Business Law Chapter 9-13 Test (Test #2)5
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.
requirements of a contract
(1) mutual assent (2) consideration (3) legality of object (4) capacity
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 $800, and Isaac is threatening to sue. Which of the following is correct with regard to this transaction?
- Harold has a pre-existing obligation to pay the 800$. - If Isaac accepts the $600, he can still sue for the remaining $200.
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.
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
List the essential elements of a contract.
1. Mutual Assent 2. Consideration 3. Legality of object 4. Capacity
Sales of personal property are governed by Article ____ of the Uniform Commercial Code (UCC).
2
Promissory estoppel is found in Section ____ of the Restatement (Second) of Contracts.
90
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
quasi contract (implied in law contract)
An obligation not based upon contract that is imposed by law to avoid injustice.
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.
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 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?
Andrew was already obligated to paint the house. He gives no additional consideration in return for Rosalene's promise to pay more money.
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.
"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
B
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.
B
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.
B
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
B
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."
B
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.
B
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.
B
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.
B
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
B
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.
B
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
B
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.
B
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
B
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.
B
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
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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.
B
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).
B
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.
B
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.
B
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.
B
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.
B
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.
B
Which of the following is NOT an element of fraud? a. Material misrepresentation b. Competent parties c. Knowledge of falsity d. Justifiable reliance
B
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
B
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
B
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
B
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
B
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.
B
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.
B
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 ____ is an offeree's refusal to accept an offer. a. revocation. b. counteroffer c. rejection d. statutory irrevocability
C
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.
C
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).
A
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.
A
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.
C
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.
A
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.
A
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.
A
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.
A
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.
A
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
A
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.
A
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.
A
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.
A
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.
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.
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
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?)
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
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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."
C
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.
C
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
C
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.
C
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
C
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.
C
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.
C
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
C
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.
C
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
C
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.
C
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.
C
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
C
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).
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
C
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."
C
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
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).
D
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
D
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.
D
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).
D
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).
D
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.
D
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).
D
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.
D
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.
D
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.
D
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
D
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.
D
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.
D
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).
D
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
D
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.
D
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.
D
The remedies of damages and rescission are available for: a. fraudulent misrepresentation. b. negligent misrepresentation. c. innocent misrepresentation. d. All of the above.
D
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.
D
Under the common law, the ____ must be the mirror image of the ____. a. contract, consideration b. contract, offer c. offer, acceptance d. acceptance, offer
D
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.
D
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.
D
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.
D
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.
D
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.
D
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.
D
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.
D
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.
D
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.
D
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.
D
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
D
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.
D
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."
D
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.
D
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
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
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 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
Maria posted several signs in the neighborhood offering $50 for the return of her lost cat. Dave calls to get a description of the cat and tells Maria, "I'll look for your cat." A contract is formed by Dave's call to Maria.
False
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
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
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 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 Code and the Restatement both contain definitions of what constitutes "unconscionable" conduct.
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 courts will enforce an agreement declared illegal by statute
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 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
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
True or False: An advertisement is usually an offer to sell.
False
True or False: An agreement to sell the entire production of a particular plant to a particular purchaser is a requirements contract.
False
True or False: An arm's-length transaction is one in which the parties owe each other special duties.
False
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
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
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: Consideration has only one basic element, which is a bargained-for exchange.
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
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
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: 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: 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 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: Under the UCC, an acceptance must always be identical to an offer for a valid contract to be formed.
False
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
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 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. If the store says "okay":
Howard must pay 179.99
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.
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.
Rosalind may avoid the contract.
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.
C
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
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.
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.
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.
mutual assent
The parties to a contract must manifest by words or conduct that they have agreed to enter a contract.
remedy for a quasi contract
The plaintiff recovers the reasonable value of the benefit she conferred upon the defendant.
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
Abe is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Abe is treated at the hospital and released a day later. The hospital sends him a bill for $2,400, which Abe refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious.
This is a quasi-contractual agreement.
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.
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 valid contract is one that meets all of the requirements of a binding contract.
True
Albert breaches a contract with Bill in a state where the statute of limitations is six years. Seven years later Bill wants to sue. The contract is unenforceable, but it is neither void nor voidable.
True
Alice makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract. Betty now realizes she was deceived and wants to get out of the contract. This contract is voidable at Betty's option.
True
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 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
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 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
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
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
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
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
Exclusive dealing contracts are binding because sufficient consideration is present.
True
General contract law governs all contracts outside the scope of the UCC.
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 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 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
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
Obligations contingent upon a stated event are known as conditional promises
True
Obligations contingent upon a stated event are known as conditional promises.
True
One type of restraint of 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
Specific lender usury statutes rather than the general usury statute generally apply to real estate mortgages and small consumer loans.
True
The Restatement and the UCC are both currently authoritative sources of contract law.
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 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 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 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: "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 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 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 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 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: 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: 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: 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, if one party is not bound, neither party is bound.
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: 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: 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: 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'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 parties to a contract may modify the agreement with no additional consideration by simply substituting a new contract.
True
True or False: The person to whom an offer is made is an offeree.
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 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, 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: 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
Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.
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
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.
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. Jason's mother's promise is:
Unenforceable because Jason already was enrolled in class.
Breach
Wrongful failure to to perform the terms of a contract
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).
a
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.
a
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
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.
a
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.
a
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
a
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.
a
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.
a
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.
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.
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.
Express contracts and implied contracts are:
a. both genuine contracts b. equally enforceable. Both (a) and (b).
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.
What are the ways in which an offer may be terminated?
acceptance. lapse of time. revocation. rejection. counteroffer. death or incompetency of the offeror or offeree. destruction of the subject matter. subsequent illegality.
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
b
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
b
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.
b
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.
b
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.
b
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
b
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.
c
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.
c
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.
c
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.
c
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.
c
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
c
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
c
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.
c
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
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
d
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).
d
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).
d
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).
d
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.
d
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.
d
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.
d
A(n) ____ contract is one in which the parties have manifested their agreement by oral or written language, or both.
express
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
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
Consideration has only one basic element, which is a bargained-for exchange.
false
Contracts generally require adequacy of consideration where the consideration given by both parties is of fair value and equitable
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 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
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
Past actions unbargained for by the parties in an agreement can become valid consideration for a contract
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
A promise against public policy:
has no legal remedy available for breach.
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.
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.
Mutual assent
the parties to a contract must manifest by words or conduct that they have agreed to enter into a contract
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.
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.
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 correct with regard to a contract?
A person who deposits money in a bank account has entered into a contract with the bank.
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.
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.
D
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." There is:
No contract - no valid consideration.
Void contract
No contract at all; without legal effect
void contract
No contract at all; without legal effect.
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.
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.
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
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).
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.
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.
Sarah offers to pay Allison $150 if Allison will paint her apartment while she is out of town on vacation for two weeks. Allison makes no promise but tells Sarah that she will think about it. While Sarah is out of town, Allison paints the apartment. This is best described as a(n):
unilateral contract.
Lee has been declared incompetent by the court and is under the care of his sister. Without his sister's knowledge, Lee rents the 30,000-seat civic center for his birthday party. Lee's contract to rent the civic center is best described as a:
void contract.
Steven intentionally makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is:
voidable.
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
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.
A
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.
A
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).
A
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.
A
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.
A
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
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.
A
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.
A
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."
A
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.
A
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.
A
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).
A
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).
A
executed contract
A contract that has been fully performed by all of the parties.
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.
A
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.
A
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.
A
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.
A
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.
A
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.
A
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.
A
contract
A binding agreement that the courts will enforce.
voidable contract
A contract capable of being made void.
unenforecable contract
A contract for the breach of which the law provides no remedy.
bilateral contract
A contract in which both parties exchange promises.
unilateral contract
A contract in which only one party makes a promise.
implied-in-fact contract
A contract in which the agreement of the parties is inferred from their conduct.
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.
B
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
B
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.
B
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).
C
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
C
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).
C
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
C
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.
C
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
C
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
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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.
C
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
C
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.
C
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.
C
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
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.
D
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).
D
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.
D
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.
D
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).
D
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.
D
Past actions unbargained for by the parties in an agreement can become valid consideration for a contract.
FALSE
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.
D
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.
D
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.
D
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.
D
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.
D
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).
D
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).
D
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
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).
E
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.
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
"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
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 contract for the sale of a copyright is governed by Article 2 of the Uniform Commercial Code.
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 negotiable instrument, such as a check, is not a formal contract.
False
A quasi contract is another name for an oral contract.
False
All written contracts are considered to be formal contracts.
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 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 output contract is a special form of an illusory contract
False
An output contract is a special form of an illusory contract.
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
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 involve a crime or tort but not if they are merely against public policy.
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
Courts require that for a contract to unenforceable based on unconscionability, both substantive and procedural unconscionability must be equally present.
False
During the twentieth century it became harder to enter into a contract as well as to get out of one.
False
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.
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.
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.
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?
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
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 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
An illusory promise has the form of a promise but imposes no real obligation.
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
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
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 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 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
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