Wednesday at 8 a.m. At what time does the law consider the acceptance to be effective? a. At 10 a.m. on Tuesday b. At 11 a.m. on Tuesday c. At 8 a.m. on Wednesday d. At the time Bart receives the letter

Bill bets his friend $100 that the Patriots will win the next Super Bowl. a. This is an unconscionable contract and therefore illegal. b. This is an illegal wagering agreement. c. This is an agreement to obstruct justice and therefore illegal. d. This is an illegal restraint of trade.

What are the two principal types of contracts?

(1) Business-to-business contracts (Commercial Contracts (2) Business-to-consumer contracts (Consumer Contracts)

Steinberg v. Chicago Medical School

(1) In forming a contract, it is required that both parties assent to the same thing in the same sense and that their minds meet on the essential terms and conditions. (2) If either party contracts in good faith he is entitled to the benefit of his contract no matter what may have been the secret purpose or intention of the other party.

Recovery requires three elements

(1) benefit conferred upon the defendant (Roy) by the plaintiff (Willard) (2) the defendant's (Roy's) appreciation or knowledge of the benefit; and (3) acceptance or retention of the benefit by the defendant (Roy) under circumstances making it inequitable for him to retain the benefit without compensating the plaintiff for its value

requirements of a contract

(1) mutual assent (2) consideration (3) legality of object (4) capacity

What are the requirements for Promissory Estoppel to be applicable?

(1). A promisor reasonably expects a promisee to act in reliance on a promise (2). The promisee, in turn, reasonably so acts; and (3). A court's refusal to enforce the promise would countenance a substantial injustice.

Contracts induced by threats of ____ are voidable, regardless of whether the coerced party has committed an unlawful act. a. civil prosecution b. criminal prosecution c. tortious conduct d. physical force

Kyle wants to buy a six-passenger car. The salesperson tells him that the two-seat sports car Kyle sees on the car lot would be just perfect for six people. Kyle test drives the car and then buys it. a. Kyle has a valid cause of action for fraud. b. Kyle was not justified in relying upon the salesperson's representation that the car would seat six people. c. The element of scienter is missing in this fact situation. d. The salesperson is a fiduciary.

Lynn offers to sell his house to Dennis for $95,000. Dennis responds, "I will pay you $95,000 if you will paint the second floor." This response could best be described as: a. an acceptance. b. a counteroffer. c. a rejection. d. an invitation.

Non-compete agreements drafted for employees of Internet companies: a. are interpreted no differently in terms of standards of reasonableness than are agreements for other types of companies. b. are subject to larger geographic restrictions than for other types of companies. c. are subject to longer periods of reasonable duration. d. are irrelevant.

Rose is working hard on Arlin's mayoral campaign. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 if she will register and vote for Arlin. Violet does so, but Arlin loses the election, and Rose now refuses to pay. a. This agreement is enforceable. b. This agreement is unenforceable and opposed to public policy. c. This is an agreement to obstruct the administration of justice. d. This is an unconscionable contract covered by the UCC.

Sarah is working hard on the mayoral campaign of Timothy. She thinks that just a few more votes could win the election, so she promises to pay her friend Violet $50 to register and vote. Violet does so, but Timothy loses the election, and Sarah now refuses to pay. a. This agreement is enforceable. b. This agreement is unenforceable and opposed to public policy. c. This is an agreement to obstruct the administration of justice. d. This is an unconscionable contract covered by the UCC.

Shane contracts to build a garage for Bob for a price of $6,000. Because of an increase in the cost of labor and materials, Shane refuses to perform. Bob wants the garage, so he agrees to pay an additional $500. a. Bob must pay the additional $500. b. Shane has given no additional consideration, and under the common law must perform at the agreed-upon original price. c. The substitute agreement is an illusory contract. d. The debt is a disputed one, and therefore Bob is obligated to pay the additional money.

Marilyn contracted with Bravo Builders to build an addition to her house for $15,000. After digging the foundation, Bravo decides that it will take more work and more concrete than it had originally thought and that it will need to charge an additional $5,000 for the job. Assuming Marilyn agrees, which of the following is correct? a. Marilyn will have to pay $20,000. b. This is a contract under seal which is enforceable. c. This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. d. This is the settlement of a disputed debt that requires no additional consideration on the part of Bravo Builders.

Marilyn read an ad in the school newspaper offering a thousand dollar swimming scholarship to anyone who could swim 500 laps in the school pool. Marilyn called the advertiser and began swimming. She has reached lap number 460; she feels great and is sure she can make it all the way. a. The advertiser may revoke the offer since there has not yet been an acceptance. b. The advertiser may not revoke the offer since Marilyn has already accepted it. c. The advertiser must permit Marilyn the opportunity to finish her attempt to swim the 500 laps, or pay damages if he interferes with the completion of the laps. d. The advertiser must pay Marilyn $920, because she has performed 92% of the offer.

Mary agrees to sew Georgia's prom dress for $50 plus costs. Georgia decides that she wants ruffles around the neck and calls Mary who says it will now cost $60. When Mary finishes the dress (with ruffles), Georgia must pay: a. $50, since that is the original agreement. b. $50, since a modification must be in writing. c. $60, since the modified agreement is supported by additional consideration. d. $60, since any subsequent agreement is enforceable.

Shirley hears about a reward being offered by the local television station for information leading to the arrest and conviction of a local rapist. She supplies the requested information, and the suspect is then arrested and convicted. a. Shirley cannot collect the money unless the offer was specifically made to her by the station. b. The offer by the television station was an offer made to the general public to enter into a unilateral contract, which offer Shirley has accepted. c. Because Shirley failed to notify the station of her intention to supply the information before actually doing so, she has not accepted their offer. d. Shirley was just doing her duty as a citizen and has no right to the payment of any money.

Wayne helped Hank study all night for an important exam. After Hank got an A on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it." a. There is no contract because there is no mutual assent. b. There is no contract because there is no valid consideration. c. There is no contract because $10 is reasonably inadequate consideration. d. There is a contract with sufficient consideration.

Which of the following is NOT an element of fraud? a. Material misrepresentation b. Competent parties c. Knowledge of falsity d. Justifiable reliance

Which of the following is correct with regard to duress? a. It always renders a contract void. b. Duress by improper threats is the most common form of duress c. The act constituting duress must be either a crime or a tort in order to be considered wrongful. d. All of the above

Which of the following results in a void, rather than voidable, agreement? a. Duress by improper threat b. Fraud in the execution c. Fraud in the inducement d. Undue influence

Which of the following would generally be considered to be a revenue-raising licensing law? a. A statute requiring that doctors be licensed b. A statute requiring that salespeople be licensed, but not establishing any educational or training requirements c. A statute requiring public school teachers to be licensed d. A statute that requires insurance agents to pass a test before selling insurance in a state

Which of the following would generally be considered to be a revenue-raising licensing law? a. A statute requiring that doctors be licensed. b. A statute requiring that salespeople be licensed, but not establishing any educational or training requirements. c. A statute requiring public school teachers to be licensed. d. A statute that requires insurance agents to pass a test before selling insurance in a state.

Which of the following would most likely be enforceable? a. An agreement supported by past consideration b. A substitute agreement to settle an undisputed debt c. A debt agreed to seven years ago in a state where the statute of limitations is six years d. A promise following the rendering of emergency services that is not supported by new consideration

Which of the following would most likely be enforceable? a. An agreement supported by past consideration. b. A substitute agreement to settle an undisputed debt. c. A debt agreed to seven years ago in a state where the statute of limitations is six years. d. A promise following the rendering of emergency services that is not supported by new consideration.

Which of the following would not be a promise statutorily made enforceable without consideration? a. Hawkins, in good faith, changes the quantity of square yards of carpet ordered from Grant Mills. b. Jones promises to pay his cousin's past-due cell phone bill. c. Dodds signs and delivers a waiver of a claim arising out of a breach of contract by Keys. d. A signed, written offer by Marcum Jewelers to sell four dozen 18" gold chains to the Alpha Sorority for $480 within the next 30 days.

_________ 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

__________ is a provision excusing one party from liability. a. Procedural unconscionability b. An exculpatory clause c. Substantive unconscionability d. Tortious conduct

n 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.

Andrew agrees to paint Betty's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job unless Betty agrees to pay him $100 more. What law applies to this fact situation? a. The acceptance of additional money to settle a disputed claim is supported by consideration. b. A past obligation is sufficient consideration for a new promise. c. Andrew gives no additional consideration in return for modification of a preexisting contract. d. Betty has made a promise in exchange for a forbearance.

Andrew agrees to paint Rosalene's house for $500. Two days after he starts the job, he decides that $500 isn't enough money. He refuses to finish the job, unless Rosalene agrees to pay him $100 more. What principle applies to this fact situation? a. The acceptance of additional money to settle a disputed claim is supported by consideration. b. A past obligation is sufficient consideration for a new promise. c. Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosalene's promise to pay more money. d. Rosalene has made a promise in exchange for a forbearance.

Barbara, a wealthy widow, promises the pastor of her church that she will donate $10,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $30,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. a. There is no consideration for Barbara's promise to pay $10,000. b. The promise to pay $10,000 is a promise to give a gift and is therefore not enforceable. c. Under the Restatement of Contracts, Barbara's promise is enforceable. d. Barbara's promise was made to satisfy a preexisting moral obligation and is therefore enforceable.

Before granting an injunction enjoining a former employee from competing in a described territory, the courts insist that the employer demonstrate that the restriction is __________ to protect the employer's legitimate interest. a. exculpatory b. unconscionable c. necessary d. usurious

Before granting an injunction enjoining a former employee from competing in a described territory, the courts insist that the employer demonstrate that the restriction is: a. exculpatory. b. conscionable. c. necessary to protect the employer's legitimate interest. d. in compliance with the state's Blue Law.

Ben and Kate had been negotiating Ben's employment contract in conversations over the phone for a couple of weeks. Finally, they agreed on some contract terms. Kate offered to create a draft of the contract for Ben to read over. On the same day Ben was fired from his job. Afraid he would be unemployed, Ben signed Kate's draft without reading it. In this example Ben: a. Can avoid the contract because of mistake by failure to read b. Can avoid the contract because he was the victim of economic duress. c. Cannot avoid the contract because of economic duress or failure to read. d. May rescind the contract because of unilateral mistake.

Carl and Rob are both engaged in road construction work. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Rob will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Rob has bid on both jobs. Rob is awarded both contracts. Carl now wants to sue Rob for breach of contract. a. Carl would probably win on the basis of promissory estoppel since he has detrimentally relied upon Rob's representation that he would not bid. b. Since Carl is less at fault than Rob, the court will likely award Carl damages. c. This is an agreement in violation of public policy that will not be enforced by the courts. d. This is an agreement obstructing the administration of justice that will not be enforced by the courts.

Carl and Ron are both engaged in road construction work. They know that several jobs are going to be up for public bids, and agree between themselves that Carl will bid on one job and Ron will bid on the other, so that they both have work for the summer. When the bids are opened, Carl realizes that Ron has bid on both jobs. Ron is awarded both contracts. Carl now wants to sue Ron for breach of contract. a. Carl would probably win on the basis of promissory estoppel since he has detrimentally relied upon Ron's representation that he would not bid. b. Since Carl is less at fault than Ron, the court will likely award Carl damages. c. This is an agreement in violation of public policy that will not be enforced by the courts. d. This is an agreement obstructing the administration of justice that will not be enforced by the courts.

Check My Work __________ 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

Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause? a. Void as an illegal primary restraint b. Valid as a reasonable restraint on trade c. An unenforceable restraint of trade contrary to public policy d. Binding as fair protection

Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause? a. Void as an illegal violation of a statute. b. Valid as a reasonable restraint on trade. c. Unenforceable as a violation of public policy. d. Binding as fair protection.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. Edward agrees. a. This is an illusory contract, because Darla is not certain she will receive the money. b. There is no consideration present in this example. c. The consideration from Darla to Edward is the promise of $6,000 subject to a condition. d. Two of the above.

Michelle's Boutique places an ad in the Sunday paper for beautiful, top-of-the-line designer suits for $3.00. Irene sees the ad in the paper and goes to the store to stock up on business suits for her new job. Michelle apologizes for the misprint. Irene has just finished a class in contract law and insists that the store sell her 5 suits for $15.00. Irene threatens to sue Michelle for breach of contract. a. This is a valid contract, and Irene will win if she sues. b. The ad in the newspaper is an offer to sell. c. The ad in the newspaper is a solicitation seeking offers, but is not an offer to sell; therefore, Irene will not be able to successfully sue for breach of contract. d. None of the above.

Nell gives Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances at a promotion. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true? a. Nell can get the money back from Al through litigation. b. Nell can get the money back and force Al to do as he promised. c. Legally, Nell can neither get the money back nor force Al to do as he promised. d. Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50.

Nell gives Big Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances at a promotion. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true? a. Nell can get the money back from Al through litigation. b. Nell can get the money back and force Al to do as he promised. c. Legally, Nell can neither get the money back nor force Al to do as he promised. d. Nell can force Al to act through an appeal to the courts, but Al gets to keep the $50.

Non-compete agreements drafted for employees of Internet companies: a. are no different in enforceability than non-compete agreements for other types of companies. b. are subject to smaller geographic restrictions than for other types of companies. c. have been held subject to shorter periods of reasonable duration than for other types of companies. d. Both (b) and (c).

Permissible lender's expenses, which would not be considered in determining the rate of interest under usury statutes, include all but which of the following? a. Cost of title examination. b. Reasonable cost of drawing up the necessary documents. c. A charge to the borrower of $500 to investigate the borrower's credit, when it actually cost the lender $75. d. All of the above charges would be considered in determining the rate of interest under usury statutes.

Eliza was an antique expert. She went to a tea party at Grandma Jones' house and saw a magnificent Queen Anne table out on the back porch. She asked Grandma about it and was told it was in the way so they were going to store it in the barn. Eliza offered to buy it from her for $200. The next week, Grandma saw it in Eliza's store on sale for $3,000. Which of the following is true? a. She can get it back because of fraudulent concealment of the value. b. She can get the true value, because it would not be fair otherwise. c. She cannot rescind the contract because Eliza did not have a duty to tell her the value of the table. d. She cannot rescind the contract because she did not rely on Eliza to give her a fair price.

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $300,000. After mailing the letter, Elmer learns that the farm is actually worth $500,000 and changes his mind about selling. a. Elmer has made a firm offer to Fred that cannot be revoked. b. Elmer must keep the offer open, because this is an option contract. c. Elmer can revoke his offer at any time, because there is no consideration to keep it open. d. Elmer is estopped from revoking his offer to Fred.

Fred is a concert violinist who is scheduled to perform at Carnegie Hall 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, although it is such a good imitation that even the dealer thought it was authentic. a. Fred has made a unilateral mistake and cannot avoid the contract. b. The dealer has committed fraud in the inducement. c. The sale is voidable by the purchaser for mutual mistake. d. The sale is voidable, because the dealer has made a fraudulent misrepresentation.

If untrue, which of the following would probably be considered a misrepresentation of a material fact? a. "This is the one that I think is the best buy." b. "This is the best computer on the market." c. "This car has new brakes." d. "These tires will wear like iron."

In general, which of the following will not terminate an offer? a. The death of the offeree b. The death of the offeror c. An inquiry by the offeree as to size or materials d. An acceptance that adds a material term

In which of the following situations will a smaller sum be unable to discharge a larger debt? a. If the smaller sum is paid before the due date of the larger debt. b. If an additional article or service is given together with the payment of the smaller sum. c. If the smaller sum is paid when the larger sum would ordinarily be due, but the debtor is on the verge of insolvency. d. A smaller sum is never able to discharge a larger debt.

John operates a small repair business and is in desperate need of a certain type of building material. He obtains the material from a large corporation, 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. in para delicto. b. partial illegality. c. substantive unconscionability. d. procedural unconscionability.

R&R, Inc. entered into a contract with Scott, an agent, under the terms of which Scott would receive $20,000 if he stole trade secrets from the leading competitor of R&R. Scott performed his end of the agreement by delivering the trade secrets. R&R now refuses to pay Scott for his services. a. Scott may recover based upon the express contract of the parties. b. Scott may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of R&R. c. Scott will be unable to recover, because this is an illegal contract. d. Scott will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by R&R.

Rorzex, Inc. entered into a contract with Denzil under the terms of which Denzil would receive $20,000 if he stole trade secrets from the leading competitor of Rorzex. Denzil performed his end of the agreement by delivering the trade secrets. Rorzex now refuses to pay Denzil for his services. a. Denzil may recover based upon the express contract of the parties. b. Denzil may recover based upon a quasi-contractual theory in order to prevent the unjust enrichment of Rorzex. c. Denzil will be unable to recover, because this is an illegal contract. d. Denzil will be able to recover based upon promissory estoppel, because he has detrimentally relied upon the promises made by Rorzex.

Sam owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. He has been offered a two-year graduate fellowship, but he will not be able to pay the loan back if he accepts the fellowship. The bank manager tells Sam that if he pays $3,000 now, they will forgive the loan. Should Sam accept the offer? a. No, because the bank can still sue for the remaining $2,000. b. No, because the manager's promise is not binding on the bank. c. Yes, because the early payment of the loan is consideration that makes the bank's promise binding. d. Yes, because the bank must do whatever the manager says.

Sam wants to sell his Golden Retriever to AI. Sam tells AI that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). AI relies on Sam's statements and purchases the bird dog. The buyer has most probably been a victim of: a. Duress b. Undue Influence c. Fraud in the Inducement d. Fraud in the execution

Sam wants to sell his Golden Retriever to Jordan. Sam tells Jordan that the dog is three years old and that he will point, back, and retrieve. Although the dog is three years old and will point at birds, he will not back (honor another dog's point). Jordan relies on these statements and purchases the bird dog. The buyer has most probably been a victim of: a. duress. b. undue influence. c. fraud in the inducement. d. fraud in the execution.

Sue owes $5,000 to the First National Bank for a student loan which will come due on January 1 next year. She has been offered a two-year graduate fellowship, but she will not be able to pay the loan back if she accepts the fellowship. The bank manager tells Sue that if she pays $3,000 now, they will forgive the loan. Should Sue accept the offer? a. No, because the bank can still sue for the remaining $2,000 b. No, because the manager's promise is not binding on the bank c. Yes, because the early payment of the loan is consideration that makes the bank's promise binding d. Yes, because the bank must do whatever the manager says

The UCC provides that a merchant is bound to keep a written offer open for a stated period but no longer than: a. ten days. b. two months. c. three months. d. a reasonable time.

The case in which the court held that a newspaper advertisement was an offer because it contained a promise of performance in definite terms in return for a requested act was: a. Catamount Slate Products, Inc. v. Sheldon. b. Newman v. Schiff. c. Lefkowitz v. Great Minneapolis Surplus Store, Inc. d. Osprey L.L.C. v. Kelly-Moore Paint Co., Inc.

Under which of the following circumstances would a court be unlikely to enforce the illegal contract? a. Where the aggrieved party was unaware of the illegality. b. Where a party withdraws from an illegal agreement prior to performance. c. Where the agreement is with an unlicensed attorney. d. Where one of the parties is less at fault than the other.

Which of the following does not exemplify a relationship that typically leads to scrutiny of a contract for undue influence? a. Wife and husband b. Clergy and parishioner c. Brother and sister d. Parent and child

Which of the following does not legally terminate an offer to enter into a contractual agreement? a. A counteroffer. b. Revocation by the offeror. c. Silence on the part of the offeree. d. Destruction of subject matter of the offer.

Which of the following need NOT be proved in order to establish the defense of economic duress? a. That one side involuntarily accepted the terms of another. b. That circumstances permitted no other alternative. c. That one party explicitly made an economic threat. d. That the circumstances leading up to the contract were the result of coercive threats or acts of the opposite party.

Which of the following requires consideration in order to be binding upon the parties? a. A written promise by a merchant to keep an offer to buy goods open for 14 days b. Material modification of a sale of goods contract under Article 2 of the UCC c. Material alteration of a personal service contract d. Settlement of a disputed debt

Which of the following statements best describes charitable subscription promises? a. They are generally not enforceable. b. They are equated with gifts. c. They are generally enforceable if there is reliance or a probability of reliance by the charity. d. Courts generally find that it would be unjust to enforce them because persons who promise charitable subscriptions do not expect to be held accountable for them.

Which of the following statements is most accurate concerning charitable subscription promises? a. They are generally not enforceable. b. The courts equate them with gifts. c. They are generally enforceable if there is reliance by the charity. d. The Restatement uses a strict reliance requirement in relation to charitable subscriptions.

Which of the following will support a contract? a. An illusory promise b. Past consideration c. Forbearance to do an act d. A pre-existing public obligation

Which of the following would NOT be a merchant under Article 2 of the UCC? a. The owner of a hardware store which sells paint b. A car mechanic who fixes used cars and sells them in his spare time c. A person who inherits three speedboats and wants to sell them to buy a car d. Both (b) and (c).

Which of the following would always be considered to be contrary to public policy? a. A contract which contains a covenant not to compete b. A contract offered on a take-it-or-leave-it basis c. An agreement to pay someone to make false, negative statements about a competitor's product d. An agreement which contains an exculpatory clause

Which of the following would always be considered to be contrary to public policy? a. A contract which contains a covenant not to compete. b. A contract offered on a take-it-or-leave-it basis. c. An agreement to pay someone to make false statements about a competitor's product. d. An agreement which contains an exculpatory clause.

Which of the following would be considered to be a misrepresentation of a material fact for purposes of establishing fraud in the inducement? a. A statement of judgment of value, such as "This is the best car in town for the money." b. "This style of jacket is going to be the most popular style next year." c. "This car has a new radiator." d. "In my opinion, this is the best buy for the money."

_________ 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

Albert read ElectroCorp's ad in the local newspaper advertising a 4-head VCR for $89. Albert rushed to the store to buy the VCR only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the VCR. a. The ad is a firm offer by the merchant and the VCR must be sold for $89. b. The ad is a contract and the store must abide by terms stated in the contract. c. The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him. d.Albert is merely making an offer to ElectroCorp to buy the VCR for $89 plus sales tax.

Albert read Gem City's ad in the local newspaper advertising a one-quarter carat diamond ring for $89. Albert rushed to the store to buy the ring only to be told by the salesperson that the ad was a misprint and the price should have been $289. Albert gave the salesperson $89 plus sales tax and demanded the ring. a. The ad is a firm offer by the merchant, and the ring must be sold for $89. b. The ad is a contract and the store must abide by terms stated in the contract. c. The store must accept the price stated in the ad, but only if Albert has a copy of the ad with him. d. Albert is merely making an offer to Gem City to buy the ring for $89 plus sales tax.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. a. This is an illusory contract, because Darla doesn't know whether she will receive the money for sure. b. The consideration moving from Darla to Edward is the promise of $6,000 subject to a condition. c. Darla's conditional promise is sufficient consideration unless Darla knows she cannot receive at least $6,000 from her uncle's estate. d. Both (b) and (c).

Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the fault or negligence of our employees. Send packages at your own risk." Mary reads this clause but sends her watch back to its manufacturer to be repaired anyway. The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy. Mary is: a. out of luck because the clause was communicated to her. b. out of luck because she should have insured the package. c. likely to collect from DP since exculpatory clauses always violate public policy. d. likely to collect from DP because it is a common carrier.

Divided Parcel (DP) includes the following on its mailing receipts: "We are not responsible for any damages to packages whether or not through the intentional or reckless fault or negligence of our employees. Send packages at your own risk." Mary reads this clause but sends her watch back to the manufacturer to be repaired anyway. The watch is destroyed when the DP driver uses the package for a ball and tosses it to his buddy. Mary is: a. out of luck because the clause was communicated to her. b. out of luck because she should have insured the package. c. likely to collect from DP since exculpatory clauses always violate public policy. d. likely to collect from DP because it attempted to excuse intentional and reckless behavior.

Doug obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years. a. Acme is obligated to use its best efforts to supply the goods even if no such clause appears in the written franchise agreement. b. According to the UCC, unless otherwise agreed, Doug must use his best efforts to promote the sale of the widgets in his territory. c. Under the UCC, such an agreement lacks consideration. d. Both (a) and (b).

Gail sent a letter of acceptance to an offer that has expired. Gail has made: a. a contract. b. a rejection. c. a revocation. d. an offer.

If a restriction in an employment contract is found to be too harsh, a court may do any of the following EXCEPT: a. change the terms of the contract. b. refuse to enforce the whole contract. c. refuse to enforce that part of the contract. d. refuse to void the restriction.

If an offer requires acceptance by mail and the offeree faxes acceptance: a. there is no contract. b. there is a contract if the acceptance is actually received within the time the authorized means would have arrived. c. under the Restatement, if the acceptance is received within the time the authorized means would have arrived, the acceptance is effective when sent. d. Both (b) and (c) are correct.

If some terms of a contract are left open, the missing terms can be supplied by the parties as they perform the contract: a. if good faith is used to supply the missing terms. b. if the missing terms are supplied within limits set by commercial reasonableness. c. if it is clear that both parties intended to enter into a binding contract. d. if all of these occur. e. none of these choices; there is no contract if missing terms exist.

If there is no time specified for the acceptance of an offer, when does the offer terminate? a. After 24 hours b. After 48 hours c. After two weeks d. After a reasonable period of time

In DiLorenzo v. Valve and Primer Corporation, the court held: a. DiLorenzo gave consideration for the stock option. b. Valve & Primer conditioned the alleged stock option on DiLorenzo's promise to remain in its employment. c. promissory estoppel applied because there was detrimental reliance on DiLorenzo's part. d. there was no consideration for the stock option, and promissory estoppel did not apply because detrimental reliance was not proven.

James offers to sell four acres of land to Jennifer for $8,000 and further offers to keep the offer open for one month if Jennifer will pay him $100 for the privilege. Jennifer pays James $100. Which statement describes the payment of $100? a. An implied in fact contract has been formed. b. A unilateral contract has been formed. c. This is a formal contract. d. This is an option contract.

Jason's mother would like him to go to college, so in June he enrolls at the local university. He also quits his job and tells his mother his plans to take classes. His mother says, "I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485. Which of the following is true regarding his mother's promise? a. It is enforceable, because Jason returned to college. b. It is enforceable, because Jason is giving up the right to do something else. c. It is unenforceable, because it is a unilateral contract. d. It is unenforceable, because Jason had already enrolled in school when she made the statement that she wanted to pay for his books, and there is no consideration.

Jesse makes an offer to Ike, and Ike accepts; then the state legislature passes a law that makes performance of the contract illegal. What is the effect of the new statute on the contract? a. The contract is severed; any portions that are legal must still be performed and any portions that have been made illegal must not be performed. b. The statute has no effect on the contract. c. The statute acts as a condition on the contract. d. The statute discharges the obligations of both parties under the contract.

Mike makes an offer to Ike, but before Ike can accept, Mike dies. Ike indicates acceptance to Mike's heirs. Mike's heirs: a. may treat Ike's acceptance as a new offer. b. are bound by the contract. c. are not bound by a contract. d. Two of the answers are correct.

Steven has a typed copy of a contract, which he would like to have Thomas sign. Thomas, who needs glasses to read typing, doesn't want to sign until he has read the document, but Steven convinces Thomas to sign it anyway, because it is a "standard" contract for this type of situation. Is the contract which Thomas signed binding upon him? a. No, because he did not read it b. No, because he entered into it based upon fraud in the execution c. Yes, because he has made a unilateral mistake of law d. Yes, because he was negligent in not ascertaining its contents

The UCC Battle of the Forms rule: a. changes the mirror image rule. b. may yield different results depending on whether the parties are merchants. c. may result in formation of a contract different from the terms of the offer. d. All of the above.

The UCC provides that if a court as a matter of law finds a contract for the sale of goods or a clause of such a contract to have been unconscionable at the time it was made, the court may: a. refuse to enforce the contract. b. enforce the part of the contract that is not unconscionable. c. limit the application of any unconscionable clause in order to avoid an unconscionable result. d. All of the above.

The remedies of damages and rescission are available for: a. fraudulent misrepresentation. b. negligent misrepresentation. c. innocent misrepresentation. d. All of the above.

The sole nursing home in the county offers a long-term 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 illegal restraint of trade. d. an adhesion contract.

There are certain transactions that are enforceable without consideration. These include: a. promises to pay a debt barred by the statute of limitations. b. a promise to pay a debt that has been discharged in bankruptcy if certain requirements are met. c. a new promise to perform a voidable obligation that has not previously been avoided. d. All of the above.

Under the common law, the ____ must be the mirror image of the ____. a. contract, consideration b. contract, offer c. offer, acceptance d. acceptance, offer

When both parties misunderstand the same set of facts relating to a basic assumption on which a contract is made, it is termed: a. rescissionary mistake. b. unilateral mistake. c. mistake of law. d. mutual mistake.

When does acceptance of an offer to enter into a unilateral contract generally occur? a. Upon notice of intent to accept by the offeree. b. Upon full performance by the offeror with the intention of accepting. c. Upon commencement of performance by the offeree. d. Upon full performance by the offeree with the intention of accepting.

Which is an irrevocable offer? a. A bid to construct a bridge for the city b. An offer to buy stock in the ABC Corporation once it is formed c. A unilateral offer to pay John $30 to mow your lawn at the point that he has completed half the job and indicates he wishes to finish d. All of the above.

Which of the following can meet the scienter requirement to establish fraud in the inducement? a. Actual knowledge b. Lack of belief in the statement's truthfulness c. Reckless indifference as to a statement's truthfulness d. All of the above meet the requirement.

Which of the following gratuitous promises are enforceable by statute? a. A good-faith contract modification in a contract for the sale of goods b. A written offer signed by a merchant to buy or sell goods that assures it will be kept open for one month c. A renunciation of a claim in a written waiver that is signed and delivered by the aggrieved party when the contract involves a sale of goods d. All of the above are enforceable by statute.

Which of the following is correct with regard to an enforceable restraint of trade? a. The restraint should be no more extensive than is required to protect a specified property interest. b. Restraints typically arise in connection with the sale of a business. c. A typical restraint is a covenant not to compete. d. All of the above.

Which of the following is correct with regard to consideration? a. In a unilateral contract, a promise is exchanged for an act or forbearance to act. b. In a bilateral contract, there is an exchange of promises. c. Legal sufficiency is always related to adequacy of consideration. d. Two of the above, (a) and (b) are correct.

Which of the following is correct with regard to counteroffers? a. A counteroffer operates as a rejection of the original offer. b. A conditional acceptance is a common type of counteroffer. c. The receipt of a counteroffer terminates the original offer. d. All of the above are correct.

Which of the following is true with regard to an exculpatory clause? a. An exculpatory clause excuses one party from liability for her own tortious conduct. b. Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. c. An exculpatory clause may be unenforceable for unconscionability. d. All of the above are true.

Which of the following is true with regard to an exculpatory clause? a. An exculpatory clause excuses one party from liability for her own tortuous conduct. b. Where one party has a superior bargaining position that has enabled him to impose an exculpatory clause upon the other, the courts are inclined to nullify the provision. c. An exculpatory clause may be unenforceable for unconscionability. d. All of the above are true.

Which of the following will often not constitute valid consideration? a. Forbearance to do an act. b. Performance of services. c. A promise to perform. d. An illusory promise.

Which of the following would be considered a valid and legally enforceable agreement? a. An agreement to pay a legislator to vote for a particular bill b. An agreement under which Arthur agrees to pay Barbara $3,000 to disparage the product of Arthur's competitor c. An agreement by the seller of a service station not to enter the service station business in Ohio for a period of 30 years after the sale of his business d. An agreement by a car salesman not to sell automobiles or automobile parts in Marin County for a period of one year after terminating his employment

Which of the following would be considered a valid and legally enforceable agreement? a. An agreement to pay a legislator to vote for a particular bill. b. An agreement under which Arthur agrees to pay Barbara $3,000 to disparage the product of Arthur's competitor. c. An agreement by the seller of a service station not to enter the service station business in Ohio for a period of thirty years after the sale of his business. d. An agreement by a car salesman not to sell automobiles or automobile parts in Marin County for a period of one year after terminating his employment.

Which of the following would most likely be a merchant with respect to the goods in question under the UCC definition? a. Amy is an authorized IBM computer dealer. b. Brian employs two salesmen to sell his homemade furniture. c. Clarence has a store in which he sells used lawn mowers. d. All of the above would be merchants. e. None of the above would be merchants.

Which of the following would most probably be considered a valid offer? a. "Would you like to buy this?" b. "I'd give $50 for a cold glass of water." c. "Special sale on VCR's today - $200 each." d. "$100 reward for return of lost white-gold, men's wedding band inscribed with initials 'TEA' to Tony Adams, 350 Main Street, Peoria."

Which of the following would not be enforceable without additional consideration? a. A promise to pay a debt barred by the statute of limitations. b. A promise to pay a debt discharged in bankruptcy where the promise meets the requirements of the Bankruptcy Code. c. A promise which falls within the doctrine of promissory estoppel. d. The settlement of an undisputed debt.

True or False: Jerry received a bill for $300 from Johnson for a tune-up Johnson had performed on Jerry's car. Jerry called Johnson and told him, "The car runs no better now than before the tune-up. I am sending you $100 and no more." Johnson received the $100 check which was marked "paid in full" and cashed it. Jerry is still liable to Johnson for $200.

False

True or False: Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

False

True or False: Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms.

False

True or False: Marjorie has been cared for by her family physician for 35 years. She decides to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence.

False

True or False: Martha puts an ad in her company's newsletter saying she would pay $5,000 for a first-issue Grace Kelly stamp to the first person who accepted her offer. Martha decides she would rather go on a European vacation and changes her mind about investing in the stamp. Martha posts a sign at the executive water fountain saying the offer is no longer valid. A foreman from a branch plant takes a flight to the Chicago main office to see Martha and accept her offer. Martha does not have owe him any money to pay for a breach of contract.

False

True or False: Matt sells bikes at a local discount store. To encourage Bob to buy a more expensive model than he originally contemplated, Matt tells Bob, "This is the most awesome bike money can buy at this price. You can expect lots of riding pleasure." Based on this statement Bob buys the bike. A week later, before his bike is fully paid for, Bob sees a far superior bike for a lower price at another store. Bob can avoid his contract with Matt because of fraudulent misrepresentation.

False

True or False: Mistake by failure to read a document is grounds to void a contract.

False

True or False: Only if the act or threat would affect a person of average strength and intelligence will the act constitute duress.

False

True or False: Output Contracts and Requirement Contracts are Illusory.

False

True or False: Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.

False

True or False: Pat repeatedly told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decide to buy the car. Pat is under no duty to tell the correct figure unless asked.

False

True or False: Pat told her friends that her car got 35 miles to the gallon in the city when in reality it only got 20 miles per gallon. When Pat decides to sell and one these friends decides to buy the car, Pat is under no duty to tell the correct figure unless asked.

False

True or False: Public officials, such as the mayor of a city, members of a city council, police, and firefighters, are under no preexisting obligation to perform their duties by virtue of their public office.

False

True or False: Ricardo posts a sign in the neighborhood offering $50 for the return of his Saint Bernard. Alicia, who knows nothing of the reward, finds the dog and returns it to Ricardo. Alicia is entitled to the reward.

False

True or False: Ron offers to sell Pete his stamp collection. Pete gives Ron $10 to induce him to keep his offer open for a week. If Ron decides on day four of the week that he really does not want to sell to Pete, he can revoke his offer without fear of a breach of contract lawsuit being filed against him.

False

True or False: Sandy's private secretary promises to keep the contents of a letter she typed secret if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy has to pay her for the day.

False

True or False: Silence can never be an acceptance.

False

True or False: The Abbot Corporation contracts with the Baker Corporation to sell to Baker its entire production. After signing the agreement, Abbot can increase its production from one shift to two shifts and Baker will have to buy all of the doubled production.

False

True or False: The UCC and the Restatement make no provision for supplying terms omitted by the parties' contract.

False

True or False: The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods.

False

True or False: The difference between fraud and misrepresentation is that fraud involves malice while nonfraudulent misrepresentation is always innocent.

False

True or False: The law applies a subjective standard of intent in determining whether there was the requisite intent to enter into a contract.

False

True or False: The law regards the performance of a public duty as a legal detriment or a legal benefit.

False

True or False: The most uncommon type of duress involves the use of economic and social coercion.

False

True or False: The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract.

False

True or False: The test for duress is objective and the act must be classified as a tort or a crime in order to be wrongful.

False

True or False: The trustee of a trust does not owe a fiduciary duty to the beneficiary of that trust.

False

True or False: There is no necessity to distinguish language which constitutes an offer from that which merely solicits or invites offers.

False

True or False: To be legally sufficient, the consideration for the promise must only be a legal detriment to the promisee.

False

True or False: True or False: A modification of a preexisting contract occurs when the parties to the contract does not mutually agree to change its terms.

False

True or False: Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed.

False

Under contract law, a person will be held to agreements he or she made whether he or she had free will or not.

False

Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed

False

When it is received, an offer gives the offeror the power to create a contract by acceptance

False

When it is received, an offer gives the offeror the power to create a contract by acceptance.

False

only if the act or threat would affect a person of average strength and intelligence will the act constitute duress

False

All merchant ads are offers

False (most merchant ads are invitations)

An offer, made by a merchant under the UCC, that is irrevocable even though no consideration is given to keep it open is known as:

Firm offer

Subsequent Illegality

If perfomance of a valid contract is subsequently made ilega, the obligations of both parties under tha contract are discharged. Illegality taking effect after the making of an offer but prior to acceptance has the same effect: the offer is legally terminated.

Stipulated Provision in the offer

If the offer SPECIFICALLY stripulates the means of communication to be used by the offeree, the acceptance MUST conform to that specification.

Is an Executed Contract a contract?

No contract - no valid consideration.

Void contract

No contract at all; without legal effect

void contract

No contract at all; without legal effect.

if Brown writes to Young, "Will you buy my automobile for $3,000?" and Young replies, "Yes,"...Is there a contract?

No, A statement that may indicate a willingness to make an offer is not in itself an offer.

Quasi contract

Obligation not based upon contract that is imposed to avoid injustice

Unilateral contract

One party makes an express engagement or undertakes a performance, without receiving in return any express engagement or promise of performance from the other.

valid contract

One that meets all of the requirements of a binding contract.

Distinguish between a rejection of an offer and a revocation of an offer.

Revocation and rejection are both methods of terminating an offer, but they differ in who does the termination. Revocation of an offer is the cancellation or the withdrawal of an offer by an offeror before its acceptance. The rejection of an offer is the refusal of an offeree to accept an offer.

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. In this case:

Rosalind may avoid the contract.

Discuss silence as acceptance of an offer.

Silence or inaction does not ordinarily indicate acceptance of an offer because an offeree is generally under no legal duty to reply to an offer. In some cases, by custom, usage, or course of dealing, the offeree's silence or inaction may operate as an acceptance. If an offeror sends unordered or unsolicited merchandise to a person and states that the goods may be purchased at a specified price and that the offer will be deemed to have been accepted unless the goods are returned within a stated period, the federal government and most states have enacted statutes providing that the recipient of the goods may keep them as a gift and is under no obligation to return or pay for them.

A gratuitous promise is a promise made without consideration.

TRUE

A modification of a preexisting contract occurs when the parties agree to change one or more of its terms.

TRUE

Although such a gratuitous promise would be otherwise unenforceable, under the UCC, any claim arising out of an alleged breach of contract can be discharged by a written renunciation signed and delivered by the aggrieved party.

TRUE

Consideration is the inducement to make a promise enforceable.

TRUE

Contracts binding without consideration include promises to pay debts barred by a statute of limitations and debts discharged in bankruptcy.

TRUE

Exclusive dealing contracts are binding because sufficient consideration is present

TRUE

If Marguarite promises to pay Neal $300 not to defame her, the promise is unenforceable because tort law imposes a preexisting obligation on Neal to refrain from such an act.

TRUE

In a bilateral contract, if one party is not bound, neither party is bound.

TRUE

In a unilateral contract, a promise is exchanged for an act or forbearance to act.

TRUE

In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

TRUE

In some states, a contract under seal is binding without consideration.

TRUE

James promises to pay Brooke $2,500 if she does not sue him for negligently injuring her in a bicycle accident. If Brooke does not sue, James's promise to pay is binding because it is supported by consideration.

TRUE

Sandy's private secretary promises not to disclose the contents of an email she typed if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day.

TRUE

The UCC provides that a contract for the sale of goods can be effectively modified without new consideration, provided the modification is made in good faith and both parties intend to modify the contract.

TRUE

The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.

TRUE

Under the common law, a modification of a preexisting contract must be supported by mutual consideration; under the Code, a contract can be modified without new consideration.

TRUE

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

TRUE

If an auction is not advertised or announced to be without reserve or reserve, which do you assume?

The auction is with reserve.

Action Sales

The auctioner at an auction sale does not make offers to sell the property being auctioned but invites offers to buy. The classic statement by the auctioner is, "How much am I offered?"

Revocation

The offeror generally may cancel or revoke an offer ( revocation) at any time prior to its acceptance.

Lapse of Time

The offeror may specify the time within which the offer he accepted, just as he may specify any other term or condition in the offer.

Bilateral contract

The parties expressly enter into mutual engagements

capacity

The parties to a contract must have contractual capacity (i.e. not minors, incompetent, intoxicated, etc.)

Capacity

The parties to a contract must have contractual capacity.

ability to repay debt

The parties to a contract must have contractual capacity. Certain persons, such as adjudicated incompetents, have no legal capacity to contract, whereas others, such as minors, incompetent persons, and intoxicated persons, have limited capacity to contract. All others have full contractual capacity.

mutual assent

The parties to a contract must manifest by words or conduct that they have agreed to enter a contract.

Define Mutual assent.

The parties to a contract must manifest by words or conduct that they have agreed to enter into a contract. The usual method of showing mutual assent is by offer and acceptance.

Offeror

The person to whom it is made is the offeree.

remedy for a quasi contract

The plaintiff recovers the reasonable value of the benefit she conferred upon the defendant.

Daniel is a self-made millionaire, but he has been medically committed to a mental health facility. A court also ordered Daniel's sister, Michelle, to preside over Daniel's business affairs. Once inside the mental health facility, Daniel befriends his nurse, Amanda. One day, Amanda tells Daniel about her invention to help identify stray dogs and cats. Daniel was so impressed by Amanda's invention that he offers to buy it for $500,000. Amanda accepts Daniel's offer. Did Daniel and Amanda form a contract? a. Yes, because Daniel offered to buy Amanda's invention, and Amanda accepts the offer. b. No, because Daniel lacks the capacity to contract. c. Yes, because the contract is perfectly legal. d. No, because the agreement lacks consideration.

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that it protects a property interest of the promisee and that the restraint is no more extensive than is reasonably necessary to protect that interest.

True

An agreement to refrain from a particular trade, profession, or business is enforceable if two requirements are met: that the purpose of the restraint is to protect a property interest of the promisee and the restraint is no more extensive than is reasonably necessary to protect that interest.

True

An exculpatory clause attempts to excuse one from liability for her own tortious conduct

True

An exculpatory clause attempts to excuse one from liability for her own tortious conduct.

True

An exculpatory clause excusing a party from liability for harm caused by reckless conduct will generally make a contract unenforceable as a violation of public policy.

True

An illusory promise has the form of a promise but imposes no real obligation.

True

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

True

An implied in fact contract is formed by conduct.

True

Andria, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Wood who agrees to testify on behalf of Andria's client at the trial. In return for Dr. Wood's testimony, Andria agrees to pay Dr. Wood $10,000 if they win the case, and $5,000 if they lose. Dr. Wood agrees. The agreement between Andria and Dr. Wood is unenforceable.

True

Any purported acceptance of an expired offer will serve only as a new offer.

True

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

True

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

True

At common law, a valid contract may be entered into on Sunday or on any other day.

True

At the marriage of her daughter, Lorna is given papers to sign which the catering company says are invoices for the food, service, and decorations. Underneath the invoices is a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers, and her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution

True

B& B, Inc. pays an attorney to draft and lobby for a bill which will greatly lessen B & B's tax liability to the state and federal governments. B&B gives the attorney $20,000 in cash to pay legislators for taking the time to listen to him. This is an agreement which is a violation of public policy.

True

Certain offers, such as bids made to the state, municipality, or other government body for the construction of a building or some public work, are made irrevocable by statute.

True

Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

True

Consideration the inducement to make a promise enforceable.

True

Contracts are primarily governed by state common law

True

Deanna, an attorney, has a personal injury case which is set for trial next week. She needs a good doctor to testify on behalf of her client, so she contacts Dr. Dogood who agrees to testify on behalf of Deanna's client at the trial. In return for Dr. Dogood's testimony, Deanna agrees to pay Dr. Dogood $10,000 if they win the case, and $5,000 if they lose. Dr. Dogood agrees. The agreement between Deanna and Dr. Dogood is unenforceable.

True

Duress by physical force Void Duress by improper threat Voidable Undue influence Voidable Fraud in the execution Void Fraud in the inducement Voidable

True

Duress may generally be defined as any act or threat that overcomes the free will of a party

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

Economic duress that compels a person to enter into a contract renders the contract voidable

True

Exclusive dealing contracts are binding because sufficient consideration is present.

True

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

True

Generally, silence or nondisclosure alone does not amount to fraud when the parties deal at arm's length. An arm's-length transaction is one in which the parties owe each other no special duties and each is acting in his or her self-interest.

True

Gratuitous promises are not legally enforceable, except in certain circumstances.

True

If a communication does not create in the mind of a reasonable offeree that his acceptance will conclude in a contract, the communication may be deemed to be part of negotiations.

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

In a bilateral contract, if one party is not bound, neither party is bound

True

In a unilateral contract a promise is exchanged for an act or forbearance to act.

True

In cases where one party to an illegal agreement is less at fault than the other, he will be allowed to recover payments made or property transferred.

True

In some circumstances a public announcement or advertisement may constitute an offer if the advertisement or announcement contains a definite promise of something in exchange for something else and confers a power of acceptance on a specified person or class of persons. Requirements of whether it is a invitation for offers vs offers. (1) they do not contain a promise and (2) they leave unexpressed many terms that would be necessary to the making of a contract.

True

In some states, a lender who charges a usurious rate forfeits both the principal and interest on the loan.

True

In the Pearsall v. Alexander case, the court found that by exchanging mutual promises to share in proceeds of lottery tickets, the parties entered into a valid, enforceable 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

Legal sufficiency has nothing to do with adequacy of consideration.

True

Many states impose no limit on the rate of interest that may be charged on loans to corporations.

True

Many states impose no limit on the rate of interest which may be charged on loans to corporations.

True

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

True

Marcus has a contract to purchase a new MP3 player. The law governing this contract is Article 2 of the UCC. (t/f)

True

Meeting of the minds is mutual assent

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

Nonfraudulent representation is made without scienter

True

Obligations contingent upon a stated event are known as conditional promises

True

Obligations contingent upon a stated event are known as conditional promises.

True

On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection.

True

One type of restraint of trade is a covenant not to compete.

True

One type of restraint on trade is a covenant not to compete.

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

Sandy's private secretary promises not to disclose the contents of a letter she typed if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy does not have to pay her for the day.

True

Some states require the lender to forfeit two or three times the amount of usurious interest charged

True

Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans

True

Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans.

True

T/F an offer and a promise are the same thing

True

The Code provides that a merchant is bound to keep an offer to buy or sell goods open for a stated period (or, if no time is stated, for a reasonable time) not exceeding three months if the merchant gives assurance in a signed writing that the offer will be held open.

True

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

True

The Restatement provides that a mistaken party's fault in not knowing or discovering a fact before making a contract does not prevent him from avoiding the contract "unless his fault amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing." This rule does not, however, apply to a failure to read a contract.

True

The Restatement recognizes moral obligations as consideration.

True

The UCC provides that a contract for the sale of goods can be effectively modified without new consideration, provided the modification is made in good faith.

True

The common law and the Restatement generally apply the same rules to both commercial and consumer contracts.

True

The courts readily enforce a covenant not to compete during the period of employment

True

The courts readily enforce a covenant not to compete during the period of employment.

True

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

True

The law does not provide a remedy for the breach of an unenforceable agreement.

True

The law of restitution provides a remedy when the parties enter into a void contract, an unenforceable contract, or a voidable contract that is avoided. In such a case, the law of restitution will determine what recovery is permitted for any performance rendered by the parties under the invalid, unenforceable, or invalidated agreement.

True

The law will regard consideration as adequate if the parties have freely agreed to exchange

True

The legal effect of a usurious loan varies from state to state

True

The parties to a contract must have capacity for the contract to be enforceable.

True

The persons attending the auction may make progressively higher bids for the property, and each bid or statement of a price or a figure is an offer to buy at that figure. If the bid is accepted, customarily indicated by the fall of the hammer in the auctioneer's hand, a contract results. A bidder is free to withdraw his bid at any time prior to its acceptance. The auctioneer is likewise free to withdraw the goods from sale unless the sale is advertised or announced to be without reserve.

True

The promise to perform a preexisting duty is not sufficient legal consideration to a contract

True

The term "past consideration" is not really past consideration at all because the law will not find a contract where there is no bargained-for-exchange.

True

The ultimate question in undue influence cases is whether the transaction was induced by dominating either or both the mind or emotions of a submissive party

True

The usual means of enforcing an agreement prohibiting an employee from competing in a described territory for a stated period of time is by injunction.

True

True or False A public duty does not arise out of a contract; rather, it is imposed on members of society by force of the common law or by statute.

True

True or False: "Consideration" does not require an actual benefit to both sides of an agreement.

True

True or False: A basic element of fraud is a false representation or a misrepresentation.

True

True or False: A conditional promise is a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur.

True

True or False: A conditional promise is generally considered sufficient consideration.

True

True or False: A conditional promise is sufficient consideration unless the promisor knows at the time of making the promise that the condition cannot occur.

True

True or False: A contract exists when an offer has been accepted.

True

True or False: A famous decision involving mistake as to the meaning of contract terms is Raffles v. Wichelhaus, a case involving two ships with the same name which were confused by the two parties to the contract.

True

True or False: A few states provide by statute that the parties need to provide no new consideration when modifying any contract.

True

True or False: A modification of a preexisting contract occurs when the parties agree to change one or more of its terms.

True

True or False: A modification of a preexisting contract occurs when the parties to the contract mutually agree to change one or more of its terms.

True

True or False: A new promise to perform a voidable obligation that has not been avoided previously is enforceable without new consideration.

True

True or False: A party to a contract may be entitled to relief even if he is contributorily negligent in relying on a fraudulent misrepresentation.

True

True or False: A promise to pay $1,000 a year to a local police officer not to have your store vandalized is legally unenforceable under the rule that makes performance of a pre-existing legal obligation legally insufficient consideration.

True

True or False: A seller's promise to service a sewing machine free for the next 90 days when she has no intention of doing so is actionable as a false representation of a fact if the other elements of fraud are present.

True

True or False: A substituted contract results when the parties to a contract mutually agree to rescind their original contract and enter into a new one.

True

True or False: A unilateral contract may consist of a promise exchanged for an act or forbearance.

True

True or False: A valid offer may be in the form of an act for a promise, which is an offer to enter into an inverted unilateral contract.

True

True or False: According to the UCC, only a merchant can make a firm offer to a buyer.

True

True or False: Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al is suspicious and asks her why she wants to buy the place. She says she would like to live in the country. Al then asks her if she thinks there might be valuable minerals under the land. Betty laughs and says she doubts that very much, so Al sells her the farm for $160,000. Al later realizes that the land was worth more than he was paid. Betty's statement to Al was a misrepresentation requisite for fraud.

True

True or False: An act that is contrary to public policy or is morally reprehensible may constitute duress.

True

True or False: An illusory promise has the form of a promise but imposes no real obligation.

True

True or False: An illusory promise is not consideration for a return promise.

True

True or False: An offer can be communicated by words or by conduct.

True

True or False: An offer must be communicated to the offeree in order for the offer to be effective.

True

True or False: At the marriage of her daughter, Lorna is given papers to sign which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices are a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers; her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution.

True

True or False: At the marriage of her daughter, Lorna is given papers to sign which the catering company says are the invoices for the food, service, and decorations. Underneath the invoices is a carbon and a contract of sale for a portion of the failing catering business. Lorna signs the papers, and her signature is transferred to the sales contract. This is a void contract because it was entered by fraud in the execution.

True

True or False: Both the Code and the Restatement provide that an authorized means of accepting an offer is any reasonable means of communication.

True

True or False: Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

True

True or False: Commercial reasonableness is a standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved.

True

True or False: Consideration exchanged for a promise does not require both legal detriment to the promisee and legal benefit to the promisor.

True

True or False: Consideration, or that which is exchanged for a promise, is present only when the parties intend an exchange. The consideration exchanged for the promise may be an act, a forbearance to act, or a promise to do either of these.

True

True or False: Contract law generally places more importance on the intent of the parties to form a contract than on the inclusion of certain terms in the contract.

True

True or False: Contracts binding without consideration include promises to pay debts barred by a statute of limitations and debts discharged in bankruptcy.

True

True or False: Death or insanity of either the offeror or the offeree ordinarily terminates the offer.

True

True or False: Economic duress renders a contract voidable.

True

True or False: Every state has a statute of limitations stating that legal actions to enforce a debt must be brought within a prescribed period of time after the rights to bring the action arose. Actions not begun within the specified period—such periods vary among the states and also with the nature of the legal action—will be dismissed.

True

True or False: For a misrepresentation to be material, it must be likely to induce a reasonable person to manifest assent or the maker must know that it would be likely to induce the recipient to do so.

True

True or False: Gratuitous promises are not legally enforceable, except in certain circumstances.

True

True or False: If Sam agrees to sell to Thomas all of the tomatoes he wants at $25 a bushel, there is no contract for lack of consideration.

True

True or False: If a confidential relationship exists between parties to a contract, the law presumes that undue influence exists if it appears that the dominant party has gained at the other party's expense, but the presumption can be rebutted by evidence that it was not exercised.

True

True or False: If a promise is illusory, mutuality of obligation is lacking.

True

True or False: If a seller occupies a fiduciary relationship with the buyer and fails to make full disclosure to the buyer, then the latter will be able to avoid the transaction.

True

True or False: If an agreement is not voluntary and knowing, it will be either void or voidable.

True

True or False: If an offeror makes an offer to an offeree by letter and it is lost in the mail, no legally sufficient offer has been made.

True

True or False: If the offer specifies it MUST be accepted by telegram, a letter will not be a valid means of acceptance.

True

True or False: In a bilateral contract there is an exchange of promises.

True

True or False: In a bilateral contract, if one party is not bound, neither party is bound.

True

True or False: In a unilateral contract, a promise is exchanged for a completed act or a forbearance to act.

True

True or False: In a unilateral contract, a promise is exchanged for an act or forbearance to act.

True

True or False: In general, an acceptance is effective upon dispatch.

True

True or False: In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor.

True

True or False: In some states a promise under seal is binding without consideration.

True

True or False: Legal sufficiency has nothing to do with adequacy of consideration.

True

True or False: Nonfraudulent representation is made without scienter.

True

True or False: On June 1, a civic club made an offer of $500 to a beer distributor to have ten kegs delivered to the city park for a July 4th fund-raising event. On June 30, the city passed a new law prohibiting consumption of alcohol in the city park. The civic club's offer is terminated on June 30.

True

True or False: On Tuesday morning John sends a letter to Arlene rejecting her offer, but later the same day John changes his mind and sends a letter of acceptance to Arlene. The letter of acceptance will be effective only if it is received by Arlene before she receives the rejection.

True

True or False: Otherwise illusory promises may be transformed by some courts into actual promises by implying an obligation of good faith and fair dealing.

True

True or False: Output Contracts and Requirement Contracts are not Illusory.

True

True or False: Pablo promises to sell to Candice an automobile for $20,000, for which Candice promises $20,000. A bilateral contract exists.

True

True or False: Physical compulsion and improper threats are the two basic types of duress.

True

True or False: Public officials, such as the mayor of a city, members of a city council, police, and firefighters, are under a preexisting obligation to perform their duties by virtue of their public office.

True

True or False: Rescission is usually permitted where the parties to a contract are both mistaken about a material fact.

True

True or False: Scienter is the element of fraud that requires that the person who makes the misrepresentation knows that it is false or has reckless indifference as to its truthfulness.

True

True or False: The Code has changed the common law rule regarding modification of a preexisting contract by providing that a contract for the sale of goods can be effectively modified by the parties without new consideration, provided they intend to do so and act in good faith.

True

True or False: The Code has modified the common law rule for contract modification by providing that the parties can effectively modify a contract for the sale of goods without new consideration, provided they both intend to modify the contract and act in good faith.

True

True or False: The Code's firm offer rule applies only to offers in writing that are made by a merchant offeror.

True

True or False: The Restatement provides that a promise following the rendering of emergency services is binding even if not supported by consideration if necessary to prevent injustice.

True

True or False: The central idea behind consideration is that the parties have intentionally entered into a bargained exchange with one another and have given each other something in exchange for a promise or performance.

True

True or False: The element of exchange is absent where a promise is given for an act that has already been done.

True

True or False: The law does not regard the performance of, or the promise to perform, a preexisting legal duty, public or private, as either a legal detriment or a legal benefit.

True

True or False: The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.

True

True or False: The performance of, or the promise to perform, a preexisting contractual duty, a duty the terms of which are neither doubtful nor the subject of honest dispute, is also legally insufficient consideration because the doing of what one is legally bound to do is neither a detriment to a promisee nor a benefit to the promisor.

True

True or False: The person to whom an offer is made is an offeree.

True

True or False: The promise to perform a preexisting duty is not sufficient legal consideration to a contract.

True

True or False: The sole presence of a legal benefit is legally sufficient

True

True or False: The sole presence of a legal detriment is legally sufficient

True

True or False: The term "past consideration" is not really consideration at all because the law will not find a contract where there is no bargained-for-exchange.

True

True or False: There are two distinct types of fraud.

True

True or False: To be legally sufficient, the consideration for the promise must be either a legal detriment to the promisee or a legal benefit to the promisor.

True

True or False: To obtain relief for negligent or innocent misrepresentation all the remaining elements of fraud must be present and the misrepresentation must be material.

True

True or False: To sustain a case of fraudulent misrepresentation, the injured party must prove that he actually relied upon the false representation.

True

True or False: Under the UCC, exclusive dealing contracts are binding because sufficient consideration is deemed to be present.

True

True or False: Under the common law, a modification of an existing contract must be supported by mutual consideration to be enforceable. Consideration may consist of the promisee's refraining from exercising a legal right.

True

True or False: Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

True

True or False: Undue influence is the taking of unfair advantage of a person by reason of a dominant position based upon a confidential relationship.

True

True or False: Unless otherwise agreed, an implied obligation is imposed on the manufacturer to use its best efforts to supply the goods and on the distributor to use her best efforts to promote their sale. These implied obligations are sufficient consideration to bind both parties to the exclusive dealing contract.

True

True or False: When a bid is made at an auction, it can be revoked if the auctioneer has not yet accepted the bid because the auctioneer has the power of acceptance.

True

True or False: he common law is not concerned with the amount of the discount, because that is simply a question of adequacy. Likewise, Barbara's payment of a lesser amount on the due date at an agreed-upon different place of payment would be legally sufficient consideration. The Restatement, however, requires that the new consideration "differ[s] from what was required by the duty in a way which reflects more than a pretense of bargain."

True

True or False: the Code imposes a good faith limitation upon the quantity to be sold or purchased under an output or requirements contract.

True

True or False: unbargained-for past events are not consideration, despite their designation as past consideration. A promise made on account of something that the promisee has already done is not enforceable.

True

True or False:Thus, in a bilateral contract, each promise is the consideration for the other, a relationship that has been referred to as mutuality of obligation.

True

Under the Code, an offer for the purchase or sale of goods may leave open particulars of performance to be specified by one of the parties. Any such specification must be made in good faith and within limits set by commercial reasonableness.

True

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

True

Where a contract provides for both goods and services, the common law applies if the predominate purpose of the contract is for services.

True

Where a stipulation in restraint of trade is a part of the contract for the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill.

True

Where a stipulation in restraint of trade is part of the sale of a business, it may be valid if the restraint is within reasonable limitations to protect the business's goodwill.

True

Where the offer contemplates a unilateral contract—that is, a promise for an act—injustice to the offeree may result if revocation is permitted after the offeree has started to perform the act requested in the offer and has substantially but not completely accomplished it.

True

a contract implied in law is not a contract at all, but an obligation imposed by law for the purpose of bringing about justice and equity without reference to the intent or the agreement of the parties and, in some cases, in spite of an agreement between the parties. (QUASI CONTRACT)

True

a mere inquiry about the possibility of obtaining different or new terms is not a counteroffer and does not terminate the original offer.

True

in most cases an oral contract is binding and enforceable. Moreover, there must be an absence of invalidating conduct, such as duress, undue influence, misrepresentation, or mistake.

True

the Code does not apply to employment contracts, service contracts, insurance contracts, contracts involving real property (land and anything attached to it, including buildings, as well as any right, privilege, or power in the real property, including leases, mortgages, options, and easements), and contracts for the sale of intangibles such as patents and copyrights.

True

True or False: A promise to pay a debt that has been discharged in bankruptcy is also enforceable without consideration.

True (However the Bankruptcy Code imposes a number of requirements)

Which of the following is correct with regard to consideration?

Two answers are correct

Distinguish between contracts that are covered by the Uniform Commercial Code and those covered by the common law.

UCC focuses on the sale of personal property or goods, while common law governs contracts outside the scope of the code.

If an offer leaves open particulars of performance to be specified by one of the parties, what limitations does Article 2 provide?

Under the Code, any such specification by one of the parties must be made in good faith and within limits set by commercial reasonableness.

Is a promise to pay a pre-existing moral obligation enforceable? Explain

Under the common law and in most states, a promise made to satisfy a pre-existing moral obligation is made for past consideration and therefore is unenforceable for lack of consideration. Instances involving such moral obligation include promises to pay for board and lodging previously furnished to a needy relative and promises to pay debts owed by a relative. The Restatement and a minority of states recognize moral obligations as consideration. Under the Restatement a promise made for a benefit previously received is binding to the extent necessary to prevent injustice.

Unauthorized Means

When the method of communication used by the offeree is unauthorized, the traditional rule is that acceptance is effective when and if received by the offeror, provided that it is received within the time during which the authorized means would have arrived. The Restatement goes further by providing that if these conditions are met, then the effective time for the acceptance is the moment of dispatch.

Breach

Wrongful failure to to perform the terms of a contract

executed contract

a contract that has been fully carried out by all of the parties to it. strictly speaking, an executed contract is no longer a contract, because all of the duties under it have been performed.

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

a contract to buy living room furniture

justifiably relied

a person is not entitled to relief unless she has done this on the misrepresentation. if the complaining partys decision was in no way influenced by the misrepresentation, she must abide by the terms of the contract. she is not deceived if she does not rely on the misrepresentation.

A fiduciary is:

a person who owes a duty of trust, loyalty, and confidence to another

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.

Define Requirements Contract

a purchaser's agreement to purchase from a particular seller all the materials of a particular kind that the purchaser needs

31. Sales of personal property are governed by Article ____ of the Uniform Commercial Code (UCC). a. 2 b. 3 c. 6 d. None of the above.

a. 2

20. A(n) ____ contract is one in which the parties have manifested their agreement by oral or written language, or both. a. express b. implied c. executory d. formal

a. express

18. A person who makes a promise is a(n): a. promisor. b. promisee. c. offeror. d. executor.

a. promisor.

7. Contracts are governed primarily by: a. state common law. b. federal common law. c. statutory law. d. federal case law.

a. state common law.

22. 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): a. unilateral contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.

a. unilateral contract.

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.

What transactions are enforceable even though they are not supported by consideration?

a. Promises to perform prior unenforceable obligations (promises to pay debts barred by the statute of limitations, promises to pay debts discharged in bankruptcy, voidable promises, and moral obligations). b. Promises which induce detrimental reliance (promissory estoppel) c. Promises made under seal. d. Promises made enforceable by statute (contract modifications for sale of goods contracts, renunciations, and firm offers).

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.

Express contracts and implied contracts are:

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

Duration of Offers

acceptance has 1. lapse of time 2. revocation 3. rejection 4. counteroffer 5. death or incompetency of the offeror or offeree 6. destruction of the subject matter to which the offer relates and 7.subsequent in the type of contract the offer proposes.

opinion

actionable fraud rarely can be based on what is merely a statement of opinion.

improper duress

acts that are improper and including economic and social coercion, to compel a person to enter into a contract. though the threat may be explicit or may be inferred from words or conduct in either case it must leave the victim with no reasonable alternative. this type of duress makes the contract VOIDABLE at the option of the coerced party. the acts need not be criminal or tortious to be wrongful; they merely need to be contrary to public policy or morally reprehensible. threatening a close relative is also duress. The fact that the act or threat would not affect a person of average strength and intelligence is not important if it places fear in the person actually affected and induces her to act against her will.

example of fraud in the inducement

alice in offering to sell her dog to bob, tells bob that the dog won first prize in its class in the recent national dog show. in truth, the dog had not even been entered in the show.

prediction

also to be distinguished from a representation of fact is this. this is similar to opinions, as no one can know with certainty what will happen int he future, and normally they are not regarded as factual statements.

example of fiduciary

an agent woes a fiduciary duty to his principal, as does a trustee to the beneficiary of the trust and a partner to her copartners. a fiduciary may not deal at arms length, as a party in most everyday business or market transactions may, but owes a duty to disclose fully all relevant facts when entering into a transaction with the other party to the relationship.

Define Restitution

an obligation imposed by law to avoid injustice. An equitable remedy under which a person who has rendered services to another seeks to be reimbursed for the costs of his acts (but not his profits) even though there was never a contract between the parties.

Silence As Acceptance

an offeree is genrally under no legal duty to reply to an offer. It does not indicate acceptance of the offer. By custom, usage, or course of dealing, however, the offeree's silcence or inaction may operate as an acceptance.

fiduciary

another instance when silence constitutes fraud. this is when a person in a confidential relationship who owes a duty of trust, loyalty, and confidence to another.

Define Duress

any wrongful or unlawful act or threat that overcomes the free will of a party. Unlawful constraint exercised upon a person, whereby he is forced to do some act against his will.

executory contract

applies to contracts that are still partially or entirely unperformed by one or more of the parties.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of the following is eligible? a. The employees of the bank who signed an employment contract to provide their best efforts to apprehend and convict perpetrators of theft crimes in connection with their work at the bank. b. An off-duty deputy sheriff 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. None of these are eligible.

A purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs is a(n) ____ contract. a. illusory b. requirements c. output d. exclusive dealing

Aaron's boss offers to pay him $500 if he will pretend he is sick so that he does not have to show up for jury duty, but will go to work instead. Aaron knows that this is against the law, but he would rather be paid $500 from his boss than the $30 that the court will pay him for jury duty. Aaron calls in sick and is excused from jury duty. This agreement between Aaron and his boss is: a. a bilateral contract. b. not a contract. c. a quasi contract d. a unilateral contract.

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.

Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable? a. Yes, there is no way for the dealer to get the extra money anyway b. Yes, there is consideration for the modified amount c. No, there is no consideration and the dealer can sue for the extra $300 d. No, there is an implied contract to pay the dealer whatever he billed Jack

Janet promises Eli $4,000 for one of his original paintings on the condition that she receive $1 million from her mother's will. a. Janet has made an illusory promise. b. Janet's promise is legally sufficient unless Janet knew at the time she made the promise that she could not inherit the $1 million. c. Janet has made a conditional promise which is not sufficient to form consideration. d. Janet's promise is legally inadequate and the courts will therefore not enforce it.

Jeanne, a wealthy widow, promises the pastor of her church that she will donate $100,000 to the church to help pay off its mortgage, if the stewardship committee can obtain enough pledges for the balance of the $300,000 mortgage. The stewardship committee has meetings to prepare for the campaign and spends $3,000 on printing to publicize the "Mortgage Burning Campaign." The committee also spends considerable time and resources on planning specific fund-raising projects. Other pledges are obtained to pay off the mortgage, but now Jeanne has changed her mind and plans to take a world cruise instead. a. There is no consideration for Jeanne's promise to donate $100,000. It was a promise to make a gift, and gift promises can never be made enforceable in a court of law. b. The committee's actions could be seen by a court asked to enforce the agreement as consideration for Jeanne's promise. This would satisfy the requirement that consideration by both parties must be found for there to be an enforceable contract. c. Under Section 90 of the Restatement, Jeanne's promise is not enforceable. d. Jeanne's promise falls under the common law doctrine that promises made to satisfy a preexisting moral obligation are generally unenforceable

Joe sends for a MBA catalog from State University. According to the catalog, the MBA applications are evaluated on the basis of undergraduate grades, GMAT (the appropriate standardized test) scores, references, and other factors that the University, in its discretion, believes will enhance the standing of the University. Joe has a 3.1 GPA, scores very well on the GMAT, and has excellent references. Based on the criteria listed in the catalog, Joe applies and pays the $100 application fee. His application is rejected. Later he finds out that others with low grades and test scores were accepted based on their family connections with the University. If Joe followed all of the guidelines in the college catalog and paid the required application fee, then according to the court in Steinberg v. Chicago Medical School: a. there is a quasi contract. b. there is a valid contract, but there has been no breach of that contract by the University or by Joe. c. there is a voidable contract. d. there is not a contract.

Sid makes a material representation of fact regarding his car to Barbara while out driving one day. The next day, Barbara calls Sid and offers to buy his car. Sid accepts Barbara's offer without correcting the misrepresentation of fact that he made the previous day. What is the effect of the material representation on the agreement between Sid and Barbara? a. Either Barbara or Sid may avoid the contract. b. Barbara may avoid the contract. c. Sid may avoid the contract. d. There is no effect because it was made the day before the offer was made.

Terri owes Mickey $125 to be paid by December 31. In consideration of Terri paying him $75 on July 4, Mickey agrees to discharge the debt. a. Mickey's promise of discharge is not binding because of lack of legal consideration. b. Mickey's promise of discharge is binding because early payment is sufficient legal consideration. c. Terri's payment of $75 was no legal detriment to the promisee because she was under preexisting legal obligation to pay that much and more. d. Two of the answers are correct

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.

Tyler contracts to build a garage for Wilbur for a price of $6,000. Because of an increase in the cost of labor and materials, Tyler refuses to perform. Wilbur wants the garage, so he agrees to pay an additional $500. a. Wilbur must pay the additional $500. b. Tyler has given no additional consideration, and under the common law must perform at the agreed upon original price. c. The substitute agreement is an illusory contract. d. The debt is a disputed one, and therefore Wilbur is obligated to pay the additional money.

Which of the following contracts is covered by Article 2 of the Uniform Commercial Code? a. The sale of a building. b. The sale of new furniture. c. An agreement to have the sidewalk shoveled. d. A sale of stock in ABC, Inc.

13. Which of the following is correct with regard to a contract? a. All contracts must be in writing. b. A person who deposits money in a bank account has entered into a contract with the bank. c. A contract may be for a tortious purpose. d. To be valid, a contract must be bilateral and cannot be unilateral.

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

33. Which of the following is an informal contract? a. A letter of credit. b. A written contract for the sale of a 5-acre tract of land. c. A check. d. A recognizance.

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

9. Article 2 of the Uniform Commercial Code deals with what type of property? a. Real b. Personal c. Intangible d. Business

b. Personal

11. 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. a. Brian may avoid the contract. b. Rosalind may avoid the contract. c. Either or both Brian or Rosalind may avoid the contract. d. Neither Brian nor Rosalind may avoid the contract.

b. Rosalind may avoid the contract.

15. Which of the following contracts is covered by Article 2 of the Uniform Commercial Code? a. The sale of a house b. The sale of a new car c. An employment agreement d. A sale of automobile insurance

b. The sale of a new car

27. 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. a. Abe has entered into a unilateral contract with the hospital and therefore will have to pay the bill. b. This is a quasi-contractual agreement. c. Abe has entered into an implied in fact contract with the hospital. d. Abe and the hospital have entered into a bilateral contract, the terms of which require that he pay the bill.

b. This is a quasi-contractual agreement.

3. A contract in which both parties exchange promises is a: a. voidable contract. b. bilateral contract. c. unilateral contract. d. quasi contract.

b. bilateral contract.

6. Any property other than an interest in real property is: a. goods. b. personal property. c. tangible property. d. intangible property.

b. personal property.

4. Caroline signs a contract to work as a sales rep for Incellmed Corporation for a period of two years. This contract is governed by: a. Article 2 of the UCC. b. state common law. c. federal statute. d. the law of quasi contract.

b. state common law.

10. 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: a. void. b. voidable. c. executed. d. unenforceable.

b. voidable.

A contract in which both parties exchange promises is a:

bilateral contract

A promise exchanged for a promise is called a

bilateral contract

A contract in which both parties exchange promises is a:

bilateral contract.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible? a. The employees of the bank b. An on-duty sheriff's deputy in the county where the arrest occurred c. An off-duty deputy sheriff from a county other than the one where the arrest occurred d. None of the above are eligible.

Another name for a quasi contract is: a. promissory estoppels. b. an implied in fact contract. c. an implied in law contract. d. an unenforceable contract

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 support a contract? a. An illusory promise b. Past consideration c. Forbearance to do an act d. A pre-existing public obligation

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.

34. Promissory estoppel is found in Section ____ of the Restatement (Second) of Contracts. a. 71 b. 81 c. 90 d. None of the above

c. 90

21. Which of the following is NOT always necessary in order for a valid contract to be formed? a. Mutual assent b. Legality of purpose c. A writing d. Competent parties

c. A writing

30. Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora. a. Bob can keep the money. b. Bob is under a contractual obligation to return the money. c. Bob's obligation to return the money is quasi contractual. d. Bob's obligation to return the money is implied in fact.

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

29. 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) d. A valid contract is always enforceable

c. Both (a) and (b)

25. Which of the following is not generally required in order to have a valid contract? a. Mutual assent b. A lawful purpose c. Fairness of the bargain d. Parties who have contractual capacity

c. Fairness of the bargain

23. 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. an implied in fact contract. b. an express contract. c. a promise. d. a quasi contract.

c. a promise.

32. A promise against public policy: a. can be contractual. b. is enforceable if the parties have capacity and mutual assent and they exchange consideration. c. has no legal remedy available for breach. d. Both (a) and (b).

c. has no legal remedy available for breach.

Molly signs a contract with a publishing company to edit text manuscripts. This contract is governed by a. the law of quasi contract. b. federal statute. c. state common law. d. Article 2 of the UCC.

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

Susie told Kelly, "If you wash my car, I promise to pay you $20." Kelly does not reply. This exchange is an example of: a. Promisee's Obligation. b. Bilateral Contract. c. Unilateral Contract. d. Promissory Estoppel.

When might a contract might be unenforceable? a. If the purpose of the contract was to commit a tort. b. If one party has not yet performed, but the other party has fully performed. c. If the statute of limitations has passed. d. If the parties could not reach an agreement.

Which of the following is NOT always necessary in order for a valid contract to be formed? a. Mutual assent b. Legality of purpose c. A writing d. Consideration

Which of the following is required in order to recover in quasi contract? a. An implied or express promise b. A valid contract c. Acceptance or retention of a benefit conferred on the defendant by the plaintiff d. A voidable contract

5. Contract law: a. has seen little change during the nineteenth and twentieth centuries. b. has experienced an expansion of the absolute freedom of contract during the twentieth century. c. today usually recognizes contractual obligations whenever the parties manifest an intent to be bound. d. requires privity between parties seeking to enforce contractual rights.

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

2. 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: a. valid contract. b. voidable contract. c. void contract. d. quasi contract.

c. void contract.

fraud in execution

consists of a misrepresentation that deceives the defrauded person as to the very nature of the contract. such fraud occurs when a person does not know, or does not have reasonable opportunity to know, the character or essence of a proposed contract because the other party misrepresents its character or essential terms. this renders the transaction VOID.

Sale

consists of the passing of title to goods from seller to buyer for a price. a contract for sale includes both a present sale of goods and a contract to sell goods at a future time.

Any property other than an interest in real property, is/are: a. tangible property. b. intangible property. c. goods. d. personal property.

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month. If Robbie does, is there a binding contract? a. No, because Robbie gave no benefit to Aunt Ellie b. No, because Robbie did not suffer any detriment c. Yes, because stopping smoking will benefit Robbie's health d. Yes, because Robbie gave up a legal right

Barbara, a wealthy widow, promises the pastor of her church that she will donate $20,000 to the church to help pay off its mortgage if the stewardship committee can obtain enough pledges for the balance of the $80,000 mortgage. Other pledges are obtained to pay off the mortgage, but now Barbara has changed her mind and plans to take an around-the-world cruise instead. a. The doctrine of promissory estoppel can be applied to this case. b. The promise to pay $20,000 is a promise to give a gift and is therefore not enforceable. c. Under the Restatement, Barbara's promise is enforceable. d. Both (a) and (c).

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 enters into a contract with Harry. The terms are that Bill will build an addition to Harry's home, replace the roof on Harry's garage, and make repave Harry's driveway in exchange for Bill's payment to Harry of several thousand dollars once all of the projects have been completed. If the driveway repavement has not yet been completed, but the addition and the roof have been completed, which term describes the type of contract in existence? a. Voidable b. Quasi-contract c. Implied-in-fact d. Executory

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 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.

Darla offers to pay Edward $6,000 for Edward's car, provided that Darla receives that much from her uncle's estate, which is currently being probated. She expects to know for sure how much she will receive within a week or so. a. This is an illusory contract, because Darla doesn't know whether she will receive the money for sure. b. The consideration moving from Darla to Edward is the promise of $6,000 subject to a condition. c. Darla's conditional promise is sufficient consideration unless Darla knows she cannot receive at least $6,000 from her uncle's estate. d. Both (b) and (c).

Sonny promises Maria not to foreclose for a period of six months on a mortgage that Sonny owns on Maria's real property. Relying on this promise, Maria begins to build a home on the land. If Sonny forecloses in two months, can Maria seek to enforce Sonny's promise?uestion a. No, this contract is illegal. b. Yes, Maria can argue that she was under duress by Sonny. c. No, Sonny's promise was illusory. d. Yes, Sonny made a non-contractual promise and Maria reasonably relied on such promise and began building a home on the land.

Susie told Kelly, "If you wash my car, I promise to pay you $20." Kelly replies, "OK—I promise to wash your car." This exchange is an example of: a. Promissory Estoppel. b. Promisor's Obligation. c. Unilateral Contract. d. Bilateral Contract.

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.

The doctrine of promissory estoppel: a. is a doctrine enforcing contractual promises. b. applies even if the promisor should not have expected the promisee to rely on the promise. c. applies even if the promisee does not rely on the promise. d. is a doctrine that relies on justice and not contractual rights.

fraud in the inducement

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 int he inducement renders the contract VOIDABLE by the defrauded party.

Define Undisputed Debt

is an obligation that is not contested as to its existence and its amount. Under the common law, the payment of a lesser sum of money than is owed in consideration of a promise to discharge a fully matured, undisputed debt is legally insufficient to support the promise of discharge.

Personal property

is any property other than a n interest in real property (land). for example, the purchase of a television set, an automobile, or a textbook is a sale of goods. all such transactions are governed by article 2 of the code, but in cases in which the code has not specifically modified general contract law, the common law of contracts continues to apply.

duress

is any wrongful or unlawful act or threat that overcomes the free will of a party. a person should not be held to an agreement he has not entered voluntarily. two types of duress- physical duress, and improper threats.

Define Merchant

is defined as a person (1) who is a dealer in a given type of goods or (2) who by his occupation holds himself out as having knowledge or skill peculiar to the goods or practices involved or (3) who employs an agent or broker whom he holds out as having such knowledge or skill.

Effective Moment

is generally an acceptance effective upon dispatch. This is true unless the offer specifically provides otherwise.. The offeree uses an unauthorized means of communication, or the acceptance follows a prior rejection.

Quasi contract

is not a contract because it is based neither on an express nor on an implied promise. rather, it is an obligation imposed by law to avoid injustice. example, bob by mistake delivers to roy a plain, unaddressed envelope containing 100 dollars intended for smith. roy is under no contractual obligation to return it, but bob is permitted to recover the 100 dollars from roy. te law imposes a quasi contractual obligation roy to prevent his unjust enrichment at the expense of bob.

unenforceable contract

is one for the breach of which the law provides no remedy. for example, a contract my be unenforceable because of a failure to satisfy the requirements of the statute of frauds, which requires certain kind of contracts to be evidenced by a writing to be enforceable. also this could happen with restrictions on the time of contracts.

arms length transaction

is one in which the parties owe each other no special duties and each is acting i his or her self interest. in most business or market transactions, the parties deal at arms length and generally have no obligation to tell the other party everything they know about the subject of the contract. thus, it is not fraud when a buyer possesses advantageous information about the sells property, information of which he knows the seller to be ignorant, and does not disclose such information to the seller. a buyer is under no duty to inform the seller of the greater value or other advantages of the property for sale.

valid contract

is one that meets all of the requirements of a binding contract. it is enforceable promise or agreement.

What is the general consequence of mutuality of obligation?

is that each promisor in a bilateral contract must be bound or neither is bound.

Define Consideration

is the inducement for a promise or performance.

undue influence

is the unfair persuasion of a person by a part in a dominant position based on a confidential relationship. examples are the relationships of guardian, trustee beneficiary, agent principal, spouses, parent child, attorney client, physician- patient, and clergy parishioner. a transaction induced by undue influence on the part of the dominant party is VOIDABLE..

material

is this if 1. it would be likely to induce a reasonable person to manifest assent or 2. the maker knows that it would be likely to induce the recipient to do so. thus, int he sale of a racehorse, it may not be material whether the horse was ridden in its most recent race by a certain jokey, but its running time for the race probably would be. the restatement of contracts provides that a contract justifiably induced by a misrepresentation is voidable if the mirepresntation is either fraudulent or material. there, a fraudulent misrepresentation does not have to be material to obtain rescission, but it must be material to recover damages.

Clint contests the amount of a bill he received from Car Care Specialists. Under the Restatement, settlement of the claim:

is valid consideration if at the time of the settlement the claim was doubtful because of uncertainty as to the facts.

real property

land and anything attached to it, including buildings, as well as any right, privilege, or power int he real property, including leases, mortgages, options, and easements.

promise

manifests or demonstrates the intention to act or refrain from acting in a specific manner. a promise may be contractual or noncontractual.

Define Legal Benefit

means the obtaining by the promisor of that which he had no prior legal right to obtain.

example of fraud in execution

melody delivers a package to ray, request that ray sign a receipt for it, holds out a simple printed form headed "receipt" and indicates the line on which ray is to sign. this line, which appears to ray to be the bottom line of the receipt, is actually the signature line of a promissory note cleverly concealed underneath the receipt.

misrepresentation

misleading conduct or an assertion not in accord with the facts, made through a positive statement. expressly denying knowledge of a fact that a party knows to exist is a misrepresentation if it leads the other party to believe that the fact does not exist or cannot be discovered. moreover, a statement of misleading half truth is considered the equivalent of a false representation. this must be of fact and must be material

necessary

nonfraudulent misrepresentation is a material, false statement that induces another to rely justifiably but is made without sienter. may occur in two ways

negligent misrepresentation innocent misrepresentation

mutual mistake

occurs when both parties are mistaken as to the same set of facts. if the mistake relates to a basic assumption on which the contract is made and has a material effect on the agreed exchange, then it is VOIDABLE by the adversely affect party unless he bears the risk of the mistake. usually, market conditions and the financial situation of the parties are no considered basic assumptions.

physical duress

occurs when one party compels another to manifest assent to a contact through actual physical force, such as pointing a gun at a person or taking a person's hand and compelling him to sign a written contract. this type of duress, while extremely rare, renders the agreement VOID.

Define Unilateral Mistake

occurs when only one of the parties is mistaken. Courts have been hesitant to grant relief for unilateral mistake, even though it relates to a basic assumption on which a party entered into the contract and has a material effect on the agreed exchange. Nevertheless, relief will be granted in cases in which (1) the nonmistaken party knows, or reasonably should know, that such a mistake has been made (palpable unilateral mistake) or (2) the mistake was caused by the fault of the nonmistaken party.

Define Acceptance

of an offer for a bilateral contract is some overt act by the offeree that manifests his assent to the terms of the offer, such as speaking or sending a letter, or other explicit or implicit communication to the offeror. If the offer is for a unilateral contract, acceptance is the performance of the requested act with the intention of accepting

Death or Incompentency

of either the offeror or the offeree ordinarily terminates an offer. On his deat or cincompetency, the offeror no longer has the legal capacity to enter into a contract; thus all outstanding offers are terminated. Death or incompetency of the offeree also terminates the offer because an ordinary offer is not assignable and may be accepted only by the person to whom it was made. When the offeree dies or ceases to have legal capacity to enter into a contract, noone else has the power to accept the offer.

A Variant Acceptance

one that contains terms different from or additional to those in the offer-receives distinctly different treatment under the common law and under the Code.

unilateral contract

only one party made a promise to mow the yard. ex. if you will mow my lawn, i will pay you 10 dollars. if it is unclear whether a unilateral or bilateral contract has been formed the courts will rule with a bilateral.

silence

or nondisclosure alone does not amount to fraud when the parties deal at arms length.

express contract

parties manifest assent in words.

promisor

personal making the contract

Any property other than an interest in real property is:

personal property.

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.

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.

puffing

sales talk

example of arms length transaction

sid owns a farm that, as a farm, is worth $100,000. brenda, who knows that there is oil under sids farm, also knows that sid is ignorant of this fact. without disclosing this information to sid, brenda makes an offer to sid to buy the farm for $100,000. sid accepts the offer, and a contract is duly made.

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

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.

mutual mistake example 2

suppose that parties contract upon the assumption that the automobile is a 2013 cadillac with fifteen thousand miles of use, when in fact the engine is that of a cheaper model and has been run in excess of fifty thousand miles. here, a court likely would allow a rescission because of mutual mistake of a material fact. in a new zealand case, the plaintiff purchased a stuff bull at an auction. there were no express warranties as to sex, condition, or otherwise. actually, the bull was sterile. rescission was allowed, the court observing that it was a bull in name only.

Goods

tangible personal property.

Define Destruction of Subject matter

terminates the offer. Suppose that Sarah, owning a Buick, offers to sell the car to Barbara and allows Barbara five days in which to accept. Three days later the car is destroyed by fire. On the following day, Barbara, without knowledge of the destruction of the car, notifies Sarah that she accepts Sarah's offer. There is no contract. The destruction of the car terminated Sarah's offer.

Destruction of Subject Matter

terminates the offer. Suppose that Sarah, owning a Buick offers to seel the car to Barbara and allows Barbara five days in which to accept. Three days later, the car is destroyed by fir. On the following day, Barbara, without knowledge of the destruction of the car, n9otifes Sarah that she accepts the offer. There is no contract. The desctruction of the car terminated Sarah's offer.

What is basic rule of Restitution?

that a person who is unjustly enriched at the expense of another is subject to liability in restitution, which usually requires the unjustly enriched person to restore the benefit received or pay money in an amount necessary to eliminate the unjust enrichment.

implied in fact contracs

the actions speak as effectively as words. implied contracts and express contracts are equally enforceable.

what does without reserve mean?

the auctioneer may not withdraw an article put up for sale unless no bid is made within reasonable time.

Promissory Estoppel

the courts enforce noncontractual promises under the doctrine of promissory estoppel to avoid injustice. A noncontractual promise is enforceable when it is made under circumstances that should lead the promisor reasonably to expect that the promisee, in reliance on the promise, would be induced by it to take definite and substantial action or to forbear, and the promisee does take such action or does forbear. Example: Gordon promises Constance not to foreclose for a period of six months on a mortgage Gordon owns on Constance's land. Constance then expends $100,000 to construct a building on the land. His promise not to foreclose is binding on Gordon under the doctrine of promissory estoppel.

Define Scienter

the misrepresentation must have been known by the one making it to be false and must be made with an intent to deceive. Knowing of the DEceit

explain revocation of an offer

the offeror can cancel the offer at anytime prior to its acceptance. if he promises to keep the offer open for a number of days he can still cancel the offer as long as he gives the offeree notice.

An arms-length transaction is one in which

the parties are acting in their own self-interest

capacity

the parties to a contract must have contractual capacity. certain persons, such as adjudicated incompetents, have no legal capacity to contract, whereas others, such as minors, incompetent persons, and intoxicated persons, have limited capacity to contract. all others have full contractual capacity.

mutual assent

the parties to a contract must manifest by word or conduct that they have agreed to enter into a contract. the usual method of showing mutual assent is by offer and acceptance.

Mutual assent

the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract

promisee

the person to whom a promise is made

legality of object

the purpose of a contract must not be criminal, tortious, or otherwise against public policy

when a nondisclosure constitutes a misrepresentation

the situation arises when: 1. a person fails to disclose a fact known to him 2. he knows that the disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and 3. nondisclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing. also for fiduciary claims

innocent misrepresentation

this also renders a contract VOIDABLE, is a false representation made without knowledge of its falsity but with due care. to obtain relief for nonfraudulent misrepresentation, all of the other elements of fraud must be present and the misrepresentation must be material.

fact

this is an event that actually took place or a thing that actually exists. suppose that dale induces mike to purchase a shares in a company unknown to mike at a price of 100 dollars per share by representing that she had paid 150 dollars per share for them during the preceding year, when in fa t she had paid only 50 dollars. this representation of a past even is a misrepresentation of fact.

voidable contract

though effective, is no wholly lacking in legal effect. for instance, through intentional misrepresentation of a material fact (fraud), thomas induces regina to enter into a contract. regina may, upon discovery of the fraud, notify thomas that by reason of the misrepresentation, she will not perform her promise, and the law will support regina. although the contract inudc3ed by fraud is not void, it is voidable a the election of regina, the defrauded party.

Conditional Acceptance

to acceppt the offer but expressly makes the acceptance contingent on the offeror's assent to additional or different terms.

scienter

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. knowledge of falsity can consist of: 1. actual knowledge 2. lack of belief in the statements truthfulness or 3. reckless indifference as to its truthfulness

Contract law:

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

Sale

transfer of title to goods from seller to buyer

"Consideration" does not require an actual benefit to both sides of an agreement

true

A conditional promise is a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur

true

A few states provide by statute that the parties need to provide no new consideration when modifying any contract

true

A modification of a preexisting contract occurs when the parties agree to change one or more of its terms.

true

A noncontractual promise may be enforceable where there has been justifiable reliance on the promise.(t.f)

true

A promise to pay $1,000 a year to a local police officer not to have your store vandalized is legally unenforceable under the rule that makes performance of a pre-existing legal obligation legally insufficient consideration.

true

A unilateral contract may consist of a promise exchanged for an act or forbearance.

true

According to the UCC, only a merchant can make a firm offer to a buyer.

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, rather than void or voidable.(t.f)

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.(t.f)

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.(t.f)

true

An illusory promise has the form of a promise but imposes no real obligation.

true

An implied contract is as enforceable as an express contract.(t.f)

true

An implied in fact contract is formed by conduct.(t.f)

true

Article 2 of the Uniform Commercial Code does not apply to the sale of services.(t.f)

true

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

true

Charitable subscriptions are one of the most frequently occurring applications of the doctrine of promissory estoppel.

true

Consideration exchanged for a promise does not require both legal detriment to the promisee and legal benefit to the promisor.

true

Contracts binding without consideration include promises to pay debts barred by a statute of limitations and debts discharged in bankruptcy.

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.(t.f)

true

If Sam agrees to sell to Thomas all of the tomatoes he wants at $25 a bushel, there is no contract for lack of consideration

true

If a promise is illusory, mutuality of obligation is lacking.

true

In a bilateral contract, if one party is not bound, neither party is bound.

true

In a unilateral contract, a promise is exchanged for an act or forbearance to act

true

In most, if not all, cases where there is a legal detriment to the promisee, there is also a legal benefit to the promisor

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.(t.f)

true

Otherwise illusory promises may be transformed by some courts into actual promises by implying an obligation of good faith and fair dealing.

true

Pablo promises to sell to Candice an automobile for $20,000, for which Candice promises $20,000. A bilateral contract exists.

true

The Code has changed the common law rule regarding modification of a preexisting contract providing that a contract for the sale of goods can be effectively modified by the parties without neew consideration, provided they intend to do so and act in good faith

true

The Restatement and the UCC are both currently authoritative sources of contract law. (t.f)

true

The Restatement provides that a promise following the rendering of emergency services is binding even if not supported by consideration if necessary to prevent injustice.

true

The central idea behind consideration is that the parties have intentionally entered into a bargained exchanged with one another and have given each other something in exchange for a promise or performance

true

The difference between an express contract and an implied in fact contract is the manner in which assent is manifested. (t/f)

true

The element of exchange is absent where a promise is given for an act that has already been done.

true

The parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract

true

The term "past consideration" is not really consideration at all because the law will not find a contract where there is no bargained-for-exchange.

true

The usual method of showing the mutual assent necessary to create a contract is by offer and acceptance.(t.f)

true

Under the UCC, exclusive dealing contracts are binding because sufficient consideration is deemed to be present.

true

Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.

true

a valid contract is one that meets all of the requirements of a binding contract.(t.f)

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. (t.f)

true

The UCC provides that a court may scrutinize every contract for the sale of goods to determine whether, in its commercial setting, purpose, and effect, the contract is

unconscionable

A promise exchanged for an act is a

unilateral contract

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.

a ____________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract

usury statute

if a mutual mistake takes place and the parties have a different set of facts then the contract is

void

if physical duress takes place the contract is

void

if you sign something, but you did not know or have the opportunity to know what exactly you were signing (fraud in the execution) the contract is

void

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

void contract.

if a contract is a result of undue influence (person in dominating position takes advantage of a situation) the contract is

voidable

if a mutual mistake takes place and both parties have the same set of facts then the contract is

voidable

if duress due to improper threats takes place the contract is

voidable

if there is false representation of a fact made with the knowledge to of the falsity and you have the intent to deceive, and the offeree is relying on your information the contract becomes

voidable

non-fraudulent ( no intent to deceive) takes place then the contract is

voidable

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.

bilateral contract

when a contract is formed by the exchange of promises, each party is under a duty to the other. in this contract, each party is both a promisor and a promisee.. ex. if you promise to mow my lawn, i will pay you 10 dollars. two promises have been exchanged

Open Terms

with respect to agreements for the sale of goods, the Uniform commercial Code provides standards by which the courts may determine omitted terms, provided the parties intended to enter into a binding contract.

True or False: An illusory promise is consideration for a return promise.

False

True or False: An implied contract is not an enforceable contract.

False

True or False: An offer is an indefinite proposal made by one person to another.

False

True or False: An offer is effective as soon as it is dispatched.

False

True or False: An offer must be in one particular form to have legal effect.

False

True or False: Common Law imposes a good faith limitation upon the quantity to be sold or purchased under an output or requirements contract.

False

True or False: Consideration has only one basic element, which is a bargained-for exchange.

False

True or False: Consideration, or that which is exchanged for a promise, is present only when the parties intend an exchange. The consideration exchanged for the promise may be an act, or a forbearance to act, but not a promise to do either of these.

False

True or False: Contracts generally require adequacy of consideration where the consideration given by both parties is of fair value and equitable.

False

True or False: D owes C a past-due undisputed debt of $500. D sees C in a bar and pays him $400. C then says to D, "Forget about the other $100 you owe me. I'm glad to get the $400." C's promise to discharge the remainder of the debt is binding.

False

True or False: Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange.

False

True or False: For a misrepresentation to be actionable as fraud in the inducement, it must be a misrepresentation of opinion.

False

True or False: For a misrepresentation to be fraud in the inducement, it need not be material.

False

True or False: Fraud in the inducement will render an agreement void.

False

True or False: Generally, whether or not the parties deal at arm's length does not affect whether silence alone amounts to fraud.

False

True or False: George offered to paint Catherine's barn for $4,000. Catherine said she would accept the offer if George would paint the woodshed, too. At this point, they have made a valid and enforceable contract.

False

True or False: Historically, courts held that representations of law were statements of fact, but the present trend is to recognize that they have only the effect of statements of opinion.

False

True or False: Hugh recently purchased a motorcycle for $4,000 but has had extensive problems starting the motor. In disgust at not being able to start the motorcycle, Hugh shouts to his friends, "Any of you want to buy this thing for $20?" A contract will be formed if a friend gives Hugh a twenty-dollar bill.

False

A conditional promise is generally considered sufficient consideration

True

A covenant not to compete is a type of restraint of trade that courts today will enforce under certain circumstances.

True

A gratuitous promise is a promise made without consideration

True

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

True

A quasi contract is also called a contract implied in law

True

A recent trend is to limit or relax usury statutes, and most states now allow credit card companies to charge whatever interest rate they wish.

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

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

false

In most states, a contract under seal is binding without consideration.

false

In settling a liquidated debt, payment of a smaller amount before the due date would constitute consideration, but paying a lesser amount on the due date at an agreed-upon different place of payment would not be legally sufficient consideration.

false

Jerry received a bill for $300 from Johnson for a tune-up Johnson had performed on Jerry's car. Jerry called Johnson and told him, "The car runs no better now than before the tune-up. I am sending you $100 and no more." Johnson received the $100 check which was marked "paid in full" and cashed it. Jerry is still liable to Johnson for $200.

false

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

false

Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms.

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. (t/f)

false

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract

false

Quasi contract is another name for a contract that is implied in fact.(t.f)

false

Sandys private secretary promises to keep the contents of a letter she typed secret if Sandy will give her the next day off with pay. If the secretary takes the day off, Sandy has to pay her for the day

false

The Abbot Corporation contracts with the Baker Corporation to sell to Baker its entire production. After signing the agreement, Abbot can increase its production from one shift to two shifts and Baker will have to buy all of the doubled production.

false

The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract.

false

Acceptance of Offer

for a bilateral contract is some overt act by the offeree that manifests his assent to the terms of the offer, such as speaking or sending a letter, a telegram or other explicit or implicit communication to the offeror. If the offer is for unilateral contract, acceptance is the perfomance of the requested act with the intention of accepting. For example, if Joy publishes an offer of a reward to anyone who returns the diamond ring that she has lost and Bob, with knowledge of the offer, finds and returns the ring to Joy, Bob has accepted the offer.

two types of fraud

fraud in the execution and fraud int he inducement.

Uniform Commercial Code

governs such sales of personal property in all states except Louisiana.

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. Abe:

has a quasi-contractual agreement with the hospital.

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

has a quasi-contractual obligation to return the money.

A promise against public policy:

has no legal remedy available for breach.

concealment

is an action intended or known to be likely to keep another from learning a fact he otherwise would have learned. active concealment can form the basis for fraud, as, for example, when a seller puts heavy oil or grease in a car engine to conceal a knock.

Output contract

is an agreement of a buyer to purchase a seller's entire output for a stated period

Requirements Contract

is an agreement of a seller to supply a buyer with all his requirements for certain goods.

"Consideration" requires an actual benefit to both sides of an agreement.

FALSE

A debt is disputed only if both the existence and amount are contested.

FALSE

A promisee's consideration is effective only if given directly to the promisor by the promisee.

FALSE

An exclusive dealing contract is one type of contract which is illusory, because it lacks consideration.

FALSE

An illusory promise is consideration for a return promise

FALSE

Andrew agreed to exchange something clearly without value to enter a contract with Milt. The contract will not fail for lack of consideration because, if the parties agree to the exchange, the courts will not be concerned about whether the consideration is "adequate."

FALSE

Bob promises to sell to Candy an automobile for $20,000, for which Candy promises $20,000. A unilateral contract exists.

FALSE

D owes C a past-due undisputed debt of $500. D sees C in a bar and pays him $400. C then says to D, "Forget about the other $100 you owe me. I'm glad to get the $400." C's promise to discharge the remainder of the debt is binding.

FALSE

Dana gives care to Marnie's dog when Dana finds Marnie's dog ill on the side of the road. After Marnie locates her dog, Marnie promises to reimburse Dana for the cost of treating the dog. Marnie's promise is binding, because there is a bargained-for-exchange.

FALSE

Exclusive dealing contracts are illegal and void.

FALSE

In a unilateral contract, a promise is exchanged from one party to another for a promise to forbear to act.

FALSE

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain.

FALSE

Nathan entered a contract while he was seventeen. If, upon reaching the age of majority, he has not avoided the contract and promises to perform those contractual obligations, new consideration is required for the contract to be enforceable.

FALSE

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.

FALSE

True or False: If Bill tells Sara that he will give her two days to decide if she wants to buy his car, he cannot sell it to anyone else during that time.

False

True or False: If Thomas seemingly offers to sell to Raquel his Toro lawnmower but he intends to offer and believes he is offering her his Murray mower, and she accepts the offer, reasonably believing it was for the Toro, no contract has been formed because there is no mutual assent.

False

True or False: If no time limit is stated, an offer will not terminate until both parties agree.

False

True or False: If the act or threat would affect a person of average strength and intelligence, then and only then will the act constitute duress.

False

True or False: In an output contract, the seller can operate a factory on a 24-hour-a-day schedule and insist that the buyer take all of the output when that buyer had operated only eight hours a day at the time the contract was made and the buyer had knowledge of the eight-hour-a-day operating schedule.

False

True or False: In most states, a contract under seal is binding without consideration.

False

True or False: In order for an offer to end by lapse of time, the offeror must specify the time within which the offer is to be accepted.

False

True or False: In settling a liquidated debt, payment of a smaller amount before the due date would constitute consideration, but paying a lesser amount on the due date at an agreed-upon different place of payment would not be legally sufficient consideration.

False

Define Illusory Promise

Is a statement that is in the form of a promise but imposes no obligation upon the maker of the statement.

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or similar business for a period of twenty-five years would be unreasonable.

True

Essentials of an offer

1.communication to the offeree 2. manifest an intent to enter into a contrac 3. be sufficiently definit and certain.

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.

Al has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain from practicing accounting anywhere within a 20-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. a. Al is in violation of the sales agreement. b. The agreement is invalid, because it is an illegal restraint of trade. c. The agreement is illegal, because it is a violation of public policy. d. The two-year provision is likely to be held invalid, because it is too long a period of time.

Al, an accountant, has a tax service and accounting business in Redwood City. He decides to move to Center City, which is 150 miles away and sells his accounting practice to Able and Baker, a CPA firm. In the sale contract, he agrees that he will refrain from practicing accounting anywhere within a 100-mile radius of Redwood City for a period of two years. However, on weekends he returns to his house in Redwood City, and when clients call him, he meets with them in his home. a. Al is in violation of the sale agreement. b. The agreement is invalid, because it is an illegal restraint on trade. c. The agreement is illegal, because it is a violation of public policy. d. The two-year provision is likely to be held invalid, because it is too long a period of time.

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of: a. an illusory promise. b. past consideration. c. the pre-existing duty rule. d. good consideration.

Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business anywhere in River City for a period of five years. a. The geographic restraint is reasonable. b. This agreement is unreasonable. c. The agreement unduly interferes with the interest of the public. d. Both (b) and (c).

Assume an offeree mails a rejection to the offeror on November 1. This rejection arrives at the offeror's place of business on November 5. In the meantime, on November 4, the offeree sends the offeror an acceptance that arrives November 6. Which of the following statements correctly describes the situation? a. There was no contract because when an acceptance follows a prior rejection, the first communication to be received by the offeror is the effective one. b. There was a contract since the acceptance was mailed prior to the time the rejection was received. c. There was no contract because the rejection was mailed first. d. There was no contract because the acceptance was mailed more than three days subsequent to the rejection.

Carlos ordered an aluminum storm door for $249.99. Before it was delivered, the same store from which he ordered the door ran an ad in the paper for the same storm door at $179.99. Carlos calls the store and demands the advertised price. They say okay. a. Carlos must pay $179.99. b. Carlos must pay $249.99. c. There is no contract. d. There is a contract for the reasonable value of the door.

A fiduciary is a: a. person in a subservient position. b. person who owes a duty of trust, confidence, and loyalty to another. c. form of formal conduct. d. person of equal power and control.

A purchaser's agreement to buy from a particular seller all the materials of a particular kind he needs is a(n) ____ contract. a. Illusory b. Requirements c. Output d. exclusive dealing

The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract

FALSE

Under the common law, payment of a lesser sum of money than is owed in consideration of a promise to discharge a fully matured, undisputed debt is legally sufficient to support the promise of discharge.

FALSE

erry received a bill for $300 from Johnson for a tune-up Johnson had performed on Jerry's car. Jerry called Johnson and told him, "The car runs no better now than before the tune-up. I am sending you $100 and no more." Johnson received the $100 check which was marked "paid in full" and cashed it. Jerry is still liable to Johnson for $200.

FALSE

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

Fairness of the bargain

"Blue laws" usually apply to activities of necessity and charity.

False

"Consideration" requires an actual benefit to both sides of an agreement

False

"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 bargain by a candidate for public office to make a certain appointment following the election is legal.

False

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

False

A contract is invalid if all of the terms are not clearly stated

False

A contract may NOT be formed by conduct

False

A contract may not be express, bilateral, valid, and executory at the same time.

False

A contract may not be formed by conduct.

False

A contract to commit a tort will be enforced by the courts.

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 modification of a contract for the sale of goods must always be supported by additional consideration

False

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

False

A noncompete clause in an employment contract with an Internet business based in New York that restricts a former employee from working for another Internet business in the entire United States within one year of leaving her position is unreasonable and will not be upheld in court.

False

A quasi contract is another name for an oral contract.

False

A revenue license is a measure to protect the public from unqualified practitioners.

False

A unilateral contract is not valid if a promise is exchanged for a forbearance.

False

All merchant ads are offers.

False

All written contracts are considered to be formal contracts.

False

American courts generally will enforce a gambling agreement

False

An agreement for an illegal substance will be enforced by the courts if all other elements of the contract are present.

False

An agreement for illegal drugs will be enforced by the courts if all other elements of the contract are present

False

An agreement for sale of an illegal substance will be enforced by the courts if all other elements of the contract are present.

False

An agreement to pay a public officer something extra for performing his official duty is enforceable

False

An agreement to sell the entire production of a particular plant is a requirements contract

False

An agreement to sell the entire production of a particular plant is a requirements contract.

False

An exclusive dealing contract is one type of contract which is illusory, because it lacks consideration

False

An illusory promise is consideration for a return promise.

False

An offer is effective as soon as it is dispatched

False

An offer may NOT be made to the general public

False

An offer may not be made to the general public.

False

An output contract is a special form of an illusory contract

False

An output contract is a special form of an illusory contract.

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

Bargains are illegal if they constitute a crime or tort but not if they are merely against public policy

False

Bargains are illegal if they involve a crime or tort but not if they are merely against public policy.

False

Bargains are illegal if they violate a crime or tort but not if they are merely against public policy.

False

Barney did some repair work for a neighbor in a community where repair businesses are required to pay license fees as a means of raising revenue for the community. Barney did not obtain a license, so he is not entitled to recover for services performed.

False

Bill is currently enrolled in law school, expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement.

False

Bill is currently enrolled in law school. He expects to graduate and take the bar exam in order to be able to practice law. Before Bill becomes a lawyer, he promises to represent his friend, Tom, in a breach of contract action if Tom will pay him 25% of the settlement. Bill negotiates and the case settles for $50,000. Tom refuses to pay Bill. Bill then graduates and attempts to sue Tom. Bill has a legal right to enforce the agreement.

False

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

False

Consideration requires an actual benefit to both sides of an agreement

False

Courts require that for a contract to unenforceable based on unconscionability, both substantive and procedural unconscionability must be equally present.

False

Courts will never limit freedom of contract

False

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

False

Edward, an engineer, is working on a new design for some highly technical equipment which Martus, Inc. hopes to market within the next five years. The employment agreement between Edward and Martus states that Edward will not go to work for another company in the same business for a period of two years after termination of his employment with Martus, Inc. This agreement is void and unenforceable because, although Martus is a very specialized company, it would make it difficult for Edward to find other employment.

False

Edward, an engineer, is working on a new design for some highly technical equipment which XYZ, Inc. hopes to market within the next five years. The employment agreement between Edward and XYZ states that Edward will not go to work for another company in the same business for a period of two years after termination of his employment with XYZ, Inc. This agreement is void and unenforceable, because it would make it difficult for Edward to find other employment.

False

Generally, silence or nondisclosure of a fact amounts to fraud in arm's-length transactions

False

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

False

In the case of Denney v. Reppert the court allowed the employees of a bank to collect a reward, because they supplied information that led to the arrest and conviction of a bank robber

False

Legal detriment means the obtaining by the promisor of that which he had no prior legal right to obtain

False

Legal sufficiency of consideration an adequacy of consideration are virtually synonymous terms

False

Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms

False

Legal sufficiency of consideration and adequacy of consideration are virtually synonymous terms.

False

Marjorie has been cared for by her family physician for 35 years. She decided to assume the mortgage on his new clinic. The contract is automatically invalid because of undue influence

False

Maximum rates of interest that are permitted under usury statutes are uniform from state to state.

False

Noncompete agreements for Internet-related jobs have the same limitations in determining what is reasonable as to time and place restrictions as other types of jobs.

False

Only if the act or threat would affect a person of average strength and intelligence will the constitute duress

False

Oswald applied for a loan from Pointe Lenders. Pointe's reasonable cost of checking Oswald's credit will be considered as part of the financing charge when determining whether Pointe's rate of interest exceeds that allowable under the usury statute.

False

Parties to a contract can only indicate their assent to a contract by words, either oral or in writing.

False

Past actions unbargained for by the parties in an agreement can become valid consideration for a contract

False

Pat repeatedly told her friends that her car got 35 miles to the gallon in the city when in reality it got 20. When Pat decides to sell and one of these friends decide to buy the car, Pat is under no duty to tell the correct figure unless asked

False

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

False

Regulation of gambling is solely under federal jurisdiction, through Congressional legislation and U.S. court enforcement.

False

Sam, a student, promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Sam guides them, but when they discover that Sam does not have a fishing license, they refuse to pay him. The agreement is an illegal one, which is not enforceable.

False

Silence can never be an acceptance

False

Stuart promises to act as a guide on a fishing trip for a group of visiting dignitaries. The dignitaries agree to pay him $200 for his services. Stu guides them, but when they discover that Stu does not have a fishing license, they refuse to pay him. The agreement between Stu and the dignitaries is an illegal one, which is not enforceable.

False

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct

False

The Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.

False

The UCC follows the common law rule that requires a modification of an existing contract be supported by consideration in order to be valid

False

The Uniform Commercial Code follows the common law rule that requires a modification of an existing contract to be supported by consideration in order to be valid.

False

The common law "mirror image" rule applies to an offer and the acceptance of that offer in a contract for the sale of goods

False

The courts generally will enforce exculpatory clauses

False

The courts will enforce an agreement declared illegal by statute

False

The law does regards the performance of, or the promise to perform, a preexisting legal duty, public or private, as either a legal detriment or a legal benefit.

False

The law regards the performance of a public duty as a legal detriment or a legal benefit

False

The performance of a pre-existing contractual duty which is neither doubtful nor the subject of an honest dispute is legally sufficient consideration to support a second contract.

False

The term "public policy" is precisely and narrowly defined in the Restatement and by state statutes

False

The two basic elements to consideration are legal adequacy and a bargained-for exchange

False

The two basic elements to consideration are legal adequacy and a bargained-for exchange.

False

True or False: A contract is invalid if all of the terms are not clearly stated.

False

True or False: A liquidated debt is an obligation the existence or amount of which is in dispute.

False

True or False: A modification of a contract for the sale of goods must always be supported by additional consideration.

False

True or False: A public duty arises out of a contract; not by members of society by force of the common law or by statute

False

True or False: A unilateral contract is not valid if a promise is exchanged for a forbearance.

False

True or False: A unilateral mistake of fact is ordinarily grounds for avoiding a contract.

False

True or False: AI owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers AI $160,000 for it. AI accepts and sells the farm to Betty. AI later realizes that the land was worth more than $160,000. AI can have the contract avoided based upon fraud.

False

void contract

is an agreement that does not meet all of the requirements of a binding contract. thus, it is no contract at all; it is merely a promise or an agreement that has no legal effect.

- Harold has a pre-existing obligation to pay the 800$. - If Isaac accepts the $600, he can still sue for the remaining $200.

What are the three things that are essential to an offer

- Manifestation of intent to enter into contractual relationship (objective standard - what you say is what you mean) - Communicated - done or authorized by the offeror and recieved by the offeree - sufficiently definite and certain (common law - requires more sufficiently; code - says you dont have to have price)

There are certain transactions that are enforceable without consideration. These include:

- promises to pay a debt barred by the statute of limitations. - a promise to pay a debt that has been discharged in bankruptcy if certain requirements are met. - a new promise to perform a voidable obligation that has not previously been avoided.

What are the ways in which an offer may be terminated?

-lapse of time. -revocation. -rejection. -counteroffer. -death or incompetency of the offeror or offeree. -destruction of the subject matter. -subsequent illegality of the type of contract the offer proposes.

4 requirements of a contract

1 mutual assent 2 consideration 3 legality of object 4 capacity

Identify the three elements of enforceable quasi contract and explain how it differs from a contract.

1. A benefit conferred upon the defendant by the plaintiff 2. The defendant's appreciation or knowledge of the benefit 3. Acceptance or retention of the benefit by the defendant making it inequitable for him to retain the benefit without compensating the plaintiff for its value

Carlos owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as part of the transaction agrees not to engage in the same business anywhere in River City for a period of four years. a. The geographic restraint is reasonable. b. This agreement is unreasonable. c. The agreement unduly interferes with the interest of the public. d. Two of the above, (b) and (c).

What are the two basic elements of consideration?

1. Legal sufficiency (Something of value in the eyes of the law) 2. Bargained-for-exchange

What are the 4 essential elements of a contract?

1. Mutual Assent 2. Consideration 3. Legality of Object 4. Capacity

List the essential elements of a contract.

1. Mutual Assent 2. Consideration 3. Legality of object 4. Capacity

What are the requirements of legally sufficient consideration?

1. That the parties have agreed to an exchange 2. That with respect to each party, the subject matter exchanged, or promised in exchange, either imposed a legal detriment on the promisee or conferred a legal benefit on the promisor

Define Legal Detriment (book terms)

1. The doing of (or the undertaking to do) that which the promisee was under no prior legal obligation to do 2. The refraining from doing the of (or the undertaking to refrain from doing) that which he was previously under no legal obligation to refrain from doing.

3 criteria for quasi contract

1. a benefit conferred upon the defendant roy by the plaintiff bob. 2. the defendants roy appreciation or knowledge of the benefit 3. acceptance or retention of the benefit by the defendant roy under circumstances making it inequitable for him to retain the benefit without compensating the plaintiff for its values.

5 requisites for fraud in the inducement

1. a false representation 2. of a fact 3. that is material 4. made with knowledge of its falsity and the intention to deceive 5. which representation is justifiably relied on

4 classifications of contracts

1. express or implied contracts 2. bilateral or unilateral contracts 3. valid, void, voidable, or unenforceable 4. executed or executory contracts The classifications are not mutually exclusive. example, a contract may be express, bilateral, valid, and executory.

The Restatement adopts a different position by providing that the settlement of a claim that proves invalid is consideration if at the time of the settlement.. (two things)

1. the claimant honestly believed that the claim was valid 2. the claim was in fact doubtful because of uncertainty as to the facts or the law.

Define Legal Detriment (summarized terms)

1. the doing of or the promise to do something that the promisee was under no legal obligation to do. 1. the refraining from doing or the promise to refrain from doing something that the promisee was previously under no legal obligation to refrain from doing.

Jack has been in the business of selling carpeting for 20 years. He calls Bob, who is opening another branch of his furniture stores, and offers to sell him 100 yards of carpet at $20 per yard. Bob agrees and sends back the following letter confirming the deal: Dear Jack: As we discussed on the phone January 3, we accept your offer of 100 yards of Saxony "heather blue" carpeting at the price of $20 per yard. We also reserve the right to purchase any additional yardage we need to carpet our other showroom facilities at the same rate for one year from that date. Very truly yours, Bob Which of the following is true? a. There is a contract for only 100 yards of carpeting. b. There is a contract for 100 yards plus the additional yardage. c. There is no contract since Bob made a counteroffer. d. There is no contract because the additional term is too uncertain to become a contract term.

Jill contracts to purchase Kevin's automobile under the belief that she can sell it at a profit to Linda, but after Jill has bought the car, she finds out that Linda isn't interested in buying it. a. Jill cannot void the contract. b. Jill can rescind the agreement. c. Jill could rescind the agreement if she was mistaken in her estimate of the value of the auto. d. Jill can sue Linda for detrimental reliance.

Leonard offers to sell his diamond ring to Emily. Diane overhears the offer and says, "I accept the offer." a. Diane cannot accept the offer, because it wasn't made to her. b. This is a valid acceptance. c. The offer has not been communicated to the offeree. d. This is an invitation seeking offers and not an offer.

Maxine offered to sell her video camera to Tom for $200 and also stated to Tom, "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy. a. Maxine has revoked her offer to Tom. b. Maxine's offer is a firm offer and she must sell Tom a video camera for $200. c. Maxine must get the camera back from Cindy if Tom accepts within two weeks. d. Both (b) and (c) are appropriate alternatives in this case.

Nanette wanted to purchase a new car and found one she liked at Minson Motors. Several important contractual terms were buried in the written agreement and some of the meaning of the contract was obscured by legal jargon. The contract involved: a. procedural unconscionability. b. substantive unconscionability. c. adhesion. d. exculpatory clauses.

Rob repairs a door for Howard. In return, Howard is supposed to pay Rob $75 on November 1 at Howard's house. Which of the following would constitute legally sufficient consideration? a. Howard pays Rob $60 on November 1 but, after checking with Rob, brings payment to Rob's house. b. Rob comes to Howard's house to collect the $75 on November 1, but Howard only has $50. Rob tells Howard to forget the other $25. c. Since this is an unliquidated debt, the only legally sufficient consideration is Howard's payment of $75 to Rob on November 1 at Howard's house. d. Since this is a liquidated debt, the only legally sufficient consideration is Howard's payment of $75 to Rob on November 1 at Howard's house.

Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction? a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable. b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. c. Stan is under a pre-existing legal obligation to pay the $800. d. Both (b) and (c).

William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. a. The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000. b. Under the UCC, the substitute contract is binding, because there is the payment of additional money. c. William is in breach of contract. John need not pay any additional money. d. William is under a pre-existing moral duty to perform at the originally agreed-upon price.

William agrees to drill a well up to 200-feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed-upon amount. a. The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000. b. Under the UCC, the substitute contract is binding, because there is the payment of additional money. c. William is in breach of contract. John need not pay any additional money. d. William is under a pre-existing moral duty to perform at the originally agreed-upon price.

William recently sold his successful business to Janice. The contract for the sale contained an unreasonable restriction that did not allow William to open a similar business for fifteen years. The courts would, in this instance: a. delete or modify the unreasonable portions of the contract. b. require the parties to draft a new contract. c. enforce the contract as it is written. d. make the entire contract voidable by William.

bilateral contract

A contract in which both parties exchange promises.

Define requirements contract

A contract in which one party agrees to purchase his total requirements from the other party; hence, such a contract is binding, not illusory.

Define Output Contract

A contract in which one party agrees to sell his entire output and the other agrees to buy it; it is not illusory, though it may be indefinite.

unilateral contract

A contract in which only one party makes a promise.

True or False: Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later realizes that the land was worth more than $160,000. Al can have the contract avoided based upon fraud.

False

contract

A binding agreement that the courts will enforce.

voidable contract

A contract capable of being made void.

Reynaldo says to Jose, "If you will paint my house, I will pay you $400." Subsequently, Jose brings paint supplies and equipment to Reynaldo's house. What type of contract exists between Reynaldo and Jose?

A contract does not exist

unenforecable contract

A contract for the breach of which the law provides no remedy.

Defective Acceptances

A late or defective acceptance does not create a contract. After the offer has expired, it cannot be accepted. However, a late or defective acceptance does manifest a willingness on the part of the offeree to enter into a contract and therefore constitutes a new offer. To create a contract based on this offer, the original offeror must accept the new offer by manifesting his assent to it.

Which of the following is enforceable without consideration?

A new promise to pay a debt barred by the statute of limitations

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.

Hilda threatens to hit Johnny on the head with a baseball bat unless Johnny signs a real estate contract giving Hilda ownership of the Summit Ridge Apartments. Johnny reads the contract and signs it. a. The agreement is void. b. This contract is voidable at Johnny's option. c. This is an example of economic duress. d. All of these are correct.

A) the agreement is void

Anna is 88 years old and under the legal guardianship of her daughter. One day Anna receives a telephone call from a health insurance salesman and purchases a $400-a-month Medicare-gap insurance policy. a. This contract is void. b. This contract is valid. c. This contract is voidable. d. This contract is enforceable as to the offeror.

A) this contract is void

All of the above.

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

All of the above.

Goods

All things which are movable at the time of identification to a contract for sale other than the money in which the price is to be paid, investment securities, and things in action TANGIBLE PERSONAL PROPERTY (other than land?)

Common Law

An acceptance must be POSITIVE and UNEQUIVOCAL. It may not change, add to, subtract from, or qualify in any way the provisions of the offer

Define Conditional Acceptance

An acceptance of an offer contingent upon the acceptance of an additional or different term. This is considered a counter offer.

Contract

An agreement between two or more persons which creates an obligation to do or not to do a particular thing. Its essentials are competent parties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.

express contract

An agreement that is stated in words either orally or in writing.

Alice says to Brian, "If I decide to buy a word processor next year, I will buy it from you." This is an example of:

An illusory promise

Florence says to Pat, "If I decide to buy a computer next year, I will buy it from you." This is an example of:

An illusory promise

quasi contract (implied in law contract)

An obligation not based upon contract that is imposed by law to avoid injustice.

An off-duty deputy sheriff from a county other than the one where the arrest occurred

Which of the following is correct with regard to duress? a. It always renders a contract void. b. Duress by improper threats is the most common form of duress. c. The act causing duress must in itself be either a crime or a tort. d. All of these are correct with regard to duress.

B) duress by improper threats is the most common form of duress

A collection agency threatened to sue Martha for the unpaid hospital bills from her heart operation. She signed a promissory note at a high but not illegal rate of interest. What result? a. It is valid because she signed it. b. It is valid because the threat to bring a civil suit to collect money owed is permissible. c. It is invalid because she signed under duress. d. It is invalid because the agency put her under undue pressure.

Mirror Image

Any communication by the offeree that attempts to modify the offer is not an acceptance but a counteroffer, whi does not creat a contract.

Promissory estoppel

Arises where there is a promise which promisor should reasonably expect to induce action or forbearance on part of the promisee and which does not induce such action or forbearance, and where injustice can be avoided only by enforcement of the promise

How does Article 2 of the UCC modify the common law of contracts with regard to consideration?

Article 2 of the UCC states that the modification of an existing contract for the sale of goods is enforceable without consideration provided both parties intend to modify the contract and they act in good faith.

Define Without Reserve

Auctioneer may not withdraw the goods from the auction or lot put up for sale unless no bid is made within a reasonable time.

"Scienter" is a legal term which means: a. That a buyer has justifiably relied upon the seller's representations b. That the seller had knowledge that his statements are false and had the intention to deceive. c. Sales puffery. d. All of the above

A __________ is a law establishing a maximum rate of permissible interest for which a lender and borrower of money may contract. a. wager b. usury statute c. Sunday statute d. None of the above.

Don has an employment contract with Dunkirk Ice Cream. He sells ice cream and novelty ice cream products. He has nine children and doesn't make enough money, so he decides to see if another dairy will hire him, too. "After all," he reasons, "most stores carry four or five different brands." His employment contract prohibits him from competing. If Don sells for another dairy in addition to Dunkirk, will he be in trouble under his contract? a. No, it is unenforceable as against public policy. b. Yes, it is likely to be enforceable during employment. c. No, the prohibition against competing is enforceable only after he quits Dunkirk. d. A court would have to rule on the enforceability of the covenant not to compete since courts are reluctant to enforce such covenants during a period of employment.

Elmer promises to pay Fred $100 if Fred will register and vote in the next election as a Democrat. a. This is a valid contract. b. This is an illegal agreement. c. This is an adhesion contract. d. This is a usurious agreement.

Elmer wrote a letter to his friend Fred offering to sell Fred an 80-acre farm for $200,000. After mailing the letter, Elmer learns that the farm is actually worth $300,000 and changes his mind about selling. a. Elmer has made a firm offer to Fred which cannot be revoked. b. Elmer can revoke his offer at any time before acceptance, because there is no consideration to keep the offer open. c. Elmer must keep the offer open, because this is an option contract. d. Elmer is prohibited from revoking his offer to Fred under the doctrine of promissory estoppel.

Gary mails an offer to Brian on June 15. Brian receives the offer on June 16. Gary mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18 and Gary receives the acceptance on June 20. Brian receives the revocation on June 19. Was a contract formed? a. Yes, on June 16 b. Yes, on June 18 c. Yes, on June 20 d. No, the offer was revoked before acceptance

In order to form a contract, the parties must: a. manifest their agreement subjectively. b. manifest their agreement objectively. c. indicate solely through written word their intent. d. create a formal document called a contract.

Jack moved from New Hampshire to Florida and decided to have an air conditioner installed in his car. After it was installed, Jack received a bill for $1,200. Jack called the dealer and told him he'd never heard of this service costing more than $500. They argued, but the dealer finally agreed to take $900. Is the agreement enforceable? a. Yes, there is no way for the dealer to get the extra money anyway. b. Yes, there is consideration for the modified amount. c. No, there is no consideration and the dealer can sue for the extra $300. d. No, there is an implied contract to pay the dealer whatever he billed Jack.

James threatens to hit Kenneth on the head with a baseball bat unless Kenneth signs a contract agreeing to pay James $900 for a motor. Because of the threat, Kenneth signs the contract. a. This contract is voidable at Kenneth's option. b. James has committed physical duress against Kenneth. c. This is an example of economic duress. d. All of the above.

Jan promises Eli $4,000 for one of his original paintings on the condition that she receives $1 million from her mother's will. a. Jan has made an illusory promise. b. Jan's promise is legally sufficient unless Jan knows she cannot inherit the $1 million. c. Jan has made a conditional promise which is not sufficient to form consideration. d. Jan's promise is legally inadequate and the courts will therefore not enforce it.

True or False: An advertisement is usually an offer to sell.

False

The State of Florida enters into a contract with Treasure Salvors governing the salvage of a Spanish galleon that sunk in the 1600's. Under the terms of the contract, the salvagers agree to relinquish 25% of the items recovered to the State of Florida in return for the right to salvage on state lands. At the time the parties enter into the contract, they both believe that the seabed where the ship lies is state land. Subsequently, the United States Supreme Court holds that the continental shelf on which the ship rests has never been owned by Florida. The salvagers sue to rescind the contract. a. The contract cannot be rescinded. b. The parties made a mutual mistake for which the contract should be avoided. c. There is a mutual mistake, but because it is not material, the court should enforce the contract. d. The United States government will automatically step into the shoes of the State of Florida to make the contract enforceable.

The Uniform Commercial Code provides that a court may scrutinize every contract for the sale of goods to determine whether, in its commercial setting, purpose, and effect, the contract is: a. exculpatory. b. unconscionable. c. usurious. d. None of the above.

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

Theresa is a travel agent at the Fly Away Travel Agency. She has signed an agreement with her employer which prohibits her from working in any similar business in any town within a 100-mile radius of where she works. If she wants to quit her job and go to work for another travel agency, it is likely that: a. a court would uphold these restrictions. b. if no trade secrets are involved, and she has no dominion over customers, a court would rule the restrictions to be invalid. c. if the period of time of the agreement is under five years, it will be upheld by the court. d. Both (a) and (c).

To be effective, notice of revocation of an offer: a. must be communicated directly to the offeree before the offeree has accepted. b. may be communicated indirectly to the offeree through a third person. c. must be dispatched before the offeree accepts; when notice actually reaches the offeree is not important. d. is not addressed in the Restatement.

Tom tries to sell his classic car to Victoria for $12,000. Tom tells Victoria, "I paid $12,000 for the car in 1978 and it's worth twice that today." Tom really paid $8,000 for the car in 1978. If Victoria buys the car, basing her decision on Tom's statement, which of the following correctly states the situation? a. Tom's statements amount to puffing only. b. Tom's statements provide grounds to set the contract aside. c. Tom's statements are actionable only if intentional. d. Tom's statements amount to fraud in the execution.

Wayne helped Hank study all night for an important exam. After Hank got an "A" on the exam, he told Wayne, "I will give you $10 for helping me get a good grade." Wayne said, "Thanks, I'll take it." a. There is no contract because there is no mutual assent. b. There is no contract because there is no valid consideration. c. There is no contract because $10 is reasonably inadequate consideration. d. There is a contract with sufficient consideration.

True or False: An agreement to sell the entire production of a particular plant to a particular purchaser is a requirements contract.

False

B) a requirement contract

General Rule of Communication Acceptance

Because acceptance is the manisfestation of the offeree's assent to the offer, it must necessarily be communicated to the offeror. This is the rule as to all offers to enter into bilater contracts. In the case of unilateral offers, however, notice of accpentance to the offeror usually is not required.

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.

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

Both (a) and (b)

Express contracts and implied contracts are:

Both (a) and (b).

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

Both (a) and (b).

A ____ is an offeree's refusal to accept an offer. a. revocation. b. counteroffer c. rejection d. statutory irrevocability

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible? a. The employees of the bank b. An on-duty sheriff's deputy in the county where the arrest occurred c. An off-duty deputy sheriff from a county other than the one where the arrest occurred d. None of the above are eligible.

A bank robbery has occurred, and the banker's association has offered a $1,000 reward for information leading to the arrest and conviction of the robber. Several people are claiming to be entitled to the money. Which of them is eligible? a. The employees of the bank. b. An on-duty sheriff's deputy in the county where the arrest occurred. c. An off-duty deputy sheriff from a county other than the one where the arrest occurred. d. None of the above are eligible.

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

An undisputed debt is: a. a contested amount of debt. b. an obligation that is not contested as to existence but is contested as to the exact amount of the debt. c. an obligation that is not contested as to its existence or amount. d. a debt action that the court will not hear because it is not definite and certain.

A contract was made for 125 bales of cotton to arrive on a ship named "Peerless" from Bombay. Unbeknownst to either party to the contract, there were two ships named "Peerless," both of which were sailing from Bombay. One sailed in October and the other in December. The buyer had in mind the ship sailing in October, but the seller had in mind the ship sailing in December. Each party held his belief in good faith. When the goods failed to arrive on time, the buyer sued for breach of contract. a. The seller is in breach and must pay damages. b. The seller is guilty of fraud in the inducement for failing to disclose to the buyer which ship would contain the goods. c. No contract exists due to mutual mistake of fact as to the existence or identity of the subject matter of the contract. d. Two of the above, (a) and (b).

A fiduciary is: a. An event that took place or a thing that exists. b. Belief in the existence of a fact or a judgement as to value. c. A person who owes a duty of trust, loyalty, and confidence to another. d. A form of formal conduct

A party to a contract may be able to avoid the contract if: a. there is a mutual mistake, and the party undertook to bear the risk by conscious allocation. b. there is a unilateral mistake, and the party undertook to bear the risk by conscious ignorance. c. there was a mistake and the mistaken party was at fault in not discovering the problem before making the contract. d. None of the above. e. Only (a) and (b).

A(n) ____ is a measure designed to protect the public from unqualified practitioners. a. exculpatory clause b. revenue license c. regulatory license d. usury statute

A(n) __________ is a measure designed to protect the public from unqualified practitioners. a. exculpatory clause. b. revenue license. c. regulatory license. d. usury statute.

Albert found a stone in his yard and took it to Bob, a jeweler, for evaluation. Although Bob knew what the stone was, he told Albert that he wasn't sure as to the nature of the stone, but that he thought it was a topaz. Bob then offered to buy the stone for $25 and Albert agreed. Later Albert found out the stone was an uncut diamond worth about $700. a. The sale was a valid contract that should be enforced by the law. b. This contract can be voided based upon fraud in the execution. c. This contract can be voided based upon fraud in the inducement. d. This contract can be voided based upon mistake as to the identity of the subject matter.

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

An arm's length transaction is one in which: a. The parties owe each other a special duty of confidentiality. b. The parties owe each other a fiduciary duty. c. The parties are acting in their own self-interest. d. None of the above

An arm's-length transaction is one in which: a. the parties owe each other a special duty of confidentiality. b. the parties owe each other a fiduciary duty c. the parties are acting in their own self-interest d. none of the above

An intentional misrepresentation of a material fact made with knowledge of the falsity and intention to deceive and which a party justifiably relies upon to his detriment is known as: a. duress. b. fraud in the execution. c. fraud in the inducement. d. non-fraudulent misrepresentation.

True or False: An arm's-length transaction is one in which the parties owe each other special duties.

False

A misrepresentation is material if: a. it would likely induce a reasonable person to enter into a transaction. b. the maker knows it would likely induce the other party to enter into the transaction. c. it is made knowingly. d. Both (a) and (b).

C) Elmer can revoke his offer at any time, because there is no consideration to keep it open

C) Silence on the part of the offeror

The Code has made certain offers irrevocable without the offeree giving any consideration for the promise to keep the offer open. These offers are known as: a. options. b. variant acceptances. c. firm offers. d. auctions.

C) firm offers

A variant acceptance—one that contains terms different from or additional to those in the offer—receives distinctly different treatment under the common law and under the Code.

Common Law An acceptance must be positive and unequivocal. It may not change, add to, subtract from, or qualify in any way the provisions of the offer. In other words, it must be the mirror image of the offer. Any communication by the offeree that attempts to modify the offer is not an acceptance but a counteroffer, which does not create a contract. Code The Code attempts to alleviate this battle of the forms by focusing on the intent of the parties. If the offeree does not expressly make her acceptance conditional upon the offeror's assent to the additional or different terms, a contract is formed. The issue then becomes whether the offeree's different or additional terms become part of the contract. If both offeror and offeree are merchants, such additional terms may become part of the contract provided that they do not materially alter the agreement and are not objected to either in the offer itself or within a reasonable period of time. If either of the parties is not a merchant or if the additional terms materially alter the offer, then the additional terms are merely construed as proposals to the contract. Different terms proposed by the offeree will not become part of the contract unless accepted by the offeror.

The requirement that each party to a contract must intentionally exchange something of value as an inducement to the other party to make a return exchange is known as:

Consideration

Define consideration.

Consideration is the inducement for a promise or performance. It is one basis for the enforcement of promises in our legal system. Consideration, or that which is exchanged for a promise, is present only when the parties intend an exchange. The consideration exchanged for the promise may be an act, a forbearance to act, or a promise to do either of these. The two basic elements of consideration are legal sufficiency and a bargained-for exchange, both of which must be present to satisfy the requirement of consideration.

Voidable contract

Contract capable of being made void

Unenforceable contract

Contract for the breach of which the law does not provide a remedy

Executory contract

Contract partially or entirely unperformed by one or more of the parties

Implied in fact contract

Contract where agreement of the parties is inferred from their conduct

common law contracts

Contracts involving employment, services, insurance, real property, patents, and copyrights.

A contract prepared on a standard form and offering terms on a take-it-or-leave-it basis is called: a. exculpatory. b. a usurious contract. c. an illegal restraint of trade. d. an adhesion contract.

True or False: An auctioneer is free to withdraw the goods from sale if the sale is advertised or announced in explicit terms to be without reserve.

False

Alex 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 Alex'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. a. Alex must perform for the agreed upon price because he has made a unilateral mistake. b. The city was aware of or should have been aware of Alex's mistake. When it accepted the bid with knowledge of Alex's mistake, the city sought to take an unconscionable advantage of Alex's error. c. This case is an example of a palpable unilateral mistake. d. Both (b) and (c).

An ad in a newspaper or a circular describing goods and stating prices would generally be considered a(n): a. firm offer if made by a merchant. b. offer if made by a merchant, but not a firm offer. c. offer irrespective of who made the offer. d. invitation to buyers to make an offer to buy goods.

An agreement to refrain from a particular trade, profession, or business is enforceable if: a. the purpose of the restraint is to protect a property interest of the promisee. b. the agreement is for no longer than two years. c. the restraint is no more extensive than is reasonably necessary to protect the promisee's property interest. d. Both (a) and (c) are correct.

An offer need not take any particular form to have legal validity. To be effective, however, it must: a. be spoken directly to the offeree. b. always contain the price of the product or service offered. c. always contain the place of delivery. d. be communicated to the offeree.

Andrew owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Betty and, as part of the transaction, agrees not to engage in the same business anywhere within the state for a period of three years. a. The agreement is reasonable. b. The agreement is unreasonable. c. The agreement unduly interferes with the interests of the public. d. Both (b) and (c).

Aunt Ellie promises her 21-year-old nephew, Robbie, that she will pay him $100 if he quits smoking for a month. If Robbie does, is there a binding contract? a. No, because Robbie gave no benefit to Aunt Ellie. b. No, because Robbie did not suffer any detriment. c. Yes, because stopping smoking will benefit Robbie's health. d. Yes, because Robbie gave up a legal right.

Carlos owns a store in Polk County. His trade extends throughout River City, but not beyond the county limits. He sells his store to Virginia and as part of the transaction agrees not to engage in the same business anywhere within the state for a period of three years. a. The agreement is reasonable. b. The agreement is unreasonable. c. The agreement unduly interferes with the interests of the public. d. Two of the above, (b) and (c).

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement best describes the situation? a. McHenry is not liable to Nancy since there was no consideration. b. McHenry is not liable to Nancy since there was past consideration. c. McHenry is liable to Nancy since adequate consideration was given by both parties. d. McHenry is liable to Nancy based on the concept of promissory estoppel.

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed, only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement is most accurate? a. McHenry is not liable to Nancy since there is no consideration. b. McHenry is not liable to Nancy since there is past consideration. c. McHenry is liable to Nancy since adequate consideration is given by both parties. d. McHenry is liable to Nancy based on the concept of promissory estoppel.

Numerous states impose no limit on the rate of interest that may be charged on: a. loans to corporations. b. credit card transactions. c. loans made by certain designated types of lenders. d. All of the above.

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

Patrick agrees to sell two different goods to his friend Ron, a retailer. One item is legal, and one item is illegal. The contract price is $2,000. a. Patrick may not recover payment for either of the goods if delivered. b. Patrick may recover for the legal item, but he may not recover for the illegal item. c. This is an unconscionable contract under the UCC. d. The court may view the contract as in (a) or (b).

Ralph sold a motel to Steve by stating that he had paid $250,000 for it and that his net average annual profit from the business has been $40,000. In reality he paid $100,000 for the motel and has earned a net average annual profit of only $30,000. Steve made no attempt to verify the statements until after the transaction was completed. a. Ralph has committed fraudulent misrepresentation. b. Steve is bound by the contract, because he failed to verify the statements which were made to him. c. The contract is voidable at Steve's option. d. Both (a) and (c).

Roberto obtains an exclusive franchise to sell widgets for the Acme Widget Company. The exclusive franchise covers the entire State of Wisconsin for a period of three years. a. The manufacturer is obligated to use his best efforts to supply the goods even if no such clause appears in the written franchise agreement. b. Roberto has an implied obligation to use his best efforts to promote the sale of the widgets. c. Under the UCC, such an agreement lacks consideration. d. Two of the above, (a) and (b).

True or False: An auctioneer is the offeror and each bid is a counteroffer until a final bid is accepted.

False

True or False: An exclusive dealing contract is one type of contract which is illusory because it lacks consideration.

False

Jerome wants to sell his golden retriever to Leroy. Jerome tells Leroy that the dog is three years old, and that he will point and retrieve. Although the dog is three years old and will point at birds, he will not retrieve. Leroy relies on Jerome's statements and purchases the bird dog. The buyer has most probably been a victim of: a. duress. b. undue influence. c. fraud in the execution. d. fraud in the inducement.

D) fraud in the inducement

D) if all of these occur

In general, the law will grant relief in a situation involving mistake only where there is a ________ mistake involving a/an ________. a. unilateral; opinion b. unilateral; fact c. mutual; issue of law d. mutual; material fact

D) mutual; material fact

Which of the following is not an element for fraud in the inducement? a. Representation b. A fact c. Materiality d. Negligence in verifying fact

D) negligence in verifying fact

D) two of the answers are correct

List the 5 types of conduct that invalidate assent.

Duress Undue influence Fraud Nonfraudulent misrepresentation Mistake p. 205

Which of the following is correct with regard to duress?

Duress by improper threats is the most common form of duress

William recently sold his successful business to Janice. The contract for the sale contained an unreasonable restriction that did not allow William to open a similar business for fifteen years. The courts would, in this instance, a. reform the contract to make it reasonable and enforceable. b. require the parties to draft a new contract. c. enforce the contract as it is written. d. refuse to enforce the unreasonable restriction. e. Either (a) or (d).

Consideration

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.

Define Consideration

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.

consideration

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.

Rick Hagedorn enters into a contract with Mike England under the terms of which England promises to pay Hagedorn $7,000 and Hagedorn promises 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

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 three essentials of an offer?

For an offer to be effective, it must be communicated to the offeree, manifest an intent to enter into a contract, and be sufficiently definite and certain.

Executed contract

Fully performed by all of the parties

Common law

General contract law governs all contracts outside the scope of the code. for example, the code does not apply to employment contracts, service contracts, insurance contracts, contracts involving real property, and contracts for sale of intangibles such as patents and copyrights.

Which of the following statements best describes charitable subscription promises?

Generally enforceable if there is reliance or a probability of reliance by the charity.

Uniform Commercial Code (UCC) contracts

Governs the sales of goods.

Howard must pay 179.99

Preliminary Negotiations

If a communication creates in the mind of a reasonable in the position of the offeree an expectation that his expectation that his acceptance will conclude a contract, then the communication is an offer.

Fox v. Mountain West Electric, Inc. (UCC v. common law contracts)

In determining whether the UCC applies, look at the entire transaction to determine which aspect, the sale of goods or the sale of services, predominates.

In situations where the UCC Battle of the Forms provision applies and writings exchanged between the parties differ as to terms, how are the terms of the contract determined?

In such cases, the terms of the particular contract consist of those terms on which the writings of the parties agree. Whether other terms become part of the contract depends on whether they are additional or different terms, whether the terms materially alter the offer, and whether the parties are merchants. If both offeror and offeree are merchants, additional terms become part of the contract unless they materially alter the agreement or are objected to within a reasonable period of time. If both parties are not merchants or if the additional terms materially alter the offer, the additional terms are construed as proposals to the contract. Different terms proposed by the offeree will not become part of the contract unless the offeror accepts them.

Define Firm Offer

Irrevocable offer to sell or buy goods by a merchant in a signed writing which gives assurance that it will not be rescinded for up to three months. written promise not to revoke an offer for a stated period of time) enforceable even though no consideration is given to the offeror for that promise (i.e., an option contract does not exist)

Define Exclusive Dealing Agreement

Is a contract in which a manufacturer of goods grants to a distributor an exclusive right to sell its products in a designated market.

Define Conditional Promise

Is a promise the performance of which depends upon the happening or nonhappening of an event not certain to occur (the condition)

Jan promises Eli $4,000 for one of his original paintings on the condition that she receives $1 million from her mother's will

Jan promise is legally sufficient

Which of the following would not be a promise statutorily made enforceable without consideration?

Jones promises to pay for his cousins past-due cell phone bill.

There are 8 ways to terminate an offer. Other than ACCEPTANCE, list the seven additional ways an offer can be terminated.

Lapse of time Revocation Rejection Counteroffer Death or incompetency of the offeror or offeree Destruction of the subject matter to which the offer relates Subsequent illegality of the type of contract the offer proposes

Define legal detriment

Legal detriment means (a) the doing of (or undertaking to do) that which the promisee was under no prior legal obligation to do or (b) the refraining from the doing of (or the undertaking to refrain from doing) that which he was previously under no legal obligation to refrain from doing.

Nell gives Big Al $50 in return for Al's promise to defame Sara. Nell hopes to ruin Sara's chances of a promotion. Nell finds out that Al did not hold up his end of the agreement. Which of the following statements is true?

Legally, Nell can neither get the money back nor force Al to do as he promised.

When is a rejection of an offer effective?

Majority rule - when received by the offeror Some states use this rule. Minority rule - upon dispatch

Which of the following is characteristic of contract law during the twentieth century compared with contract law in the nineteenth century?

Many of the formalities of contract formation were relaxed.

Maxine offered to sell her video camera to Tom for $200 and also stated to Tom "I will give you two weeks to accept my offer." One week later Tom learned that Maxine had sold the video camera to Cindy.

Maxine has revoked her offer to Tom

McHenry is liable to Nancy based on the concept of promissory estoppel.

Valid contract

Meets all of the requirements for a contract: 1. Mutual Assent 2. Consideration 3. Legality of object 4. Capacity

Terri owes Mickey $125 to be paid by December 31. In consideration of Terri paying him $75 on July 4, Mickey agrees to discharge the debt.

Mickey's promise of discharge is binding because early payment is sufficient legal consideration.

the offer ha been communicated with the offeree and accepted, but the offer was mailed by the secretary of the offeror. The offeror did not tell the secretary to mail the offer. Do they have a contract?

No, the offer must be communicated or authorized by the offeror

can you revoke all offers?

No, when dealing with the federal government you cannot revoke

If a person, without knowing of an advertised reward for information leading to the return of a lost dog, gives information that leads to its return, is she entitled to the reward?

No. The finder's act was not an acceptance of the offer because she could not accept something of which she had no knowledge.

express and implied contracts

Parties to a contract may indicate their assent either in words or by conduct implying such willingness. for instance, a regular customer known to have an account at a drug store might pick up an item at the drugstore, show it to the clerk, and walk out. this is a perfectly valid contract.

Promisor

Person making a promise

Promisee

Person to whom a promise is made

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

Personal

What are the certain transactions that are enforceable without Consideration?

Promise to Pay Debt Barred by the Statute of Limitations Promise to Pay Debt Discharged in Bankruptcy Voidable Promises

Which of the following contracts falls within the Uniform Commercial Code and which would fall outside the Code?

Purchase of new house - outside UCC Purchase of new car - within UCC Purchase of a life insurance contract on self - outside UCC Sale of baseball card collection - within UCC

Skebba v. Kasch (promissory estoppel)

Regarding promissory estoppel: (1a) Did the promisor reasonably expect to induce substantial action or forbearance on the part of the promisee? (1b) Did the promise induce such action or forbearance? (1c) Can injustice be avoided only by the enforcement of the promise? (2) To fulfill the purpose of promissory estoppel and prevent injustice, a court must be able to fashion a remedy that restores the promisee to where he or she would be if the promisor had fulfilled the promise (i.e. specific performance).

Mistake in Meaning of Terms

Somewhat related to mistakes of fact is the situation in which the parties misunderstand their manifestations of mutual assent. A famous case involving this problem is Raffles v. Wichelhaus, 2 Hurlstone & Coltman 906 (1864), popularly known as the Peerless case. A contract of purchase was made for 125 bales of cotton to arrive on the Peerless from Bombay. It happened, however, that there were two ships by the name of Peerless each sailing from Bombay, one in October and the other in December. The buyer had in mind the ship that sailed in October, whereas the seller reasonably believed the agreement referred to the Peerless sailing in December. Neither party was at fault, but both believed in good faith that a different ship was intended. The English court held that no contract existed.

Contracts are primarily governed by?

State common law

How do Article 2 of the UCC and the Restatement deal with definiteness of contract terms?

Terms of a contract must be reasonably certain so courts have a basis for determining the existence of a breach and for giving an appropriate remedy. Missing terms may be supplied by course of dealing, usage of trade, or inference. In agreements for the sale of goods, Article 2 of the UCC provides standards by which omitted terms may be determined as long as the parties intended to enter into a binding contract. The UCC provides missing terms in such instances as where the contract fails to specify the price, the time or place of delivery, or payment terms. The Restatement has adopted an approach similar to the UCC's in supplying terms the parties have omitted from their contracts.

"Scienter" is a legal term which means

That the seller had knowledge that is statements are false and has the intention to deceive

Define Output Contract

The agreement of a seller to sell her entire production to a particular purchaser

The committee's actions could be seen by a court asked to enforce the agreement as consideration for Jeanne's promise. This would satisfy the requirement that consideration by both parties must be found for there to be an enforceable contract.

What is the common law mirror image rule?

The common law mirror image rule states that an acceptance cannot deviate from the terms of the offer.

Code

The common law mirror image rule, by which the acceptance annot vary or deviate from the terms of the offer is modified by the code. This modification is necessitatated by the realities of modern business practices.

Claudia sells her highly successful hair salon to Carl. In the sales contract, Claudia agrees never to open a hair salon in the state. Which of the following best describes this contract clause?

The contract requires an unenforceable restraint of trade

True

Define Legality of Object

The purpose of a contract must not be criminal, tortious, or otherwise against public policy.

legality of object

The purpose of a contract must not be criminal, tortious, or otherwise against public policy.

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 would not be enforceable without additional consideration?

The settlement of an undisputed debt

Although wagering is generally illegal, some states permit certain kinds of regulated gambling, especially wagering conducted by governmental agencies.

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 adhesion contract is offered on a "take it or leave it" basis

True

An adhesion contract is offered on a "take-it-or-leave-it" basis

True

Alice offers to sell her computer, monitor, and printer to Bradley for $300. Bradley says he will accepts provided that Alice includes her word processing software. What is the status of their discussions?

There is no contract, because Bradley has made a counter offer

Promissory Estoppell

This has been used to prevent an offeror from revoking an offer prior to its acceptance.

An adhesion contract is offered on a "take-it-or-leave-it" basis.

True

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or similar business for a period of twenty-five years would be unreasonable and unenforceable.

True

This is a quasi-contractual agreement.

Elmer promises to pay Enrique $100 if Enrique will register and vote in the next election as a Republican.

This is an illegal contract

Intent

This is determined objectively from the words or conduct of the parties. The meaning of either party's manifestaition is based on what a reasonable person in the other party's position would have believed.

What are the three essentials of an offer?

Three essential to an offer are: (a) it must be communicated to the offeree; (b) manifest an intent to enter into a contract; (c) and be sufficiently definite and certain. p. 186

Communication

To provide his part of the mutual assent required to form a contract, the offeree must know about the offer; he cannot agree to something about which he has no knowledge about.

Jasdip Properties SC, LLC v. Estate of Richardson (restitution / unjust enrichment)

To recover on a theory of restitution, the plaintiff must show: (1) That he conferred a non-gratuitous benefit on the defendant. (2) That the defendant realized some value from the benefit. (3) That it would be inequitable for the defendant to retain the benefit without paying the plaintiff for its value. Unjust enrichment is usually a prerequisite for enforcement of the doctrine of restitution; if there is no basis for unjust enrichment, there is no basis for restitution.

Unenforceable because Jason already was enrolled in class.

When is an acceptance effective?

Upon dispatch

George has been declared incompetent by a court. George is very charming, but he lives in a fantasy world. The manager of the local civic center enters into a contract with George to rent the 30,000-seat civic center for George's birthday party. George's contract with the civic center can best be described as a(n) ________ contract.

Void

Louise makes a material misrepresentation of fact regarding her motorcycle to Thelma, who agrees to buy the motorcycle based upon the misrepresentation. This contract is:

Voidable

Arthur mails an offer to Brian on June 15. Brian receives the offer on June 16. Arthur mails a revocation of the offer on June 17. Brian mails a letter of acceptance on June 18, and Arthur receives the acceptance on june 20. Brian receives the revocation on June 19. Was a contract formed?

Yes, on June 18

Wes offered to buy a print from Le Monde Gallery. Le Monde balked at the price sending Wes a letter of rejection. That day it discovered that the print was not as highly valued originally thought. Le Monde immediately telephoned Wes to accept the offer. Is there a contract?

Yes, since the acceptance was received before the rejection.

3. Stan purchased 400 pairs of gloves from Isaac at a contract price of $800. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Stan refuses to pay the $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction? a. If Isaac agrees to accept $600 to settle the dispute and Stan agrees to pay that amount, the substitute agreement is enforceable. b. If Isaac agrees to accept $600 to settle the dispute and Stan pays that amount, Isaac can still sue for the balance of $200 and will win the lawsuit. c. Stan is under a pre-existing legal obligation to pay the $800. d. Both (b) and (c).

Contracts that are implied in law: a. are obligations imposed by law on grounds of justice and equity. b. are really contracts. c. are also called implied in fact contracts d. require the assent of the contracting parties.

Florence says to Pat, "If I decide to buy a computer next year, I will buy it from you." This is an example of: a. an illusory promise. b. past consideration. c. the preexisting duty rule. d. good consideration.

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.

If both parties exchange promises, the contract is: a. bilateral. b. void. c. implied. d. executed.

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.

Sally offers to sell her Business Law textbook from last semester to Bob for $50.00. Bob accepts Sally's offer and tells her he will pay her on Friday when he gets his paycheck. A contract is formed: a. when Bob accepts Sally's offer b. when Sally offers to sell her book to Bob. c. when Bob gets his paycheck. d. when Bob pays Sally.

Sergio buys an LED television from The Television Superstore in Sacramento, California. What law governs this transaction? a. The Uniform Commercial Code (UCC). b. None of these answers are correct. c. Both the common law and the UCC. d. Common law.

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.

Which of the following are the two basic elements to consideration? a. Bargained-for exchange and legal sufficiency b. Legal detriment and legal benefit c. Legal sufficiency and legal adequacy d. Promise and forbearance

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.

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.

In order to have a valid contract, in addition to the four basic requirements of a contract, which of the following must also occur? a. The consideration that one party is giving the other must be of the same value as the consideration that is being received. b. There must be the sale of goods from one party to another. c. There must be an absence of invalidating conduct, such as duress. d. Both parties must already have performed (done what they promised to do).

Joe sends for a MBA catalog from State University. According to the catalog, the MBA applications are evaluated on the basis of undergraduate grades, GMAT (the appropriate standardized test) scores, and references. Joe has a 3.1 GPA, scores very well on the GMAT, and has excellent references. Based on the criteria listed in the catalog, Joe applies and pays the $100 application fee. His application is rejected. Later he finds out that others with low grades and test scores were accepted based on their family connections with the University. If Joe followed all of the guidelines in the college catalog and paid the required application fee, then according to the court in Steinberg v. Chicago Medical School: a. there is a voidable contract b. there is a quasi contract. c. there is a valid contract. d. there is not a contract.

Joe takes his car into the repair shop to have his tires realigned. While he is waiting for his car, he sees the repairmen take his car to the area where they change the car's oil. Joe tries to get their attention but cannot because he is not allowed in the repair area and there is too much noise in there for the repairmen to hear him knocking on the window. The car is then taken to the area where the tires are realigned. Joe watches while the tires are realigned. The employees next take Joe's car to be washed. Joe asks another customer in the waiting room if the car wash is complimentary (free). The customer points to the sign above the counter listing prices for services, including the car wash. Joe does not bother trying to get the attention of the repairmen because he was not successful before, but he does approach the cashier who has just returned from break. Joe tells the cashier he did not want the car washed. The cashier tells him it is too late because the car is already being washed. When Joe is presented with the bill, there is a charge for the oil change, the realignment, and the car wash. If challenged in court, the court will most likely require Joe to pay for: a. the entire bill (oil change, realignment, and the car wash) under the doctrine of quasi contract because Joe saw all of the work being done and was unable to stop it. b. the entire bill (oil change, realignment, and the car wash) because he had a contract with the repair shop for all three items. c. only the realignment because that is all he contracted for. d. the realignment because that is what he contracted for and the car wash under the doctrine of quasi contract because he spent too much time talking to the customer before he told the cashier he didn't want the car washed.

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.

Jason's mother would like him to go to college, so in June he enrolls at State University. He also quits his job and tells his mother his plans to continue taking classes. His mother says, "I'm so happy that you are going to college that I want to pay for your books." Jason then sends her a bill for $485. Which of the following is true regarding his mother's promise? a. It is enforceable, because Jason returned to college. b. It is enforceable, because Jason is giving up the right to do something else. c. It is unenforceable, because it is a unilateral contract. d. It is unenforceable, because Jason had already enrolled in school and there is no consideration.

Joe takes his car into the repair shop to have his tires realigned. While he is waiting for his car, he sees the repairmen take his car to the area where they change the car's oil. Joe says nothing as he is hoping he can get a free oil change. Joe watches while the oil in his car is changed. The car is then taken to the area where the tires are realigned. Joe watches while the tires are realigned. The employees next take Joe's car to be washed. Joe did not know his car would be washed, but knows that many car repair businesses have a practice of cleaning the cars at no additional cost to the customer after completing the repair work. When Joe is presented with the bill, there is a charge for the oil change, the realignment, and the car wash.If challenged in court, the court is most likely to make Joe pay for: a. the entire bill (oil change, realignment, and the car wash) under the doctrine of quasi contract because Joe saw all of the work being done and did nothing to stop it. b. only the realignment because that is all he contracted for. c. the entire bill (oil change, realignment, and the car wash) because he had a contract with the repair shop for all three items. d. the realignment because that is what he contracted for and the oil change under the doctrine of quasi contract.

Mary induces James to enter into a contract. James subsequently discovers that Mary intentionally misrepresented the terms of their contract. Upon this discovery, James tells Mary that he will not perform his promise under the contract. If Mary sues James for breach of contract, will Mary win? a. Yes, because Mary and James have a valid agreement. b. No, because the contract was not in writing. c. Yes, so long as consideration exists. d. No, because Mary induced James into the contract by fraudulent misrepresentations, which makes the contract voidable.

Nancy, who lives in Birdville, wants to open a McHenry Roast Chicken franchise. Mark, a representative of McHenry, told Nancy, "If you will buy a lot and build a building in River City, we will give you a franchise." Nancy bought the lot and built the building as instructed, only to discover that McHenry had awarded the franchise to a large corporation. McHenry claims no liability to Nancy since there was no consideration. Which statement is most accurate? a. McHenry is not liable to Nancy since there is no consideration. b. McHenry is not liable to Nancy since there is past consideration. c. McHenry is liable to Nancy since adequate consideration is given by both parties. d. McHenry is liable to Nancy based on the concept of promissory estoppel.

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.

Vince has lost his job and is having difficulty making ends meet. Last week, the bank repossessed Vince's car. He is telling his neighbor Paul about his bad luck and Paul says he wishes he could help Vince. Paul suggests that maybe Vince could have the old car sitting in Paul's garage if Vince could get it to run. He ends the conversation by saying "Let me think about it." The next day while Paul is at work, Vince goes into Paul's garage and begins working on the old car. He gets it running and drives it out of Paul's garage and into Vince's driveway. When Paul gets home from work, Vince shows Paul the car and asks him for the title to the car. Paul tells Vince he had not made up his mind about whether or not he would give Vince the car. Vince: a. has no claim to the car because he did not have a written agreement with Paul. b. can collect reasonable value for the work he did on Paul's car under the doctrine of quasi-contract. c. has no claim to the car because Vince's financial problems made him incapacitated. d. has no claim to the car because Paul did not make a promise.

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.

1. The Uniform Commercial Code would be applied in which of the following situations? a. A contract for landscape services b. A contract for sale of patent rights c. A contract for the purchase of farmland d. A contract to buy living room furniture

d. A contract to buy living room furniture

16. 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.

d. All of the above.

17. 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.

d. All of the above.

28. 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.

d. All of the above.

19. Express contracts and implied contracts are: a. both genuine contracts. b. equally enforceable. c. not really contracts. d. Both (a) and (b).

d. Both (a) and (b).

8. 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. c. The courts will not, under any circumstance, enforce promises that do not include all four of the elements of contract. d. Both (a) and (b).

d. Both (a) and (b).

12. 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? a. Quasi contract b. Executed contract c. Illusory contract d. Executory contract

d. Executory contract

24. One of the changes in contract law between the nineteenth century and the twentieth century is that in more recent times: a. contractual liability, once assumed, can rarely be escaped. b. contract damages are viewed more narrowly and equitable remedies are no longer available. c. privity of contract is required. d. intended third-party beneficiaries may sue in their own right.

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

26. 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): a. implied in fact contract. b. express contract. c. void contract. d. quasi contract.

d. quasi contract.

14. 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): a. commercial contract. b. express contract. c. formal contract. d. sale.

d. sale.

Dana gives care to Marnie's dog when Dana fineds marnies dog ill on the side of the road. After Marnie locates her dog, Marine promises to reinburse Dana for the cost of treating the dog. Marnie's promise is binding because there is a bargained-for-exchange

false

not knowing or discovering the facts before making a contract

does not make a persons reliance unjustified unless her reliance amounts to a failure to act in good faith and in accordance with a reasonable standards of fair dealing. thus, most courts will not allow a person who concocts a deliberate and elaborate scheme to fraud on that the defrauded party should readily detect to argue that the defrauded party did not justifiably rely upon the misrepresentation.

Which of the following words are NOT a illusory promises? a. "desire" b. "want" c. "wish to buy" d. all of these e. none of these

consideration

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.

example of undue influence

ex. bob a person without business experience has for years relied on boris, who is experienced in business, for advice on matters. boris without making any false representations of fact, induces bob to enter into a contract with Boris confederate, sam. this is disadvantageous to bob as both sam and boris know. it is voidable

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

express

breach

failure to properly perform, these promises.

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

false

A contract for the sale of a copyright is governed by Article 2 of the Uniform Commercial Code. (t/f)

false

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

false

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

false

A liquidated debt is an obligation the existence or amount of which is in dispute.

false

A modification of a contract for the sale of goods must always be supported by additional consideration

false

A negotiable instrument, such as a check, is not a formal contract. (t/f)

false

A quasi contract is another name for an oral contract. (t/f)

false

All written contracts are considered to be formal contracts.(t.f)

false

An agreement to sell the entire production of a particular plant to a particular purchaser is a requirements contract

false

An exclusive dealing contract is one type of contract which is illusory because it lacks consideration.

false

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

false

Consideration has only one basic element, which is a bargained-for exchange.

false

Contracts are primarily governed by the Uniform Commercial Code. (t/f)

false

Contracts generally require adequacy of consideration where the consideration given by both parties is of fair value and equitable

false

During the twentieth century it became harder to enter into a contract as well as to get out of one.(t/f)

false

Define Bargained-for exchange

he central idea behind consideration Mutually agreed-upon exchange.

example of improper duress

if ellen, a landlord, induces bob, an infirm, bedridden tenant, to enter in to a new lease on the same apartment at a greatly increased rent by wrongfully threatening to terminate bobs lease and evict him, bob can escape or avoid the new lease by reason of the duress exerted on him. also in another example, it is not wrongful to threaten a civil suit against an individual to recover a debt. what is prohibited is threatening to bring a civil suit when bringing such a suit would be abuse of process.

example of mutual mistake

if gail contracts to purchase petes automobile under the belief that she can sell it at a profit to jessse, she is not excused from liability if she is mistaken in this belief. nor can she rescind the agreement simply because she was mistaken as to her estimate of what the automobile was worth.

example of when a nondisclosure constitutes a misrepresentation

if the property at issue in the contract contains a substantial latent (hidden) defect, one that would not be discovered through an ordinary examination, the seller may be obliged to reveal it. suppose, for example, that judith owns a valuable horse, which she knows is suffering from a disease discoverable only by a competent veterinary surgeon. if judith sells the horse to curt and curt use a reasonable examination and finds nothing wrong, but later discovering the disease in question, can have the sale put aside or no sale. judiths silence is a misrepresentation of fact.

promissory estoppel

in certain circumstances, the courts enforce noncontractual promises under this. example, gordon promises smith not to foreclose for a period of six months on a mortgage gordon owns on smiths land. smith then expends 100,000 dollars to construct a building on the land. his promise not to foreclose is binding on gordon under the doctrine of promissory estoppel.

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.

mistakes

is a belief that is not in accord with the facts. as a result, establishing clear rules to govern the effect of mistake has proven elusive. the restatement and modern cases treat mistakes of law in existence at the time of making the contract no differently than mistakes of fact. ex. susan contracts to sell a parcel of land to james with the mutual understanding that james will build an apartment house on the land. both susan and james believe that such a building is lawful. unknown to them, however, three days before they entered into their contract, the town in which the land was located had enacted an ordinance precluding such use of the land.

contract

is a binding agreement that the courts will enforce. all contracts are promises but not all promises are contracts.

Define Option Contract

is a contract by which the offeror is bound to hold open an offer for a specified period of time. It must comply with all of the requirements of a contract, including the offeree's giving of consideration to the offeror.

Counteroffer

is a counterproposal from the offeree to the offeror that indicates a willingness to contract but on terms or conditions different from those contained in the original offer.

Define Counteroffer

is a counterproposal from the offeree to the offeror that indicates a willingness to contract but on terms or conditions different from those contained in the original offer. It is not an unequivocal acceptance of the original offer, and by indicating an unwillingness to agree to the terms of the offer, it generally operates as a rejection. Also operates as a new offer.

Offer

is a definite undertaking or proposal made by one person to another indicating a willingness to enter into a contract.

negligent misrepresentation

is a false representation that is made without due care in ascertaining its truthfulness; such representation renders an agreement VOIDABLE.

Define Commercial reasonableness

is a standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved and in terms of the facts and circumstances of the case.

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