Question 1

Explain how an insurance contract avoids being void as a wager.

Accepted Answer

The answer of Explain how an insurance contract avoids being...

Question 2

A provision in a contract for the sale and purchase of a business reads as follows: "The vendor (Jones) shall not, directly or indirectly, in any capacity whatsoever, carry on a similar business in any location for one year." Six months later, Kates (the buyer) found that Jones was competing directly by opening up a similar business, contrary to the contract drafted by Kates.Kates sued Jones for breach of contract, namely, breach of the restrictive covenant.Which of the following best describes the legal position of the parties?
A)This provision is in restraint of trade and causes the whole contract to be void.
B)Agreements such as these are always binding, being the result of a free bargain between the parties.
C)Although this type of provision is illegal, this particular one would be enforceable because it is reasonable between the parties and not contrary to public policy.
D)Such provisions are always void, being an illegal restraint of trade.
E)Although this provision would be void, the remainder of the contract for the sale of the business would be enforceable.

Accepted Answer

The answer of A provision in a contract for the...

Question 3

All contracts to restrict competition are void.

Accepted Answer

Not all contracts to restrict competition are void. Some are permissible and enforceable if they are reasonable in scope, duration, and geographic area, and if they protect legitimate business interests.

Question 4

Which of the following is true with regard to the intention of the parties to an agreement to enter into a legal relationship? Where appropriate, assume that all other elements necessary to form a contract are present.
A)Since family matters are private matters, an agreement between a husband and wife to transfer property from the husband to the wife could not be a contract even if all other elements of a contract are present.
B)The court will presume that there is always an intent to be legally bound in family situations.
C)The court makes presumptions about the intention of parties to be bound; whether that presumption may be rebutted by evidence to the contrary makes no difference to the court.
D)An intention to be legally bound is not a necessary element of a contract.
E)Parties may expressly state their intention to be legally bound, in which case the court need not rely on presumptions.

Accepted Answer

Parties may expressly state their intention to be legally bound, in which case the court need not rely on presumptions. This means that if the parties explicitly state their intention to enter into a legally binding agreement, the court will not question that intention. However, if there is no express statement of intention, the court may rely on presumptions about the parties' intention to be legally bound based on the nature of their relationship or the context of the agreement.

Question 5

A necessary element of a contract is that the parties must have the intention to be legally bound.Which of the following is true with regard to this element of a contract?
A)Family members can never have the intent to be legally bound in their agreements because family matters are private matters.
B)The court always presumes an intention to be legally bound, so this is never an issue in a contract case.
C)The court can presume the intention to be legally bound, but a party to the contract can bring forward contrary evidence to rebut that presumption.
D)If the parties fail to state expressly in their contract their intention to be legally bound, there is no contract.
E)In contract cases, the court hears evidence as to what the parties actually had in their minds at the time of contract.

Accepted Answer

The court can presume the intention to be legally bound, but a party to the contract can bring forward contrary evidence to rebut that presumption. While there is a presumption of intention to be legally bound, this can be rebutted with evidence to the contrary. Family members can still intend to be legally bound in their agreements, and it is not necessary for parties to expressly state their intention to be legally bound for a contract to exist. The court may hear evidence as to what the parties had in mind at the time of contract, but this does not necessarily mean that such evidence will be determinative of the issue of intention to be legally bound.

Question 6

Contracts involving domestic relationships are presumed to be binding.

Accepted Answer

Contracts involving domestic relationships, such as marriage or cohabitation agreements, may be subject to certain legal limitations and considerations, such as equitable distribution and fairness. Therefore, they are not automatically presumed to be binding.

Question 7

Contracts that unduly restrict competition are void.

Accepted Answer

Contracts that unduly restrict competition are considered against public policy and therefore, are void.

Question 8

"Contracts must be in writing to be enforceable." Discuss the accuracy of this statement.

Accepted Answer

The answer of "Contracts must be in writing to be...

Question 9

Given the provisions of the Statute of Frauds, which of the following contracts should be evidenced in writing?
A)Domestic agreements
B)A sale of goods involving $4
C)A sale of land
D)An employment contract
E)A retainer with a lawyer

Accepted Answer

The Statute of Frauds requires contracts for the sale of land to be evidenced in writing.

Question 10

Smith runs a software-design business.He needed someone to handle some product demonstrations, so he hired Janet to do this work.In the employment contract, Smith insisted that Janet promise that if she left the firm, she would not work for Smith's competitors within a stated period of time and within a stated geographical region.If Janet now wishes to leave the job, indicate the statement that accurately describes the likely effect of her promise.
A)Such promises are in restraint of trade and thus the courts invariably hold them to be invalid.
B)If the court thinks that such a promise is reasonable between the employer and employee and that the public interest will not be damaged, it will enforce it.
C)Such promises are valid only if given under seal.
D)Such promises are invariably held to be valid when they are part of the terms of employment and thus are given in consideration for getting the job.
E)If the court holds such a promise to be invalid, the whole employment contract is necessarily void as well.

Accepted Answer

Non-compete clauses in employment contracts are generally viewed as restraints of trade, and therefore, are presumed to be invalid. However, if the court finds the clause to be reasonable and not harmful to the public interest, it may be enforced. Therefore, the likely effect of Janet's promise would depend on whether the court finds it to be reasonable and not harmful to the public interest.

Question 11

"A verbal contract is every bit as binding as a written one." Discuss the validity of this statement.

Accepted Answer

The answer of "A verbal contract is every bit as...

Question 12

Mrs.Johnson is thinking of selling some property to her son.Which of the following is correct with respect to intention when entering into such a contract?
A)In domestic agreements, there is a presumption that there is no intention to be legally bound.
B)Commercial contracts are always binding, no matter what the stated intention.
C)When intention is the issue, there is never any presumption for or against intention; the courts will always apply the reasonable person test.
D)Since domestic relationships are serious, there is a legal presumption that in such relationships there is an intention for the parties to be legally bound by their agreements.
E)In commercial arrangements, there is always an intention to be bound by agreements no matter what the parties state to the contrary.

Accepted Answer

The presumption in domestic agreements is that there is no intention to be legally bound, which means that unless the parties explicitly state otherwise, the contract is not legally enforceable. The other answer choices are incorrect because they make sweeping generalizations about commercial contracts or presume that the court will always apply a certain test, which may not be the case in all situations.

Question 13

"A person's intention to be bound by contracts is presumed." Discuss the accuracy of this statement.

Accepted Answer

The answer of "A person's intention to be bound by...

Question 14

If a person says that he had not intended to be bound by an agreement when he entered it, there can be no contract.

Accepted Answer

The statement is not entirely true. A person's intention to be bound by an agreement is important in contract law, but it is not the only factor. Other factors include mutual consent, consideration, legality, and capacity. Even if a person claims they did not intend to be bound by the agreement, a court may still enforce it if all other elements of a valid contract are present.

Question 15

Mr.Buyer, the plaintiff in the action, was attempting to enforce a contract in which the defendant, Mr.Seller, agreed to sell to the buyer his property, Blackacre, for $100 000.Which of the following, by itself, would be sufficient to allow Mr.Seller to get out of the contract?
A)At the time of the contract, unknown to Mr.Buyer, Mr.Seller did not understand the quality and nature of this act because of mental incapacity.
B)The $100 000 was not enough (i.e., not fair).
C)Although both parties agreed to this, no money had actually been paid on the contract, not even a deposit or a down payment.
D)Mr.Buyer referred to essential terms in a letter sent to Mr.Seller.
E)There was only a verbal agreement between Mr.Seller and Mr.Buyer.

Accepted Answer

The answer of Mr.Buyer, the plaintiff in the action, was...

Question 16

Which of the following is correct with respect to the law of intention?
A)In commercial arrangements, there is always an intention to be bound by agreements no matter what the parties state to the contrary.
B)In domestic agreements, there is a presumption that there is no intention to be legally bound.
C)Since domestic relationships are serious, the parties to such relationships are always bound by their contracts with each other.
D)Since domestic relationships are serious, there is a legal presumption that in such relationships there is an intention for the parties to be legally bound by their agreements.
E)Where intention is the issue, there is never any presumption for or against intention; the courts will always apply the reasonable person test.

Accepted Answer

The law of intention states that for an agreement to be legally enforceable, it must have been entered into with an intention to create legal relations. In commercial arrangements, there is a presumption that there is an intention to be legally bound by agreements unless stated otherwise. In domestic agreements, however, there is a presumption that there is no intention to be legally bound unless stated otherwise. Therefore, option B is correct. The other options are either incorrect or provide incomplete or inaccurate information.

Question 17

A formal contract is one that is signed and sealed.

Accepted Answer

A formal contract is a legally binding agreement that is signed and sealed by all involved parties.

Question 18

Discuss the Statute of Frauds as it relates to contract law.In your answer, consider the justification of requiring some contracts to be evidenced in writing, and changes related to the Statute of Frauds in several jurisdictions.

Accepted Answer

The answer of Discuss the Statute of Frauds as it...

Question 19

Joe sold Harry his barbershop, but Harry wanted a commitment on Joe's part that he would not open another barbershop in the area after he received payment.Explain how the parties could include a clause in their agreement, to that end, without it being void as a restraint of trade.

Accepted Answer

The answer of Joe sold Harry his barbershop, but Harry...

Question 20

Contracts that unduly restrict competition are void.

Accepted Answer

This is known as the doctrine of restraint of trade, which considers restrictions on competition to be against public policy and therefore void.

Quiz 3: Formation of Contracts

Explain how an insurance contract avoids being void as a wager.

All contracts to restrict competition are void.

Which of the following is true with regard to the intention of the parties to an agreement to enter into a legal relationship? Where appropriate, assume that all other elements necessary to form a contract are present.

A necessary element of a contract is that the parties must have the intention to be legally bound.Which of the following is true with regard to this element of a contract?

Contracts involving domestic relationships are presumed to be binding.

Contracts that unduly restrict competition are void.

"Contracts must be in writing to be enforceable." Discuss the accuracy of this statement.

Given the provisions of the Statute of Frauds, which of the following contracts should be evidenced in writing?

"A verbal contract is every bit as binding as a written one." Discuss the validity of this statement.

Mrs.Johnson is thinking of selling some property to her son.Which of the following is correct with respect to intention when entering into such a contract?

"A person's intention to be bound by contracts is presumed." Discuss the accuracy of this statement.

If a person says that he had not intended to be bound by an agreement when he entered it, there can be no contract.

Mr.Buyer, the plaintiff in the action, was attempting to enforce a contract in which the defendant, Mr.Seller, agreed to sell to the buyer his property, Blackacre, for $100 000.Which of the following, by itself, would be sufficient to allow Mr.Seller to get out of the contract?

Which of the following is correct with respect to the law of intention?

A formal contract is one that is signed and sealed.

Discuss the Statute of Frauds as it relates to contract law.In your answer, consider the justification of requiring some contracts to be evidenced in writing, and changes related to the Statute of Frauds in several jurisdictions.

Joe sold Harry his barbershop, but Harry wanted a commitment on Joe's part that he would not open another barbershop in the area after he received payment.Explain how the parties could include a clause in their agreement, to that end, without it being void as a restraint of trade.

Contracts that unduly restrict competition are void.