Question 1

Contractual consideration is defined as the thought process a party uses to decide whether or not to accept the offer and enter into a contract.

Accepted Answer

Consideration constitutes the legal detriment and bargained for exchange required for a valid contract.

Question 2

An agreement to purchase $499 worth of land does not have to be in writing to be enforceable.

Accepted Answer

Any contract regarding an interest in land must be in writing regardless of the monetary amount to be enforceable under the statute of frauds.

Question 3

In Harley-Davidson Motor Co.,v.PowerSports,Inc.,the court permitted PowerSports to retain their Harley-Davidson franchise because their decision to become a publicly owned corporation had nothing to do with their commitment to sales and service so it was deemed not material to the negotiations so no fraud occurred.

Accepted Answer

The promise to remain a private company was a key negotiating point and PowerSport's failure to disclose their plans was deemed a fraudulent misrepresentation allowing rescission of the contract.

Question 4

Ronald is 17 years old and contracts to purchase a car and make monthly payments for three years.His birthday is August 1^st.If Ronald changes his mind,he may disaffirm the contract at anytime prior to August 1^st but loses the right to disaffirm on August 2^nd.

Accepted Answer

A minor may disaffirm a contract until they reach 18 and for a reasonable time afterward.

Question 5

If you give a truthful answer to a question during contract negotiations,but something then happens that makes that answer now false,you are not obligated to notify the other party unless they ask the question again.

Accepted Answer

If the truth of a prior statement has changed, the speaker is under an affirmative duty to correct the answer to the prior statement or a fraud ensues.

Question 6

Duress must be based on a physical threat and not an economic one.

Accepted Answer

Duress may be a result of acts or threats that are physical, economic or extortion.

Question 7

Generally,mutual mistakes will often lead to the court allowing an avoidance of a contract; however,a unilateral mistake is not usually grounds to cancel a contract.

Accepted Answer

When both parties share the same incorrect belief that is not in accordance with the facts, the courts find mutual assent lacking. However, the courts are not as supportive of a single party making an error and will often hold them to the contract.

Question 8

Generally,for an acceptance to create a non-commercial contract,the acceptance must be without qualifications or conditions.

Accepted Answer

The mirror image rule requires that an acceptance in a noncommercial contract not deviate from the offer.

Question 9

Under a bilateral contract,there is no contract until the offeree performs the requested act.

Accepted Answer

A bilateral contract is formed when the enforceable promises are exchanged.

Question 10

Larry has had a few beers and is starting to get a bit drunk.He isn't acting strange and he's conducting conversations with others slurring only an occasional word or two.Larry,should he enter into a contract in this state would be considered mentally incompetent and his contract would be void.

Accepted Answer

Larry is not unable to understand or unable to act in a reasonable manner so his contract would likely be valid or at most voidable.

Question 11

A minor's contract for actual necessities does not require that the minor be mentally competent for the contract to be valid.

Accepted Answer

Parties to a contract must be mentally competent regardless of other factors or exceptions to enter into a valid contract.

Question 12

Jon owns two cars.He says to Rachel,"I'll sell you either car for $8,000".This would be a valid offer.

Accepted Answer

This is not an insufficient or vague offer because the acceptance would specify the car to be contracted for.

Question 13

After an offer is made,the offeror may revoke that offer at any time,even if the offeree has not been given a reasonable period of time to decide whether or not to accept.

Accepted Answer

Unless an option is entered into, an offeror may revoke an offer at any time prior to acceptance.

Question 14

Should an adult find out that they have entered into a contract with a minor,the adult may disaffirm the contract if they do so before the minor reaches the legal age.

Accepted Answer

A minor may disaffirm a contract however the adult may not disaffirm.

Question 15

Ike has orally agreed to paint Tina's portrait.The oral agreement is for the portrait to be completed in nine months.Even if the portrait actually takes thirteen months to complete,the agreement will be enforceable.

Accepted Answer

The determining factor is how long the contract was supposed to take, not how long it actually took.

Question 16

Amanda,a recent university graduate,needed a car to get to her new job.To help Amanda secure a loan for the car,Ted,a friend,agreed to pay the loan should Amanda default.Ted's promise is enforceable as long as he goes to the bank,declares his promise to guarantee Amanda's loan in front of witnesses and shakes hands on the deal giving his word.

Accepted Answer

A promise to stand for the debt of another must be in writing to be enforceable under the statute of frauds.

Question 17

The legal detriments exchanged by the parties must be equal,or reasonably close to equal,for consideration to be valid.

Accepted Answer

The court does not usually look to the amount or type of consideration exchanged but concerns itself with whether it was a voluntary bargained for exchange.

Question 18

An option contract refers to the choices that one has when entering into a contract.

Accepted Answer

An option contract is an enforceable agreement to keep an offer open for a specified period of time.

Question 19

It is not possible for a total stranger with no ties to the alleged victim to commit undue influence over another.

Accepted Answer

For undue influence to occur, undue pressure of a trusted relationship must take place.

Question 20

All bilateral contracts are express.

Accepted Answer

If there is an exchange of promises then there must be a knowing agreement to enter into a contract.

Quiz 6: Overview and Formation of Contracts