Business Law - Exam 3

Which of the following is correct with respect to election of remedies? -The Code follows the doctrine of election of remedies with respect to contracts for the sale of goods. -The remedy of specific performance is consistent with that of restitution. -A person who seeks an injunction may also seek incidental damages for the breach. -All of the above are correct.

A person who seeks an injunction may also seek incidental damages for the breach.

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

A substitute agreement to settle an undisputed debt.

An express condition is usually preceded by which of the following terms? -While. -After. -Provided that. -All of the above.

All of the above.

A valid contract may be unenforceable for which reason(s)? -Failure to satisfy the statute of frauds. -Running of the statute of limitations. -Both (a) and (b). -A valid contract is always enforceable.

Both (a) and (b).

The UCC provides missing contract terms in which of the following instances? -The contract fails to specify the price. -The contract fails to specify the place of delivery. -Both (a) and (b). -The UCC cannot provide missing contract terms; only the parties can provide terms.

Both (a) and (b). -The contract fails to specify the price. -The contract fails to specify the place of delivery.

An agreement to refrain from a particular trade, profession, or business is enforceable if: -the purpose of the restraint is to protect a property interest of the promisee. -the agreement is for no longer than two years. -the restraint is no more extensive than is reasonably necessary to protect the promisee's property interest. -Both (a) and (c) are correct.

Both (a) and (c) are correct.

Which is not a revocable offer? A bid to construct a bridge for the city. An offer to buy stock in the ABC Corporation once it is formed. A unilateral offer to pay John $30 to mow your lawn after he has completed half the job and indicates he wishes to finish. None of the above are revocable offers.

None of the above are revocable offers.

__________ is/are any property other than an interest in real property. -Goods. -Personal property. -Tangible property. -None of the above.

Personal property.

To accomplish the basic purposes of contract remedies, which of the following limitations have not been imposed upon monetary damages? -Foreseeability. -Certainty. -Mitigation. -Restitution.

Restitution.

Which of the following is untrue regarding the contracts of intoxicated persons? -If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable. -The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency. -Slight intoxication will destroy one's contractual capacity. -To make a contract voidable, a person need not be so drunk that he is totally without reason or understanding.

Slight intoxication will destroy one's contractual capacity.

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

The offer is terminated.

In addition to the four basic requirements of a contract, which of the following must also occur in order to have a valid contract? -The agreement must always be in writing. -There must be evidence of undue influence. -There must be an absence of invalidating conduct. -A legal remedy must be available for there to be a breach.

There must be an absence of invalidating conduct.

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

a requirements contract.

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

a. Fraud in the inducement; voidable

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

a. civil prosecution; criminal prosecution

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

a. fraud in the execution.

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

a. scienter.

Under the common law, the __________ must be the mirror image of the __________. acceptance, offer. offer, acceptance. contract, offer. contract, consideration.

acceptance, offer.

The sole nursing home in the county offers a long-term care agreement. The contract is prepared on a standard form and offers terms on a take-it-or-leave-it basis. Such a contract is called: -exculpatory. -a usurious contract. -an illegal restraint of trade. -an adhesion contract.

an adhesion contract.

The concept of consideration in contract law includes: -that each party to a contract must unintentionally exchange a legal benefit. -an inducement to each party to make a return exchange. -that each party takes out an insurance bond if the possibility of damages is above $500. -All of the above.

an inducement to each party to make a return exchange.

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

b. duress.

The majority of states follow the __________ rule in awarding damages for fraud. -benefit-of-the-bargain -out-of-pocket -liquidated -restitution

benefit-of-the-bargain

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

c. is in a confidential relationship who owes a duty of trust and loyalty to another.

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

c. unilateral mistake.

According to the "American Rule," when contracting parties litigate over a breach: each party pays its own attorney fees, regardless of who wins. attorney fees are considered consequential damages. the losing party has to pay the winner's attorney fees. a provision for attorney fees in the written contract will not be given effect.

each party pays its own attorney fees, regardless of who wins.

Bob, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine, Marge will: -not have to pay Bob. -not have to accept the work. -have to pay Bob for all but the gift taxes. -have to pay Bob the contract price.

have to pay Bob for all but the gift taxes.

A small breach of contract damage amount fixed without regard to the amount of loss is known as: -reliance damages. -out-of-pocket damages. -nominal damages. -None of the above.

nominal damages.

The court in the Weichert Co. Realtors v. Ryan case held that the performing party was entitled to recoup the reasonable value of the services rendered under: -an express contract. -quantum meruit -promissory estoppel. -Article 2 of the UCC.

quantum meruit

The process whereby a court "rewrites" or "corrects" a written contract to make it conform to the true intentions of the parties is: -injunction. -reformation. -specific performance. -rescission.

reformation

A __________ is the refusal to accept an offer. revocation. counteroffer. rejection. statutory irrevocability.

rejection.

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): -commercial contract. -express contract. -formal contract. -sale.

sale.

If the contract does not state otherwise, standard goods under a contract for sale to meet the satisfaction of the buyer must: -meet the buyer's actual satisfaction, if honest and in good faith, even if unreasonable. -meet the buyer's actual satisfaction, only if reasonable. -meet a subjective standard. -satisfy a reasonable person.

satisfy a reasonable person.

The principle illustrated in the Christy v. Pilkinton case is: -a breach of contract is material if it is an intentional breach. -subjective impossibility does not discharge the contractual duty of the party. -objective impossibility generally discharges the contractual duty of the party. -commercial impracticability occurs when performance can only be accomplished under unforeseen and unjust hardship.

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

The definition of commercial reasonableness as used in contract law includes: the business judgment of expert business managers. that the practices customary in the type of transaction involved be used as a standard. the requirements to develop creative and innovative solutions never before used in a particular industry. None of the above.

that the practices customary in the type of transaction involved be used as a standard.

Contract law is significant in that it is basic to other fields of law such as: -sales of personal property. -commercial paper. -secured transactions. -All of the above.

All of the above.

If Anna by mistake delivers to Bob a plain, unaddressed envelope containing $50 intended for Cora: -Bob is under no obligation to return the money. -Bob is under a contractual obligation to return the money. -Bob's obligation to return the money is quasi-contractual. -Bob's obligation to return the money is implied in fact.

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

Many states impose no limit on the rate of interest that may be charged: on loans to corporations. -on consumer credit card transactions. -on any consumer loan. -All of the above. -Both (a) and (b).

Both (a) and (b).

Promissory estoppel is a contractual doctrine that includes which of the following considerations? -The courts use the doctrine of promissory estoppel to enforce noncontractual promises. -Under this doctrine, the promisor reasonably expects that the promisee, in reliance on the promise, will be induced by the promise to take action or refrain from taking action and the promisee does so. -The courts will not, under any circumstance, enforce promises that do not include all four of the elements of contract. -Both (a) and (b).

Both (a) and (b).

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

an offer by words or conduct and an acceptance by words or conduct.

A contract that binds the offeror to keep an offer open for a specified period of time is known as: a offer with reserve. an option. promissory estoppel. a unilateral contract.

an option.

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

manifest their agreement objectively.

The usual remedy for breach of contract is: -injunction. -specific performance. -punitive damages. -money damages.

money damages.

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

Fairness of the bargain.

Which of the following is true with regard to an exculpatory clause? -An exculpatory clause excuses one party from liability for her own tortious conduct. -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. -An exculpatory clause may be unenforceable for unconscionability. -All of the above are true.

-All of the above are true.

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. -All of the above.

-All of the above.

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

-An agreement to pay someone to make false statements about a competitor's product.

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

-Bargained-for exchange and legal sufficiency.

Which of the following is NOT true regarding specific performance? -It will not be granted if money damages would be adequate to compensate the injured party. -It is granted in contracts involving unique items of personal property. -It will be granted frequently in contracts involving the sale of goods. -The courts will not order directly the specific enforcement of contracts for personal services.

-It will be granted frequently in contracts involving the sale of goods.

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 not liable to Nancy since there was no consideration. -McHenry is not liable to Nancy since there was past consideration. -McHenry is liable to Nancy since adequate consideration was given by both parties. -McHenry is liable to Nancy based on the concept of promissory estoppel.

-McHenry is liable to Nancy based on the concept of promissory estoppel.

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

-The settlement of an undisputed debt.

Which of the following statements best describes charitable subscription promises? -They are generally not enforceable. -They are equated by the law with gifts. -They are generally enforceable if there is reliance or a probability of reliance by the charity. -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.

-They are generally enforceable if there is reliance or a probability of reliance by the charity.

In the case of Hadley v. Baxendale, the plaintiff was seeking damages for: -restitution. -lost profits. -failure to convey land. -failure to specifically perform a contract.

-lost profits.

Damages for reliance include expenses for: -lost profits. -injury to the person. -preparing to perform. -punishment of the breaching party.

-preparing to perform.

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

-regulatory license

The court in National Business Services, Inc. v. Wright found a noncompete agreement drafted for an employee of an Internet company was: -no different in enforceability than noncompete agreements for other types of companies. -subject to smaller geographic restrictions than for other types of companies. -unreasonable in duration with a one-year time restriction. -subject to larger geographic restrictions than for other types of companies. -Both (c) and (d).

-subject to larger geographic restrictions than for other types of companies.

In Berg v. Traylor, the court found that: -a minor may not disaffirm an agreement signed by a parent. -the disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement. -Craig could not disaffirm the contract to secure personal management services because it was a contract to provide his and his family's necessaries. -Craig, an infant, could not disaffirm in this case because it would cause undue hardship on the other party.

-the disaffirmance of an agreement by a minor does not operate to terminate the contractual obligations of the parent who signed the agreement.

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

-there was no consideration for the stock option, and promissory estoppel did not apply because detrimental reliance was not proven.

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

-usury statute

The definition of "discharge by breach" is: -performance that is incomplete but that does not defeat the purpose of the -contract but entitles the injured party to damages. -wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party. -a breach that prevents performance by either party. -None of the above.

-wrongful failure to perform the terms of a contract that gives rise to a right to damages by the injured party.

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

A statute requiring that salespeople be licensed, but not establishing any educational or training requirements.

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

A writing.

If there is no time specified for the acceptance of an offer, when does the offer terminate? -After 48 hours from receipt of the offer. -After two weeks from dispatch of the offer. -After 30 days from receipt of the offer. -After a reasonable period of time, which depends on the circumstances.

After a reasonable period of time, which depends on the circumstances.

The doctrine of promissory estoppel: -is a doctrine enforcing noncontractual promises. -includes as a requirement within the doctrine that there has been justifiable reliance on the promise. -a doctrine relying on justice and not contractual rights. -All of the above

All of the above

In which of the following situations is restitution available as a remedy? -As an alternative remedy for a party injured by breach. -For a party in default. -For a party who may not enforce the contract because of the statute of frauds. -All of the above are situations in which restitution is available.

All of the above are situations in which restitution is available.

Which of the following would be considered a material breach of a contract? -Partial performance that omits some essential part of the contract. -Delivery of 50 chairs in a contract that calls for 100 chairs. -An intentional breach of the contract. -All of the above would be material breaches. -Only (a) and (b) above would be material breaches

All of the above would be material breaches.

A power of avoidance held by a party may be lost if: -the contract is affirmed. -there are unreasonable delays in exercising the power. -the rights of third parties intervene. -All of the above.

All of the above.

Contracts that are implied in law: -are obligations imposed by law on grounds of justice and equity. -are intended to prevent unjust enrichment. -do not rest upon the assent of the contracting parties. -All of the above.

All of the above.

Ratification can occur in which of the following ways? -Through express language. -As implied from conduct. -Through failure to make a timely disaffirmance. -All of the above.

All of the above.

The Uniform Commercial Code does not apply to: -employment contracts. -service contracts. -insurance contracts. -contracts involving real property. -All of the above.

All of the above.

To be effective, an offer must: -be sufficiently definite and certain. -be communicated to the offeree. -manifest an intent to enter into a contract. -All of the above. -None of the above.

All of the above.

Which of the following would not be a promise statutorily made enforceable without consideration? -Hawkins, in good faith, changes the quantity of square yards of carpet ordered from Grant Mills. -Jones promises to pay his cousin's past-due cell phone bill. -Dodds signs and delivers a waiver of a claim arising out of a breach of contract by Keys. -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.

Jones promises to pay his cousin's past-due cell phone bill.

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: Catamount Slate Products, Inc. v. Sheldon. Sherrod v. Kidd. Lefkowitz v. Great Minneapolis Surplus Store, Inc. Giannetti v. Cornillie.

Lefkowitz v. Great Minneapolis Surplus Store, Inc.

In the First State Bank of Sinai v. Hyland case, the Supreme Court of South Dakota held: -Mervin's obligation on a promissory note was void due to his alcohol-related incapacity. -Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation. -the alcohol intoxication of a party to a contract does not affect the contract's enforceability. -Mervin could only use express language to ratify a contract formed while he was incapacitated by alcohol use.

Mervin ratified his voidable contract by conduct, making it a fully valid legal obligation.

When a minor falsely advises the other party that he is of the age of majority and based upon that misrepresentation, the other party enters into a contract with the minor: -the minor has lost his right to disaffirm the contract because of the misrepresentation if the adult party in good faith reasonably relied on the misrepresentation. -the adult party can recover damages from the minor in tort. -the minor is required to restore the other party to the position occupied before the making of the contract. -There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

There is no uniform rule. States differ, and depending upon the state, any of the above could be correct.

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? -Marilyn will have to pay $20,000. -This is a contract under seal which is enforceable. -This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders. -This is the settlement of a disputed debt that requires no additional consideration on the part of Bravo Builders.

This is a modification of a preexisting contract, which under common law must be supported by additional consideration on the part of Bravo Builders.

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

Two of the above, (a) and (b) are correct.

Which of the following is true with respect to substantial performance? It has particular importance in the construction industry. -Substantial performance does not defeat the purpose of the contract. -When one party to a contract has substantially performed, the other party -cannot recover damages for the imperfect performance. -All of the above. -Two of the above, (a) and (b) are correct.

Two of the above, (a) and (b) are correct.

Express contracts and implied in fact contracts: are both genuine contracts. are equally enforceable. are not really contracts. Two of the above, (a) and (b).

Two of the above, (a) and (b).

In which of the following situations will a court grant specific performance? -In a case involving breach of contract for the sale of real property. -In contracts for personal services. -Where goods are unique or rare. -Two of the above, (a) and (c).

Two of the above, (a) and (c).

Which of the following is untrue regarding the contracts of incompetent persons? -An incompetent person is liable for necessaries. -Unlike a minor, an incompetent person can never ratify a contract. -To avoid a contract, a person need not be permanently incompetent. -Under the cognitive ability test, a person is incompetent if he is unable to understand the nature and effect of his act.

Unlike a minor, an incompetent person can never ratify a contract.

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

Upon full performance by the offeree.

What principle did the court apply in the case of Madison Square Garden Corp., Ill. v. Carnera? -When damages are not adequate, an injunction may be used to enforce a negative covenant regarding exclusive services that are unique and extraordinary. -When services contracted for are unusual or extraordinary, the injured party cannot obtain injunctive relief. -An injured party's damages may not be reduced by mitigation for his failure to accept or seek other employment of a different or inferior kind. -Damages are recoverable only if they were foreseeable at the time of entering into the contract.

When damages are not adequate, an injunction may be used to enforce a negative covenant regarding exclusive services that are unique and extraordinary.

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

Where the agreement is with an unlicensed attorney.

In which of the following situations would a minor be unable to disaffirm a contract which he had made? -Upon restoring the consideration received in a situation involving a fully executed contract. -Where real property is involved, upon reaching the age of majority. -During the time of his minority or for a reasonable time thereafter. -Where the minor wishes to perform part of a contract and disaffirm another part of the same contract.

Where the minor wishes to perform part of a contract and disaffirm another part of the same contract.

An ad in a newspaper or a circular describing goods and stating prices would generally be considered: a firm offer if made by a merchant. an offer if made by a merchant, but not a firm offer. an offer irrespective of who made the offer. an invitation to buyers to make an offer to buy goods.

an invitation to buyers to make an offer to buy goods.

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

b. The horse's running time in the last race was the fastest in the circuit.

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

b. justifiably relied on the misrepresentation.

To be effective, an offer must: be spoken directly to the offeree. always contain the price of the product or service offered. always contain the place of delivery. be communicated to the offeree.

be communicated to the offeree.

Refusal of a tender of performance by one party to a bilateral contract will: -be treated as a repudiation, excusing the tendering party from further duty of performance under the contract. -not discharge either party from further duty of performance under the contract. -be considered a condition subsequent. -None of the above.

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

A contract in which both parties exchange promises is a: -voidable contract. -bilateral contract. -unilateral contract. -quasi contract.

bilateral contract.

Robinson Wiring Co. submits a written offer for Turner Construction's use as part of its bid as a general contractor for an office complex. Robinson knows Turner is relying on Robinson's bid. Robinson: can revoke its offer at any time until it is notified that Turner's bid has been accepted. cannot, under the doctrine of promissory estoppel, revoke its bid even prior to acceptance. cannot revoke its offer since it is a "firm offer." can revoke its offer for a reasonable time under the doctrine of "commercial reasonableness."

cannot, under the doctrine of promissory estoppel, revoke its bid even prior to acceptance.

A standard determined in terms of the business judgment of reasonable persons familiar with the practices customary in the type of transaction involved and in terms of the facts and circumstances of the case is: good faith. a subjective standard. commercial reasonableness. None of the above.

commercial reasonableness.

Contract damages that put the injured party in as good a position as if the other party had performed are: -compensatory damages. -incidental damages. -consequential damages. -liquidated damages.

compensatory damages.

Possible remedies for a breach of contract include: -compensatory damages. -fines. -incarceration. -All of the above. -None of the above.

compensatory damages.

The requirement that each party to a contract must intentionally exchange something of value as an inducement to the other party to make a return exchange is known as: -mutual assent. -consideration. -legality of object. -contractual capacity.

consideration

A contract of adhesion: -is automatically unenforceable. -consists largely of boilerplate provisions, such as a standard-form insurance policy. -is a contract that exhibits either procedural or substantive unconscionability. -is a contract containing multiple exculpatory clauses.

consists largely of boilerplate provisions, such as a standard-form insurance policy.

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

d. All of these are correct

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

d. Hair dresser and client

The exercise of the power to avoid a contract is known as: -ratification. -disaffirmance. -ab initio. -restitution.

disaffirmance.

A(n) __________ contract is one in which the terms have been definitely and specifically stated and agreed upon. express implied written formal

express

Unless one of the parties contractually assumes the risk, the __________ discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible. -bankruptcy law -frustration of purpose doctrine -perfect tender rule -impossibility of performance doctrine

frustration of purpose doctrine

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

illegal wagering agreement.

In the case of Michael Silvestri v. Optus Software, Inc., the court held: -an objective standard is typically applied to satisfaction clauses in employment contracts. -an objective standard must be used in determining what is satisfactory performance in any "satisfaction" contracts. -idiosyncratic judgments as to what constitutes satisfactory employee performance are inherently unfair and should not be allowed. -in judging a high-level manager's satisfactory performance, a subjective test is appropriate.

in judging a high-level manager's satisfactory performance, a subjective test is appropriate.

A conditional acceptance: generally accepts the original offer, but provides a way to later avoid contractual obligations. is a common type of counteroffer. operates as a rejection and not a new offer. cannot exist because an acceptance is, by definition, an act that manifests the offeree's willingness to enter into a contract on the terms of the offer.

is a common type of counteroffer.

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

necessary

Joanne, a minor, sold her laptop computer to Bruce, an adult. Bruce then sold the laptop to Anna, also an adult, who had no knowledge of the fact that the original owner was a minor. Under the Uniform Commercial Code, Joanne may: -avoid her contract with Bruce and recover her laptop. -not avoid her contract with Bruce and may not recover her laptop. -register with the UCC filing department and require that if Anna sells the laptop she must give Joanne the rights of first refusal. -None of the above.

not avoid her contract with Bruce and may not recover her laptop.

Randy, a minor, buys a new four-wheel drive truck from the Jones Dealership. Randy sells this truck to his cousin, Steve, who is an adult. Steve conveys this vehicle to Arthur Smith. Arthur does not personally know Steve or Randy. Randy may: -recover the vehicle from Mr. Smith. -not recover the vehicle from Mr. Smith. -hold Steve liable in tort. -recover the reasonable value of the vehicle but not the vehicle itself.

not recover the vehicle from Mr. Smith.

The Code greatly alters the common law doctrine of material breach by adopting what is known as the: -perfect tender rule. -anticipatory repudiation rule. -prevention of performance rule. -discharge by operation of law rule.

perfect tender rule.

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): -implied in fact contract. -express contract. -void contract. -quasi contract.

quasi contract.

The case of In re The Score Board, Inc. involved the issue of: -a minor's liability for misrepresentation of age. -whether an incompetent person's contracts are void or voidable. -ratification of a contract upon attaining majority. -liability for necessaries.

ratification of a contract upon attaining majority.

Which of the following is correct with regard to conditions subsequent? -Conditions subsequent are quite common in contracts. -A "sale or return" contract is an example of a contract with a condition subsequent. -A condition subsequent must occur before performance is due under a contract. -All of the above are correct.

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

Which of the following is least likely to be classified as a necessary item for which a minor will be held liable on a contract? -A camera. -School supplies. -Clothing. -An automobile.

A camera.

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

A charge to the borrower of $500 to investigate the borrower's credit, when it actually cost the lender $75.

Which of the following is enforceable without consideration? -A new promise to pay a debt barred by the statute of limitations. -An illusory promise. -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. -In the majority of states, 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 new promise to pay a debt barred by the statute of limitations.

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

A person who inherits three speedboats and wants to sell them to buy a car.

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

The sale of a new car.

In the Osprey L.L.C. v. Kelly-Moore Paint Co.,Inc. case, the Supreme Court of Oklahoma held that: -the lease was ambiguous. -the plain language of the lease required that it be renewed by delivering notice either personally or by mail, and Kelly-Moore had done neither. -a faxed delivery of the written notice to renew the commercial lease was sufficient to exercise the renewal option of the lease. -a lease is a specialized contract, and therefore the usual rules for the interpretation of contractual writings do not necessarily apply.

a faxed delivery of the written notice to renew the commercial lease was sufficient to exercise the renewal option of the lease.

A change in contract law between the nineteenth and twentieth centuries was: -a relaxation of requirements of contract formation. -an increase in technical requirements for contract formation. -a movement toward enforcement of promises only if there was strict compliance with basic contract requirements. -increasing difficulty for parties to get out of a contract.

a relaxation of requirements of contract formation.

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

a. "This car has a new engine."

In the Pacific Custom Pools, Inc. v. Turner Construction Company case, the court found: -that the trial court erred in granting a motion for summary judgment on the basis that PCP had not been licensed in California and thus could not bring suit. -that the purpose of the relevant licensing law was to protect the public from incompetence and dishonesty in those who provide building and construction services. -that, under the facts, PCP acted reasonably and in good faith to maintain its license. -PCP met an exception to the California statute providing that a contractor may not maintain an action for the recovery of compensation for work requiring a license unless it had a license at all times during performance of the work.

that the purpose of the relevant licensing law was to protect the public from incompetence and dishonesty in those who provide building and construction services.

In the Zelnick v. Adams case, the Supreme Court of Virginia found: -the trial court correctly granted summary judgment, ruling the contingency fee agreement was not binding because Jonathan was a minor when the contract was executed. -the case must be remanded for further proceedings, including the taking of evidence on the issue of the factual determination of necessity under all of the circumstances. -when faced with a defense of infancy, a court has an initial duty to determine, as a matter of fact, whether the things supplied to the infant under a contract were in the general class of "necessaries." -Both (b) and (c).

the case must be remanded for further proceedings, including the taking of evidence on the issue of the factual determination of necessity under all of the circumstances.

If a court finds a contract unconscionable: -the court may refuse to enforce only the unconscionable part. -it must, in all states, be found both substantively and procedurally unconscionable to be unenforceable. -the court must refuse to enforce the contract. -the contract must fall strictly within the Code's or the Restatement's definition of "unconscionable" to be unenforceable.

the court may refuse to enforce only the unconscionable part.

Under the Uniform Commercial Code, when the minor has sold goods and the buyer has resold them to a good faith purchaser for value: -the minor can disaffirm and recover the property. -both the purchaser from the minor and the good faith purchaser for value acquire legal title. -the good faith purchaser for value acquires legal title. -the good faith purchaser for value receives a voidable title.

the good faith purchaser for value acquires legal title.

In the Giannetti v. Cornillie case, the court found: the modification of the mortgage amount, unlike the purchase price, was not a material term of the contract. the modification of the mortgage amount was a material term, a counteroffer which rejected the original offer. the doctrine of promissory estoppel required the court to grant plaintiff's motion for specific performance. in order for an acceptance to create a binding contract, it need not strictly comply with the terms of the offer as long as the parties intended to form a contract.

the modification of the mortgage amount was a material term, a counteroffer which rejected the original offer.

For an offer to be valid: the offeree must have knowledge of the offer. the offeree must have first-hand knowledge of the offer. the offer must be stated or communicated by words. the offer must be made by the offeror.

the offeree must have knowledge of the offer.

In considering a covenant not to compete in an employment contract, the court in the case of Payroll Advance, Inc. v. Yates said in its opinion: -in order to obtain an injunction it is necessary for the employer to show that actual damage has occurred. -covenants not to compete are presumptively valid, and they are enforceable to the extent they are reasonable. -the question of reasonableness of a restraint requires consideration of such circumstances as the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business. -Both (b) and (c).

the question of reasonableness of a restraint requires consideration of such circumstances as the subject matter of the contract, the purpose to be served, the situation of the parties, the extent of the restraint, and the specialization of the business.

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

three months.

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

unconscionable

Byron and Merv enter a contract for the sale of a computer. If Merv breaches the contract and Byron waits until the time specified in the statute of limitations has passed, the contract is now: -void. -unenforceable. -voidable. -executory and enforceable.

unenforceable

Quasi contracts are used to provide a remedy when the parties enter into a(n): -void contract. -implied in fact contract. -situation in which promissory estoppel applies. -All of the above.

void contract.