Deck 11: Contract Formation

Question 1

In an express contract, the terms are fully stated in words.

Answer 1

True

Question 2

An invitation to negotiate is an offer.

Answer 2

False

Question 3

A counteroffer occurs when a seller makes an offer "over the counter."

Answer 3

False

Question 4

The power of acceptance continues forever.

Question 5

An express contract must be in writing.

Question 6

One of the elements of a valid contract is a fair price.

Question 7

A promise is an assertion that something will or will not happen in the future.

Question 8

An executed contract is one that was "put to death" before it was performed.

Question 9

An expression of opinion is not an offer.

Question 10

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

Question 11

A contract is void if its purpose is illegal.

Question 12

A valid offer requires reasonably certain terms.

Question 13

An offer to form a unilateral contract is accepted by a promise to perform.

Question 14

A contract can be created only when a promise is given in exchange for another promise.

Question 15

An essential element for contract formation is that the parties agree on the terms.

Question 16

A contract lacking a quantity term may not be enforceable.

Question 17

The communication of an offer is not necessary to form an agreement.

Question 18

An acceptance must be unequivocal to create a contract.

Question 19

The mirror image rule requires an offer to be phrased in the same terms to all offerees.

Question 20

Some promises are not legally binding.

Question 21

A court may refuse to enforce an exculpatory clause on the ground that it is unconscionable.

Question 22

An adult may avoid any contract with a minor.

Question 23

A minor may disaffirm a contract only if the subject matter is illegal.

Question 24

A contract with an unlicensed professional can be illegal.

Question 25

The lack of an opportunity to read a contract or ask questions about it may be unconscionable.

Question 26

Extraordinary unforeseen difficulties can be the basis for an exception to the preexisting duty rule.

Question 27

Clay offers to pay Dot $50 for a golf lesson for Eula. They agree to meet the day after tomorrow to exchange the cash for the lesson. These parties have

A) a bilateral contract.
B) a trilateral contract.
C) a unilateral contract.
D) no contract.

Question 28

A bargained-for exchange is one of the elements of consideration.

Question 29

A covenant not to compete can be enforceable if it is part of the sale of an ongoing business.

Question 30

Under the mailbox rule, an acceptance is not valid until it is received.

Question 31

Luther asserts that a deal he entered into with Mona is an unenforce?able contract because of a certain defense to its enforcement. Such defenses include

A) a desire not to perform.
B) adverse economic consequences.
C) results that do not match expectations.
D) the lack of a party's voluntary consent.

Question 32

To be legally sufficient, consideration must include something of economic value.

Question 33

Laura and Mike enter into what Laura later claims is a contract. In de?cid?ing whether a valid contract was formed, a court will not look at

A) the circumstances surrounding the alleged contract.
B) the parties' conduct at the time of the alleged contract.
C) the parties' statements at the time of the alleged contract.
D) the parties' subjective beliefs at the time of the alleged contract.

Question 34

Topp-Off Pavers, Inc., agrees to repave Unity Building Corporation's parking lot. The elements required for this agreement to constitute a valid contract do not include

A) consideration.
B) contractual capacity.
C) legality.
D) practicality.

Question 35

Jack asserts that he will buy Kris's handheld game-player for $75. This is

A) an execution.
B) an offer.
C) a promise.
D) a moral obligation.

Question 36

The doctrine of promissory estoppel requires a party to temporarily stop performing in order to make a promise.

Question 37

A covenant that prohibits marriage is enforceable.

Question 38

Disaffirmance is the legal avoidance of a contractual obligation.

Question 39

A promise in return for an event that has already occurred is enforceable.

Question 40

A promise to do what one already has a legal duty to do does not normally constitute legally sufficient consideration.

Question 41

Can-Do Fix-It, Inc., offers Dewey a job as a plumber. No time for acceptance is specified in the offer. The offer will terminate

A) after a reasonable period of time.
B) after a typical work week (five business days).
C) after a usual month (thirty calendar days).
D) never.

Question 42

Yvon asks Zack, "Do you want to buy one of my fishing rods" This is

A) a valid offer.
B) not a valid offer because the terms are not definite.
C) not a valid offer because Yvon did not state an intent.
D) not a valid offer because Zack did not respond.

Question 43

Fact Pattern 11-1 (Questions 25-27 apply)
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-1. A court is most likely to evaluate the adequacy of consid?era?tion if

A) a thing exchanged has no intangible value to one of the parties.
B) something exchanged is not of direct economic or financial value.
C) the items exchanged were of unequal value.
D) there is a gross disparity in the value of the consideration exchanged.

Question 44

Quality Aluminum Corporation files a suit against Rite Tool Company, claiming that the consideration for their contract is inadequate. The court will most likely not examine the adequacy of the considera?tion if

A) it is obvious that the consideration is adequate.
B) Rite Tool asserts that there is adequate consideration.
C) something of value passed between the parties.
D) the consideration is worth more than $100.

Question 45

Avatar Designs, Inc., and Bling Retail Corporation sign a contract in which Avatar agrees to deliver t-shirts emblazoned with video game characters in exchange for Bling's prom?ise to pay. Avatar delivers. The contract is

A) voidable.
B) executed.
C) executive.
D) executory.

Question 46

Nate tells Opal, "I might sell the skis that I bought last fall since I haven't used them and the skiing season is almost over." This is

A) an acceptance of an offer.
B) an invitation to accept an offer.
C) an offer.
D) a statement of future intent.

Question 47

Build-Rite Contractors, Inc., asks Cool Electric, a subcontractor, to provide certain services. Nothing is said about payment. Cool provides the services and submits an invoice, which Build-Rite refuses to pay. In Cool's suit to recover, the chief issue is most likely to be whether these parties had

A) a formal contract.
B) an executory contract.
C) an implied-in-fact contract.
D) a voidable contract.

Question 48

QT Transport, Inc., offers to sell a truckload of palettes to Rapid Delivery Company. Before accepting the offer, Rapid learns that the palettes have been sold to Speedy Trucking Corporation. QT is

A) liable to Rapid for breach of contract.
B) liable to Speedy for breach of contract.
C) not liable, because the sale revoked the offer to Rapid.
D) not liable, if QT offers substitute goods to Rapid.

Question 49

Paco offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a package from his accountant Rupert within 30 minutes. QD can ac?cept the offer only by meeting the deadline. If QD performs as directed, these parties will have

A) a bilateral contract.
B) a trilateral contract.
C) a unilateral contract.
D) no contract.

Question 50

Bret enters Coffee Café, where he has an open account, fills a cup of coffee, holds it so Demy the cashier can see it, acknowledges her nod, and walks out with the coffee, knowing that he will be billed for it at the end of the month. Bret has formed

A) an express contract.
B) an implied-in-fact contract.
C) an implied-in-law contract.
D) no contract.

Question 51

Bill offers to sell his Consumer Service Center business to Dina for $100,000. Dina replies, "The price is too high. I will buy it for $90,000." Dina has

A) accepted the offer.
B) made a counteroffer without rejecting the offer.
C) rejected the offer and made a counteroffer.
D) rejected the offer without making a counteroffer.

Question 52

May tries to start her new car with no success. She yells that she will sell the car to anyone for $10. Nick, a passerby who owns Nick's Pre-owned Autos, hands May $10. This is

A) a valid acceptance because May is seriously frustrated.
B) a valid acceptance because Nick is a car dealer.
C) not a valid acceptance because May does not seriously intend to sell.
D) not a valid acceptance because Nick is a car dealer.

Question 53

Max promises to pay Nan $500 to install a pump in his factory. Nan com?pletes the installation. The act of installing the pump

A) is not sufficient consideration because it is not goods or money.
B) is not sufficient consideration if $500 is too much money for the act.
C) is not sufficient consideration unless Nan is a licensed professional.
D) is the consideration that creates Max's obligation to pay $500 to Nan.

Question 54

Elmo advertises a reward for the return of his lost dog. Floyd, who does not know of the reward, finds and returns the dog. Floyd cannot recover the re?ward because he

A) did not confer a benefit on Elmo by returning the dog.
B) did not know of the reward when he found and returned the dog.
C) does not need the money.
D) returned the dog.

Question 55

Flo tells Gregor that she will buy his textbook from last semester for $65. Gregor agrees. Flo and Gregor have

A) an executed contract.
B) an express contract.
C) an implied-in-fact contract.
D) no contract.

Question 56

Dusty accepts what she believes was an offer to work for Destination Vacations, Inc., as a chef. In determining whether a contract has been formed, an element of prime importance is

A) the condition of the workplace. b the duration of the work.
C) the intent of the parties.
D) the subject of the contract.

Question 57

Scot enters into a contract with Tiffany that later proves voidable at Tiffany's option. If she elects to avoid any duty to perform under the contract

A) both parties are released from it.
B) neither party is released from it.
C) only Scot is released from it.
D) only Tiffany is released from it.

Question 58

Cole drives into Dino's Service Station and asks Erin, the attendant, to fill the tank in Cole's sport utility vehicle. After Erin fills the tank, but before Cole pays for the gas, any contract between Cole and Dino's is

A) executed.
B) executory.
C) unenforceable.
D) voidable.

Question 59

Following negotiations with Lester's Landscaping for maintenance services for a lawn and garden, Moore enters into an informal contract. This means that the parties' contract

A) requires no special form.
B) is not enforceable.
C) is not a true contract.
D) is voidable.

Question 60

NuCell Phone Company offers to buy a laser printer, with a case of paper and an extra cartridge, for $500 from Office Products, Inc. (OPI). Paul, OPI's representative, says, "Okay, but no paper and no extra cartridge." Paul has

A) accepted the offer.
B) made a counteroffer without rejecting the offer.
C) rejected the offer and made a counteroffer.
D) rejected the offer without making a counteroffer.

Question 61

Intoxicated but fully aware of the consequences, Uri agrees to a two-year cell-phone service contract with Wander Talk, Inc., at more than the average market price. This contract is

A) enforceable.
B) not enforceable because contracting parties can change their minds.
C) not enforceable because the contract clearly favors Wander Talk.
D) not enforceable because Uri was intoxicated when he agreed to it.

Question 62

Fact Pattern 11-1 (Questions 25-27 apply)
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-1. "Adequacy" of consideration refers to

A) "how much" consideration is given.
B) legally sufficient value in the eyes of the law.
C) the intangible value to a contracting party of a thing exchanged.
D) the substantiality of the consideration exchanged.

Question 63

Noni, a seventeen-year-old, signs a contract to sell her car to OK Used Cars. The next day, Noni tells OK that she's decided not to sell the car. Noni is

A) liable to OK and must sell it a car of comparable value.
B) liable to OK and must sell it her car.
C) liable to OK for the amount of its profit on the deal.
D) not liable to OK.

Question 64

Koko signs a covenant not to compete as part of a sale of her ongoing medical equipment business to Laurel Valley Medico, Inc., in exchange for a bonus payment. If the covenant is reasonable, it will most likely be enforceable by

A) both parties.
B) Koko, but not Laurel Valley.
C) Laurel Valley, but not Koko.
D) neither party.

Question 65

U-Can-Own-It Corporation sells appliances to less educated consumers, including Viv, on installment plans. U-Can-Own-It files a suit against Viv when she stops making payments. Viv claims that the deal is unconscionable. The court will most likely consider

A) the geographic area of the relevant market.
B) the parties' relative bargaining power.
C) the quality of related products in the general market.
D) the relation of this deal to those of other customers.

Question 66

Baby Products, Inc., hires Chewy to develop and implement an e-commerce strategy for marketing Baby's products. Chewy signs a contract that includes a clause prohibiting him from competing with Baby during and after the employment. Before the strategy is implemented, Chewy resigns from Baby's employ and opens a business to compete with Baby. In Baby's suit against Chewy, to determine whether he may compete with Baby, what is the most important factor the court should consider Is the clause likely to be enforced Explain.

Question 67

Auto Body Repair Shop (ABRS) promises to pay Ben $1,000 a week to work for ABRS. Ben accepts and quits his job with Car Care Service. ABRS fails to provide a job for Ben. Most likely, Ben has a cause of action based on

A) past consideration.
B) preexisting duty.
C) promissory estoppel.
D) rescission.

Question 68

Bulk Baked Foods Company agrees to supply Comida Café with all the corn chips that it re?quires for a year. A sudden blight caused by an organism hitherto unknown in the United States results in a shortage of corn, and the price rises sharply. Bulk asks Comida to pay a higher price for the chips. This request is most likely

A) invalid as an attempt at extortion or the so-called holdup game.
B) invalid under the preexisting duty rule.
C) valid as a risk ordinarily assumed in business.
D) valid due to the unforeseen difficulty of the sharp price increase.

Question 69

Neil represents himself as a contractor in Ohio, but he is not licensed in that state. A contract between Pam and Neil by which Neil agrees to build a warehouse for Pam in Ohio is

A) enforceable only if Pam does not object after learning of Neil's status.
B) enforceable only if Pam knows that Neil is unlicensed.
C) enforceable only if the outcome is successful.
D) not enforceable.

Question 70

Elle, a minor acting on her own, signs a contract to buy a horse and its tack from Field Equine Ranch. Later, after taking possession of the horse and tack, Elle disaffirms the deal. She

A) can keep the horse and the tack.
B) can keep the horse but not the tack.
C) can keep the tack but not the horse.
D) must return both the horse and the tack.

Question 71

On May 1, Faith, a real estate agent, and Grace, a commercial property owner, sign an agreement to find a buyer for Grace's office building. Under the terms, if a buyer makes a serious offer within sixty days, Grace must pay Faith's commission. Faith puts signs on the building, ads in real estate pamphlets and a local newspaper, and features the property in a "walking" tour on the Internet. On June 1, Grace tells Faith that she is canceling their arrangement. Ten days later, Grace closes a sale on the building without Faith's participation. Faith files a suit against Grace for the amount of her commission. In whose favor is the court most likely to rule and why

Question 72

Fact Pattern 11-1 (Questions 25-27 apply)
Brad defends against a breach-of-contract suit by College Credit Corporation by claiming that their deal-a student loan accruing interest at a certain rate and payable beginning on a certain date-was unfair because the consideration for their contract was inadequate.
Refer to Fact Pattern 11-1. If, as Brad claims, the consideration in this problem is inadequate, it may indicate a lack of

A) accord in Brad's satisfaction with the value of the deal.
B) bargained-for exchange or mutual assent.
C) flexibility on the part of College Credit to accommodate Brad's needs.
D) "heft," "substance," or "weight" in the terms of the contract.