Legal Environment Exam 2
T or F: Damages that reimburse the non-breaching party for the loss of a bargain are known as punitive damages
False
T or F: For a party to a contract to receive relief from a mistake, the mistake must not involve a material fact
False
T or F: If a bargain is grossly unfair, it is unliquidated
False
T or F: If no time for acceptance is specified in an offer, the offer will remain open forever
False
T or F: Punitive damages are commonly awarded in an action for breach of contract
False
Leon contracts to install automatic watering troughs in Kendall's dairy barn. Leon then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. In most states, Kendall can sue
Jake or Leon
T of F: Material breach discharges the non-breaching party from the contract
True
T or F: A contract that has been fully performed by the parties is an executed contract
True
T or F: An innocent party can rescind a fraudulent contract and be restored to his or her original position.
True
T or F: Anything less than substantial performance is a material breach of contract
True
T or F: If a mistake concerns the future value of the object of the contract, a court will normally provide relief to the mistaken party
True
T or F: Intended third party beneficiaries acquire legal rights in a contract
True
T or F: Under federal law, an e-document is as enforceable as a paper one
True
T or F: Under the doctrine of promissory estoppel, promises may still be enforced, even if they lack consideration
True
T or F: When a contract party materially alters a written contract without consent of the other party, the innocent party has the option to discharge the contract
True
Quinn contracts to provide ten tons of scrap steel at $500 per ton to Rendered Materials, Inc. An unforeseen shortage of scrap steel suddenly develops, making it impossible for Quinn to fulfill the contract for less than $5,000 per ton. Quinn's best defense against performing the contract would be that
performance of the contract is commercially impracticable
T or F: A contract is an agreement that is unenforceable in a court of law
False
T or F: A covenant not to compete included in the sale of an ongoing business is always enforceable
False
Chet, a minor, signs a contract with Denise, an adult. The contract is voidable at the option of
Chet only
Guido and Hal want to rescind their contract under which Guido sold Hal a mountain bike for $100. To rescind the contract
Guido must return the $100 and Hal must return the bike
An acceptance must be unequivocal
True
State University provides housing on campus and in some adjacent off-campus neighborhoods, To lease a university house or apartment, a person must be a student at SU. This requirement is
a condition
Revenue & Sales Corporation and Software Solutions, Inc., enter into a contract for the design of custom software for which Revenue & Sales agrees to pay $64,500. Software Solutions transfers their duty to design the software to another firm. This transfer is
a delegation
Digital Enterprise, Inc., promises to pay its employees a year-end bonus "if profits continue to be high and management agrees at the time." This is
an illusory promise
Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is
an intended beneficiary
Nevin negotiates a deal for the sale of twenty-five acres of farmland to Otis. Nevin promises to hold the offer open in return for a small payment. This is an example of
an option contract
Amy and Bob enter into a contract for Bob to perform waste management services for Amy's commercial properties. Later, Bob alters a material term—increases the price—without Amy's knowledge or consent. Amy
can be discharged by operation of law
Global Enterprise enters into a contract with HealthCare Insurance to obtain insurance for Global employees. HealthCare breaches the contract and Global would likely sue to pursue monetary damages for their loss of the bargain. These are known as
compensatory damages
Kali contracts to sell Leony her car for $3,000. This contract will be fully discharged when Kali and Leony
exchange for the car of $3,000
Orin signs a covenant not to compete with his employer, Product Distribution, Inc. The covenant will be enforced if it
none of the choices
Idina admires Jules's collection of guitars. July says, "I plan to sell the collection when I get tired of it." Jules's statement is
not an offer because Jules expressed only an intent to enter into a future contract
In selling 300 acres of rural land to Organic Farms, Peyton tells the buyer that the land "will be worth twice as much by next year." This is
opinion
Mother & Daughter Jewelers breaches its lease with Longview Mall and vacates the premises six months before the end of the term, In some states, Longview would have to
use reasonable means to find a new tenant to mitigate damages
Money loaned at an interest rate that exceeds the state's maximum constitutes
usury
Ruth owns Skyview, a complex under construction that will include commercial and residential suites, and a parking garage. She allows Town Contracting, the contractor, to complete a stage of the project late. This is known as a
waiver of breach