Exam Five 20 chs 7,8,9 na Buisness Law PDF

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Fifth Exam of the semester for Business Law...

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Test Chs 7, 8, and 9 True/False Indicate whether the statement is true or false. ____

1. The person who makes a promise is the promisee.

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2. A contract is an agreement that can be enforced in court.

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3. In contract law, intent is determined by the objective theory of contracts.

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4. The only requirement for a valid contract is that the parties voluntarily entered into it.

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5. A lottery is an example of an offer for a unilateral contract.

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6. A voidable contract is a valid contract that can be avoided at the option of at least one of the parties to it.

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7. A quasi contract is not a true contract.

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8. An offer does not need to be communicated to the offeree to become effective.

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9. An expression of opinion⎯"this is perfect!"⎯is an effective offer as long as it is not made in jest.

____ 10. The mirror image rule requires an acceptance to adhere exactly to an offer to create a contract. ____ 11. A forum-selection clause indicates the forum, or location, for the delivery of goods purchased online. ____ 12. A shrink-wrap agreement is an agreement whose terms are expressed inside a box in which the goods are packaged. ____ 13. Browse-wrap terms are arguably not enforceable. ____ 14. Under the Uniform Electronic Transactions Act, a typed name at the end of an email message is not considered an e-signature. ____ 15. Adequacy of consideration refers to how much consideration is given. ____ 16. It is illegal for two parties to mutually agree to rescind a valid contract. ____ 17. A release does not require consideration to be legally binding. ____ 18. If a minor disaffirms a contract, he or she must disaffirm the entire contract. ____ 19. A minor has a reasonable time, after the minor reaches the age of majority, to disaffirm a contract. ____ 20. Some states impose a duty on a minor who disaffirms a contract to restore the adult party to the position he or she held before the contract was made.

____ 21. In general, minors are personally liable for their contracts. ____ 22. Parents who sign a contract made by their minor child with an adult have the same option to disaffirm as the child. ____ 23. A person who enters into a contract when he or she is intoxicated can void the contract under any circumstances. ____ 24. All forms of gambling are legal in all states. ____ 25. Any contract entered into with an unlicensed party is unenforceable. ____ 26. A covenant not to compete is never enforceable. ____ 27. An exculpatory clause in an employment contract is not enforceable if it removes the employer's potential liability for injuries to employees. ____ 28. A unilateral mistake is a mistake made by both parties to a contract. ____ 29. For a party to a contract to receive relief from either a unilateral or a bilateral mistake, the mistake must involve a material fact. ____ 30. An innocent party may never rescind a fraudulent contract. ____ 31. A false statement by an expert to a naive buyer usually will entitle the buyer to rescind or reform a contract. ____ 32. A seller's failure to disclose a serious defect about a product for sale may give rise to an action for fraud. ____ 33. Under the Statute of Frauds, oral contracts are void. ____ 34. An oral contract for a sale of goods for more than $5,000 is not enforceable even if the parties to it admit to its existence in court. ____ 35. An insurance policy is an example of a right that can be assigned. ____ 36. A right can be assigned even if the assignment will significantly alter the risks or duties of the obligor. ____ 37. A transfer of contract duties to a third party is an assignment. ____ 38. An incidental beneficiary can sue directly to enforce a promisor's promise. ____ 39. A breach of contract occurs only when a party fails to perform all of his or her duties under a contract. ____ 40. A party is entitled to cancel a contract based on the other party's material breach. ____ 41. Objective impossibility discharges a contract. ____ 42. A breach of contract entitles the nonbreaching party to sue for monetary damages.

____ 43. A party seeking to recover compensatory damages cannot also recover incidental damages. ____ 44. Compensatory damages compensate the injured party for injuries sustained due to loss of the contract and also punish the party that breached the contract. ____ 45. Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages. ____ 46. The measure of damages for breach of a construction contract depends on which party breaches and when. ____ 47. Normally, when a nonbreaching party has been damaged by a breach of contract, he or she does not have a duty to mitigate those damages. ____ 48. Liquidated damages provisions are usually not enforceable. ____ 49. Restitution involves one party's recapture of a benefit through which another party has been unjustly enriched. ____ 50. A party seeking to recover in quasi contract must show that there was an actual contract or agreement between the parties. ____ 51. A contract can include a provision stating that no damages can be recovered for certain types of breaches. Multiple Choice Identify the choice that best completes the statement or answers the question. ____

1. Cynthia tells Darryl that she will deliver his boxes of Paradise Cookies as he directs. A declaration that one will do something in the future is part of the definition of a. a prediction. b. a premise. c. a principle. d. a promise.

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2. Phil agrees to work for Vacation Resorts, Inc., as a chef. In determining whether a contract has been formed, an element of prime importance is a. the parties' intent. b. Phil's rate of pay. c. Phil's education. d. the terms of Phil's employment.

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3. Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave Fabricated's parking lot for which Fabricated agrees to pay. The requirements of this, and any other, contract do not include a. consideration. b. capacity. c. legality. d. practicality.

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4. 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(n) a. bilateral contract. b. unilateral contract. c. void contract.

d. unenforceable contract. ____

5. Kathryn signs a lease agreement for an apartment. Kathryn has entered into a(n) a. express contract. b. implied contract. c. quasi contract. d. unenforceable contract.

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6. Holiday Sales Company and Global Distributors, Inc., enter into a contract for the delivery of imported specialty goods. Until the goods are delivered and paid for, these parties have a. an executory contract. b. no contract. c. a quasi contract. d. an informal contract.

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7. Fresh Fast Service, Inc., offers to deliver produce to Growers' Market's customers for a certain price. Fresh's intent to extend a serious offer to Growers' Market is determined by reference to a. Fresh's assumptions. b. Fresh's beliefs. c. Fresh's intentions. d. what a reasonable person in Growers' position would conclude Fresh's words and actions meant.

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8. Peter and Ray are riding their horses together. Peter jokingly tells Ray that Ray's horse is too slow. Ray laughs and jokingly responds, "Yes, he is too slow! I would sell him for $5!" Peter hands Ray $5. This is a. a valid acceptance because Peter gave Ray the money in a reasonable time. b. a valid acceptance because there is consideration on both sides. c. not a valid acceptance because Ray's offer was made in jest. d. not a valid acceptance because Ray's horse is worth more than $5.

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9. Mary admires Julia's collection of scarves. Julia says, "I might sell you a few someday, if I get tired of them." Julia's statement is a. an effective offer. b. not an effective offer because it has not been communicated to Mary. c. not an effective offer because the Julia does not show a serious intent to be bound. d. an acceptance.

____ 10. Jon says to Kristy, "I would like to sell you my sports memorabilia collection." This is not an offer because it a. does not describe the subject matter sufficiently. b. does not include a price term. c. only expresses an opinion. d. only invites Kristy to negotiate. ____ 11. Quality Sales Corporation enters into contracts over the Internet. Quality can protect itself against disputes involving these contracts by making important terms a. reasonably clear. b. difficult to notice. c. impossible to find. d. standardized. ____ 12. Deb buys a song through eSongs, an online music vendor. Before completing the purchase and downloading the song, Deb must agree to a provision stating that she will not make and sell copies of the song. This provision is

a. b. c. d.

a browse-wrap term. a click-on agreement. a shrink-wrap agreement. a wrap-on agreement.

____ 13. Over the Internet, Red & White Contractors, Inc., arranges to lease storage space from Blue Services Company. To complete the deal, Red & White clicks on a button that says, in reference to certain terms, "I agree." Most likely, the parties have a. a binding contract that includes the terms. b. a binding contract that does not include the terms. c. an unenforceable contract that includes the terms. d. an unenforceable contract that does not include the terms. ____ 14. Jared downloads some video games from the Internet. There is a page indicating the terms of use, but nothing that requires Jared to affirmatively indicate his consent before downloading the games. These terms are a. a click-on agreement. b. browse-wrap terms. c. a wrap-on agreement. d. a shrink-wrap agreement. ____ 15. Rollo promises to perform, for a price, shoe repair services in affiliation with Togs 'n Things, a clothing store. To support a contract, the consideration exchanged by the parties must be a. adequately considerate. b. equally valuable. c. legally sufficient. d. wisely priced. ____ 16. Genovese Contracting, Inc., agrees to build a warehouse for Hawthorne Distributors. Genovese runs into the types of difficulties that contractors ordinarily confront, and Hawthorne agrees to pay extra compensation to overcome them. Regarding the agreement to pay more, a court would likely a. enforce it. b. rescind it. c. order the parties to renegotiate it. d. not enforce it. ____ 17. Dave's uncle tells Dave that if "he feels that Dave deserves it," he will give Dave $1,000 when Dave graduates from college. Dave's uncle's promise is a. illusory. b. enforceable. c. a forbearance. d. a preexisting duty. ____ 18. Richard is an adult. He enters into a contract to sell sixteen-year-old Jane his car for $3,000. The next day Richard receives an offer of $4,000 for his car from twenty-year-old Bill. Richard a. cannot disaffirm his contract with Jane because he is an adult. b. can disaffirm his contract with Jane because Bill is an adult and contracts with adults take precedence over contracts with minors. c. cannot disaffirm his contract with Jane because she is a minor. d. can disaffirm his contract with Jane because the contract has not been ratified. ____ 19. Eli, a minor, buys an automobile insurance policy from Faithful Insurance Company and pays a $1,000 premium. If Eli can disaffirm the contract, he can most likely recover a. $500.

b. $1,000. c. $1,500. d. nothing. ____ 20. Beth is a minor. She buys a set of sessions with a personal trainer, and a water bottle and some weights from a fitness store. Later, Beth decides that she does not want the water bottle or weights. In most states, Beth a. can disaffirm the contract and return the water bottle and weights, but keep the training sessions. b. can only disaffirm the contract if she returns all the goods. c. cannot disaffirm the contract. d. can disaffirm the contract and keep all the goods. ____ 21. Lucy, a minor, disaffirms a contract for necessaries without returning the goods. To Manny's Food Mart, the seller, Lucy is required to pay a. nothing. b. the reasonable value of the goods. c. the sales price of the goods. d. the ultimate worth of the goods. ____ 22. Carly is a minor. Without her parents' knowledge, she signs a contract to buy an airplane ticket to Hawaii for spring break. Carly's parents are a. liable for the contract. b. not liable for the contract. c. liable for up to half the value of the goods in the contract. d. liable for up to one third of the value of the goods in the contract. ____ 23. Colleen is intoxicated, but still mentally capable of understanding the consequences of her actions when she signs a contract to sell the rights to her latest phone app design to Addie. The contract is a. enforceable only if Colleen does not attempt to disaffirm it. b. enforceable even if Colleen attempts to disaffirm it. c. unenforceable if Addie attempts to disaffirm it. d. enforceable only if Addie does not attempt to disaffirm it. ____ 24. Jolie signs a contract with Keaton, an unlicensed physician, to perform a medical procedure. This contract is enforceable by a. Jolie. b. Jolie's medical insurance company. c. Keaton. d. no one. ____ 25. Odina signs a covenant not to compete with her employer, Penultimate Sales Corporation. A court decides that the covenant is overly restrictive. The court will likely a. enforce it as written so as not to undercut the freedom of contract. b. enforce it but evaluate its effects over time. c. reform its terms to prevent any undue burden. d. refuse to enforce it unless Penultimate pays additional consideration. ____ 26. SuperBumperCars, Inc. requires all customers to sign a release that contains a clause that releases SuperBumperCars from all liability in the event of an injury occurring during a bumper car ride, no matter who is at fault. This is an example of a. a covenant not to compete. b. an adhesion contract. c. an exculpatory clause.

d. an illusory promise. ____ 27. Rolf is an emergency medical technician. Medical personnel such as Rolf are prohibited by state statute from working more than a certain number of consecutive hours. One month, Rolf works more than the legal limit. Rolf can recover for a. the hours up to the statutory maximum but not more. b. the hours up to the statutory maximum and the extra hours. c. the hours up to the statutory maximum or the extra hours. d. nothing. ____ 28. Joy and Karl contract for the sale of Joy's prize-winning show dog for $1,000. Unknown to either party, the dog has died. Karl is a. entitled to another dog of equivalent value. b. not required to pay due to the bilateral mistake. c. not required to pay due to the unilateral mistake. d. required to pay because he assumed the risk the dog might die. ____ 29. Garth owns two all-terrain vehicles (ATVs), worth $1,000 and $500, respectively. Helen agrees to buy "Garth's ATV" for $750. Garth believes, in good faith, that he is selling the $500 ATV. Helen believes, in good faith, that she is buying the $1,000 ATV. In this situation a. Garth is entitled to $750 for the $500 ATV. b. Helen is entitled to the $1,000 ATV for $750. c. Helen must buy both ATVs for $1,500. d. there is no contract. ____ 30. Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the horse is too slow to win any races. Richard then enters the horse in a race, and it wins easily. He enters it in more races, and the horse soon wins more than $1 million. Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more than $1,000. A court will a. cancel the contract due to Kathleen's failure to know the horse's value. b. cancel the contract due to Richard's failure to know the horse's price. c. cancel the contract due to the difference between the contract price and the horse's true value. d. enforce the contract. ____ 31. Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain horse has no talent and is not likely to win any competitions. Peter convinces Andy to buy the horse for $500,000 by assuring him that it has great talent. The horse turns out to have no talent and never wins any competitions. Andy can most likely recover damages based on a. fraud. b. mistake. c. undue influence. d. duress. ____ 32. Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for a. nothing. b. fraud. c. mistake. d. undue influence.

____ 33. Wild Rides Theme Park owes money to both RollercoasterRepair, Inc. and Hot Dog Harry. RollercoasterRepair orally agrees to assume Wild Rides's debt to Hot Dog Harry to prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable by a. no party. b. any party. c. Wild Rides only. d. RollercoasterRepair only. ____ 34. Valley Tack Shop signs a contract with Gary's Boots and Saddles for delivery of five saddles that cost $200 each. To be enforceable under the Statute of Frauds, the written contract must designate a. the method of delivery. b. the method of payment. c. the quantity of saddles. d. the seller. ____ 35. Will owes Jenny $1,000. Brad owes Will $1,000. Will unconditionally assigns his rights to Jenny. Will's right to the $1,000 is then a. unchanged. b. extinguished. c. incidental. d. assigned to a court. ____ 36. Marco and Fred enter into a contract for the sale of Marco's apartment for which Fred agrees to pay him $100,000. Marco cannot prohibit Fred from transferring his right to the ownership of the apartment because such a prohibition is a. against public policy. b. immoral. c. unconscionable. d. a crime. ____ 37. Leonardo contracts to install automatic watering troughs in Kendall's dairy barn. Leonardo then becomes seriously ill and contracts with Jake to install the troughs. Jake is unreliable and never shows up to install the troughs. Kendall can sue a. no one. b. Jake only. c. Leonardo only. d. Jake or Leonardo. ____ 38. App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is a. an intended beneficiary. b. an incidental beneficiary. c. a delegatee. d. an assignee. ____ 39. Dylan enters into a contract to manage the operations of Cash's accounting office for one year, renewable for subsequent one-year terms. If this contract is discharged like most contracts, it will be a. breached. b. rescinded. c. altered. d. performed.

____ 40. Red's Plumbing Service substantially performs its contract with Shady Grove Condominiums, Inc. Shady Grove is entitled to a. damages. b. nothing more. c. repudiation. d. alteration. ____ 41. Lily is a farmer. When bad weather destroys her crop, her obligation to deliver it under an outstanding contract with Macro Food Corporation is a. discharged. b. completely enforceable. c. enforceable only to the extent of finding an alternative supply. d. enforceable only to the extent of transferring to the next year's crop. ____ 42. Clarice pays Damien $10,000 to design an ad campaign for her Sweetwater Coffee Stand chain. The next day, Damien tells Clarice that he has accepted a job in New York and cannot design her campaign. She files a suit against Damien. As compensatory damages, she can recover a. $100,000. b. $10,000. c. $1,000. d. $0. ____ 43. Even-Flo Hydraulics enters into a contract to repair valves and fittings in Fiesta Company's plant. If Even-Flo breaches the contract, Fiesta can a. do nothing but make a deal with a different service provider. b. do nothing but temporarily suspend operations and wait. c. file a criminal complaint against Even-Flo. d. sue Even-Flo for damages. ____ 44. Rite Contractors, Inc., agrees to build a motel for Sleep Inn Corporation. The project proceeds according to plan, but before it is done, Sleep tells Rite to quit. Rite may recover a. the contract price less costs of materials and labor. b. the contract price. c. the costs needed to...