Deck 17: Writing, Electronic Forms, and Interpretation of Contracts

Question 1

When the main purpose of the promisor's promise to pay the debt of another is to benefit the promisor, the statute of frauds is not applicable, and the oral promise to pay the debt is binding.

Answer 1

True

Question 2

Under the statute of frauds, an oral contract must be completed within one year after performance begins.

Answer 2

False

Question 3

A person who is prevented from enforcing a contract because of the statute of frauds also is prevented from recovering the value of services, property, or money furnished the other party to the oral contract.

Answer 3

False

Question 4

A writing required by the statute of frauds may be in any form.

Question 5

The statute of frauds applies to promises to answer for another party's debt, but does not apply to a promise to answer for another party's default.

Question 6

The parol evidence rule generally precludes testimony that would contradict a complete written contract.

Question 7

An oral agreement to supply a line of credit for two (2) years cannot be enforced because of the statute of frauds.

Question 8

An insurance company cannot refuse to pay the fire loss of the buyer of a house on the grounds that the sales contract for the house was not binding because it was not properly signed.

Question 9

In the absence of a statute requiring a writing, a contract may be oral or written.

Question 10

When a contract falls within the statute of frauds, the signatures of both parties must be shown to the court.

Question 11

When a contract may be terminated at will by either party, the statute of frauds is not applicable because the contract may be terminated within one year.

Question 12

Under the majority view, a contract that does not satisfy the statute of frauds is voidable.

Question 13

A father's oral promise to his daughter and her fiancée made in consideration of their contemplated marriage is binding when made in the course of a serious discussion.

Question 14

The parol evidence rule generally excludes words spoken before or at the time a written contract was executed from contradicting the terms of the contract.

Question 15

A contract for the sale of goods with a price of $500 or more requires written proof to be enforceable.

Question 16

A signed letter from an employer setting forth details of an oral contract of employment satisfies the statute of frauds.

Question 17

A promise to pay an attorney a fee owed by a third person can be enforced without a writing.

Question 18

A promise to grant a mortgage on real property does not require written proof because it is not a transfer of land.

Question 19

Because many oral contracts are legally enforceable, it is a good business practice in the preliminary stages of discussions to stipulate that no binding agreement is intended to be formed until a written contract is prepared and signed by the parties.

Question 20

The parol evidence rule is based on the theory that either there never was an oral agreement or, if there was, the parties purposely abandoned it when they executed their written contract.

Question 21

The standard statute of frauds:

A)requires full disclosure in the case of consumer sales on credit.
B)requires a seller of real estate to obtain a broker's license.
C)specifies the punishment of perjury.
D)requires that a contract for the sale of land be evidenced by a writing.

Question 22

The statute of frauds applies to:

A)the lease of an apartment on a month-to-month basis.
B)the cancellation of a written agreement for the sale and purchase of land.
C)an employment agreement.
D)the sale of goods priced at less than $500.

Question 23

A promise to pay a debt must be in writing if:

A)the debt is for more than $500.
B)the debt is now due and payable.
C)the promise is to pay the debt of another.
D)the debt owed is the promisor's.

Question 24

Provisions of a contract will be considered separately and not as a whole.

Question 25

Details of performance of a contract not expressly stated in a contract will often be implied by the court.

Question 26

The past performance of the parties under a continuing contract is important in determining what the contract means.

Question 27

Through incorporation by deference, a contract can consist of both the original document and the detailed statement that is incorporated in it.

Question 28

If a contract is unclear, it will be interpreted against the party who drafted it.

Question 29

The Uniform Commercial Code contains a statute of frauds rule relating to sales of personal property, specifically:

A)goods.
B)chattel paper.
C)real property.
D)none of the above.

Question 30

The parol evidence rule does not apply to changes made after the signing of the contract.

Question 31

The one-year performance requirement for an oral contract begins:

A)on the day of the agreement.
B)on the first day of performance.
C)on the day following the agreement.
D)the day on which the agreement was placed in writing.

Question 32

If words and numbers contradict each other in a contract, the rule of construction favors the words.

Question 33

An oral understanding is not binding if:

A)the services performed were not to the satisfaction of the other party.
B)the amount agreed to be paid for services rendered was not a fair and reasonable amount.
C)the parties intended to formalize their understanding with a written agreement.
D)the understanding may be terminated at will by either party.

Question 34

An oral contract containing a promise by an executor to pay estate debts from estate funds is:

A)binding.
B)voidable by the executor or administrator.
C)enforceable against the executor only if the executor signs written proof of the agreement.
D)enforceable against the other contracting party only if that party signs a written agreement.

Question 35

The statute of frauds applies to:

A)a contract of indefinite duration that is terminable at will by either party.
B)a promise made directly to a debtor that the promisor will pay the creditor of the debtor what is owed.
C)a promise by an executor to pay a claim against the estate out of his or her personal funds.
D)mutual promises to marry.

Question 36

Customs and trade usage can override the express provisions of a contract.

Question 37

As a rule of contractual construction and interpretation, ordinary words are to be interpreted according to their ordinary meaning; accordingly, an unambiguous contract will be interpreted as it is written, not on the basis of the secret intent of one party.

Question 38

The parol evidence rule prohibits only the use of oral testimony that alters an apparently complete written contract.

Question 39

An oral contract can be enforced when it relates to:

A)the purchase of a television set for $200.
B)the sale of an interest in land for $400.
C)managing a factory for five years.
D)a promise to answer for the debt of another.

Question 40

An oral contract to sell a house is binding if:

A)the agreement is witnessed by a member of the clergy.
B)there is a tape recording of the agreement.
C)the buyer paid the price and received the deed of conveyance.
D)the seller is a merchant.

Question 41

When a person has performed services under an oral contract that cannot be enforced because of the statute of frauds, such person:

A)can recover the agreed payment for the services because a refusal to make payment would be a breach of the contract.
B)can recover the reasonable value of the services because there is a quasi-contractual duty to pay for the benefit received from such services.
C)cannot recover the value of the services because they were rendered under a unilateral mistake of law.
D)can have the party receiving the services arrested for obtaining property by false pretenses.

Question 42

In interpreting an ambiguous contract, one part of the contract:

A)must be viewed in isolation.
B)must be viewed as a condition.
C)must be viewed in connection with the rest of the contract.
D)must be viewed as indicating joint and several liability.

Question 43

Parol evidence may be admitted to show that a provision was omitted as the result of:

A)fraud.
B)accident.
C)mistake.
D)all of the above.

Question 44

A contract is interpreted to give effect to:

A)the intent manifested by the contract.
B)what the court believes is a fair contract.
C)what the defendant thought the contract meant.
D)what will be best for the economic life of the community.

Question 45

Parol evidence generally is admissible to explain:

A)ambiguous terms.
B)why signatures are missing.
C)why a contract was not performed.
D)implied terms.

Question 46

When an insurance policy is ambiguous, the policy is interpreted:

A)against the insurer.
B)in favor of the insurer.
C)according to the dictionary meaning of the words.
D)according to the meaning of the words in the insurance industry.

Question 47

A court may not imply a term:

A)governing the details of performance.
B)governing the time of performance.
C)limiting the cost in a cost-plus contract to 10 percent of the estimated cost.
D)requiring good faith.

Question 48

Parol evidence may be admissible to:

A)contradict a complete written contract.
B)prove the modification or termination of a contract.
C)replace the statute of frauds.
D)create a contract.

Question 49

A writing that satisfies the requirement of a writing under the statute of frauds could be evidenced by:

A)a note.
B)a memorandum.
C)a contract.
D)all of the above.

Question 50

Bart was a self-made millionaire who had earned his fortune by dedicated hard work. Bart had worked so hard that he never had developed much of a social life. Bart met Linda and fell in love with her. When Bart proposed to Linda, she told him that she needed time before making such an important decision. Pressing her for a favorable response, Bart telephoned Linda and promised her $100,000 if she would marry him. Linda then accepted the proposal.
Bart contracted with Quick Builders for the construction of a home Bart intended to move into with Linda after their marriage. Construction by Quick was not very quick because Quick was not paying subcontractors the sums that they were owed. They, in turn, were not completing their work. To expedite matters, Bart called the subcontractors and assured them that Bart would pay any sums that Quick Builders did not pay if they would complete the construction.
Bart and Linda married and the subcontractors completed the work. Quick Builders did not pay the subcontractors in full. Bart failed to pay Linda the $100,000. Both Linda and the subcontractors sued Bart. Discuss the probable outcome of the lawsuits.

Question 51

The writing required by the statute of frauds in the case of a contract for the sale of land must:

A)be addressed to the other party to the contract.
B)be made with the intent to create a writing to satisfy the statute of frauds.
C)be signed at the end of the writing.
D)describe the land to be sold.

Question 52

The parol evidence rule may not apply if:

A)the contract is materially incomplete.
B)the parties disagree on the meaning of the contract.
C)there is no ambiguity regarding the terms of the contract.
D)one party is unable to perform the contractual obligations.

Question 53

A contract is created by which the terms are stated to be for consideration in the amount of $3,000. If typewritten in the contract is the term "four thousand dollars," while the amount of $3,000 is printed within the form:

A)the contract will be interpreted to be for $3,000.
B)the contract will be interpreted to be for $4,000.
C)there is a contract but the courts will not specify the dollar amount, as a conflict exists.
D)a compromise settlement amount of $3,500 will be used.

Question 54

Suzy Bartles enters into an oral contract to purchase a tract of land from Bill Hermes. The land is considered worthless, but Bartles feels that she has discovered a possible usage that would drastically increase the value of the land. To assure herself of the potential value of the land, Bartles orally hires an attorney to investigate the title and records associated with the land in question. Before gaining any information from her attorney, Bartles orally contracts with a builder to construct a huge building on the site. Because of the size of the project, a completion time is difficult to predict. Bartles now discovers that the land is indeed useless, a fact that she obtains through information from her attorney.
Bartles now refuses to honor her contracts with Hermes, her attorney, and the builder. Must Bartles honor her contractual agreements?

Question 55

The parol evidence rule:

A)applies to complete written contracts.
B)prevents proof of fraud.
C)applies to incomplete contracts.
D)is not designed to preserve the integrity of written contracts.

Question 56

Franklin, a hobby-shop supplier, and Gordon, a hobby-shop owner, entered into a contract that provided that Franklin would sell Gordon fifty World War II battleship models at Franklin's cost of $2.95 each, plus a reasonable profit. Gordon brought suit to enforce the contract against Franklin, who refused to deliver the models. Franklin claimed that there was no contract because of indefiniteness. Is Franklin correct?

Question 57

The parol evidence rule does not prohibit proof that:

A)the contract was thereafter modified.
B)conduct exists that violates the law.
C)the written contract is not a binding agreement.
D)all of the above.

Question 58

Jones and Clark entered into a written contract for the purchase of an apartment building by Clark. The contract was carefully drafted to set forth the agreement of the parties. It was signed by both parties. Clark subsequently claimed that the contract did not cover all the terms included in the written and oral agreements that the parties had made during their prior negotiations.
Jones claimed that the parol evidence rule barred proof of all of their prior agreements. Which claim would be upheld in court?

Question 59

When the statute of frauds applies and there is no written proof of the contract, the contract is:

A)void.
B)enforceable if there are two credible witnesses.
C)voidable by a party who has not signed.
D)illegal.