Deck 13: Contracts: Performance, Remedies, and Rights

Question 1

Contracts with illegal subject matter are voidable.

Answer 1

False

Question 2

Covenants not to compete are valid only in sales of a business.

Answer 2

False

Question 3

Liquidated damages are void as penalties.

Answer 3

False

Question 4

Minors are liable for the reasonable value of necessaries.

Question 5

Substantial performance is available for all types of contracts.

Question 6

Contracts by minors to enter the military are generally viewed as unenforceable.

Question 7

Unconscionability is an illegality defense.

Question 8

Misrepresentation must be fraudulent before rescission can be permitted.

Question 9

Fraud is misrepresentation with intent to mislead or deceive.

Question 10

"This shirt is 100% cotton" is a statement that is puffing.

Question 11

Material information is something that would affect the decision to buy or sell.

Question 12

The contracts of a person who has been declared legally incompetent are void.

Question 13

Puffing is sufficient grounds for setting aside a contract on the basis of misrepresentation.

Question 14

Competency licensing statutes do not prevent enforcement of contracts by unlicensed parties.

Question 15

A contract with a party who has been declared incompetent is voidable.

Question 16

A contract with a minor is voidable at the minor's option.

Question 17

Undue influence requires proof of a confidential relationship.

Question 18

Duress requires proof of physical force.

Question 19

A force majeure clause is one that provides excuses for nonperformance.

Question 20

Conditions precedent are events that must happen before contract performance is required.

Question 21

Misrepresentation does not require proof of the buyer's reliance.

Question 22

All contracts have conditions for performance.

Question 23

The seller's cost of running another ad in order to sell the car that a buyer breached a contract on is an example of consequential damages.

Question 24

"Only those on the cutting edge of technology have this product," is an example of puffing.

Question 25

Covenants not to compete are generally considered void as against public policy.

Question 26

Incidental and consequential damages are the same types of damages.

Question 27

A television rent-to-own contract that requires 24 payments of $30 each before the renter owns the $199 television set is unconscionable.

Question 28

Silence, or the failure to disclose information, is not misrepresentation.

Question 29

Compensatory damages are in addition to liquidated damages.

Question 30

Attorneys' fees are an example of liquidated damages.

Question 31

An architect who fails to pay her annual license renewal fee will be unable to collect fees for work done until the renewal fee is paid.

Question 32

Covenants not to compete are void only in sale-of-business contracts.

Question 33

Incidental damages are the costs of being compensated and are nonrecoverable.

Question 34

An accord and satisfaction is a void contract.

Question 35

The types of statements that qualify for express warranties also qualify as a basis for misrepresentation.

Question 36

Exculpatory clauses are generally considered void as against public policy.

Question 37

A liability limitation clause is the same as an exculpatory clause.

Question 38

The difference between fraud and misrepresentation is proof of intent.

Question 39

The difference between fraud and misrepresentation is knowledge.

Question 40

A force majeure clause is a clause that prevents additional terms in acceptances from becoming part of the contract.

Question 41

Goods can be transferred physically or by transfer of the bill of lading.

Question 42

An assignment is the transfer of benefits under a contract.

Question 43

Which of the following statements would not be a basis for misrepresentation?

A) "This toothpaste is the best tasting around."
B) "This house is built the way they used to build houses."
C) "There is no merger pending for the company."
D) All of the above are sufficient bases for misrepresentation.

Question 44

In the iParadigms case (Turnitin case), the court ruled that the students who submitted papers to Turnitin who did not want to submit their papers were victims of duress.

Question 45

An example of a condition precedent in a home purchase contract is that the buyer must qualify for financing first.

Question 46

Parents of minors can be held liable for the reasonable value of necessaries that their minor children contracted for.

Question 47

A multi-million dollar contract between a manufacturer and a parts supplier provides for damages of $300 per day for late delivery is void as a penalty contract.

Question 48

The failure to deal fairly with a party to a contract can result in damages for breach.

Question 49

Duress requires proof of:

A) physical force.
B) threat of physical force.
C) deprivation of a meaningful choice.
D) none of the above

Question 50

A minor who has received medical care can never be responsible for payment for those services.

Question 51

A bill of lading is a receipt for shipment issued by the seller.

Question 52

In a relationship of dependence, the failure to deal fairly can result in liability for the party controlling the contract term.

Question 53

An example of a condition precedent in an audit contract is access by the auditor to financial information.

Question 54

A lawyer/client relationship is an example of a confidential relationship.

Question 55

Contracts with illegal subject matter are:

A) void.
B) voidable.
C) neither a nor b

Question 56

There is no difference between assignments and delegation.

Question 57

A letter of credit is issued by the buyer's bank.

Question 58

Bob, age 17, has entered into a contract to buy a car. The contract is:

A) voidable.
B) void.
C) voidable only if Bob can return the car.
D) enforceable since it is for a necessary.
E) none of the above

Question 59

A mortgage broker who sells mortgage contracts to mortgage companies has created a third party beneficiary contract.

Question 60

Compensatory damage formulas are provided under the UCC.

Question 61

Which of the following statements (if later established as untrue) would constitute a misrepresentation defense to contract formation?

A) "You are going to love this house as we have."
B) "This farm's well is adequate for household, ranch, and crop needs."
C) "The school system here is very fine."
D) "Our buyers are the happiest customers around."

Question 62

The court in the case involving Turnitin (iParadigms) held that:

A) duress was clearly involved.
B) the Clickwrap acceptance was valid.
C) the owners of Turnitin have unlimited liability to the students submitting papers.
D) the plaintiffs' infancy defense was successful.

Question 63

Force majeure clauses:

A) are liquidated damages clauses.
B) are void.
C) serve to shift the risk of unforeseen events.
D) none of the above

Question 64

The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years within a one-mile radius of the sold business. Such an agreement:

A) is void as against public policy.
B) is void as unconscionable.
C) is void as usurious.
D) is valid and enforceable.

Question 65

A minor's right to disaffirm a contract is conditioned on:

A) the ability to return the contract consideration.
B) whether the minor misrepresented his/her age.
C) a time limit of six months.
D) none of the above

Question 66

Undue influence requires the presence of:

A) a fiduciary relationship.
B) some threat or force.
C) a lack of capacity in the contracting party.
D) none of the above

Question 67

A seller recovering the difference between his resale price and the buyer's original contract price is an example of:

A) compensatory damages.
B) incidental damages.
C) liquidated damages.
D) none of the above

Question 68

Which of the following contracts would be void?

A) A contract with a person declared mentally incompetent.
B) A contract with a minor.
C) A contract with a force majeure clause.
D) All of the above are void.

Question 69

Cindy Nanson had a contract with Bob Greenly for Bob to repay Cindy $2000 plus interest by July 1986. It is now August 1990 and Cindy has not received any payment. Cindy wishes to file suit to collect the $2000. Bob reminds her that the statute of limitations for contract suits is four years. Cindy's contract with Bob is:

A) unenforceable.
B) void.
C) voidable.
D) all of the above

Question 70

James Krieg has finished law school but has unsuccessfully taken the bar exam twice. Krieg is running low on patience and cash. He has begun writing wills to see him through this time of crisis and is charging $200 per will. Some of his will clients have refused to pay Krieg and he wishes to take them to a small claims court. Which of the following statements is true?

A) Krieg could recover the fees on a quasi-contract theory.
B) Krieg could recover the fees since the licensing after the bar exam is simply to raise funds.
C) Krieg agreements are voidable.
D) Krieg agreements are void.

Question 71

Clothing For Accountants is a popular retail store owned by I.M. Material. Material has just sold the business to Phil Forma. Phil has asked that a covenant not to compete be inserted into the agreement. Such covenants are:

A) void as against public policy.
B) only valid in employment contracts.
C) valid if reasonable in time and geographic scope.
D) none of the above

Question 72

The Hoffmans were having their home remodeled by All-Right Contractors. The roof had to be removed in order to build the second story the Hoffmans had contracted and designed to build. After All-Right had removed the roof, but before a covering was placed over the exposed half of the home, All-Right's foreman said the job would cost an additional $12,500. The Hoffmans refused to agree to the additional fees and All-Right's foreman said, "Suit yourselves. Looks like rain for the next day or two," and left. The Hoffmans called All-Right and agreed to pay the
$12,500 extra and went in to sign the paperwork. Which of the following statements is true?

A) The contract for the additional $12,500 is valid and binding.
B) The contract for the additional $12,500 is invalid because of duress.
C) The contract was not valid because of duress, but the Hoffmans signed anyway - so there is a valid and enforceable agreement.
D) none of the above

Question 73

Alice, age 17, purchased a 2005 Kia auto at the Tempe Autoplex. After driving the vehicle for three months, Alice returned to the Autoplex for her money. She did not, however, have the Kia. "It was stolen at school last week." Which of the following statements is true?

A) Alice may not rescind the agreement.
B) Alice may rescind the agreement only if the stolen Kia is found.
C) Alice may rescind the agreement regardless of whether she has the car.
D) none of the above

Question 74

Paddock Pools constructed a swimming pool and deck for the Jensens' home. Paddock installed the wrong trim on the pool. It would cost $2800 to change the trim - one-fifth the total cost of the pool. The Jensens refuse to pay anything for the pool. Paddock's best defense is:

A) duress.
B) substantial performance.
C) mistake.
D) failure of conditions.

Question 75

Which of the following statements would be a basis for claiming misrepresentation?

A) This car is a real honey.
B) This car has the finest road performance going.
C) This car has the fastest zero to 60 acceleration on the planet.
D) This car represents status.
E) All of the above could be a basis for misrepresentation.

Question 76

A provision in a contract requiring that a buyer obtain financing before a deal can go through is an example of:

A) a contract with no consideration.
B) economic duress.
C) a condition precedent.
D) none of the above

Question 77

If entered into by a minor, which of the following contractual situations may be enforceable against the minor?

A) Student loan agreements
B) Military obligations
C) Payment for reasonable value for necessities
D) All of the above

Question 78

Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Suppose that the listing agent was aware of the home's history and the drug dealer's arrest and conviction. The agent told the neighbors to cooperate by not disclosing any information to Dana. "Look," the agent told them, "you can get the house sold and keep your values up or let it sit there and have the old druggies come by and destroy it." Which of the following statements is true?

A) The real estate agent has committed fraud.
B) The real estate agent is under no obligation to disclose the information.
C) The most the real estate agent has committed is misrepresentation.
D) none of the above

Question 79

Dana Riley purchased a home in the Brentwood area of Los Angeles. After she purchased the home, she learned that the home had been the residence of a long-time drug dealer. She experienced many late-night visitors and often noticed cars parked outside near the street curb with the drivers and passengers studying the home. The former owner has been convicted of drug charges. Dana has become uncomfortable with the visitors and the surveillance. She just wants out of the house. Which of the following statements is true?

A) Dana has no grounds for rescinding her agreement.
B) The information about the drug dealer was material and should have been disclosed to her.
C) Withholding information about the former drug-dealer owner is not misrepresentation.
D) none of the above

Question 80

Andy Seagroves purchased a computer from Best Buy. Best Buy did not disclose to him that the computer was a return item. There was no indication of any price difference between the computer Andy bought and the unopened computers. Andy experiences significant difficulties with the computer and returns it to Best Buy. Andy indicates that he would like to have a new computer and that the price is now $150 more. Best Buy indicates that it is happy to take the return on the computer and credit Andy's account, but that it has no further liability.

A) Best Buy's position is correct.
B) Andy has no damages since Best Buy took back the computer.
C) Andy is entitled to recover the price difference so that he can replace the computer.
D) Andy is entitled to the return, but no additional damages.
E) none of the above