Question 1

Prior to signing a written agreement for hotel accommodations that provided for no refunds,the hotel manager stated to the guest,"We will give refunds if you have a good reason." Assuming that there was no fraud on the part of the hotel,which of the following is true?

Accepted Answer

The parol evidence rule generally prevents the introduction of prior or contemporaneous oral statements that contradict a written agreement, assuming the written agreement is intended to be a complete and final representation of the parties' agreement.

Question 2

What is "parol evidence?"

Accepted Answer

Parol evidence refers to any extrinsic evidence, such as oral testimony or written communication, that can be used to interpret or clarify the terms of a written contract. This evidence is admissible in court to help determine the parties' intent if there are any ambiguities or inconsistencies in the written contract. However, it cannot be used to contradict or vary the terms of a valid written contract.

Question 3

Which of the following is not a general rule of contract interpretation?

Accepted Answer

Ambiguities in a contract are not always resolved in favor of the party who drafted the contract. The interpretation of the contract will depend on the specific facts and circumstances of the case, and the court will look at the entire contract, including the context and purpose of the agreement, to determine the intent of the parties. The other choices A, B, and C are generally accepted as rules of contract interpretation.

Question 4

Jack and Jill were discussing business over lunch when they agreed on the sale of some goods.Because neither of them had any paper handy,Jack wrote the following on a napkin: "Jill agrees to purchase from Jack,1,000 widgets to be delivered on July 1,2001,at a cost of $10,000,payable on delivery." Jill signed the napkin,although Jack did not sign it.Jack delivered the widgets per the contract,but Jill refuses to pay for them.If Jack sues Jill for the price of the goods,the most likely result is which of the following?

Accepted Answer

Even though the writing on the napkin is not ideal, Jill's signature on it shows her agreement to purchase the widgets on the specified terms. This is sufficient to make the napkin a valid contract. Jack did not need to sign it since the signature of the party to be charged (Jill) is present. Therefore, Jack will likely win if he sues Jill for the price of the goods.

Question 5

A contract for the purchase of a bicycle states that the sale is made without any warranty and includes no service.In a separate paragraph of the contract it states that the seller will make free adjustments to the bicycle one time between 30 and 60 days after the purchase.This contract:

Accepted Answer

The contract explicitly states a one-time adjustment service, which is a specific term that can coexist with the general disclaimer of warranty and service.

Question 6

John is president and sole shareholder of Photo,Inc.Photo,Inc.wishes to borrow money,but to do so,the bank requires John to orally guarantee to repay the loan if Photo,Inc.cannot.John's guaranty to repay is:

Accepted Answer

The "main purpose" or "leading object" rule is an exception to the statute of frauds, allowing an oral guaranty to be enforceable if the guarantor's main purpose is to benefit themselves.

Question 7

Mandy enters a written agreement to rent a motor home for six days.Persons under age 25 are not permitted to drive it under terms of the written agreement.Mandy calls the rental company on the third day and asks if Dave,age 23,can drive it.The rental company says Dave can drive it if Mandy pays an extra $10 per day when he returns the motor home.When Dave drives in to return the motor home,the rental company refuses to return the $500 deposit because the written contract says any breach of the contract will result in the forfeiture of the entire damage deposit.Which is true?

Accepted Answer

The parol evidence rule does not apply because there is no ambiguity in the written contract. The rental company's oral modification to allow Dave to drive for an extra fee is not enforceable because it contradicts the written contract. However, the forfeiture of the entire damage deposit is excessive and may not be enforceable. Mandy should seek legal advice to determine the validity of this clause.

Question 8

Seller and Buyer negotiate for the sale of 100 acres of land.They orally agree on a price of $100,000,with payment to be made within 10 days and the deed delivered within another 30 days.Buyer sends Seller a letter in which all these terms are included,along with a check for $100,000 that Seller deposits.Seller fails to deliver a deed,and Buyer seeks to enforce the contract.This contract is:

Accepted Answer

The answer of Seller and Buyer negotiate for the sale...

Question 9

Helen goes to the bank to obtain an auto loan.Her father accompanies her to the bank.The loan officer states that the bank does not feel comfortable granting the loan unless her father will also guarantee that the money will be repaid.Her father states,"I'll make sure that she makes her payments,but I'm not signing anything!" The bank makes the loan.Is the father liable?

Accepted Answer

The loan officer stated that the bank does not feel comfortable granting the loan unless her father guarantees that the money will be repaid, but the father did not sign anything. Therefore, he is not liable unless he signs for the loan.

Question 10

Under the parol evidence rule,which of the following items could be used to interpret,explain,or otherwise affect a complete and final written contract?

Accepted Answer

The parol evidence rule allows evidence of a subsequent oral agreement and evidence to explain an unclear term or phrase to affect a complete and final written contract. Subsequent agreements are not barred by the rule, and clarifying ambiguous terms is an exception to the rule.

Question 11

Assuming the existence of a complete and final written contract,the parol evidence rule would prohibit evidence of:

Accepted Answer

The parol evidence rule prohibits evidence of prior or contemporaneous oral statements that alter, contradict, or add to the terms of the contract. However, it does not prohibit evidence of prior or contemporaneous oral statements that explain ambiguities in the contract or subsequent oral statements that modify the contract.

Question 12

Buyer and Seller orally agree to a contract for the sale of 400 shirts at $10 per shirt.Seller fails to perform and Buyer sues.This contract is:

Accepted Answer

The contract is unenforceable because it is not in writing. The Statute of Frauds requires contracts for the sale of goods above a certain dollar amount ($500 in most states) to be in writing in order to be enforceable. Additionally, the fact that the goods being sold are shirts does not exempt the contract from the Statute of Frauds.

Question 13

Seller and Buyer negotiate for the sale of 100 acres of land.They orally agree on a price of $100,000,one half in cash at closing and the other half 90 days after closing.Buyer sends Seller a letter in which all the terms are included and is signed by Buyer.Seller never responds.When the closing date arrives,Seller refuses to transfer title.Buyer sues.This contract is:

Accepted Answer

The contract is unenforceable because the Statute of Frauds requires a written agreement signed by the party to be charged (Seller, in this case) for the sale of land. Since Seller did not sign any writing, the contract is unenforceable.

Question 14

Sam and Betty sign a written contract on June 1 in which Sam will sell his 1999 Honda Accord to Betty for $10,000,not including the CD player which is mounted in the trunk.Sam will remove the CD player from the car and keep it.They will exchange the car and money on June 10.On June 8,Betty tells Sam she will pay an extra $100 if he will include the CD player and Sam agrees.Which is true?

Accepted Answer

The parol evidence rule applies to the original agreement signed on June 1, which did not include the CD player. However, the agreement to include the CD player was made on June 8, after the original agreement was made. Therefore, the parol evidence rule does not apply to the agreement about the CD player. The agreement to include the CD player is enforceable because both parties agreed to it.

Question 15

In December,2001,Mark signs a written consulting agreement for the period of January,2002,through May,2003.The contract is going well,so on June 15,2002,the parties orally agree to extend the arrangement by 4 months through September 2003.In October 2002,the client tells Mark that the 4-month extension will not be honored.Under these circumstances,which of the following is true?

Accepted Answer

The extension is unenforceable because it cannot be completed within one year of when the extension agreement was made, thus violating the Statute of Frauds which requires such agreements to be in writing.

Question 16

Two adults enter into an oral contract for the sale and purchase of some land.All material facts were disclosed by the seller to the buyer.Which is true?

Accepted Answer

The Statute of Frauds requires certain contracts, including those for the sale of land, to be in writing to be enforceable.

Question 17

Buyer and Seller enter into an agreement on April 26 for the sale of a piece of equipment for $595.This agreement is in writing and calls for delivery and payment on June 1.On May 10,the Buyer and Seller orally agree to reduce the price to $495 because the Buyer has agreed to delay the delivery date to July 1.Which of the following is true?

Accepted Answer

The modified agreement is enforceable even though it was an oral modification to a written contract. While some contracts may require modifications to be in writing, the original contract did not have this requirement. Additionally, the modification was supported by consideration as the Buyer agreed to delay delivery. The parol evidence rule does not apply in this scenario as it only prohibits extrinsic evidence that contradicts or alters the terms of a written contract, not evidence of a subsequent oral modification.

Question 18

Lyle offers to sell Eddie his car for $1,000.Eddie shows up a day later,but Lyle refuses to deliver the car.Can Eddie enforce the contract?

Accepted Answer

In most jurisdictions, contracts for the sale of goods over $500 are required to be in writing to be enforceable under the Statute of Frauds. As this sale was for $1,000, it is subject to this requirement, and as there is no written agreement, Eddie cannot enforce the contract.

Question 19

A written agreement was signed by the parties and was intended to be their entire agreement.Under the parol evidence rule,oral evidence CANNOT be admitted to:

Accepted Answer

The parol evidence rule prohibits the admission of oral evidence to contradict or modify the terms of a written agreement that is intended to be the complete and final representation of the parties' agreement. Therefore, oral evidence cannot be admitted to prove the existence of a prior oral agreement that modifies the written contract.

Question 20

A signed written contract states that "Sam will pay $900 for Skitravel to provide a week of skiing that includes lift tickets Sunday through Wednesday at Vail and Thursday through Saturday at Aspen.Skitravel will provide seven nights of lodging: Sunday,Monday,and Tuesday at Vail Hotel and Thursday,Friday,and Saturday at Aspen Lodge." The written contract failed to mention where Wednesday night accommodations would be.Which of the following statements,all made before this contract was signed,could be admitted into evidence?

Accepted Answer

This statement addresses the missing information about Wednesday night accommodations and is consistent with the overall terms of the contract.

Quiz 14: Statute of Frauds and Equitable Exceptions