Final

StudyBlue printing of Final html, body, div, span, applet, object, iframe, h1, h2, h3, h4, h5, h6, p, blockquote, pre, a, abbr, acronym, address, big, cite, code, del, dfn, em, font, img, ins, kbd, q, s, samp, small, strike, strong, sub, sup, tt, var, b, u, i, center, fieldset, form, label, legend, table, caption, tbody, tfoot, thead, tr, th, td { margin: 0; padding: 0; border: 0; outline: 0; font-size: 100%; background: transparent; } body { line-height: 1; } blockquote, q { quotes: none; } blockquote:before, blockquote:after, q:before, q:after { content: ''; content: none; } /* remember to define focus styles! */ :focus { outline: 0; } /* remember to highlight inserts somehow! */ ins { text-decoration: none; } del { text-decoration: line-through; } /* tables still need 'cellspacing="0"' in the markup */ table { border-collapse: collapse; border-spacing: 0; } /* end RESET */ .header { min-width:800px; } .logo { padding:6px 20px 2px 20px; margin:0; font-size:25px; font-weight:bold; color:#808285; position:relative; border-bottom: 1px solid #c5c5c5; } .logo-blue { color:#70adc4; } .logo-desc { font-weight:normal; font-size:19px; color:#cccccc; margin-top:50px; position:absolute; display: none; } .back-button { position:absolute; top:20px; right:20px; font-size:13px; line-height:25px; color:rgb(0,175,225); font-weight:normal; } .back-button a { color:rgb(0,175,225); } .instructions { padding:0; margin:0; width:100%; position:relative; color:rgb(100,100,100); } .step-holder { border-left:1px solid #ededed; margin-left:20px; } .steps { padding:15px 0; float:left; width:24%; border-right:1px solid #ededed; text-align:center; } .steps-01 { } .steps-02 { } .steps-03 { } .steps-04 { } .label { padding:5px 10px; } .print-button { } .print-button a { background-color:rgb(0,175,225); color:white; line-height: 19px; padding:9px 8px 5px 30px; font-size:14px; text-decoration:none; background-image: url(images/printer.png); background-repeat: no-repeat; background-position: 7px 50%; -moz-border-radius: 5px; -webkit-border-radius: 5px; } .print-button a:hover { background-color:black; } .theNote .content { width: 8.0in !important; margin: 5px auto; padding:20px; background-color:white; } .theNote .header { border-bottom: 1px dashed #C8C8C8; font-size: 17px; padding: 0 0 10px; line-height: 19px; color: #00ADE1; min-width:500px; } .theNote .body { font-size: 14px; line-height: 19px; padding: 10px 0; } .theNote{ padding:6px 0; clear:both; background-color: rgb(200,200,200); } .theNote h3{ color: rgb(100,100,100); } .theNote h1, .theNote h3{ background-color:white; padding:2px 20px; width:8.0in !important; margin: 0 auto; font-size: 15px; } .theNote h1{ padding-top: 10px; font-size: 15px; } .theNote h1:first-child{ font-size: 20px; } .theNote h3 { font-size: 14px; font-weight: normal; } #options { border: 3px double #ccc; padding: 5px 12px; margin: 10px 50px 10px 20px; float: left; } #info { border-top: 1px solid #ccc; padding-top: 5px; font-style: italic; } li { margin: 5px 10px 5px 25px; } ul li { list-style: disc; } ol li { list-style: decimal; } img { border: 0; } table { clear: both; width: 100%; border: 1px solid #c5c5c5; border-width: 1px 0; margin: 0; page-break-after: always; } table#page { page-break-after: auto; } td { text-align: center; font-size: 12px; border-bottom: 1px dashed #c5c5c5; height: 1.75in; width: 50%; padding-left: 15px; } .leftside { border-right: 1px solid #cccccc; padding: 0 15px 0 0; } .bottom td { border-bottom: none; } .clearfix { clear:both; line-height:1px; height:1px; } img { max-width:80%; max-height:150px; margin:20px; } @media print {.header { display: none; } .content .header{ display:inherit; } table { border: 1px dashed #bbb; border-width: 1px 0; } .theNote{ background-color:white; } } Final Chapter 13 6. Which of the following is not an element of a valid contract? A written document with notarized signatures 7. The kind of contract in which each party offers as consideration a promise to do something is a(n)_______________contract. Bi-Lateral 8. The person who makes an offer to form a contract is the ______________. Offeror 9. The person to whom an offer to form a contract is made is called the___________. Offeree 10. Liz read the following announcement in the newspaper: '$100 reward for the return of my lost dog, Duffy.' This announcement is an offer to form a ________________contract. Unilateral 11. A contract is voidable if d. One of the parties has the option to set aside the contract. 12. John bought a dishwasher from Local Appliance Store. The law that governs the contract between John and Local is_________________. The Uniform Commercial Code 13. The Garcia family hired Home Improvements, Inc., a local construction company, to put an addition on their home. The law that governs the contract between the Garcia's and Home Improvement is ____________________. State Common Law 14. Nellie Neighbor made the following offer to two students who lived next door: I will give you each $50 if you come to my house and move some furniture for me on Saturday. This is an offer to form a ___________________contract. Unilateral 15. Please see problem 9 above. To accept this offer the students should d. Go to Nellie's house on Saturday and move the furniture. 16. Manny Manufacturer sent an e-mail to its widget supplier with this message: 'Please confirm by return e-mail if you will be able to send me an additional 10 dozen red widgets for the usual price by the 30th of this month.' Supplier e-mailed back: 'Yes, the additional widgets will be part of our delivery to you on the morning of the 30th.' This exchange created a ____________contract. Bi-lateral 17. Which of the following statements about quantum meruit is correct ? d. It is an equitable remedy to prevent unjust enrichment when there is no contract. 18. Ellen has a contract with Sue to buy her riding lawn mower for $200. Ellen has given Sue $200 in cash and Sue has given Ellen possession of the mower. The status of this contract between Sue and Ellen is __________________. Executed 19. Kelly received a cookbook in the mail that she had not ordered. The packing slip read: 'Return this book to the publisher within 14 days or send a check for $35 to the address below.' Kelly did not return the book within the 14 days and she has not sent the money as requested. Is Kelly required to pay for the cookbook? d. No, federal law allows Kelly to treat the unsolicited book as a gift and she may do whatever she wants with it. 20. Another term for consequential damages is _____________. Special 1. Plaintiff's duty to take steps to lessen the damages that result from a defendant's breach of contract is the duty to ______________. a. Mitigate 2. Another term for punitive damages is_________________. Exemplary 3. Typically in construction contracts there will be a provision awarding damages to the buyer at 'X' amount of dollars per day for each day the builder is late in completing the work. The parties to the contract agree upon this amount in advance because they know the buyer will incur added costs, or will lose profits, because of the delay. These contractually fixed payments are _______________ damages. Liquidated 4. Please see problem 18 above. If the amount fixed for the damages is unreasonably high, the court will consider it a ________________and will not enforce it. Penalty 5. If the seller of a parcel of real property breaches and refuses to sell, the best legal remedy for the buyer who wants this particular piece of property is Specific Performance 6. The award of a very small amount of money, such as $1, acknowledges that a wrong has been done, even though there were no monetary losses. This award represents ______________damages. Nominal 7. Betty Buyer discovers that the pin she bought from Sally Seller is not a ruby as Sally had claimed. She believes that Sally's misrepresentation was innocent, but she wants to get her money back. The contract remedy Betty should seek is Resciccion 8. Please see problem 22 above. In order to get her money back, Betty will have to return the pin to Sally. This is the duty of Restitution 9. Bill Builder entered into a contract with Carl's Carpets to supply him with the carpeting he needed to complete the renovation of Famous Restaurant. When Carl did not deliver the carpeting on the contract date, Bill had to find similar carpeting from a different vendor for $5 a yard more than he would have paid to Carl. The difference between the cost of the carpet in the contract with Carl and the cost Bill had to pay the new vendor can be recovered from Carl as _________ damages. Compensatory 10. Please see problem 24 above. There was a time is of the essence clause in Bill's contract with Famous Restaurant. Bill was to lose $300/day for each day after the contract date that he was late in finishing the renovation. The $300/ day represented the profit the Restaurant would lose each day it was not in operation. Bill told Carl about this clause, impressing on Carl the need for him to deliver the carpet on time. Bill finished the renovation 3 days after the contract date. The delay was due solely to Carl’s failure to deliver the carpet on time. Bill can recover the $900 he lost from Carl as ___________ damages Consequential Chapter 14 6. The common law requirement that the acceptance contain exactly the same terms as the offer is the ________________rule. Mirror Image 7. A merchant's firm offer will remain open for a maximum of _________. 3 months 8. Which of the following is not a requirement for a firm offer? The offeree must be a merchant. 9. Jackson offered to sell his painting, Blue Opus #2, to Pollock for $ 10,000. Pollock was to send his acceptance by mail to Jackson by the 30th of the month. Before Pollock could accept the offer, Jackson died. Which statement best describes the legal status of the transaction? Pollock cannot accept the offer because it terminated by operation of law when Jackson died. 10. Please see problem 4 above. Assume now that Pollock's acceptance arrived at Jackson’s on the 21st and Jackson died two days later on the 23rd. Which statement best describes the legal status of the transaction? A valid contract exists and Jackson's estate will have to sell Blue Opus #2 to Pollock for $10,000. 1. The term that describes offers that have become invalid because too much time has passed is__________. Precluded 2. The term for the withdrawal of an offer by an offeror is_____________' Revocation 3. If an offer does not specify how long it will remain open, it will remain open fora. A reasonable period of time 4. Which of the following will terminate an offer by operation of law? All of the Above 5. The Uniform Commercial Code classifies a person who deals in goods of the kind under contract, or holds himself out as having special knowledge of those goods, as a(n)_________. Merchant 6. The common law rule that makes acceptances effective when dispatched is the ___________rule. Mail Box 7. Which of the following is not a term a court will supply if it is missing in the contract? Quantity of Goods Purchase 8. Ivan was interested in buying a 40 acre parcel of commercially zoned property offered for sale by Land Co. He thought he might build a professional office complex, but would not know for sure until he consulted with soil engineers and architects. To make certain that the property was not taken off the market or sold to another buyer while he was deciding, he gave Land Co. $15,000 to keep the offer open for 3 months. This is an example of a __________________ Option Contract 9. Frank put an ad in the local paper stating that he had a 1998 Avalon with 110,000 miles for sale for $9,000. Which statement best describes the legal status of this ad? d. It is not an offer, but an announcement that he has a car to sell. 10. Harry is selling his rare coin collection through Marshall Auction House. Harry will not sell the collection for less than $300,000 and has the right to withdraw the collection if the highest bid is below the $300,000 minimum. What is the term for this kind of auction? Option with reserve 1. Please see problem 15 above. Who is the offeror in this auction? The People who make bids 2. On June 25, Sam Seller mailed Ben Buyer an offer to sell his car to Ben for $10,000. The offer arrived on June 28. Ben put his acceptance in the mail on June 30, but, because of the long holiday, it did not arrive at Sam's home until July 7. Sam found a buyer who was willing to pay $11,000 for the car and mailed a revocation on June 27. Ben got the revocation on July 1. Was a contract formed between Sam and Ben? If so, on what date did it become effective. Yes, there is a contract that became effective on June 30, the day Ben mailed the acceptance. 3. Sally, a non-merchant, offered to sell her bicycle to Allison for $100. Allison replied: 'I accept. Please include the new kickstand that you bought but have not yet installed on the bike.' What is the status of this agreement? There is a contract: the kickstand is not included. 4. Manny Manufacturer offered to sell Curley Contractor 100 Anderson windows for $80 a unit, delivery to be made at Curley's warehouse in Salisbury. Curley sent an acceptance which stated: delivery to be made at our construction site in Salisbury. What is the status of this agreement? There is a contract: delivery is to be made at the construction site according to the acceptance. 5. Debbie taught a very popular Pilates class at Local Fitness Center. The class was always filled and had a long waiting list of people who wanted to enroll. When an opening became available, Debbie mailed an offer to May, the first person on the waiting list. The offer said that May should accept the offer by sending a check for $75 payable to Debbie. May did not respond to the offer, but her roommate June saw the offer on May's desk and sent Debbie a check for $75. Is there a contract between June and Debbie? No, there is no contract because the offer was not communicated to June 6. As part of an advertising campaign, a plane flew over the beach in Ocean City trailing a banner that read: 'Boardwalk Bistro will give $100 to the first person to swim from the inlet at 1st Street to Bistro's at 33rd street .' Daisy was a very strong swimmer and accepted the challenge. When she got to 25th Street, however, the plane appeared again with a banner that read: 'Bistro withdraws its offer.' Bistro's first banner had contained an offer to form a(n) __________ contract. Unilateral 7. Please see problem 22 above. Which statement best describes Daisy's and Bistro’s rights in this situation? Bistro cannot revoke the offer because Daisy has substantially performed the requested action. 8. Which of the following statements about option contracts is false? A contract option can last for a maximum of 3 months. 9. Ted learned from Bonnie, Hillary's sister, that Hillary had withdrawn her offer to sell her 34 foot sailboat. This is an example of a (n) _____________revocation. Indirect 10. On Saturday, Jean offered to sell her trail bike to Henry for $250. Henry said he was not interested in buying a used trail bike. On Tuesday morning, Henry told Jean that he had changed his mind and had a check in his wallet made out to her for $250. Is this a valid acceptance of Jean's offer? No, this is a counteroffer and as the offeree Jean is free to accept or reject it. Chapter 15 6. Which element of a contract is met by a bargained-for exchange? Consideration 7. Consideration in a bilateral contract always involves both A legal benefit and a legal detriment 8. Benny bought shares in Big Chip Maker (BCM) when the shares were trading for $37 a share. For the past 9 years BCM shares have not traded above $21. Can Benny rescind his purchase based on failure of consideration? No, unless he was induced into buying the shares through fraud or other wrongdoing. 9. Which of the following is not a legal detriment? A 20 year old who lives in a state where the drinking age is 21 promises not to drink alcohol. 10. Which of the following statements about nominal consideration is correct? a and b are true 1. Mutuality of consideration is a requirement for a (n)_________________. Bilateral contract 2. Which of the following is an illusory promise? 'I will go with you to the donkey basketball game if I can't think of anything better to do.' 3. An illusory promise is created when The promise is conditional on an event happening first that is totally within the promissor's control. 4. Famous Chef told Shrimp Boat Captain: 'I will buy your catch if I think the shrimp are large enough.' What is the status of this promise? This is a valid promise because the chef must make the decision in good faith. 5. Bay Crab Processor has a contract with Jim, a local crabber, to buy all the crabs Jim catches during the season for $35 per bushel. This is an example of a (n) ___________contract. Output 6. Please see problem 10 above. Which of the following actions would constitute a breach of the contract between Bay Crab and Jim? A and B 7. Big Oil Company has a contract with homeowner to deliver however much heating oil homeowner needs for the fall and winter seasons. This is an example of a (n__________________contract. Requirements 8. Brenda was the lead detective assigned to investigate the murder of a prominent local businessman. A local civic group offered a $10,000 reward to anyone who provided information leading to the arrest and conviction of the murderer. The murderer was found, tried, and convicted largely due to Brenda's efforts. Can Brenda collect the reward? No, Brenda had a preexisting contractual duty to find and try to convict the murderer. 9. Which of the following statements is true about modifying contracts governed by the Code? All of the Above 10. Which of the following is an example of an unliquidated debt? A bill sent to homeowner by contractor for an additional $500 for cost overruns: owner claims he will pay only $250. 1. Local Delivery Service had a one year contract with Supply Co. to make four deliveries a month to Supply's customers who live across the Bay. There is only one bridge spanning the Bay for 200 miles in each direction. Without warning, the state closed the bridge to all traffic for 10 months after an inspection revealed dangerous structural problems. Local now has to travel an extra 400 miles for each of the scheduled deliveries. Local asked Supply Co. for an additional $60 per trip above the contract price and Supply Co. agreed. Under common law, is this an enforceable contract? Yes, the request is made in good faith for an unforeseen difficulty 2. Which of the following statements is true about an accord and satisfaction? It can be used for unliquidated debts based on contract or tort claims. 3. In an accord and satisfaction, the accord is The Substitute Agreement 4. Promissory estoppel is best described as An equitable remedy when one party suffers an unbargained-for detriment. 5. Another term for promissory estoppel is Detrimental reliance 6. Which of the following is not an element of promissory estoppel? All of the Above 7. Which of the following is false about a renunciation? Renunciations are valid in common law but not under the Code 8. Customer ordered fried chicken strips at the drive-in window of Famous Burger. One of the 'strips' turned out to be an entire chicken head, battered and deep fried. Famous Burger tested the head and found that it was, indeed, cooked in their batter and in their oil. Pictures of Customer with the fried head showed up in newspapers and on the Internet. Famous Burger offered Customer a cash settlement in exchange for Customer's promises not divulge the amount of the settlement, sue Famous Burger over the incident, or ever speak of it in public again. Agreeing not to exercise these three rights in exchange for the settlement is an example of ____________________. Forbearance 9. Promissory estoppel is often used in which of the following business situations? When a contractor submits a bid in reliance on the bids of his subcontractors. 10. Under which of the following circumstances will cashing a check marked 'paid in full' create an accord and satisfaction? The check is for an unliquidated debt and both parties know of the dispute. Chapter 16 6. Six months after being adjudicated insane, Connie signed a contract for premium cable service. The legal status of this contract is Void 7. Mike, a minor, sold his trail bike to Allen, an adult. The status of this contract is Voidable by Mike 8. Please see problem #2 above. Assume that Allen sold the bike to Ben Buyer, who paid cash and had no knowledge that Allen had purchased the bike from a minor. What kind of title does Ben have to the bike? Good Title 9. Mike, a minor, bought a car from Used Car Lot for $6,000. Two months before he turned 18, the age of majority in his state, Mike decided he didn't want the car anymore and returned it to Used Car Lot. Mike had put 50,000 miles on the car. Applying the law followed by the majority of states, please select the statement that best describes Mike’s rights in these circumstances. Mike would be entitled to get back the full $6,000 purchase price. 10. Goods which are required for maintaining life or health are classified as Necessaries 1. For which of the following purchases would a minor have to pay the full contract price? Insurance 2. For which of the following purchases would a minor be liable to the seller for the fair value of the goods? a. Medicine 3. For which of the following purchases could a minor disaffirm the contract and get the full purchase price back? Ipod 4. After reaching the age of majority, if a party does nothing to disaffirm a contract entered into while a minor, his silence will _____________the contract. Ratify 5. Which test do courts use to decide if the contract of a person who has not been adjudicated insane can be avoided because of mental incompetence? d. The court will look to see if the party understood the nature, purpose and consequences of entering into a contract at the time the contract was formed. 6. Punitive damages are available for which of the following? Fraudulent misrepresentation 7. The term 'scienter' means Knowing Misrepresentation 8. Which of the following mistakes would result in the rescission of the contract? A bilateral mistake of material fact 9. British Textile Manufacturer entered into a contract with Cotton Broker for 2, 000 bales of cotton to be shipped from India to England on the ship 'Peerless, sailing from Bombay.' The contract was silent about the shipping date. Buyer expected the cotton to be shipped on the Peerless that sailed from Bombay in October; seller expected to ship the cotton on the Peerless that sailed from Bombay in December. By the time the second ship arrived in England, buyer had found another supplier and refused to accept the cotton. Does manufacturer have any defenses to the breach of contract suit brought by Broker? Yes, there was a bilateral mistake of material fact 10. Ted told Bob, the owner of Bob's Travel Agency that, unless Bob bought $10,000 worth of advertising from him, Ted will circulate false stories in the community that Bob had stolen clients' deposits. No one would be willing to book tours through Bob or make down payments with him. Bob agreed to the contract only because of Ted's threats, which he believed Ted was perfectly capable of carrying out. Bob could rescind this contract with Ted based on Duress 1. Larry Lawyer entered into a contract to buy land from a client at well below market value. The client was elderly and trusted Larry as his lawyer and son of his best friend to be fair and give him good advice. Client can rescind the contract based ona. Undue influence 2. A person who occupies any position of trust and confidence in relation to another person or the property of another person is a (n) ______________ Fudiciary 3. Sue, who was the executor of her uncle's estate, sold Ann a riding mower that had belonged to her uncle. Sue told Ann that she thought the mower was about 3 years old. When getting parts for the mower, Ann learned that the mower was in fact 7 years old. Ann can rescind the contract based on Innocent Misrepresentation 4. Fred, in desperate need of quick money, sold his new Key West boat for less than market value to a good faith purchaser. Does Fred have any basis for rescinding the contract? No, this was a valid bargained for exchange 5. Sid Salesman sold Bea Buyer a used 2004 Camry for $8,000. The morning after the contract was signed, Sid called Bea to say that he had forgotten that the dealership would not let that Camry go for less than $9,000 so she would have to pay an additional $1,000 if she wanted the car. Is Bea liable for the extra $1,000? No, this was a unilateral mistake of fact by Sid 6. Beth agreed to buy Sam's home for $400,000. After both parties had signed the contract, which was prepared by the real estate agent, it was discovered that the property was listed on the contract as 1200 Elm Street instead of 200 Elm Street, the actual house number. The remedy courts use to correct mistakes like this in contracts is Reformation 7. Sally Seller deliberately misrepresented to Bill Buyer the condition of a wood chipper she sold him. The misrepresentation materially altered the value of the machine and obscured a safety hazard. If Bill wishes to avoid the contract, his best defense is Fraudulent misrepresentation 8. Please see problem #22 above. What remedies are available to Bill Buyer in these circumstances? All of the Above 9. Which of the following elements is present in fraudulent misrepresentation but not in innocent misrepresentation? Scienter 10. A party has an affirmative duty to disclose information in a contract when All of the Above Chapter 17 6. Whether or not a contract provision is unconscionable is a question of ______to be decided by the _________. d. law....judge 7. Locus poenitentiae means d. A place for repentance 8. Ed entered into a contract with Cindy, who owns a liquor store, to bring in from Canada two shipments of Cuban rum, packaged in a way to disguise the country of origin. It is illegal to import Cuban goods into the United States because of a trade embargo. Cindy took delivery of the first shipment and paid Ed the contract price. After receiving the second shipment, however, she refused to pay for it. What remedies, if any, are available to Ed if he sues Cindy for breach of contract? a. This is an illegal contract so Ed has no judicial remedies. 9. Clare bought shares in ABC Corporation that were sold to her in violation of an SEC rule protecting investors. What remedies, if any, does Clare have if she wants to avoid the contract? d. b and c are both remedies available to Clare. 10. Paul, who is not a licensed electrician, did all the wiring for an extensive renovation Manny had done to his home. Manny refuses to pay the full contract price, claiming the work was not done properly. It is illegal in their state to do electrical work for compensation without a license. Is Manny liable to Paul for his services? a. No, the contract is illegal and Manny need not pay for the services. 1. Failure to obtain a required license will not void a contract if c. The license requirement is a revenue-raising measure and not one designed to protect the public. 2. State statutes that limit the interest that can be charged on loans and contracts are ______ laws. c. Usury 3. In most states there is no legal maximum to the interest rate that can be charged__________. b. Corporations 4. Assume that State Y limits the amount of interest than can be charged on consumer installment sales contracts to 23 percent. To which of the following penalties might Acme be subject if it charges a consumer 27 percent? d. a, b and c 5. Which of the following would not violate usury laws? d. a and b 6. The statute under which the federal government controls monopolies and activities in restraint of trade is d. The Sherman Antitrust Act 7. The power of the federal government to control and punish monopolies derives from a. The Commerce Clause 8. Individuals who are injured by the anti-competitive practices of businesses may collect ________damages in a civil suit. b. Treble 9. Activities that are conclusively presumed to violate antitrust laws so that prosecutors need only prove that the activity took place are __________violations. d. Per se 10. If the CEO's of Coke and Pepsi agree that all 2 liter bottles of their sodas would sell in a certain market area for $1.49, they would engage in ____________price fixing. b. Horizontal 1. When courts use the rule of reason to determine whether or not an activity violates antitrust laws, they look to see if the activity a. Suppresses competition 2. Which of the following is not a per se violation of the antitrust laws? d. An identical agreement between a franchisor and all its franchisees 3. Assume that Big Photocopy Machine (BPM) manufactures a photocopier that produces copies faster and with fewer breakdowns than its competitors' machines due to a patented component. Assume also that BPM refuses to sell or lease its machines to any company that does not agree to buy photocopy paper exclusively from BPM’s subsidiary, Big Paper. This paper is not patented and is indistinguishable from competitor papers. The requirement that the paper be bought as a condition for being able to buy the machines is an example of a (n) _________________arrangement. c. Tying 4. Please see problem #18 above. The arrangement described in problem #18 is a. Illegal per se 5. If a person who enters into an illegal contract seeks to withdraw from it before performing any of the illegal acts, he will be allowed to do so under the doctrine of a. Locus poenitentiae 6. Alice sold her accounting business to a nation wide accounting firm that wanted to establish an office in that area. As part of the sales contract, Alice promised that she would not start up another accounting firm within 75 miles of her old business for at least a year. This clause in the sales contract is a _____________________. d. Covenant not to compete 7. Which of the following is not an example of an adhesionary contract? d. Contracts for the sale of a business 8. Which of the following rules will a court use in interpreting an adhesionary contract? d. The court will construe unfair provisions against the drafting party. 9. The provision in a contract whereby one party attempts to avoid or limit his liability for tort damages is a (n) _______________clause. b. Exculpatory 10. Which of the following statements is true about the doctrine of unconscionability? d. a and c Chapter 18 6. The statute that requires that certain contracts be in writing to be enforceable is the Statute of__________________. c. Frauds 7. Which of the following contracts would not have to be in writing to be enforceable? a. A contract for the services of a personal fitness trainer for 16 weeks 8. Son applied for a car loan from First Bank. First Bank would not approve the loan unless Dad agreed that he would pay the loan if First Bank's efforts to collect from Son were unsuccessful. In this situation, Dad is a (n) ______________. b. Guarantor 9. Please see problem #3 above. To be enforceable, Dad's agreement with First Bank a. Must be in writing 10. Please see problems #3 and #4 above. The kind of liability Dad assumed in his contract with First Bank is b. Secondary 1. Courts use the 'main purpose' rule to determine a. Whether a promisor has primary or secondary liability on a debt. 2. Which of the following contracts represents the transfer of an interest in land? c. Sale of copper ore: ore is to be taken out of the ground by the buyer. 3. Dell, a farmer, has an agreement to lease 500 acres from Wood for 3 years. Must this agreement be in writing to be enforceable? a. Yes, it is an interest in land and it is for more than one year. 4. The period that is measured to determine if a contract can be performed within a year begins when b. The contract is formed 5. The period that is measured to determine if a contract can be performed within a year ends when d. Performance could conceivably be completed. 6. Under the Code, contracts for the sale of goods costing __________or more must be in writing. d. $500 7. Under the Code, contracts for the sale of intangible personal property, such as patents and royalties, must be in writing if the amount exceeds__________. d. $5,000 8. To meet the writing requirement under common law, whose signature(s) must be on the contract document(s)? a. Only the defendant's signature 9. To meet the writing requirement under common law, a contract must contain d. All of the above 10. In construing a contract, the primary function of the court is to c. Determine the intention of the parties 1. In construing a contract, a court will give the greatest weight to c. Course of performance 2. Business people are presumed to be so familiar with the ordinary methods and practices of their business that they naturally expect them to be part of their contracts. These ordinary and expected practices are called the c. Usage of the trade 3. In which of the following situations would oral evidence be allowed? d. B and c 4. Parole evidence is evidence based on a. Oral statements 5. Written contracts which the parties intend to be the final statements about some, but not all, of the terms of their agreement are called ______________contracts. b. Partially integrated 6. Which of the following is not an exception to the Statute of Frauds? d. Guarantor agreements in which the guarantor has secondary liability. 7. Mel had an oral contract with Tool and Dye Company. Tool and Dye was to design and specially manufacture a part for one of Mel's machines. The agreed upon price was $2,000. When the part was completed, Mel refused to take delivery or pay for the part. Tool and Dye has no other customers for a unique part like this. Tool and Dye filed suit against Mel for breach of contract. Mel claims that the contract is unenforceable under the Statue of Frauds and that he has no liability. Which party will win this dispute? c. Tool and Dye wins because specially manufactured goods are an exception to the Code's writing requirement. 8. Cathy's China Shop ordered 3 shipments of handmade dinner ware from Pam’s Pottery. The shipments were to be made on May 1, July 1, and October 1. The price was $600 per shipment, payable by the 15th of the month. The agreement between Cathy and Pam was entirely oral. Cathy accepted the first shipment, but has not paid for it, and she has cancelled the July and October shipments. Pam has filed suit for breach of contract. Cathy contends that the oral agreement is not enforceable and that she has no liability for the first shipment. How will the court resolve this dispute? d. The contract is a Code exception to the Statute of Frauds: Cathy must pay $600 for the first shipment, but she has no obligation to accept or pay for the 2nd and 3rd shipments. 9. Which of the following is not a rule of construction used by courts to determine the terms of a contract? a. Ambiguous language is construed in favor of the party who drafted the contract. Chapter 19 Chapter 19 1. Assume that the Pope is visiting the United States in an historic, once in a life time visit and that he will conduct an outdoor service in Easton. Assume also that Dale paid $5000 to rent a house with a view of the service for that one day. If the Pope fell ill and the service had to be cancelled, what would be Dale's best argument for having his money returned? a. Commercial frustration 2. The Statute that restricts the time within which a lawsuit must be filed after the cause of action arises is the Statute of_______________. b. Limitations 3. To use an accord and satisfaction to discharge the obligations due under a contract d. A and C 4. Please see problem #21 above. Assume this time that oil producing countries made enough oil available to meet world needs, but increased the base price from $70 a barrel to $700 a barrel. Acme will be out of business if it sells to its customers at their contract price. What is Acme's best defense to breach of contract claims if it increases the costs to the retailers? b. Commercial impracticability 5. Acme was a petroleum wholesaler who supplied heating oil to retail oil companies. When oil producing countries cut world wide production of oil by 50 percent to protest certain political actions, Acme, along with other wholesalers in the world, was unable to get the oil necessary to meet his contractual obligations. In an action for breach of contract, Acme's best defense is c. Objective impossibility 6. Manny Manufacturer agreed to buy widgets from Supplier only on the condition that the widgets would be delivered in 10 days time. When Supplier could not meet the delivery date, Manny agreed to accept the widgets one week later. Manny's acceptance of a different performance date under this contract is a (n) _________________of the original condition c. Waiver 7. Ellen is renting an apartment under a lease that requires that the landlord approve any assignment or sublease. Ellen wants to assign the lease and has found four candidates with excellent jobs, credit ratings and personal references. Landlord has rejected all four of them. Please advise Ellen. c. Ellen is discharged from any further obligations on the lease because the landlord's failure to cooperate is in bad faith. 8. Andy has been hired by University under a two year contract to teach three courses a semester. He receives a paycheck every two weeks. Employment contracts like Andy's are interpreted by the courts to be ___________contracts. b. Divisible 9. Under the Code, unless the parties agree otherwise, contracts for the sale of goods are assumed to be ___________________contracts. a. Entire 10. Jerry built a 3,000 square foot home for Susan for $350,000. There was a time is of the essence clause in the construction contract. On the day of settlement, Jerry had not screened the porch and had primed, but not painted, the trim in the master bath. What is Jerry entitled to receive in payment? c. Jerry substantially performed the contract and is entitled to $350,000 less the amount it will cost Susan to have the work finished. 1. Sal offered Owen a cashier's check for $5,000 on July 1, 2005 in payment of a debt to him. The interest on the loan was 8 percent and Owen had taken Sal's boat as collateral to secure the debt. Owen refused the tender, claiming that Sal actually owed him $7,000. The dispute was litigated and, on October 1, 2006, a court issued a judgment for Sal, confirming that the amount owed was $5,000. As a result of Sal’s tender on July 1 and the court decision d. All of the above 2. Under the Code, a seller tenders goods when d. A and b are both necessary for tender 3. Tender of performance occurs when c. A party to a contract demonstrates that he is ready, willing and able to perform. 4. Unless expressly stated otherwise, contracts for the sale of goods assume that the seller's duty to tender goods and the buyer’s duty to pay are c. Constructive conditions concurrent 5. Which of the following statements is true about 'time is of the essence' clauses in contracts? b. These clauses are examples of express conditions precedent. 6. Please see problems #8 and #9 above. Assume that Carl learns that he can procure the needed carpeting after all and wants to reinstate the contract. What rights does Carl have in these circumstances? c. Carl may retract the repudiation unless Renovator has indicated that he is treating it as final 7. Please see problem #8 above. What are Restorer's rights upon receiving this notice from Carl? d. Restorer may exercise any or all of the rights above 8. Carl had a contract to deliver 600 yards of carpeting to Renovator for installation in an office complex. Three days before the delivery date, Carl called to say that he would not be able to deliver the carpeting 'any time in the near future.' Carl's statement constitutes a (n) _________ of the contract. c. Anticipatory repudiation 9. A condition precedent in Max's contract to buy Al’s sailboat is that Max find financing below 8 percent. Since Max has not been able to do this, but still wants to buy the boat, he has voluntarily relinquished the right to this condition. This is an example of a (n) __________________. b. Waiver 10. Which of the actions below, if taken by the parties to a contract, will terminate the contract? d. All of the above will terminate a contract by action of the parties 1. Please see problem #3 above. An additional clause in the contract makes Mary's purchase contingent on the seller’s landscaping the front yard 'to Mary’s satisfaction.' Can Mary reject the contract based on dissatisfaction with the landscaping? a. Yes, if her dissatisfaction is actual, honest and in good faith. 2. Please see problem #3 above. Another clause in the contract makes Mary's purchase contingent upon the house satisfactorily passing a termite inspection. The standard used to determine whether or not the result of the inspection is 'satisfactory' is b. The objective standard: would an average, reasonable person be satisfied? 3. Terms and conditions that the parties themselves write into the contract are ________terms a. Express 4. Terms and conditions that are read into contracts by courts to serve justice are __________terms b. Constructive 5. Mary has a contract to buy Jena's house. The contract says that Mary’s obligation to go through with the purchase is contingent upon Mary selling the house she currently owns. This is an example of a _________________. a. Condition precedent