Deck 8: Contract Formation

Question 1

A unilateral contract is an agreement with only one promise, and only one party is committed to perform.

Answer 1

True
Explanation: A unilateral contract is an agreement with only one promise, and only one party is committed to perform.

Question 2

An executed contract is one that is fully performed.

Answer 2

True
Explanation: An executed contract is one in which the parties have performed their promises.

Question 3

A teacher's promise to pay $5.00 if a student to go to her office to get her some chalk is an example of a unilateral contract.

Answer 3

True
Explanation: A unilateral contract is an agreement with only one promise, and only one party is committed to perform.

Question 4

Ana offers Corey her vacuum cleaner for $300. Corey rejects the offer so Ana promises to sell the vacuum cleaner to Abey. But, a day later, Corey decides to buy the vacuum cleaner and informs Ana of his acceptance. Ana must sell the vacuum cleaner to Corey.

Question 5

Contracts are legally enforceable promises.

Question 6

Fixman Ltd. agrees to renovate Juan's house for $20,000. During the renovation, Fixman demands an additional $5,000 to complete the work, which Juan agrees. Fixman can sue Juan, if Juan fails to pay the additional amount.

Question 7

Miguel asks Alicia, an accountant, for her professional advice regarding his portfolio, Miguel is not obligated to pay Alicia since he did not express a promise to pay for her advice.

Question 8

The Uniform Commercial Code (UCC) applies to individuals as well as firms.

Question 9

Contract law enables private agreements to be legally enforceable.

Question 10

Promises to make gifts are not binding because there is no bargained for exchange.

Question 11

Juan offers to sell his cycle to Charles for $1000. Charles agrees saying, "I will pay you $1000, if you give me an extra tire with the cycle." This is an example, a binding contract is created between Juan and Charles as a result of the mirror image rule.

Question 12

A voidable contract is an agreement when one party has the right to withdraw from the promise made without incurring any legal liability.

Question 13

Darcy offers Kate his farm house for $200,000. However, before Kate communicates her acceptance, the farm house gets destroyed due to a fire. In this situation Kate can sue Darcy for breach of contract.

Question 14

According to the UCC, a contract for the sale of goods can be valid even when the acceptance proposes new or different nonquantity terms.

Question 15

The mirror image rule is the same under common law rules and the UCC.

Question 16

A deposited acceptance creates a binding contract even if there is a revocation in the mail.

Question 17

Shane wants to sell his car. He accepts Layla's offer and sells the car at $15,000. Layla is the offeree.

Question 18

Avery mails Taylor offering to sell her house at a reasonable price. Taylor mails his acceptance. Avery and Taylor are bound by a valid contract.

Question 19

To be enforceable, a contract must contain a written promise.

Question 20

If a debtor overpays a creditor $5,000, the debtor can force the creditor to return that amount by suing under quasi-contract.

Question 21

Contract law applies to:

A) only formally written documents.
B) documents that use the word 'contract'.
C) private agreements, making them legally enforceable.
D) all business dealing, covering those that are against public policy.
E) only oral agreements and contracts.

Question 22

Promissory estoppels often is used to prevent a party who has made a unilateral offer from withdrawing the offer after the requested work has begun.

Question 23

Under the UCC, all contracts and contract offers must have consideration.

Question 24

When there is a mutual mistake as to a material fact inducing a contract, rescission is inappropriate.

Question 25

Madison promises Grace $10 if Grace will pick-up her dry cleaning for her. This is an example of a _____ contract.

A) bilateral
B) unilateral
C) voidable
D) void
E) unenforceable

Question 26

An option offer is open for a certain time period, and is supported by the offeree's consideration.

Question 27

A minor can disaffirm the contract and legally recover any consideration that has been given to an adult, even if the minor cannot return the adult's consideration disaffirm

Question 28

A collateral promise is a secondary or conditional promise.

Question 29

The ultimate purpose of a contract is the creation of an agreement that courts will order parties to perform or to pay consequences for the failure of performance. When courts uphold the validity of such promises, the resulting agreement is a(n) "_____ contract."

A) absolute
B) differentiated
C) void
D) relative
E) enforceable

Question 30

A(n) _____ contract is one that appears to be an agreement but lacks an essential requirement for validity and enforceability.

A) voidable
B) unenforceable
C) void
D) valid
E) unapplied

Question 31

A(n) _____ contract is the one in which the promised terms of the contract have been discussed by the parties.

A) express
B) reciprocal
C) implied
D) bilateral
E) unilateral

Question 32

Casper offers to sell a car to Amanda for $1,000, to which Amanda agrees. Both the parties have signed a contract fully detailing the transaction which will be executed in 24 hours. This contract is an example of a firm offer.

Question 33

The courts enforce the concept of _____ to remedy situations of unjust enrichment.

A) quasi-contracts
B) implied-in-law
C) divisible contracts
D) bilateral contracts
E) unilateral contracts

Question 34

Implied-in-law contracts are also known as _____.

A) reciprocal contracts
B) quasi-contracts
C) express contracts
D) bilateral contracts
E) unilateral contracts

Question 35

Contracts are:

A) legally enforceable promises.
B) always required to be written.
C) a form of a circular.
D) enforceable only in the supreme court.
E) informal agreements.

Question 36

The doctrine of part performance creates an exception to the requirement that sales of interests in land must be in writing.

Question 37

Fred takes Betty to dinner at a very expensive and exclusive restaurant. The menu does not mention the prices. The server takes their order and both Fred and Betty enjoyed the meal immensely. When the bill comes, Fred refuses to pay because the menu had no prices and because he and the server never engaged in language indicating an offer and acceptance. The server said, "Are you ready to order" and when Fred said "yes", the server merely asked, "What may I get you tonight"?

A) Fred must pay based on an implied-in-fact contract theory.
B) Fred must pay based on a promissory estoppel theory.
C) Fred must pay based on an express contract theory.
D) Fred is correct because no contract was formed.
E) Fred and the server are a part of an express contract; hence Fred will have to pay.

Question 38

Misrepresentation is simply a misstatement without intent to mislead.

Question 39

A party who makes a unilateral mistake can void the contract.

Question 40

A(n) _____ is an agreement containing mutual promises.

A) unilateral contract
B) quasi-contract
C) express-in-fact contract
D) bilateral contract
E) implied-in-fact contract

Question 41

An _____ contract is one that is partially or completely unperformed.

A) executed
B) executory
C) express
D) exculpatory
E) unenforceable

Question 42

In case an offeror withdraws his/her offer, it is called _____.

A) rejection
B) reversion
C) novation
D) revocation
E) triangulation

Question 43

Aria phones Jessica and asks if she can borrow one of her dresses for an office party that weekend. Jessica agrees to this. However, when Aria goes to pick up the dress, Jessica refuses to give it to her. Which of the following statements is true of this situation?

A) Jessica has committed a breach of contract.
B) A bargained-for exchange has not occurred, so Jessica does not have to loan Aria the dress.
C) Jessica has promised Aria something of value, so she must loan her the dress.
D) A bargained-for exchange has occurred, so Jessica must loan Aria the dress.
E) Jessica has given a valid consideration, making the agreement between her and Aria a binding contract.

Question 44

Victor Enterprise Inc. writes a letter dated August 1 to Hallway Stores, offering to sell table lamps to Hallway Stores at $80 each for the next one month. In mid August, Victor Enterprises receives an offer from Shine Retailers to purchase the table lamps at a price of $85 each. Can Victor withdraw its offer to Hallway Stores?

A) Yes, as this is only an option.
B) No, since the doctrine of promissory estoppel is applicable.
C) Yes, the offer was simply an invitation to negotiate.
D) No, as this is a firm offer.
E) Yes, the offer may be withdrawn since it lacks consideration.

Question 45

Brett offers to sell his old, but working, cell phone to James for $65. James says he will accept the offer if Brett lowers the price to $60. James has:

A) made an unequivocal acceptance.
B) made a counteroffer.
C) demonstrated the mirror image rule.
D) entered into an option contract.
E) entered into an executory contract.

Question 46

The deposited acceptance rule is also known as the _____ rule.

A) mirror image
B) mailbox
C) unilateral
D) bilateral
E) negotiation

Question 47

Josh's dog, Ginger, has run away so Josh places reward posters throughout the neighborhood offering $500 for anyone who brings Ginger home safely. Amanda, Josh's colleague sees Ginger and brings her back to Josh without ever seeing a poster. After returning the dog, Amanda then sees one of the reward posters and returns to claim the money. Which of the following is true of this situation?

A) Amanda is not entitled to the money because the offer was not communicated to her.
B) Amanda is not entitled to the money because she is Josh's colleague and acted in good faith.
C) Amanda is entitled to the money because the poster constituted an offer and is effective for the entire neighborhood.
D) Amanda is entitled to the money since performance of the requested act in the poster indicates acceptance.
E) Amanda is not entitled to the money since she did not communicate the acceptance of offer in writing.

Question 48

Valid consideration can include any promise to do something one has no obligation to do, refrain from doing something one has the right to do, or in the case of a unilateral contract, a performance when there is no obligation to do so. This is called as a(n) _____.

A) accord
B) legal detriment
C) release
D) negotiation
E) promissory estoppel

Question 49

According to the mirror image rule, _____.

A) the acceptance must exactly match the offer
B) to be enforceable, a contract must be accepted in writing by both the parties involved
C) the acceptance of an offer involves changing the terms of offer or adding new terms
D) terms of contract must be definite to be clear and enforceable
E) the contract becomes enforceable by performing a requested act, not by making a promise

Question 50

Mayra offers to sell her home to Hanna for "about $100,000 plus closing costs." Hanna accepts Mayra's offer but later, a dispute arises concerning the precise dollar amount of the purchase price. How will a court resolve this dispute?

A) The court will determine a reasonable price to be paid by Hanna.
B) The court will determine that Hanna pay only the figures mentioned in the contract.
C) The court will appoint a licensed real estate appraiser to determine the price to be paid by Hanna.
D) The court will require Hanna to pay the average of her price and Mayra's price.
E) The court will declare the purchase price and terms too indefinite to create a binding contract.

Question 51

Robert is about to graduate from his university and his parents tell him that because he is the first member of the family to graduate college, they want to buy him a new but inexpensive car. They have the money to buy the car and Robert is excited to get his gift. On graduation day, his parents tell him that they have decided to use the car money for a vacation and there will be no car.

A) Robert can successfully sue based on promissory estoppel.
B) Robert can successfully sue based on the promise of a gift.
C) Robert cannot sue because the promise was not reasonable and would not support promissory estoppel.
D) Robert cannot sue because he did not suffer any legal detriment in the receipt of the promise.
E) Robert can sue since the promise is his legal benefit and he suffered legal detriments.

Question 52

In contracts that are not between merchants selling goods, a promise to keep an offer open for a certain time period must be supported by the offeree's consideration. Such an agreement to not revoke an offer is called a(n) _____.

A) firm offer
B) option
C) promissory estoppel
D) novation
E) assignment

Question 53

According to the mailbox rule:

A) a contract is formed when the offer is mailed.
B) a contract is formed when the offer is received.
C) a contract is formed when the acceptance is received.
D) a contract is formed when the acceptance is mailed.
E) a contract is formed when the offer is converted in a written document.

Question 54

A(n) _____ contains a specific promise and a specific demand.

A) consideration
B) revocation
C) offer
D) capacity
E) novation

Question 55

An important exception to the rule requiring consideration to support a promise is the doctrine of _____. This doctrine arises when a promisee justifiably relies on a promisor's promise to his or her economic injury.

A) firm offer
B) consideration
C) termination
D) promissory estoppel
E) accord and satisfaction

Question 56

A(n) _____ contract is an agreement when one party has the right to withdraw from the promise made without incurring any legal liability.

A) executory
B) voidable
C) void
D) implied-in-fact
E) reciprocal

Question 57

Brandie is facing financial difficulties. Warren wants to help Brandie and tells her that he will pay her $1,000. But afterwards Warren refuses to pay the promised money to Brandie. Which of the following statements is correct?

A) Brandie is entitled to the payment because a promise is made and consideration has nothing to do with the agreement.
B) Warren need not pay Brandie because Brandie did not promise anything in return.
C) Warren must pay the money to Brandie because by promising her the money he has entered into an implied-in-fact contract.
D) Warren does not have to pay because of the mirror image rule.
E) Warren must pay the money to Brandie because by promising her the money he has entered into an executory contract.

Question 58

There must be some incentive or inducement for a person's promise or it is not binding. The legal mechanism for evaluating the existence of this incentive is "_____" which refers to the receipt of a legal benefit or the suffering of a legal detriment.

A) collusion
B) promissory estoppel
C) consideration
D) reversion
E) novation

Question 59

Which statement is true concerning silence as a method of acceptance?

A) An offeree's silence implies that the offree will make a counter offer.
B) Parties' prior course of dealing may allow silence as a valid acceptance.
C) If the offer states that silence means acceptance, then the offeree must respond or there will be a valid contract.
D) Silence alone can be acceptance and basis of a binding contract.
E) Silence leads to acceptance of an offer due to the mirror image rule.

Question 60

Under the UCC, the rules of consideration also do not apply to _____.

A) real estate sales
B) service contracts
C) firm offers
D) employment contracts
E) an option

Question 61

A(n) _____ beneficiary is a third party who unintentionally benefits from a contract.

A) donee
B) creditor
C) intended
D) accidental
E) incidental

Question 62

Allan promises to pay $400 to Waker if he can steal the next day's test paper from their professor. That night, Waker steals the paper and brings it to Allan. Allan, who is now worried about being caught, tells Waker he does not want the test paper and refuses to pay him the $400. Has Allan breached the contract between him and Waker?

Question 63

Appy hires Tring Painters to paint her living room. She selects deluxe paints that cost her $200 in total. However, as the painters begin their work, Appy notices that they are mistakenly using washable finesse paints, which would cost her $500 in total. When the work is done, Appy refuses to pay Tring Painters the $500, saying she wanted paints that would cost $200. Analyze the rights of the parties in this case.

Question 64

Ajax Pvt. Ltd. made a promise to Garrett offering a job with an annual salary of $150,000, and at least two years employment. Since Garrett would have to move to New York for the new job, Ajax Pvt. Ltd. also offered to reimburse all moving expenses. Based on this promise, Garrett resigned from his $100,000 annual salary job at Dab Pvt. Ltd., San Francisco. However, once Garrett moved to New York, his employment with Ajax was terminated because the company found a candidate who was willing to work for a lesser salary. Which of the following is true of this situation?

A) Garrett cannot sue Ajax since the promise was oral.
B) Garrett can sue Ajax under promissory estoppel.
C) Garrett cannot file a lawsuit since a promise of employment is always subject to market conditions.
D) Garrett can sue Ajax, but only for the moving expenses that Garrett can prove he incurred.
E) Garrett cannot sue Ajax since the reasons for termination will be accepted in court as legal detriment.

Question 65

Electronics, Inc., sells 250 radios on credit at $20 apiece to Radio Land Retail. Electronics then sells its rights under the contract to Manufacturers' Credit Co. When the payment becomes due, Manufacturers' Credit collects the $5,000 owed to Electronics by Radio Land. This transaction is controlled by the law of _____.

A) negotiation
B) agreement
C) assignment
D) novation
E) representation

Question 66

Which of the following terms refers to a person's ability to be bound by a contract?

A) Legality
B) Capacity
C) Usability
D) Negotiability
E) Measurability

Question 67

Tony's Carpets wants to charge $9.80 a yard for installing a carpet for Serenity Bookstore, but accidentally states $8.90 a yard in the bid. Serenity Bookstore accepts Tony's bid. Tony's Carpets made a _______ mistake.

A) bilateral
B) unilateral
C) mutual
D) rescission
E) contractual

Question 68

If a minor fails to disaffirm a contract within a reasonable time after reaching majority, the minor is said to _____ the contract.

A) transcend
B) confirm
C) void
D) ratify
E) breach

Question 69

Kevin has been offered the position of vice-president by the Earnest Group Pvt. Ltd. at their head office in Washington
D.C. Earnest Group has also offered to provide Kevin and his family with a house, and an annual salary of $100,000. Kevin replied stating that he would accept the offer if the company would pay him an annual salary of $150,000, and relocation expenses. Analyze the agreements between the parties.
Kevin and Earnest Group have not created a contract yet. Kevin has not accepted the offer but has made a counteroffer when he asked Earnest an annual salary of $150,000 and relocation expenses. Hence, Earnest's original offer is now terminated. For a contract to exist, the offeree has to express acceptance. If Earnest accepts Kevin's counteroffer, the contract would be valid.

Question 70

Barney takes his wife Betty to a Porsche dealership and tells her to pick out whichever car she wants as a birthday present. She chooses a red Boxter. Barney negotiates a price with the dealership and signs a contract paying cash for the car. Barney repeatedly tells the dealer that the car is a gift for his wife. The car is to be serviced and picked up at 10:00 a.m. the next morning. Barney dies that night. When Betty arrives at the dealership to get the car, they refuse to give it to her because only Barney signed the contract.

A) Betty is entitled to the car as a creditor beneficiary.
B) Betty is entitled to the car as a donee beneficiary.
C) Betty is entitled to the car as an incidental beneficiary.
D) Betty is not entitled to the car but can get the money back.
E) Betty is not entitled to the car as it was a gift without any consideration.

Question 71

Which of the following oral contracts can be enforceable in court?

A) Contracts involving goods worth $500, or more
B) Contracts involving the sale of land
C) A contract for goods for which payment has been made
D) A contract for a service that lasts for 5 years
E) A collateral promise to pay another's debt

Question 72

Which of the following involves an intentional misstatement of a material fact that induces one to rely justifiably to his or her injury?

A) Duress
B) Misrepresentation
C) Undue influence
D) Mutual mistake
E) Fraud

Question 73

Which of the following terms refers to force or threat of force?

A) Unilateral mistake
B) Misrepresentation
C) Undue influence
D) Duress
E) Mutual mistake

Question 74

Sam goes to a supermarket and fills his cart with food items, pushing it up to a checkout line. Discuss the type of contract Sam and the supermarket have.

Question 75

Dustin, aged 17, purchased a car from Speed Auto Sales for $1,000. The following year, his father gifted him a brand new car on Dustin's 18th birthday. Dustin returned the car to Speed Auto Sales the next day, and demanded his money back. At the time of disaffirmance, Dustin was 18, the age at which he was considered an adult in his jurisdiction. Will this disaffirmance be enforceable in the court of law?

A) No, since Dustin did not give Speed a signed revocation.
B) Yes, since Dustin disaffirmed during the year he reached his adulthood.
C) No, since the disaffirmance must be written when the price exceeds $500.
D) Yes, since the courts and laws always rule in the favor of minors.
E) No, since Dustin has reached adulthood and disaffirmance can be expressed only by a minor.

Question 76

Stanley offers Rachel $60 to take care of his dog when he is traveling. Rachel accepts Stanley's offer, but delegates the duty to her neighbor, Ashley. In this assignment, Rachel is the _____.

A) assignee
B) obligee
C) obligor
D) beneficiary
E) assignor

Question 77

What are the five essential elements of a valid contract?

Question 78

Daniel purchases a house through Adelaide Loan Co. However, he moves to another city for work and sells the house to Christopher. Daniel wants to be released from his payment obligations to Adelaide Loan Co. Which of the following would release Daniel from this liability?

A) An oral delegation of the payment obligation by Daniel to Christopher will release Daniel from liability.
B) The sale of the house by Daniel to Christopher involuntarily releases his payment obligation.
C) A delegation of the payment obligation to Christopher along with a written notice to Adelaide Loan Co. can release Daniel from liability.
D) A novation in which Adelaide Loan Co. agrees to substitute Christopher for Daniel will release Daniel.
E) An assignment where Daniel transfers his rights to Christopher will release Daniel from all his liabilities.

Question 79

If an assignor assigns the same rights to two different assignees:

A) the assignee who first received the assignment has priority in receiving payment from the obligor.
B) the assignee who first notifies the obligor of the assignment has priority in receiving payment from the obligor.
C) the obligor must pay both assignees equal amounts but no more than what would have been paid had there only been one assignment.
D) the assignment becomes void and the original contract remains in force.
E) the original contract and the assignments, thereafter, will be declared void since assigning the same rights to two assignees is illegal.

Question 80

Hans is notified that her mortgage with Omer Bank has been transferred to Grate Loan Co. However, Hans made his mortgage payments in full one day before receiving the notice. Omer Bank, however, argues that at the time of the assignment, Hans had not made the mortgage payment, and hence has to make payments to Grate Loan Co. Which of the following is true of this situation?

A) Hans is not liable to Grate Loan Co. since he has already paid to Omer Bank.
B) Hans is liable to Grate Loan Co. since his mortgage has been transferred.
C) Hans is not liable to Grate Loan Co. due to the rule of mirror image.
D) Hans is liable to Grate Loan Co. since they sent him the notification of the assignment.
E) Hans is liable to Grate Loan Co. since he was an obligor to Omer Bank at the time of the assignment.