Deck 9: The Law of Contracts and Sales—I

Question 1

Which of the following statements defines a bilateral contract?

A)the exchange of one promise for another promise
B)the exchange of a promise for an act
C)the exchange of two or more promises for two or more acts
D)a contract that will be performed twice

Answer 1

A

Question 2

An exchange between parties of oral or written promises that are enforceable in a court of law is a(n) ________.

A)implied contract
B)exchange contract
C)express contract
D)quasi-contract

Answer 2

C

Question 3

Which of the following statements is true of a legal offer?

A)The offer must be communicated to the party intended by the offeror.
B)Industry custom and prior dealings are irrelevant when determining whether the terms of the offer are definite.
C)Courts consider what was in the person's mind when entering the contract.
D)The contractual process ends with the legal offer.

Answer 3

A

Question 4

Which of the following would render a contract voidable?

A)the contract being unilateral
B)one of the parties to the contract committing a crime
C)one of the parties to the contract being underage
D)the contract being bilateral

Question 5

Mrs. Jones offers to sell her house to Smith for $200,000. Smith says he will pay no more than $185,000. Which of the following statements would be true at common law?

A)Mrs. Jones and Smith have negotiated a settlement.
B)Smith's price is close enough to constitute acceptance of Mrs. Jones's original offer, but the contract price will be set at $200,000.
C)Smith has terminated the original offer and now has set forth a counteroffer.
D)Mrs. Jones's offer remains open and so does Smith's counteroffer.

Question 6

Which of the following is an example of a contract that would be governed by Article 2 of the Uniform Commercial Code?

A)Bill agrees to sell his farm to Sam for $200,000.
B)Chantelle agrees to work for Jenna as her personal secretary for $50 an hour for the next year.
C)Dwayne buys a used car from Tom's Autos for $7,000.
D)Carlo leases a car for a year from EZ Cars for $2,000 per month.

Question 7

A contract established by the conduct of the parties is a(n) ________.

A)implied contract
B)exchange contract
C)express contract
D)quasi-contract

Question 8

________ of the Uniform Commercial Code deals with electronic communication of an acceptance by an offeree.

A)Section 2-213
B)Section 2-207
C)Section 2-202
D)Section 2-201

Question 9

Contract law is grounded in ________.

A)state and federal case law and statutes including the Uniform Commercial Code
B)state and federal case law that now supersedes the Uniform Commercial Code
C)the Uniform Commercial Code alone, which now supersedes state and federal case law
D)the Commerce Clause of the U. S. Constitution

Question 10

What purpose does the Restatement of the Law of Contracts accomplish?

A)It interprets the U. S. Constitution in areas relating to the Commerce Clause.
B)It summarizes contract principles as determined by legal scholars.
C)It supersedes the old Uniform Commercial Code.
D)It serves as an implied contract form in cases where there is no written instrument.

Question 11

An offeree can forestall a revocation by using a(n) ________.

A)attachment
B)garnishment
C)option
D)enforceable contract

Question 12

A contract is defined as ________.

A)a formal writing that is signed and notarized as required by law
B)a legally enforceable exchange of promises
C)an exchange of a promise for an act, whether or not it is legally enforceable
D)an exchange of goods or money for services or barter

Question 13

Article 2A prescribes a set of uniform rules for the creation and enforcement of contracts ________.

A)covering financial services
B)for the sale of leases of goods
C)covering employment
D)for the sale of electronic data

Question 14

An offeror can be given an amount of money to keep the offer open for a time, which is usually ________.

A)15 days
B)30 days
C)60 days
D)90 days

Question 15

Which of the following is an example of an offer to make a unilateral contract?

A)Jose offers to sell Melinda his car for $20,000.
B)Martin offers to fund the renovation of Billy's farm to help ease his debt problems.
C)Robert offers to take Jasmine to the park on Thursday if it does not rain.
D)Helena offers to pay $300 to anyone who finds her lost puppy and returns it to her.

Question 16

Which of the following is an example of a void contract?

A)Missy orally agrees to lease Bob's house for $950 a month.
B)Kallie agrees in writing to pay Will $400,000 to mug her uncle.
C)Jamal, who is 15, agrees to buy a stereo from Stereo World for $5,000.
D)Roberto orally agrees to buy Jim's art collection for $150,000.

Question 17

Article 2 of the Uniform Commercial Code applies to ________.

A)contracts covering real property
B)contracts covering professional services
C)contracts covering employment
D)contracts covering the sale of goods

Question 18

Under the Uniform Commercial Code, a merchant can prevent additional terms contained in a counteroffer from being added to the contract by ________.

A)citing the limitations described in the Restatement of the Law of Contracts
B)applying the mailbox rule
C)issuing a written objection to the added terms within 90 days of receipt
D)objecting to the added terms within a reasonable time

Question 19

Sean agrees to restore Janine's car for $2,000. Janine agrees to this amount. However, she will pay Sean only after the restoration is complete. This is an example of a(n) ________.

A)quasi-contract
B)executed contract
C)bilateral contract
D)executory contract

Question 20

According to the Uniform Commercial Code Section 2-207, which of the following is true with regard to nonmerchants dealing with the sale of goods?

A)A counteroffer by the offeree does not constitute a rejection, and the additional term added by the offeree will automatically become part of the contract.
B)A counteroffer by the offeree does not constitute a rejection, but the additional term added by the offeree will not become part of the contract.
C)A counteroffer terminates the negotiation and triggers the terms of the Restatement of the Law of Contracts.
D)A counteroffer constitutes a rejection of the original offer, but the parties may continue to negotiate the contract terms.

Question 21

When is a legal acceptance by e-mail effective?

A)when the e-mail is sent
B)when the e-mail arrives
C)when the offeror reads it
D)offers cannot be validly accepted by e-mail

Question 22

A notable exception to the requirement that contracts for sale of an interest in land must be written is ________.

A)partial performance
B)garnishment
C)consideration
D)competency

Question 23

The doctrine of promissory estoppel is used when the requirements of ________ are not met.

A)garnishment
B)acceptance
C)consideration
D)restatement

Question 24

Which of the following is true of Section 2-213 of the Uniform Commercial Code with regard to electronic communication?

A)Legally defensible acceptance cannot be communicated using electronic communication.
B)Electronic communication of an acceptance is legally defensible but only if the recipient is aware that it has arrived.
C)A company that sends an acceptance electronically must include a clause that indicates acceptance of the agreement can be made electronically.
D)Acceptance occurs when the electronic communication is received, even if the recipient is unaware that it has arrived.

Question 25

Morgan entered into a long-term contract at age 17. In the state in which the contract was executed, the majority age was 18. She is now 19 and would like to disaffirm the contract on the grounds that she was a minor when she entered into the contract. Which of the following statements is true?

A)Morgan can disaffirm the contract because she lacked competency at the time she entered into the contract, thus rendering the contract voidable.
B)Morgan can disaffirm the contract because the contract is void.
C)Morgan cannot disaffirm the contract because there was ample consideration.
D)Morgan cannot disaffirm the contract because she ratified it by failing to disaffirm the contract in a timely fashion.

Question 26

Which of the following is true of the parol evidence?

A)It discourages parties from signing a no-competition clause.
B)It prevents a party from varying the terms of a written contract by claiming the existence of contradictory oral terms.
C)It provides a set of exceptions to the statute of frauds.
D)It prevents the unjust enrichment of a party who has refused to perform pursuant to clear contract terms.

Question 27

Which of the following contracts would be void due to duress?

A)Mikhail wants Ivana to sign a contract for the sale of her apartment. He tells her that if she does not sign the contract, he will harm her son.
B)Janet owns a pair of zircon earrings. She sells them claiming they are diamonds and receives a much higher price from them.
C)Carla unknowingly sells a painting to a collector thinking it's genuine. However, the collector finds out that it actually is an imitation.
D)Gary has been the McGill family attorney for decades. When he needs investors for his business, he convinces Mr. McGill to invest in the new business.

Question 28

Celine offered Jenna $50 for a six carat diamond necklace. Jenna immediately agreed to sell it to Celine. However, after Jenna went home and looked at it again, she decided that the necklace was worth a lot more than $50. She told Celine she could not sell her the necklace for such a low price. In this scenario, did the parties have an enforceable contract?

A)yes, because all the elements of a valid contract are present
B)no, because the value of the consideration for the necklace is inadequate
C)no, because of the preexisting duty rule
D)no, because of the past consideration rule

Question 29

Which of the following contracts would be void because of undue influence?

A)Mikhail wants Ivana to sign a contract for the sale of her apartment. He tells her that if she does not sign the contract, he will harm her son.
B)Janet owns a pair of zircon earrings. She sells them claiming they are diamonds and receives a much higher price from them.
C)Carla unknowingly sells a painting to a collector thinking it's genuine. However, the collector finds out that it actually is an imitation.
D)Gary has been the McGill family attorney for decades. When he needs investors for his business, he demands that Mr. McGill invest in the new business.

Question 30

Leases for longer than ________ usually have to be in writing.

A)six months
B)one year
C)eight months
D)two months

Question 31

Which of the following contracts needs to be in writing?

A)an agreement to provide medical help to a person till the person dies
B)an agreement to play for a football team as long as the player's health allows it
C)an agreement to pay a person's tuition for as long as they are on the honor list
D)an agreement to provide services to a hospital for two years

Question 32

Which of the following contracts would be void due to fraudulent misrepresentation?

A)Mikhail wants Ivana to sign a contract for the sale of her apartment. He tells her that if she does not sign the contract, he will harm her son.
B)Janet owns a pair of zircon earrings. She sells them claiming they are diamonds and receives a much higher price from them.
C)Carla unknowingly sells a painting to a collector thinking it's genuine. However, the collector finds out that it actually is an imitation.
D)Gary has been the McGill family attorney for decades. When he needs investors for his business, he convinces Mr. McGill to invest in the new business.

Question 33

An illusory promise can be defined as ________.

A)a contract providing that only one of the parties need perform, only if he or she chooses to do so
B)a contract not supported by consideration since the promise is supported by an illegal act
C)a promise that lacks consideration since the person promises to perform an act or do something she already has an obligation to do
D)a contract based on love and affection

Question 34

Roberto has an art collection valued at $1,000,000. He has promised to donate his collection to a local arts foundation if that foundation satisfactorily obtains donations of equal value from other sources. The foundation manages to obtain matching donations. However, when Roberto died, his will stated that he had left his collection to his nephew, Michael. If the foundation sues, which of the following is true?

A)Since Michael is the beneficiary of Roberto's will, the arts foundation cannot collect.
B)The arts foundation will be awarded the art collection based on the quasi-contract.
C)The arts foundation will be awarded the art collection based on the doctrine of promissory estoppels.
D)The art foundation cannot contest the will since they are not immediate family.

Question 35

Raj may sell his car to Hazel for $1,000, on Friday, if he feels like it. If he refuses to sell her the car on Friday, can she sue him for breach of contract?

A)yes, because they formed a valid, enforceable contract
B)no, because Raj made an illusory promise
C)no, because of the preexisting duty rule
D)no, because the consideration from Hazel was inadequate

Question 36

Abigail agrees to clear Adam's debt with the bank if he is unable to pay it. Which of the following is true of this scenario?

A)This agreement is not within the statute of frauds.
B)Abigail has primary liability to the bank.
C)Under the statute of frauds, this contract must be in writing.
D)Adam is not liable to the bank in any way.

Question 37

James works for the county fire department and hasn't had a raise in three years. When he shows up at the mayor's house to put out a fire, he sees the mayor standing outside. James tells the mayor that he will put out the fire only if the mayor agrees to give him a raise. The mayor agrees. In this scenario, which of the following statements is true?

A)A valid contract exists because all the elements of a valid contract are present.
B)A valid contract does not exist because the value of the consideration for the mayor's promise is inadequate.
C)A valid contract exists because of the past consideration rule.
D)A valid contract does not exist because of the preexisting duty rule.

Question 38

________ is defined as a bargained-for exchange of promises in which a legal detriment is suffered by the promisee.

A)Acceptance
B)Garnishment
C)Consideration
D)Restatement

Question 39

Based on the statute of frauds, which of the following contracts is orally enforceable?

A)an agreement by the administrator of Harold's estate to personally pay Harold's outstanding debt if the estate cannot
B)an agreement by an athlete to endorse a company's products for three years
C)an agreement between two parties to sell goods worth $5,000
D)an agreement to provide medical help to a person till the person dies

Question 40

Which of the following statements is true about a court's willingness to rescind a contract due to a mistake?

A)Courts are more willing to rescind a contract when a unilateral mistake has occurred.
B)Courts are equally willing to rescind a contract whether the mistake is unilateral or bilateral.
C)Courts are more willing to rescind a contract when a bilateral mistake has occurred.
D)Neither a unilateral nor a bilateral mistake constitutes sufficient reason to rescind a contract.

Question 41

Contract law is grounded in the case law of the state and federal courts, as well as state and federal statutory law.

Question 42

Sarah owes Jane $10,000 under a valid contract but has been unable to pay the debt. Becky agrees to pay $10,000 to Jane in exchange for Jane's contract claim against Sarah. This arrangement is an example of a(n) ________.

A)garnishment
B)parol evidence
C)attachment
D)assignment of rights

Question 43

A(n) ________ is the present transfer of an existing right.

A)garnishment
B)assignment
C)attachment
D)consideration

Question 44

Which of the following is true about an assignment of rights after the obligor-promisor has received notice of the assignment by the obligee to an assignee?

A)The offer is terminated.
B)The assignee stands in the shoes of the obligee.
C)The offer becomes firm and cannot be revoked.
D)Consideration is implied under the doctrine of promissory estoppel.

Question 45

A unilateral contract is an exchange of a promise for an act.

Question 46

Under Uniform Commercial Code ________, written memoranda that are intended to be a final expression of the parties' agreement cannot be contradicted by prior or contemporaneous oral agreement.

A)Section 2-213
B)Section 2-207
C)Section 2-202
D)Section 2-201

Question 47

The death of the agent of a corporation will result in termination of an offer.

Question 48

A contract that is established by the conduct of a party rather than by the party's written or spoken words is an implied contract.

Question 49

Consideration is defined as a bargained-for exchange of promises in which a legal detriment is suffered by the promisee.

Question 50

Daniel works for Jake in exchange for Jake's promise to pay Anne the money Daniel owes her. This is an example of a ________.

A)donee-beneficiary contract
B)creditor-beneficiary contract
C)quasi-contract
D)void contract

Question 51

An offeree can forestall revocation by paying an offeror an amount of money to keep the offer open for 60 days.

Question 52

Contracts are essential to the workings of a private-enterprise economy.

Question 53

A ________ exists when the purpose of the promisee in requiring a promisor's performance to be made to a third person is to fulfill a legal obligation of the promisee to the third person.

A)void contract
B)quasi-contract
C)creditor-beneficiary contract
D)donee-beneficiary contract

Question 54

The doctrine of promissory estoppel requires a promise justifiably relied on by the promisee.

Question 55

Sarah owes Jane $10,000 under a valid contract but has been unable to pay the debt. Becky agrees to pay $10,000 to Jane in exchange for Jane's contract claim against Sarah. In this scenario, Becky is the ________.

A)assignee
B)obligor-promisor
C)obligee-assignor
D)obligee-promisee-assignor

Question 56

The contractual process begins with a legal offer.

Question 57

Jones buys a life insurance policy from Liberty Insurance Company. The policy is designed to pay Smith the sum of $100,000 upon Jones's death. The policy is an example of ________.

A)a no-competition clause
B)the parol evidence
C)a third-party beneficiary contract
D)an assignment of rights

Question 58

________ involve two parties to a contract, either by words, writing, or actions, intending to bring benefits to a third party by virtue of an enforceable contract.

A)Intended beneficiary contracts
B)Incidental beneficiary contracts
C)Donee-beneficiary contracts
D)Creditor-beneficiary contracts

Question 59

The Restatement of the Law of Contracts summarizes contract principles as set out by the U.S. Supreme Court.

Question 60

Randall agrees to pay a yearly premium to an insurance company that promises to give his daughter $150,000 upon his death. This is an example of a ________.

A)void contract
B)creditor-beneficiary contract
C)quasi-contract
D)donee-beneficiary contract

Question 61

In an intended beneficiary contract, there is no intent to bring benefits to the third party.

Question 62

State the elements of a legal contract.

Question 63

List the five methods of termination of an offer.

Question 64

Discuss how land is a long-term operational asset with regard to accounting.

Question 65

Fraud is one of the factors that prevents genuine assent.

Question 66

Explain the types of third-party beneficiary contracts.

Question 67

In the case of necessaries, the intoxicated individual is not allowed to disaffirm, but is held liable for the reasonable value of such items.

Question 68

Courts apply an objective test when determining the existence of duress. The party's state of mind is irrelevant.

Question 69

A notable exception to the requirement that contracts for sale of an interest in land must be written is partial performance.

Question 70

Contracts in consideration of marriage are nonbusiness-related contracts that must be in writing to be enforceable.

Question 71

Discuss the various exceptions to the parol evidence rule.

Question 72

Fraud is defined as any wrongful act or threat that prevents a party from exercising free will when executing a contract.

Question 73

A donee-beneficiary contract exists when the purpose of the promisee in obtaining a promise from the promisor is to make a gift to a third person.

Question 74

Explain the differences among void, voidable, and valid contracts.

Question 75

A liquidated debt exists when there is a dispute about the amount or other terms of the debt.

Question 76

State the requirements for a legal acceptance to be valid.

Question 77

An assignment is the present transfer of an existing right.