Question 1

Barbara,a skilled welder,was hired at Mainco Enterprises for a welding position.She was asked to sign noncompete clauses limiting future employment if she left Mainco.A court would be very likely to enforce the noncompete clause unless the time or geographic restriction is unreasonable.

Accepted Answer

False

Question 2

Bry,Inc.and Gangl Co.entered into an oral agreement for the sale of 3,000 sweaters.Both parties performed as required under the contract.Bry delivered the sweaters and Gangl accepted and paid for them.Since the contract is fully executed,it makes no difference that it was oral.

Accepted Answer

Since both parties have performed as required under the contract and the contract is fully executed, it is enforceable even though it was oral.

Question 3

Consideration can be a promise or an act.

Accepted Answer

Consideration can be both a promise, such as agreeing to pay for something or provide a service, or an act, such as performing a service or delivering a product.

Question 4

Agreeing not to open a competing business could be consideration.

Accepted Answer

Agreeing not to open a competing business could be considered a promise or act that provides some benefit or advantage to the other party, and therefore can be considered as valid consideration in a contract.

Question 5

Raul agrees to paint Mike's house for $1,000.Before finishing,Raul states it is too hot to finish,and Mike offers to pay $1,200 if Raul finishes.Mike's statement that he will pay $1,200 is unenforceable.

Accepted Answer

Mike's statement about paying $1,200 is not enforceable because there is no consideration, or exchange of value, for the promise. Raul has already agreed to paint the house for $1,000, and Mike's promise to pay more in exchange for finishing the job is not supported by any new consideration or agreement. Therefore, it is not a valid contract.

Question 6

Fraudulent,but not innocent,misrepresentation permits the injured party to rescind a contract.

Accepted Answer

The answer of Fraudulent,but not innocent,misrepresentation permits the injured party...

Question 7

Any contract involving a sale of goods of $100 or more must be in writing.

Accepted Answer

The Uniform Commercial Code (UCC) requires a contract for the sale of goods priced at $500 or more to be in writing to be enforceable, not $100. This threshold has been updated to $5,000 in the amendments to the UCC Article 2, but the original statement is incorrect based on the traditional $500 rule.

Question 8

Noncompetition agreements are:

Accepted Answer

Noncompetition agreements have been around since the 1700s and have continued to raise policy issues. While their use may have increased in recent years, they are not a relatively recent development. They are also not illegal, although their enforceability can vary by state. While they may not be litigated frequently, they remain a common tool in certain industries.

Question 9

If a court finds as a matter of law that a clause of a contract was unconscionable at the time the contract was made,the court must refuse to enforce the contract.

Accepted Answer

The answer of If a court finds as a matter...

Question 10

Vernon suffers from a mental impairment due to a brain injury from a motorcycle accident.He contracts with Glena to purchase her dining room furniture.A month later,he tries to void the contract.If he is unable to return the furniture,a court will not rescind the agreement unless Vernon can show that Glena acted in bad faith.

Accepted Answer

Vernon's mental impairment due to a brain injury makes the contract voidable, but he must return the furniture to Glena to rescind the agreement.

Question 11

In January,Alex promised to pay Y-K Inc.$5,000 if it would refrain from filing suit against him on a breach of contract action.Y-K agreed and accepted a $5,000 check from Alex.Which of the following statements is correct?

Accepted Answer

Y-K's promise to refrain from suing Alex was supported by legal consideration, as Alex promised to pay $5,000 in exchange for Y-K refraining from filing suit. This is a valid and enforceable contract.

Question 12

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 contractual provision that relieves one party of liability for their own wrongful conduct. In this case, the garage is attempting to limit their liability for items stolen from cars by including the notice.

Question 13

When a noncompete agreement is ancillary to the sale of a business,it is enforceable
if reasonable in time,geographic area,and scope of activity.

Accepted Answer

Noncompete agreements that are ancillary to the sale of a business are generally enforceable if they are deemed reasonable in time, geographic area, and scope of activity by a court. This means that they must not impose undue hardship on the party being restricted and must be necessary to protect the goodwill or other legitimate interests of the buyer of the business.

Question 14

Raymond agrees to transfer an easement right to Sandra for $1,000.This contract is within the statute of frauds and therefore needs to be in writing to be enforceable.

Accepted Answer

Contracts for the transfer of an interest in land, such as an easement, are typically within the statute of frauds and therefore require a written agreement to be enforceable.

Question 15

Roger,a minor,buys a stereo from Tuneland,Inc.Roger uses the stereo for a few months,returns it to Tuneland,and demands his money back.In a majority of states,Roger may return the stereo and he does not have to pay for the use of the stereo or the damages.

Accepted Answer

In many states, minors have the right to disaffirm (cancel) contracts within a reasonable time after reaching the age of majority or receiving some other type of legal capacity. This means that Roger can return the stereo and receive a refund. As a minor, he is not responsible for paying for any use of the stereo or any damages that he may have caused while using it.

Question 16

An exculpatory clause is generally enforceable when it attempts to exclude an intentional
tort or gross negligence.

Accepted Answer

An exculpatory clause is usually not enforceable when it attempts to exclude liability for intentional torts or gross negligence, as it goes against public policy and is considered void.

Question 17

Contract rescission can sometimes be based upon a unilateral mistake.

Accepted Answer

Contract rescission due to unilateral mistake occurs when one of the parties makes a mistake about the contract that the other party is not aware of, and this mistake is so significant that the party would not have entered into the contract if they had known about it. In such cases, the mistaken party may be entitled to rescind or cancel the contract.

Question 18

Generally an agreement not to compete ancillary to a legitimate bargain is not valid.

Accepted Answer

An agreement not to compete ancillary to a legitimate bargain is generally considered valid if it is reasonable in scope, duration, and geography, and is designed to protect legitimate business interests.

Question 19

According to the UCC,one or more open terms will not cause a sales contract to fail for indefiniteness as long as the parties intended to make a contract and there is a reasonably certain basis for the court to grant an appropriate remedy.

Accepted Answer

This is a correct statement as per the Uniform Commercial Code (UCC) which allows for open terms in a sales contract as long as the parties intended to make a contract and the court can provide an appropriate remedy based on reasonable certainty.

Question 20

Under the statute of frauds,the writing must: be signed by the defendant; and must state with reasonable certainty the name of each party,the subject matter of the agreement,and all of the essential terms and promises.

Accepted Answer

This is the accurate statement of what is required under the statute of frauds.

Quiz 10: Contract Impediments