Question 1

Whittle sent an order over the Internet for a $1,200 garage door.His name keyed onto the order will only be effective as a signature sufficient to create a "writing" "signed by the party against whom enforcement is sought" if he follows up with a signature on paper.

Accepted Answer

False

Question 2

E-mation hired Jose to bribe a foreign government official.E-mation gave Jose $10,000 in cash to make the bribe payment and $2000 for Jose's efforts.Instead of paying the bribe,Jose pocketed all of the money.If E-mation sues Jose,E-mation will:

Accepted Answer

Jose committed theft and fraud by not making the bribe payment and keeping all the money for himself. As such, E-mation can file criminal charges against Jose and pursue civil action to recover the money. However, if Jose spent or otherwise disposed of the money, E-mation may not be able to recover the $12,000.

Question 3

Roger parked his car at a garage that has a large sign at the entrance saying,"This garage is not liable for items stolen from a car." This type of notice is referred to as an exculpatory clause.

Accepted Answer

An exculpatory clause is a provision in a contract that purports to release one of the parties from liability in the event of certain occurrences, such as theft. In this scenario, the garage has a sign with an exculpatory clause indicating that they are not liable if any items are stolen from a car parked in their garage.

Question 4

Travis had too many beers at the baseball game.Ed realized Travis was so intoxicated he wouldn't know what he was doing,so he got Travis to sign a promise to sell his motorcycle to Ed for $50.When Travis gets sober,he may void the contract.

Accepted Answer

A person who is intoxicated at the time of signing a contract may later void the contract due to lack of capacity to enter into a legally binding agreement.

Question 5

To be valid,an agreement not to compete must be ancillary to a legitimate bargain.

Accepted Answer

This is a well-established legal principle. An agreement not to compete, also known as a non-compete clause, is only valid if it is part of a larger, legitimate contract or business relationship, such as a sale of a business or an employment contract. If the non-compete clause is too broad or restrictive or not connected to a legitimate business purpose, it may be unenforceable in court.

Question 6

A minor,someone under age 18,lacks legal capacity to contract and normally can create only a voidable contract.

Accepted Answer

Minors are considered to lack legal capacity to contract, which means they cannot enter into a legally binding contract. However, in certain situations, a minor may create a voidable contract, which means they have the option to either disaffirm or enforce the contract.

Question 7

A party injured by fraud generally has the choice of suing for damages or rescinding the contract.

Accepted Answer

This statement is true. A party who has been deceived by fraud may choose to pursue legal action for damages, or they may seek to cancel the contract altogether through rescission.

Question 8

Contract rescission cannot be based upon a unilateral mistake.

Accepted Answer

Contract rescission can be based on a unilateral mistake if the mistake is material and the other party knew or should have known of the mistake.

Question 9

An exculpatory clause is generally enforceable if the affected activity involves medical care or an essential service.

Accepted Answer

An exculpatory clause is generally not enforceable under common law, as it is considered against public policy to allow a party to waive liability for their own negligence or intentional wrongdoing. Some state laws may allow for limited enforcement of such clauses, but they are typically subject to strict scrutiny and must be supported by strong considerations of public policy, such as in the case of medical care or essential services.

Question 10

When Randy accepted a job with Buren Construction,Randy signed the following agreement,"Upon termination of my employment with Buren Construction,I agree never to work for another employer as an electrician." If Randy resigns from Buren Construction,this agreement would be upheld under the theory of freedom of contract.

Accepted Answer

The answer of When Randy accepted a job with Buren...

Question 11

Roger,a minor,buys some electronic equipment from Tuneland,Inc.Roger uses the equipment for a few months and destroys it.In a majority of states,Roger is not entitled to his money back since the merchandise cannot be returned.

Accepted Answer

In a majority of states, minors can disaffirm contracts and are entitled to a refund even if the merchandise is damaged or destroyed, as long as the contract is not for necessities.

Question 12

The original statute of frauds is the English law that began the practice of requiring written evidence of certain kinds of contracts.

Accepted Answer

The statement is true. The original statute of frauds was passed by the English Parliament in 1677 and required certain contracts, such as those involving land, to be in writing to be enforceable in court. This practice influenced the development of similar laws in other countries, including the United States.

Question 13

Suppose that Lenny,a lawyer,enters into an agreement with Cindy,his client,that his fees will be a percentage of the recovery Lenny obtains for Cindy in her pending divorce.State law makes such a contingency fee arrangement illegal in divorce actions.What will be the probable outcome if Lenny attempts to enforce the agreement?

Accepted Answer

State law prohibits contingency fee arrangements in divorce actions. Therefore, the contract between Lenny and Cindy will be considered void as it violates the statute. Lenny will not be able to recover any fees from Cindy.

Question 14

To be valid,a noncompete clause must be:

Accepted Answer

To be valid, a noncompete clause must meet all three criteria mentioned in choices A, B, and C. Therefore, the correct answer is choice D.

Question 15

When Mohammed was hired by Pomico,Inc.,he signed the following agreement,"Upon termination of my employment with Pomico,I agree not to work for a competing company within 30 miles of Pomico's headquarters for one year." This agreement,important to protecting secret information developed in the employer's business,is an:

Accepted Answer

The agreement mentioned in the scenario is an enforceable agreement not to compete. It restricts the employee from working for a competitor within a certain geographical area for a specific period to prevent the disclosure of confidential information or trade secrets. Such agreements are legal and enforceable as long as they are reasonable in scope, duration, and geography.

Question 16

Sweet Plantation,Inc.made a written contract with Candy,Inc.whereby Sweet Plantation agreed to supply all of Candy's sugar requirements for the next year at $.35 per pound.A dispute arose as to how much sugar Sweet is to supply.The parol evidence rule will bar Sweet's introduction of evidence concerning the intent of the parties regarding the requirements of Candy.

Accepted Answer

The parol evidence rule only bars the introduction of evidence that contradicts or varies the terms of a written contract. However, evidence that shows the parties' intent or understanding of the terms of the contract at the time of its formation may be admissible. Therefore, Sweet may be able to introduce evidence of the parties' intent regarding the sugar requirements under the contract.

Question 17

Mark sues Paula to enforce an alleged oral contract to sell a one-acre lot.She defends based on the statute of frauds.Even if Mark proves he paid 15 percent of the purchase price and that Paula was aware that he had begun construction of a house on the lot,Mark will not be allowed to enforce the contract since a contract for the sale of any interest in land must be in writing to be enforceable.

Accepted Answer

The part performance doctrine is an exception to the statute of frauds, allowing enforcement of an oral contract for the sale of land if the buyer has taken significant steps, like making a payment and starting construction, indicating reliance on the contract.

Question 18

If a salesperson says,"This is a great car," but the car turns out to be a lemon,the salesperson has committed fraud.

Accepted Answer

Fraud requires intentional deception. Simply stating an opinion or making a general positive statement about a product does not constitute fraud unless there is evidence of intentional deceit.

Question 19

Barb has been a children's day-care provider for several years in the small town of Sallton.She has decided to give it all up and move to the big city for excitement and adventure.She sells her business to Ken,agreeing not to open a competing business within two miles of Sallton for a period of six months.After four months of the big city life,Barb is broke and moves back to Sallton.She opens a new day-care business.Ken sues on the noncompete clause.What is the most likely result?

Accepted Answer

Ken is likely to win the lawsuit because the noncompete clause was agreed upon by Barb and Ken, and it was for a reasonable amount of time and location. It was ancillary to Barb selling her day-care business to Ken, so it is considered a legitimate bargain. Therefore, the non-compete clause is enforceable.

Question 20

Ramona orally agreed to work for Brahma,Inc.for the rest of her life for $50,000 per year.This agreement would not be enforceable since it violates the one-year rule of the statute of frauds.

Accepted Answer

The agreement does not violate the one-year rule of the statute of frauds because it is possible for Ramona to complete her lifetime employment within one year if she were to pass away within that time frame.

Quiz 10: Legality, consent, and Writing