Question 1

Sales Marketing Corporation and Tech Support, Inc., negotiate a contract. If the contract has all of the elements necessary for one of the parties to enforce it in court, it is
A) a valid contract.
B) a voidable contract.
C) a void contract.
D) an unenforceable contract.

Accepted Answer

A valid contract has all the elements necessary for it to be legally enforceable in court.

Question 2

Sal assures Tom that she will deliver a truckload of hay to his cattle ranch. A person's declaration to do a certain act is part of the defini?tion of
A) an expectation.
B) a moral obligation.
C) a prediction.
D) a promise.

Accepted Answer

A promise is a declaration or assurance that one will do something or refrain from doing something.

Question 3

Sunny enters into a contract with Trey to act as his personal sports trainer. If a dispute later arises and the contract contains un?clear terms, the rules of contract interpretation will give effect to
A) the parties' intent as expressed in their contract.
B) what the promisor claims was the parties' intent.
C) what the promisee claims was the parties' intent.
D) what the parties now agree they intended.

Accepted Answer

The rules of contract interpretation strive to give effect to the parties' intent as expressed in their contract. This means that the language used in the contract will be analyzed in order to determine what the parties intended the terms to mean. If the terms are unclear, the court will try to interpret them according to the parties' intentions at the time they entered into the contract. Therefore, A is the best choice.

Question 4

Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores, Inc. Whether or not this agreement meets all of the requirements of a contract, the parties are likely to follow the rules of contract law because they
A) want to avoid potential disputes.
B) are conscious of those rules.
C) are not conscious of those rules.
D) have a moral obligation to do so.

Accepted Answer

The parties are likely to follow the rules of contract law because they want to avoid potential disputes, which could be costly and time-consuming. By ensuring that the agreement meets the requirements of a contract, both parties are protected and can feel confident in their legal obligations to one another.

Question 5

Otto mistakenly pays property taxes that should have been assessed against Pip. Otto can recover the amount from Pip in quantum meruit
A) even if Pip was not aware of the error.
B) only if Pip tried to conceal the error.
C) only if Pip was aware of the error.
D) only if Pip consents.

Accepted Answer

The answer of Otto mistakenly pays property taxes that should...

Question 6

A letter-of-credit agreement between Rural Feed Corporation and Soybean Farms, Inc., requires Rural Feed's bank to pay Soybean Farms on receipt of invoices. This letter of credit is
A) a formal contract.
B) no contract.
C) an implied contract.
D) a quasi contract.

Accepted Answer

The letter-of-credit agreement is a formal contract between Rural Feed Corporation and Soybean Farms, Inc., which outlines the terms and conditions of the agreement for payment by Rural Feed's bank to Soybean Farms based on the receipt of invoices.

Question 7

When Hester's car breaks down, she asks Insta-Tow, Inc., to tow it to Jerry's Repair Shop. There is no discussion of a price, and Hester and Insta-Tow do not sign any documents. Later, Insta-Tow sends Hester a bill. With respect to Hester's obligation to pay the bill, this is
A) an express contract.
B) an implied contract.
C) no contract.
D) a quasi contract.

Accepted Answer

This is an example of an implied contract, where the actions of both parties (Hester requesting the tow and Insta-Tow providing the service) imply an agreement to pay for the service. While there was no discussion of price or signing of documents, the fact that Insta-Tow provided the service and sent a bill implies an expectation of payment from Hester.

Question 8

Avatar, Inc., agrees to deliver t-shirts emblazoned with video game characters for a certain price to Bling Bling Corporation. To consti?tute a contract, the terms of this deal
A) must all be express.
B) must all be implied.
C) may be express, implied, or a mixture of both.
D) may be express or implied, but not both.

Accepted Answer

The terms of the deal may be express, implied, or a mixture of both to constitute a contract. This means that the parties may have explicitly stated certain terms while leaving other terms to be inferred from the circumstances or conduct of the parties involved. A contract can be formed through both express and implied terms.

Question 9

Gilbert promises to buy Hadley's iPod for $75. Hadley is
A) an offeree.
B) an offeror.
C) a promisee.
D) a promisor.

Accepted Answer

The answer of Gilbert promises to buy Hadley's iPod for...

Question 10

Mallory promises to buy illegal digital copies of movies from Napoleon, who promises to deliver on October 31. These promises are most likely
A) enforceable.
B) valid.
C) void.
D) voidable.

Accepted Answer

The promises made by Mallory and Napoleon are to buy and sell illegal digital copies of movies, which is against the law. As such, these promises are considered void and unenforceable in a court of law.

Question 11

Following negotiations, Office Park, Inc., enters into an informal contract with Quality Janitorial Company for custodial services for Office Park's buildings. This means that the parties' contract
A) requires no special form.
B) is freely open to either party's interpretation.
C) is subject to change by either party, within reason.
D) is not yet completely formed.

Accepted Answer

An informal contract does not require a special form, and can be formed through a simple exchange of promises or actions between the parties.

Question 12

In a one-care auto accident, Carmel is rendered unconscious and otherwise injured. At the scene, Dana, a physician, acts to save Carmel's life. Later, Dana seeks to recover for the cost of the aid. She is most likely to recover
A) nothing.
B) on a theory of an express contract.
C) on a theory of an implied contract.
D) on a theory of a quasi contract.

Accepted Answer

Dana is likely to recover under a theory of a quasi-contract because she provided necessary services to Carmel and Carmel did not explicitly decline those services. Therefore, there is an obligation for Carmel to pay for the value of those services. This is also known as unjust enrichment. The other options do not apply because there was no express contract or implied contract between the parties.

Question 13

Jonah tells Levi he will give him an Xbox if Levi does Jonah's chores for a month. Levi promises to do the chores. Jonah and Levi have formed a
A) a bilateral contract.
B) a formal contract.
C) a unilateral contract.
D) no contract.

Accepted Answer

The answer of Jonah tells Levi he will give him...

Question 14

Francie drives into Gage's Auto Service and asks Hong, a Gage's employee, to replace a tire on Francie's car. After Hong replaces the tire, but before Francie pays for it, any contract between Francie and Gage's is
A) executed.
B) executory.
C) void.
D) unenforceable.

Accepted Answer

The contract is executory because Francie has not paid for the service yet, and therefore, there are still obligations on both sides.

Question 15

Bilbo signs a lease agreement for an apartment with Cato, who owns and manages the Deer Creek Apartments complex. These parties have
A) an express contract.
B) an implied contract.
C) a quasi contract.
D) no contract.

Accepted Answer

Bilbo and Cato enter into an explicit agreement by signing a lease agreement. This is referred to as an express contract because the terms and conditions of the contract are explicitly stated and agreed upon by both parties.

Question 16

Lark promises to buy Mac's used textbook for $60. Lark is
A) an offeror.
B) an offeree.
C) a promisee.
D) a promisor.

Accepted Answer

Lark is a promisor because she is making a promise to buy Mac's used textbook for $60.

Question 17

Cellphones & Calltime, Inc., makes an offer to Delores to enter into a contract to work as a salesperson for a certain base salary plus commission for ninety days subject to a one-year renewal based on her performance. Delores accepts the offer. A valid contract requires
A) a price and a subject.
B) a duration and termination provision.
C) an offer and an acceptance.
D) specific quality standards.

Accepted Answer

A valid contract requires an offer and an acceptance, which are present in the scenario where Cellphones & Calltime, Inc. offers employment to Delores and she accepts it. The other options are not necessary components for a valid contract.

Question 18

Robin claims that her contract with Stroud for tennis lessons is voidable. If their contract is avoided,
A) both parties are released from it.
B) both parties must fully perform their obligations under it.
C) both parties will agree to a wholly different contract.
D) a wholly different contract is imposed "as if" the parties had agreed.

Accepted Answer

If Robin's contract with Stroud for tennis lessons is voidable and avoided, both parties are released from it. This means that the contract is considered null and void from the beginning, and neither party has any further obligations or responsibilities under it.

Question 19

Brady accepts what he believes is an offer to work for Canyon River Adventures, Inc., as a tour and fishing guide. In determining whether a contract has been formed, an element of prime importance is
A) the price to be paid. 
B) the duration of the work.
C) the intent of the parties.
D) the subject of the contract.

Accepted Answer

The intent of the parties is an element of prime importance in determining whether a contract has been formed. Both parties must intend to enter into a legally binding agreement for a contract to exist. The other options - price to be paid, duration of work, and subject of the contract - are also important elements of a contract, but they are not as critical as the intent of the parties.

Question 20

Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a
A) bilateral contract.
B) unilateral contract.
C) void contract.
D) unenforceable contract.

Accepted Answer

Wilson has accepted an offer for a unilateral contract by purchasing a lottery ticket. In a unilateral contract, one party (the person offering the reward) promises to pay after the other party (person performing the requested action) fulfills a specified task or action. In this case, the gas station (the person offering the reward) promises to pay Wilson (person performing the requested action) if his lottery ticket is a winner.

Quiz 11: Nature and Terminology

Sales Marketing Corporation and Tech Support, Inc., negotiate a contract. If the contract has all of the elements necessary for one of the parties to enforce it in court, it is

Sal assures Tom that she will deliver a truckload of hay to his cattle ranch. A person's declaration to do a certain act is part of the defini?tion of

Sunny enters into a contract with Trey to act as his personal sports trainer. If a dispute later arises and the contract contains un?clear terms, the rules of contract interpretation will give effect to

Smith & Jones, Accountants, agrees to perform an audit for Brick & Mortar Stores, Inc. Whether or not this agreement meets all of the requirements of a contract, the parties are likely to follow the rules of contract law because they

Otto mistakenly pays property taxes that should have been assessed against Pip. Otto can recover the amount from Pip in quantum meruit

A letter-of-credit agreement between Rural Feed Corporation and Soybean Farms, Inc., requires Rural Feed's bank to pay Soybean Farms on receipt of invoices. This letter of credit is

When Hester's car breaks down, she asks Insta-Tow, Inc., to tow it to Jerry's Repair Shop. There is no discussion of a price, and Hester and Insta-Tow do not sign any documents. Later, Insta-Tow sends Hester a bill. With respect to Hester's obligation to pay the bill, this is

Avatar, Inc., agrees to deliver t-shirts emblazoned with video game characters for a certain price to Bling Bling Corporation. To consti?tute a contract, the terms of this deal

Gilbert promises to buy Hadley's iPod for $75. Hadley is

Mallory promises to buy illegal digital copies of movies from Napoleon, who promises to deliver on October 31. These promises are most likely

Following negotiations, Office Park, Inc., enters into an informal contract with Quality Janitorial Company for custodial services for Office Park's buildings. This means that the parties' contract

In a one-care auto accident, Carmel is rendered unconscious and otherwise injured. At the scene, Dana, a physician, acts to save Carmel's life. Later, Dana seeks to recover for the cost of the aid. She is most likely to recover

Jonah tells Levi he will give him an Xbox if Levi does Jonah's chores for a month. Levi promises to do the chores. Jonah and Levi have formed a

Francie drives into Gage's Auto Service and asks Hong, a Gage's employee, to replace a tire on Francie's car. After Hong replaces the tire, but before Francie pays for it, any contract between Francie and Gage's is

Bilbo signs a lease agreement for an apartment with Cato, who owns and manages the Deer Creek Apartments complex. These parties have

Lark promises to buy Mac's used textbook for $60. Lark is

Cellphones & Calltime, Inc., makes an offer to Delores to enter into a contract to work as a salesperson for a certain base salary plus commission for ninety days subject to a one-year renewal based on her performance. Delores accepts the offer. A valid contract requires

Robin claims that her contract with Stroud for tennis lessons is voidable. If their contract is avoided,

Brady accepts what he believes is an offer to work for Canyon River Adventures, Inc., as a tour and fishing guide. In determining whether a contract has been formed, an element of prime importance is

Wilson buys a lottery ticket at his local gas station. Wilson has accepted an offer for a