MSU BL 2413 Test 3 Mallette

Article​ _____ of the Uniform Commercial Code prescribes a set of uniform rules for the creation and enforcement of contracts for the sale of goods.

2

Article​ _____ of the Uniform Commercial Code prescribes a set of uniform rules for the creation and enforcement of contracts for the lease of goods.

2A

Which of the following is an INCORRECT statement regarding​ arbitration? A. Arbitration is conducted by a neutral third party known as a barrister. B. Arbitration is a​ non-judicial, private resolution of a contract dispute. C. Many business contracts contain arbitration clauses. D. Many consumer contracts contain arbitration clauses. E. Most arbitration agreements stipulate binding arbitration.

A. Arbitration is conducted by a neutral third party known as a barrister.

Which of the following is an INCORRECT statement regarding​ duress? A. If someone threatens to physically harm another person unless that person signs a​ contract, this is economic duress. B. The threat to commit extortion unless someone enters into a contract constitutes duress. C. A threat to bring a criminal lawsuit unless someone enters into a contract constitutes duress even if the criminal lawsuit is​ well-founded. D. Duress can occur where a threat does not involve physical harm. E. A threat to bring a civil lawsuit does not constitute duress unless such a suit is frivolous or brought in bad faith.

A. If someone threatens to physically harm another person unless that person signs a​ contract, this is economic duress.

Which of the following is an accurate statement regarding silence as​ acceptance? A. Silence is not usually considered acceptance. B. Silence usually constitutes a counteroffer. C. Silence usually results in the creation of a unilateral​ (one-sided) contract. D. Silence usually constitutes a revocation of the offer. E. Silence is usually considered acceptance.

A. Silence is not usually considered acceptance.

Which of the following is an INCORRECT statement regarding a​ minor's right to disaffirm a​ contract? A. Special formalities are required for a minor to expressly disaffirm a contract. B. A former minor can disaffirm a contract entered into while he or she was a minor for a reasonable time after reaching the age of majority. C. A minor can orally disaffirm a contract. D. A minor can disaffirm a contract through his or her conduct. E. A minor can disaffirm a contract at any time prior to reaching the age of majority.

A. Special formalities are required for a minor to expressly disaffirm a contract.

Which of the following is an element that must be shown to prove that a contract or a clause in a contract is​ unconscionable? A. The adhering party had no reasonable alternative. B. One party reasonably used his or her bargaining power. C. The parties possessed equal bargaining power. D. The parties gave mutual consideration. E. The contracting parties entered into an​ "arm's-length" transaction.

A. The adhering party had no reasonable alternative.

Which of the following is an INCORRECT statement regarding undue​ influence? A. Undue influence occurs when the servient party unduly persuades the dominant party to enter into a contract. B. A court may permit the rescission of a contract based on undue influence. C. If there is a confidential relationship between​ persons, any contract made by the servient party that benefits the dominant party is presumed to be entered into under undue influence. D. For undue influence to​ occur, the persuasion by the wrongdoer must overcome the free will of the innocent party. E. Undue influence is an equitable doctrine

A. Undue influence occurs when the servient party unduly persuades the dominant party to enter into a contract.

A contract requires which of the​ following? A. an offer and an acceptance B. a promise for a promise C. equal consideration D. a promise for an act E. an offer and a counteroffer

A. an offer and an acceptance

Which of the following is NOT a required element of a​ contract? A. counteroffer B. consideration C. lawful object D. agreement E. contractual capacity

A. counteroffer

Which of the following is NOT a valid type of​ consideration? A. illusory promise B. property C. money D. forbearance E. act

A. illusory promise

Which of the following is an INCORRECT statement regarding silence as​ misrepresentation? A. ​Generally, each party to a contract owes a duty to disclose all the facts to the other party. B. Silence can constitute misrepresentation if​ non-disclosure would cause death. C. Silence can constitute misrepresentation if​ non-disclosure would cause bodily injury. D. Silence can constitute misrepresentation if there is a fiduciary relationship between the contracting parties. E. Silence can constitute misrepresentation if federal and state statutes require disclosure.

A. ​Generally, each party to a contract owes a duty to disclose all the facts to the other party.

​_____ is a manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the​ _____ theory of contracts.

Acceptance; objective

​_____ is the manifestation of willingness to enter into a​ bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.

An offer

Which of the following is an INCORRECT statement regarding inferior​ performance? A. Where there has been a material breach of​ contract, the​ non-breaching party is discharged from any further performance under the contract. B. A​ non-material breach of a contract occurs when a party renders inferior performance. C. Where there has been a material breach of​ contract, the​ non-breaching party may rescind the contract and seek restitution of any compensation paid under the contract to the breaching party. D. Whether there has been a material breach of contract is made on a​ case-by-case basis. E. Where there has been a material breach of​ contract, the​ non-breaching party may treat the contract as being in effect and sue the breaching party to recover damages.

B. A​ non-material breach of a contract occurs when a party renders inferior performance.

Which of the following is an INCORRECT statement regarding the implied covenant of good faith and fair​ dealing? A. The covenant of good faith and fair dealing is usually implied in contracts where the parties have a special relationship that involves a fiduciary duty. B. States refuse to recognize the implied covenant of good faith and fair​ dealing, instead requiring that such a covenant be expressly included in the contract between the parties. C. Courts typically recognize the implied covenant of good faith and fair dealing in contracts between insurance companies and insureds. D. Under the implied covenant of good faith and fair​ dealing, the parties to a contract are not only held to the express terms of the contract but also required to act in​ "good faith" and deal fairly in all respects in obtaining the objective of the contract. E. A breach of the implied covenant of good faith and fair dealing is a tort for which tort damages are recoverable.

B. States refuse to recognize the implied covenant of good faith and fair​ dealing, instead requiring that such a covenant be expressly included in the contract between the parties.

Which of the following is an INCORRECT statement regarding defenses to the enforcement of a​ contract? A. If consent is obtained by​ duress, there is no real consent. B. The consent of the parties to create a contract need not be genuin C. If consent is obtained by​ fraud, there is no real consent. D. The law requires that certain contracts be in writing or in a certain form. E. If consent is obtained by undue​ influence, there is no real consent.

B. The consent of the parties to create a contract need not be genuin

Which of the following is an INCORRECT statement regarding covenants not to​ compete? A. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the duration of the restriction. B. The reasonableness of covenants not to compete is examined on a uniform basis. C. If a covenant not to compete is​ unreasonable, the courts may​ either: 1) refuse to enforce​ it; or​ 2) change it so that it is​ reasonable; usually, courts choose the first option. D. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the geographic area protected. E. In order to be​ enforceable, a covenant not to compete must be reasonable regarding the line of business protected.

B. The reasonableness of covenants not to compete is examined on a uniform basis.

Which of the following is a required element for an offer to be​ effective? A. The offeror must subjectively intend to be bound by the offer. B. The terms of the offer must be definite or reasonably certain. C. The offeree must make a counteroffer to the offer. D. The offeror must personally intend to be bound by the offer. E. The offer must be communicated to the offeror.

B. The terms of the offer must be definite or reasonably certain.

Which of the following is an INCORRECT statement regarding the enforceability of contracts entered into by intoxicated​ persons? A. A person who disaffirms a contract based on intoxication generally must be returned to the status quo. B. Under the majority​ rule, all contracts entered into by intoxicated persons are void. C. The amount of alcohol or drugs that must be consumed for a person to be considered legally intoxicated to disaffirm contracts varies from case to case. D. A person who disaffirms a contract based on intoxication generally must return the consideration received under the contract to the other party and make restitution that returns the other party to status quo. E. Intoxicated persons are liable in quasi contract to pay the reasonable value for necessaries they receive.

B. Under the majority​ rule, all contracts entered into by intoxicated persons are void.

Which of the following is an INCORRECT statement regarding intentional interference with contractual​ relations? A. As an essential element of the tort of intentional interference with contractual​ relations, it must be shown that there was a​ valid, enforceable contract between the contracting parties. B. The third party does not have to have acted with malice or bad faith. C. A party to a contract may not sue a third person who intentionally interferes with the contract and causes that party injury. D. The tort of intentional interference with contractual relations usually arises when a third party induces a contracting party to breach a contract with another party. E. As an essential element of the tort of intentional interference with contractual​ relations, it must be shown that the​ third-party induced one of the contracting parties to breach the contract.

C. A party to a contract may not sue a third person who intentionally interferes with the contract and causes that party injury.

Which of the following is an INCORRECT statement regarding rejection of an​ offer? A. Any subsequent attempt by the offeree to accept the offer is ineffective and is construed as a new offer that the original offeror is free to accept or reject. B. ​Generally, a rejection of an offer is not effective until it is actually received by the offeror. C. An offer is not terminated if the offeree rejects it. D. A rejection may be evidenced by the​ offeree's express words. E. A rejection may be evidenced by the​ offeree's conduct.

C. An offer is not terminated if the offeree rejects it.

Which of the following is an INCORRECT statement regarding undue​ influence? A. To prove undue​ influence, it must be shown that a fiduciary or confidential relationship existed between the parties. B. Undue influence is an equitable doctrine. C. Courts may permit the​ modification, but not the​ rescission, of a contract based on the doctrine of undue influence. D. A contract that is entered into because of undue influence is voidable by the innocent party. E. To prove undue​ influence, it must be shown that the dominant party unduly used his or her influence to persuade the servient party to enter into a contract.

C. Courts may permit the​ modification, but not the​ rescission, of a contract based on the doctrine of undue influence.

Which of the following is an INCORRECT statement regarding federal arbitration​ law? A.The U.S. Supreme Court has upheld the Federal Arbitration​ Act's national policy favoring arbitration and the enforcement of arbitration agreements. B. The Federal Arbitration Act promotes the arbitration of contract disputes involving state law. C. Federal law requires an arbitrator to either be a judge or have at least five years of experience as a litigator. D. The U.S. Congress has enacted the Federal Arbitration Act. E. The Federal Arbitration Act promotes the arbitration of contract disputes involving federal law.

C. Federal law requires an arbitrator to either be a judge or have at least five years of experience as a litigator.

Which of the following is an INCORRECT statement regarding silence as​ misrepresentation? A. Silence can constitute misrepresentation if​ non-disclosure would cause death. B. Silence can constitute misrepresentation if there is a fiduciary relationship between the contracting parties. C. ​Generally, each party to a contract owes a duty to disclose all the facts to the other party. D. Silence can constitute misrepresentation if​ non-disclosure would cause bodily injury. E. Silence can constitute misrepresentation if federal and state statutes require disclosure.

C. Generally, each party to a contract owes a duty to disclose all the facts to the other party.

Which of the following is an INCORRECT statement regarding the enforceability of immoral​ contracts? A. Judges must look to the practices of society when defining immoral conduct. B. Immoral contracts have as an objective the commission of an act that society considers immoral. C. Judges are free to define morality based on their individual views. D. Immoral contracts may be found to violate public policy. E. Judges must look to the beliefs of society when defining immoral conduct.

C. Judges are free to define morality based on their individual views.

Which of the following is an accurate statement regarding past​ consideration? A. A promise based on past consideration is enforceable at the election of the promisor. B. Under the Uniform Commercial Code​ (UC, a promise based on past consideration is enforceable in a contract for the sale of goods transaction. C. Past consideration is not consideration for a new promise. D. Past consideration is adequate consideration for a new promise. E. Past consideration is also known as forbearance.

C. Past consideration is not consideration for a new promise.

Which of the following is an INCORRECT statement regarding contracts entered into by minors for the necessaries of​ life? A. The​ seller's recovery is based on the equitable doctrine of​ quasi-contract. B. There is no standard definition of what constitutes a necessary. C. The minor is obligated to pay the contract price for the necessaries he or she received. D. The minor is obligated only to pay for the reasonable value of the necessaries he or she received. E. Items such as food and clothing are generally considered to be necessaries.

C. The minor is obligated to pay the contract price for the necessaries he or she received.

Which of the following is NOT a required element for the doctrine of promissory estoppel to​ apply? A. Injustice would be caused if the promise were not enforced. B. The promisor made a promise. C. The subject contract is supported by mutual consideration. D. The promisor should have reasonably expected to induce the promisee to rely on the promise. E. The promisee actually relied on the promise and engaged in an action or forbearance of a right of a definite and substantial nature.

C. The subject contract is supported by mutual consideration.

The goal of the Uniform​ _____ Code is to create a system of commercial law among the 50 states.

Commercial

​_____ damages place the​ non-breaching party in the same position as if the contract had been fully performed by restoring the​ "benefit of the​ bargain."

Compensatory

Which of the following is an accurate statement regarding a completed gift​ promise? A. A completed gift promise can be rescinded for lack of consideration. B. A completed gift promise is voidable at the election of the donor. C. A completed gift promise is an executed contract. D. A completed gift promise cannot be rescinded for lack of consideration. E. A completed gift promise is an executory contract.

D. A completed gift promise cannot be rescinded for lack of consideration.

Which of the following is a correct statement regarding the enforceability of a contract entered into by an intoxicated​ person? A. Without​ exception, a contract entered into by an intoxicated person is void. B. A contract entered into by an intoxicated person is voidable​ if, at the time the contract was entered​ into, the person was intoxicated to the point that he or she would have been guilty of driving while intoxicated had she been operating a motor vehicle. C. Without​ exception, a contract entered into by an intoxicated person is voidable. D. A contract entered into by an intoxicated person is voidable only if the person was so intoxicated when the contract was entered into that he or she was incapable of understanding the nature of the transaction. E. Without​ exception, a contract entered into by an intoxicated person is revoked.

D. A contract entered into by an intoxicated person is voidable only if the person was so intoxicated when the contract was entered into that he or she was incapable of understanding the nature of the transaction.

Which of the following is an INCORRECT statement regarding gift​ promises? A. From the perspective of contract​ law, gift promises cause considerable trouble for persons who do not understand the importance of consideration. B. To change a gift promise into an enforceable​ promise, the promisee must give consideration in exchange for the promise. C. To change a gift promise into an enforceable​ promise, the promisee must offer to do something in exchange for the promise. D. A gift promise is enforceable if the donee desires to receive the gift. E. A completed gift promise cannot be rescinded for lack of consideration.

D. A gift promise is enforceable if the donee desires to receive the gift.

Which of the following is an INCORRECT statement regarding the elements of intentional misrepresentation​ (fraud)? A. The​ wrongdoer's intent to deceive the innocent party can be inferred from the circumstances. B. Statements of opinion generally do not form the basis for fraud. C. The innocent​ party's justifiable reliance on the​ wrongdoer's misrepresentation is generally found unless the innocent party knew that the misrepresentation was false or was so extravagant as to be obviously false. D. A misrepresentation of a material fact cannot occur by the conduct of a party. E. Predictions about the future generally do not form the basis for fraud.

D. A misrepresentation of a material fact cannot occur by the conduct of a party.

Which of the following is an INCORRECT statement regarding a mutual mistake of a material​ fact? A. A material fact is a fact that is important to the subject matter of a contract. B. An ambiguity in a contract may constitute a mutual mistake of a material fact. C. If there has been a mutual​ mistake, the contract may be rescinded on the grounds that no contract has been formed because there has been no​ "meeting of the​ minds" between the parties. D. A party may not rescind a contract if there has been a mutual mistake of a material fact. E. A mutual mistake of a material fact is a mistake made by both​ parties, while a unilateral mistake is made by only one party.

D. A party may not rescind a contract if there has been a mutual mistake of a material fact.

Which of the following is a correct statement regarding specific​ performance? A. Specific performance is not a remedy available to enforce contracts for the sale of rare coins. B. Specific performance is not a remedy available to enforce contracts for the sale of art. C. Specific performance is a remedy available to enforce personal service contracts. D. Courts have the discretion to award specific performance if the subject matter of the contract is unique. E. Specific performance is not a remedy available to enforce land contracts.

D. Courts have the discretion to award specific performance if the subject matter of the contract is unique.

Which of the following is an INCORRECT statement regarding the infancy​ doctrine? A. Under the infancy​ doctrine, a minor has the option of choosing whether to enforce a contract. B. If both parties to a contract are​ minors, both parties have the right to disaffirm the contract. C. A minor may not affirm one part of a contract and disaffirm another part. D. In most​ states, the infancy doctrine is a subjective standard. E. ​Generally, contracts for the necessaries of life are exempt from the scope of the infancy doctrine.

D. In most​ states, the infancy doctrine is a subjective standard.

Which of the following is an INCORRECT statement regarding the elements of intentional misrepresentation​ (fraud)? A. To prove​ fraud, the plaintiff must establish that the innocent party justifiably relied on the misrepresentation. B. To prove​ fraud, the plaintiff must establish that the wrongdoer intended to deceive the innocent party. C. To prove​ fraud, the plaintiff must establish that he or she was injured. D. To prove​ fraud, the plaintiff must establish that the wrongdoer made a false representation of a​ non-material fact. E. A misrepresentation of a material fact by the wrongdoer may occur by oral or written words.

D. To prove​ fraud, the plaintiff must establish that the wrongdoer made a false representation of a​ non-material fact.

​_____ occurs when one party threatens to do some wrongful act unless the other party enters into a contract.

Duress

Which of the following is a correct statement regarding an advertisement for the sale of​ goods? A. An advertisement for the sale of goods constitutes an acceptance. B. By​ law, an advertisement is presumed to be premised on the​ seller's motive to​ "bait and​ switch" customers. C. An advertisement for the sale of goods constitutes a counteroffer. D. An advertisement for the sale of goods constitutes an offer. E. An advertisement for the sale of goods constitutes an invitation to make an offer.

E. An advertisement for the sale of goods constitutes an invitation to make an offer.

Which of the following is an INCORRECT statement regarding the doctrine of​ unconscionability? A. The courts are given substantial discretion in determining whether a contract or contract clause is unconscionable. B. The doctrine of unconscionability is based on equity. C. There is no single definition of unconscionability. D. The doctrine of unconscionability is based on public policy. E. The doctrine of unconscionability may be used merely to save a contracting party from a bad bargain.

E. The doctrine of unconscionability may be used merely to save a contracting party from a bad bargain.

Which of the following is NOT a valid type of​ consideration? A. money B. the performance of an act C. property D. forbearance E. an illusory promise

E. an illusory promise

​_____ damages are damages that parties to a contract agree in advance should be paid if the contract is breached.

Liquidated

​_____ of damages is a​ _____ party's legal duty to avoid or reduce damages caused by a breach of contract.

Mitigation; non-breaching

​_____ damages are awarded when the​ non-breaching party sues the breaching party even though no financial loss has resulted from the breach.

Nominal

​_____ damages are usually​ $1 or some other small amount.

Nominal

​_____ is the act of a​ minor, after the minor has reached the age of​ majority, by which he or she accepts a contract entered into when he or she was a minor.

Ratification

​_____ is​ a(n) _____ doctrine that permits the court to rewrite a contract to express the​ parties' true intentions.

Reformation; equitable

​_____ is an action to undo a contract.

Rescission

​_____ is the withdrawal of an offer by the offeror that terminates the offer.

Revocation

​_____ is the​ offeror's withdrawal of an offer that results in termination of the offer.

Revocation

​_____ performance of personal service contracts is not granted because the courts would find it difficult or impracticable to supervise or monitor performance of such a contract.

Specific

​_____ performance occurs when there has been a minor breach of contract.

Substantial

Suppose a person threatens a business​ owner, "I will burn your business down unless you agree to pay me​ $10,000." Out of​ fear, the business owner promises to pay the money. Which of the following is an accurate statement regarding the business​ owner's obligation to pay the​ $10,000?

The agreement is not an enforceable contract.

​_____ is a situation in which one person takes advantage of another​ person's mental,​ emotional, or physical weakness and unduly persuades that person to enter into a contract.

Undue influence

​_____ occurs when one person takes advantage of another​ person's mental,​ emotional, or physical weakness and unduly persuades that person to enter into a contract.

Undue influence

According to the mailbox​ rule, what happens when an acceptance letter is dispatched​ (i.e., mailed) but lost in​ transmission?

acceptance is effective

​A(n) _____ is an agreement whereby the parties agree to accept something different in satisfaction of the original contract.

accord

​A(n) _____ is an agreement whereby the parties agree to accept something different in satisfaction of the original​ contract, while​ a(n) _____ is the performance of the new agreement.

accord; satisfaction

Preprinted forms whose terms the consumer cannot negotiate and that they must sign in order to obtain a product or service are called contracts of​ _____.

adhesion

The law has developed which two standards concerning contracts of mentally incompetent​ persons?

adjudged insane and insane but not adjudged insane

If no time is​ stated, an offer terminates​ _____.

after a reasonable time

The words​ _____ and contract are often used interchangeably.

agreement

A contract may not be enforced if the​ _____ of one or both parties to the contract was not genuine or real.

assent

Voluntary​ _____ by the parties is necessary to create an enforceable​ _____.

assent; contract

A writ of​ _____ orders the sheriff or other government officer to seize property in the possession of the breaching party that he or she owns and to sell the property at auction to satisfy the judgment.

attachment

Unless otherwise expressly​ stated, an auction is considered​ a(n) _____.

auction with reserve

In​ a(n) _____, the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid.

auction without reserve

Breach of the covenant of good faith and fair dealing is sometimes referred to as the tort of​ _____.

bad faith

​A(n) _____ exchange leads to an enforceable contract.

bargained-for

​A(n) _____ contract contains a clause that requires one or both of the parties to do their best to achieve the objective of the contract.

best efforts

​A(n) _____ contract is a​ "promise for a​ promise."

bilateral

​A(n) _____ contract is entered into by way of an exchange of promises between the contracting parties.

bilateral

Suppose​ Mary, the owner of the Chic Dress​ Shop, says to​ Peter, a​ painter, "If you promise to paint my store by July​ 1, I will pay you​ $3,000." Peter​ says, "I promise to do​ so." A​ _____ was created at the moment Peter promised to paint the dress shop.

bilateral contract

Most arbitration agreements stipulate​ _____ arbitration.

binding

A major source of contract law is the​ _____ law of​ contracts, which developed from early court decisions that became precedent for later decisions.

common

Most contracts are discharged by the​ _____ performance, or​ _____ performance, of the contracting parties.

complete; strict

An accord and satisfaction is also known as a​ _____.

compromise

An accord and satisfaction is also known as​ a(n) _____.

compromise

Fraud by​ _____ occurs when one party takes specific action to conceal a material fact from another party.

concealment

A promise lacks​ _____ if a person promises to perform a preexisting duty.

consideration

The recovery for breach of contract is usually limited to​ _____ damages.

contract

​A(n) _____ is a promise or 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.

contract

Suppose Fei says to​ Harold, "I will sell you my house for​ $700,000." Harold​ says, "I think​ $700,000 is too​ high; I will pay you​ $600,000." Harold has made​ a(n) _____.

counteroffer

​A(n) _____ by the offeree simultaneously terminates the​ offeror's offer and creates a new offer.

counteroffer

​A(n) _____ is a response by an offeree that contains terms and conditions different from or in addition to those of the offer.

counteroffer

Promissory estoppel is also known as​ _____ reliance.

detrimental

According to the mailbox​ rule, acceptance is effective when it is​ _____.

dispatched

The threat to commit extortion unless someone enters into a contract constitutes​ _____.

duress

Promissory estoppel is​ a(n) _____ doctrine that permits a court to order enforcement of a contract that lacks​ _____.

equity; consideration

An​ _____ clause is also called a release of liability clause

exculpatory

​A(n) _____ clause is also called a release of liability clause.

exculpatory

A completed contract is called​ a(n) _____ contract.

executed

A fully performed contract is called​ a(n) _____ contract.

executed

A written agreement to buy an automobile from a dealership is​ a(n)_____ contract.

express

​A(n) _____ authorization is a stipulation in an offer that says the acceptance must be by a specified means of communication.

express

​A(n) _____ contract is stated in oral or written words.

express

Fraud in the inception is also known as fraud in the​ _____.

factum

Fraud in the​ _____ occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing.

factum

Accepting an​ out-of-court settlement in exchange for dropping a lawsuit is an example of​ _____.

forbearance

Negotiable instruments are special types of​ _____ contracts.

formal

Two defenses may be raised to the enforcement of​ contracts: _____ and​ _____.

genuineness of​ assent; writing and form

A gift promise is also known as​ a(n) _____ promise.

gratuitous

A gift promise is also called a​ _____.

gratuitous promise

Scienter means​ _____.

guilty mind

A contract cannot be supported by a promise to refrain from doing an illegal act because that is​ _____ consideration.

illegal

If a department store had a sign above the entrance​ stating, "The store is not liable for the ordinary negligence of it​ employees," this would be​ a(n) _____clause.

illegal exculpatory

A contract that provides that one of the parties has to perform only if he or she chooses to do so is​ a(n) _____ contract.

illusory

​A(n) _____ contract is a contract into which both parties enter but in which one or both of the parties can choose not to perform their contractual obligations.

illusory

​A(n) _____ authorization is a mode of acceptance that is implied from what is customary in similar​ transactions, usage of​ trade, or prior dealings between the parties.

implied

​A(n) _____ term in a contract is one that can reasonably be supplied by the courts.

implied

A​ quasi-contract is also known as​ a(n) _____ contract.

implied-in-law

At common​ law, parties to an illegal contract were considered​ _____.

in pari delicto

Legal insanity is a state of contractual​ _____, as determined by law.

incapacity

Fraud in the​ _____ occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing.

inception

The​ _____ doctrine allows minors to disaffirm most contracts they have entered into with adults.

infancy

To protect​ minors, the law recognizes the​ _____ doctrine, which gives minors the right to disaffirm most contracts they have entered into with adults.

infancy

​A(n) _____ is a court order that prohibits a person from doing a certain act.

injunction

A promise based on past consideration​ _____.

is unenforceable

​Usually, misrepresentation of​ _____ is not actionable as fraud.

law

A​ _____ is an agreement by the issuer of the letter to pay a sum of money on the receipt of an invoice and other documents.

letter of credit

The​ acceptance-upon-dispatch rule is more commonly known as the​ _____ rule.

mailbox

​A(n) _____ fact is a fact that is important to the subject matter of a contract.

material

For an acceptance to​ exist, the offeree must accept the terms as stated in the offer. This is called the​ _____ rule.

mirror image

Genuineness of assent may be missing because a party entered into a contract based on​ _____, fraudulent​ misrepresentation, or​ _____.

mistake; duress

A mistake made by both parties concerning a material fact that is important to the subject matter of a contract is known as​ a(n) _____ mistake of a material fact.

mutual

A​ _____ mistake of value exists if both parties know the object of the contract but are mistaken as to its value.

mutual

Mary enters into an employment contract with Microhard Corporation. It is a​ three-year contract, and Mary is to be paid​ $100,000 per year. After Mary works for one​ year, Microhard Corporation fires Mary. The next​ day, Mary finds a better position at Microsoft​ Corporation, in the same​ city, paying​ $125,000 per year on a​ two-year contract. Mary has suffered no monetary damages but could bring a civil lawsuit against Microhard Corporation because of its breach and recover​ _____ damages​ ($1).

nominal

The intent to enter into a contract is determined using the​ _____ theory of contracts.

objective

The​ _____ theory of contracts states that the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.

objective

In order for an offer to be​ valid, the offeror must​ _____ intend to be bound by the offer.

objectively

The​ _____ is the party to whom an offer has been made.

offeree

The​ _____ is the party to whom the offer is made.

offeree

The​ _____ is the party who makes an offer to enter into a contract.

offeror

The​ _____ is the party who makes an offer.

offeror

The​ _____ is the party who makes an offer to enter into a​ contract, and the​ _____ is the party to whom the offer is made.

offeror; offeree

In an auction without​ reserve, the seller is the​ _____, and the bidders are the​ _____.

offeror; offerees

An exculpatory clause can be used to relieve a party from tort liability for​ _____.

ordinary negligence

In​ a(n) _____​ contract, the seller agrees to sell all of its production to a single buyer.

output

A promise lacks consideration if a person promises to perform​ a(n) _____ duty.

preexisting

A​ _____ is something a person is already under an obligation to do.

preexisting duty

Under the modern law of​ contracts, a contract is considered to be supported by legal value if the​ _____ suffers a legal detriment or the​ _____ receives a legal benefit.

promisee; promisor

The doctrine of unconscionability is based on​ _____.

public policy

​Generally, _____ damages are not recoverable for breach of contract.

punitive

Which of the following is NOT a type of formal​ contract?

quasi-contract

​A(n) _____ statute is enacted to protect the public.

regulatory licensing

The anticipatory breach of a contract is also called anticipatory​ _____.

repudiation

In​ a(n) _____​ contract, the buyer agrees to purchase from the seller all of an item it needs.

requirements

​Generally, to​ _____ a​ contract, the parties must make restitution of the consideration they received under the contract.

rescind

According to the duty of​ _____, if a minor has transferred​ money, property, or other valuables to the competent party before disaffirming the​ contract, the party must place the minor in status quo.

restitution

​Generally, to rescind a​ contract, the parties must make​ _____ of the consideration they received under the contract.

restitution

According to the duty of​ _____, a minor is obligated only to return the goods or property he or she has received from the adult in the condition it is in at the time of disaffirmance.

restoration

Licensing statutes enacted to raise money for the government are called​ _____ statutes.

revenue-raising

If an accord is​ performed, it is called​ a(n) _____.

satisfaction

Consequential damages are also referred to as​ _____ damages.

special

An award of​ _____ performance orders the breaching party to perform the acts promised in a contract.

specific

Complete performance is also known as​ _____ performance.

strict

The enactment of a​ statute, regulation, or court decision that makes the object of an offer illegal is known as a​ _____.

supervening illegality

An offer​ _____ if the subject matter of the offer is destroyed through no fault of either party prior to the​ offer's acceptance.

terminates

Prior to acceptance of an​ offer, the death or incompetence of the offeror or the offeree​ _____ the offer.

terminates

A counteroffer by the offeree simultaneously​ _____ the​ offeror's offer and​ _____ a new offer.

terminates; creates

What is the legal effect of fraud in the​ inducement?

the contract is voidable by the innocent party

If there has been a mutual mistake of material​ fact, _____.

the contract may be rescinded

What is the legal effect of a mutual mistake of​ value?

the contract remains enforceable by either party

Tender is​ a(n) _____ and​ _____ offer by a contracting party to perform his or her obligations under the contract.

unconditional; absolute

​A(n) _____ contract is a contract that courts refuse to enforce in part or at all because it is so oppressive or manifestly unfair as to be unjust.

unconscionable

A contract based on an illusory promise is​ _____ because the contract lacks​ _____.

unenforceable; consideration

An offer to pay a reward​ (for example, for the return of lost property or the capture of a​ criminal) is an offer to form​ a(n) _____ contract.

unilateral

A​ _____ contract is a​ "promise for an​ act."

unilateral

In a​ _____ contract, the​ offeror's offer can be accepted only by the performance of an act by the offeree.

unilateral

​Mary, the owner of the Chic Dress​ Shop, says to​ Peter, a​ painter, "If you paint my shop by July​ 1, I will pay you​ $3,000." This offer creates a​ _____.

unilateral contract

State​ _____ laws set an upper limit on the annual interest rate that can be charged on certain types of loans.

usury

Under the modern law of​ contracts, a contract is considered to be supported by legal​ _____ if the promisee suffers a legal detriment or the promisor receives a legal benefit.

value

A(n) _____ contract has no legal effect.

void

An agreement between two companies to engage in price fixing in violation of federal antitrust statutes is illegal and therefore​ _____.

void

An illegal contract is​ _____.

void

Any contract entered into by a person who has been adjudged insane is​ _____.

void

Contracts based on illegal consideration are​ _____.

void

Contracts contrary to public policy are​ _____.

void

Contracts that have an illegal object are​ _____.

void

Contracts to commit criminal acts are​ _____.

void

​A(n) _____ contract has no legal effect.

void

Exculpatory clauses that result from superior bargaining power are usually found to be​ _____.

void as against public policy

A contract entered into by a person who is​ insane, but not adjudged​ insane, is generally​ _____.

voidable

​A(n) _____ contract is a contract in which at least one of the parties has the option to void his or her contractual obligations.

voidable

Unless otherwise expressly​ stated, an auction is considered an auction​ _____.

with reserve

​_____ is something of legal value given in exchange for a​ _____.

​Consideration; promise

​_____ contracts are implied from the conduct of the parties.

​Implied-in-fact

​_____ of damages is a​ _____ party's legal duty to avoid or reduce damages caused by a breach of contract.

​Mitigation; non-breaching

Under the modern law of​ contracts, a contract is considered to be supported by legal value if the promisee suffers a legal​ _____ or the promisor receives a legal​ _____.

​detriment; benefit

A contract is an agreement that is enforceable by a court of​ _____ or​ _____.

​law; equity

A party may rescind a contract if there has been a​ _____ mistake of a​ _____ fact.

​mutual; material

Gift promises are​ _____ because they lack​ _____.

​unenforceable; consideration

A contract that is based on sexual favors is an immoral contract and​ _____ as against​ _____.

​void; public policy