Chapter 9
The common law of contracts governs all contracts outside the scope of the UCC.
True
The difference between an express contract and an implied in fact contract is the manner in which the parties manifest assent.
True
A contract in which the parties indicate their assent in words is a(n): a. quasi-contract. b. implied contract. c. express contract. d. unlawful contract.
c
A voidable contract is an agreement that does not meet all of the requirements of a binding contract; thus, it is no contract at all and has no legal effect.
f
As defined by the UCC, goods are movable, tangible and intangible personal property.
f
Thomas says to Steve, "If you will paint my garage, I will pay you $75." Steve replies, "Would you make it $85?" Under these facts, Thomas and Steve are both promisors and promisees.
f
Morris interviewed for a job as plant manager at Northland Bearings and was offered a two-year contract if she could relocate and start the new job within three weeks. Morris agreed. Northland promised to follow up the oral agreement with a written contract setting forth all the agreed terms, but the contract had not arrived within several days. Morris wanted to give two-weeks' notice to her present employer, so she called Northland to check on the written contract and was told it was ready to be sent to her and assured her the job was hers. She gave notice of her intention to quit her present job and moved two states away to the Northland location. When Morris arrived for her first day of work, she was told someone else with better qualifications had been found and hired for the position. Morris:
may be entitled to good-faith reliance damages under the doctrine of promissory estoppel to avoid injustice.
Distinguish between a contract and a gift and explain why one is enforceable and the other is not.
A contract has the element of consideration associated with it. The duties associated with a contract have been bargained for, whereas the making of a gift is a gratuitous situation and thus not enforceable.
A valid contract may be unenforceable for which reason(s)?
Both failure to satisfy the statute of frauds and running of the statute of limitations.
Solomon Tate enters into a contract with William 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
Which of the following is NOT generally required in order to have a valid contract?
Fairness of the bargain.
What is promissory estoppel? Explain your answer.
Promissory estoppel is an equitable doctrine under which noncontractual promises will be enforced where there has been justifiable reliance on the promise by the injured party and justice requires enforcement.
Addison is approached by Archer Enterprises to work as a consultant for a period of two years, and he signs a two year agreement. This contract is governed by:
State common law
Arthur Accountant orally agrees to serve as an accountant for Clem Client in exchange for Clem's promise to pay Arthur an annual salary of $15,000. Describe this contract in terms of the following classifications: (a) express and implied; (b) unilateral and bilateral; (c) valid, void, voidable, and unenforceable; and (d) executory and executed.
The contract to provide accounting services to Clem for $15,000 involves an oral manifestation of willingness by both parties to enter into a contract. Therefore the contract is express, even though not in writing. The contract also involves an exchange of promises. Arthur promised to provide accounting services for one year in exchange for Clem's promise to pay $15,000 to Arthur. Therefore the contract is bilateral. There is no evidence that the contract is void, voidable, or otherwise unenforceable. Therefore it is valid. Finally, since, at its inception, neither party has performed any of its duties, the contract is executory.
Discuss how state common law, the Restatements of the Law of Contracts, and Article 2 of the UCC combine to form the law of contracts.
The law of contracts is governed primarily by state common law. An often-cited source of this law is found in the Restatements of the Law of Contracts promulgated by the American Law Institute. In all states except Louisiana, however, Article 2 of the UCC governs sales. A sale is a contract involving the transfer of title to goods from seller to buyer for a price. In all transactions to which Article 2 does not apply, and in all those governed by Article 2 but where general contract law has not been specifically modified by the Code, contract common law continues to apply.
Which of the following contracts is covered by Article 2 of the Uniform Commercial Code?
The sale of a new car.
Explain why and how certain promises are enforceable even though they do not meet all the requirements of a contract.
Under the doctrine of promissory estoppel and the theory of quasi-contract, promises are sometimes enforced even though they do not meet contractual requirements. Under promissory estoppel a noncontractual promise will be enforced where there has been justifiable reliance on the promise and justice requires enforcement. A quasi-contract is not actually a contract at all because it is based neither on an express nor an implied promise but rather is an obligation imposed by law to avoid injustice.
You are really hungry and just want a large pepperoni pizza to share with your dog for supper. You call up your favorite restaurant, Pizza Café and tell them your order. They respond with "Got it! Should be ready in 30 minutes. " Which statement is NOT correct?
You did not make a valid contract since you did not discuss price, payment or delivery terms.
A manifestation of the intention to act or refrain from acting in a specified way is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.
a
All of the following are relevant to defining the principles of contract law EXCEPT: a. federal common law. b. state common law. c. Restatements of the Law of Contracts. d. Uniform Commercial Code.
a
An executed contract is one in which: a. all duties under it have been performed by all parties to the contract. b. at least one party has performed all of its duties under the contract. c. there are one or more unperformed promises by any party to the contract. d. the contract is wholly unperformed by one or more of the parties.
a
CPA: Kay, an art collector, promised Hammer, an art student, that if Hammer could obtain certain rare artifacts within two weeks, Kay would pay for Hammer's post-graduate education. At considerable effort and expense, Hammer obtained the specified artifacts within the two-week period. When Hammer requested payment, Kay refused. Kay claimed that there was no consideration for the promise. Hammer would prevail against Kay based on: a. unilateral contract. b. unjust enrichment. c. public policy. d. quasi contract.
a
Contract law: a. has more relaxed requirements today than in the nineteenth century. b. has more rigid requirements today than in the nineteenth century. c. has remained static throughout the nineteenth and twentieth centuries. d. is governed primarily by the Uniform Commercial Code.
a
Simone offers to pay Andrea $150 if Andrea will paint her apartment while she (Simone) is out of town on vacation for two weeks. Andrea makes no promise but tells Simone that she will think about it. While Simone is out of town, Andrea paints the apartment. This is best described as:
a unilateral contract
Which of the following is NOT always necessary in order for a valid contract to be formed?
a writing
A contract in which one party seeks an act in exchange for a promise is a(n): a. quasi contract. b. unilateral contract. c. implied in fact contract. d. bilateral contract.
b
The Uniform Commercial Code defines goods as: a. tangible and intangible personal property. b. tangible personal property. c. land and anything attached to it. d. none of the above.
b
A promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes a duty, is best described as: a. a promise. b. an agreement. c. a contract. d. none of the above.
c
UCC Article 2 applies to contracts involving which of the following? a. The services of an accountant b. An employment relationship c. The sale of a television set d. The sale of a private residence
c
A contract in which both parties exchange promises is a(n): a. formal contract. b. quasi contract. c. implied in fact contract. d. bilateral contract.
d
A contract which fails to satisfy the requirements of the statute of frauds is: a. valid. b. void. c. voidable. d. unenforceable.
d
Bill Businessman places an ad in the local newspaper saying, "Reward: $50 for return of my golden retriever named Fido." The ad lists his address and telephone number. If Tim Teenager finds Fido and returns him to Bill, there will be: a. an executed contract requiring that Bill pay Tim $50. b. a bilateral contract, because two people are involved. c. an implied in fact contract requiring that Bill pay Tim $50. d. a unilateral contract, because Bill has promised to pay $50 but Tim hasn't promised anything.
d
Each of the following is an essential element of a binding promise EXCEPT: a. mutual assent. b. consideration. c. capacity. d.a writing signed by the parties.
d
The remedies provided for breach of contract include:a. compensatory damages. b. punitive damages. c. reliance damages. d. (a) and (c), but not (b).
d
A bilateral contract results from the exchange of a promise for an act, whereas a unilateral contract results from the exchange of a promise for a return promise.
f
A contract may be formed orally or by a writing, but it may not be inferred merely from the conduct of the parties.
f
A contract to provide legal services for a fee is governed by Article 2 of the UCC.
f
The Uniform Commercial Code
presumes the parties are acting in good faith and in a commercially reasonable manner
The Uniform Commercial Code does not apply to:
service contracts. contracts involving real property. insurance contracts. employment contracts
A quasi contract is not a contract, but rather is an obligation imposed regardless of the intention of the parties in order to assure a just and equitable result.
t
An executory contract is one in which there are one or more unperformed promises by any party to the contract.
t
As defined by the UCC, a sale is the transfer of title to goods from seller to buyer for a price.
t
In a "quasi-contract" situation, the remedy granted will be similar to a breach of contract remedy.
t
In certain circumstances, noncontractual promises are enforced under the doctrine of promissory estoppel in order to avoid injustice.
t
Most contracts are primarily governed by state common law.
t
Nearly every business transaction is based on contract, and even the most common transactions may involve multiple contracts.
t
The courts will presume that the parties intended to form a bilateral contract when it is unclear whether a unilateral or a bilateral contract has been formed.
t
Where general contract law has not been specifically modified by the UCC, the common law of contracts continues to apply.
t
Adonia and Merv enter a contract for the sale of a computer. If Merv breaches the contract and Adonia waits until the time specified in the statute of limitations has passed, the contract is now:
unenforceable
June offers to sell a puppy Cecil for $300 and that he can get the puppy on May 1st when it is six weeks old. Cecil says he will buy the puppy on May 1st since he will have received a paycheck at that time to cover the cost. A contract is formed:
when Cecil tells June he will buy the puppy.
Asher is involved in an automobile accident and is injured. While he is unconscious, the police call an ambulance which takes him to a hospital. Asher is treated at the hospital and released a day later. The hospital sends him a bill for $4,500, which Asher refuses to pay, claiming it is too high and he never consented to the treatment because he was unconscious. Asher:
will have to pay the hospital the reasonable value of their services because this is a quasi-contractual agreement.