Deck 7: Contracts

Question 1

In a unilateral contract,a promise is given in exchange for another promise.

Answer 1

False

Question 2

The Statute of Frauds requires certain types of contracts to be evidenced by some form of written communication.

Answer 2

True

Question 3

When entering into contracts with companies in other nations,a manager should understand whether that company's laws are based on civil codes,rather than on case-by-case common law.

Answer 3

True

Question 4

To act with a power of attorney,one must be a licensed attorney.

Question 5

Generally,if Taye's factory unforeseeably burns down through no fault of Taye's own,then Taye is discharged from contractual obligation to manufacture widgets for Jordan.

Question 6

Consideration can be either a promise to do a certain act or the performance of the act itself.

Question 7

An offerer is free to revoke an offer at any time before the offer is accepted,but still risks precontractual liability.

Question 8

Generally,prior to upholding a contract,a court will carefully scrutinize the value of consideration to be sure that the contract is a fair one.

Question 9

According to the text,most advertisements are treated as offers,rather than as invitations to negotiate.

Question 10

When the sale of goods is the basis of the contract,it is a unilateral contract.

Question 11

In many states,professional licensing statutes provide that if a party to a contract does not have a required license,the other party must still pay and can sue in court for damages.

Question 12

Mutuality of obligation applies only to bilateral contracts.

Question 13

Void means the same thing as voidable in contract law.

Question 14

A minor may ratify a contract after reaching the age of majority.

Question 15

Courts enforce liquidated damages as a form of a penalty.

Question 16

Reliance damages are awarded in addition to expectation damages.

Question 17

In court cases,equitable remedy must be in the form of monetary damages.

Question 18

A counteroffer does not terminate the original offer.

Question 19

Acquisitions are simpler than mergers and most are accomplished by a standard acquisition contract.

Question 20

An objective standard is used in determining whether an offer has been made.

Question 21

_____of a contract occurs when one party knows ahead of time that the other party will _____.

A) Anticipatory repudiation; breach the contract
B) Anticipatory repudiation; perform the contract
C) Mutual performance repudiation; breach the contract
D) Conditional performance; breach the contract

Question 22

Which of the following is true regarding the effect of death and incapacitation on an offer?

A) Death or incapacitation of either party terminates an offer.
B) Death of either party terminates an offer,and incapacitation on the part of the offeror terminates an offer,but incapacitation on the part of an offeree does not terminate an offer.
C) Death of either party terminates an offer,and incapacitation on the part of an offeree terminates an offer,but incapacitation on the part of the offeror does not terminate an offer.
D) Neither death nor incapacitation on either the part of the offeror or offeree terminates an offer.

Question 23

A third-party beneficiary is someone who is NOT:

A) a legal and recognized type of beneficiary.
B) intended to benefit from the contract.
C) a party to the original contract.
D) intended to enforce the contract.

Question 24

An agreement between two parties that provides that the seller will sell all of a product that he produces to the buyer is called a(n)

A) illusory promise.
B) requirements contract.
C) output contract.
D) fulfillment contract.

Question 25

Azariah promises to give Carey $50 if Carey promises to sell Azariah a business law book.This is an example of a(n)_____ contract.

A) unilateral
B) bilateral
C) void
D) conditional

Question 26

An illegal contract is generally considered a voidable contract.

Question 27

Under traditional common law,the acceptance must be the __________ of the offer.

A) essential terms
B) consideration
C) understanding
D) mirror image

Question 28

Which of the following is NOT one of the basic elements for formation of a valid contract?

A) Consideration
B) Promissory estoppel
C) An offer and acceptance
D) A legal purpose

Question 29

__________ damages compensate a party for losses that occur as a foreseeable result of the breach.

A) Quantum meruit
B) Reliance
C) Restitution
D) Consequential

Question 30

Which of the following would NOT be among the main reasons contracts are critical to business?

A) They prevent illegal business activity.
B) They enhance predictability.
C) They allocate risk and reward.
D) They provide a basis for enforceability.

Question 31

Which of the following is a type of conditional promise?

A) Condition concurrent
B) Condition subsequent
C) Condition illusory
D) Both a condition concurrent and a condition subsequent

Question 32

Which of the following are damages that give the plaintiff the benefit of its bargain,putting the plaintiff in the case position it would have been in if the contract had been fulfilled?

A) Expectation damages
B) Reliance damages
C) Restitution damages
D) In kind damages

Question 33

A third-party beneficiary has the legal rights to enforce a contract if the contracting parties intended to benefit that party.

Question 34

In CASE 7.1,SIGA Technologies,Inc.v.PharmAthene,Inc.(2013),the main issue before the Supreme Court of Delaware was whether

A) the pre-contractual letter of intent was enforceable.
B) PharmAthene had breached its obligation to negotiate the licensing agreement in good faith.
C) SIGA had breached its obligation to negotiate the licensing agreement in good faith.
D) the Delaware court had properly applied New York law in the case.

Question 35

_____ damages are awarded in promissory estoppels cases,where expectation damages are generally not allowed.

A) Incidental
B) Liquidated
C) Reliance
D) Quantum meruit

Question 36

A contract entered into by a minor is

A) void.
B) voidable.
C) binding.
D) illusory.

Question 37

Jaylin and Skylar enter into a contract.Among the terms of the contract is the clause that specifies the amount of money to be paid if one of them should later breach the agreement,also known as:

A) expectation damages.
B) liquidated damages.
C) restitution damages.
D) in kind damages.

Question 38

An agreement between two parties that provides that the buyer will buy all of a particular product from a particular seller is called a(n)

A) illusory promise.
B) requirements contract.
C) output contract.
D) fulfillment contract.

Question 39

In CASE 7.2,Kurashige v.Indian Dunes,Inc.(1988),plaintiff Kurashige used Indian Dunes Park for motorcycle dirt bike riding.Prior to entering the park he signed a general release.Kurashige was injured and sued Indian Dunes.How did the court rule and why?

A) For the defendant,holding that the release was not unconscionable,and that all the risk was on the plaintiff.
B) For the plaintiff,holding that the release was unconscionable,and that all the risk was on the defendant.
C) For the defendant,holding that the release was enforceable,and that plaintiff should have been insured.
D) For the plaintiff,because the release was enforceable based on the plaintiff's age in that he could not legally contract.

Question 40

Which of the following is true regarding acceptance?

A) In the absence of a provision in an offer regarding how acceptance is to be made,acceptance is effective upon dispatch into a mailbox.
B) Acceptance is never effective until it is received.
C) An offeror may not by law specify that an offer can be accepted only by facsimile to a stated fax number and that the acceptance is not effective until actually received.
D) An offeror may revoke an offer as long as the revocation is made before an acceptance is received.

Question 41

If a new law of general application indirectly affects a government contract,making the government's performance impossible,the _____ will protect the government in a subsequent suit for breach of contract.

A) sovereign acts doctrine
B) discretionary acts doctrine
C) ministerial acts theory
D) legislatively enacted principle

Question 42

Under the doctrine of ______,a court may invalidate an agreement if one party had sufficient influence and power over the other as to make genuine assent impossible.

A) fraud
B) mistake
C) undue influence
D) detrimental reliance

Question 43

Fraud in the _______ occurs when a party is persuaded to sign one document thinking that it is another.

A) acceptance
B) obligation
C) factum
D) inducement

Question 44

Val and Collins agree that Val will give Collins guitar lessons each week for six months and Collins will drive Val to the grocery store each week.Describe the elements that make this a valid contract.

Question 45

As a birthday gift,Bryce's uncle promised Bryce that he would pay Bryce's business school tuition for the next semester.In reliance on that promise,Bryce quit a part-time job at a fast food restaurant.When the tuition bill became due,Bryce's uncle told Bryce that he was sorry but that he would not be able to pay the tuition because he just built a new swimming pool at his house,and funds were running short.Bryce asks you if there is any basis upon which Bryce could win in litigation against this uncle.Which of the following would be the best advice?

A) Bryce should sue for breach of contract because an offer,acceptance,and consideration are all present.
B) Bryce should sue for breach of contract because an offer and acceptance are present,and Bryce's reliance would substitute for consideration.
C) Bryce should sue based on promissory estoppel.
D) Bryce should hurry and try to get the former restaurant job back because there is no basis upon which Bryce would have a viable case.

Question 46

If the promisee entered into the contract in order to discharge a duty he or she owed the third party,then the third party is a(n)__________ beneficiary.

A) express
B) implied
C) creditor
D) donee

Question 47

S calls B and says,"I will sell my 1966 Mustang convertible to you for $3,000." B knows that the car is worth $4,000.B replies,"Would that include the trunk-mounted spare tire?" S hangs up without a word.B calls back in three days and says,"I'll buy the car for $3,000." Is there a contract? Discuss fully.

Question 48

Jean is an accountant who works for the firm of Readum & Weep.Jean was approached by Henley,who represents one of Readum's competitors,Numbers R Us.Jean was offered a substantial raise to leave Readum and work for Numbers.Jean's boss heard this and called Jean in and said,"If you agree to stay with us for at least five years,I promise that next year you will receive a promotion with a 50 percent raise,and a five-year contract." Jean turned down the offer from Numbers and stayed with Readum.Nine months later Jean was dismissed due to corporate downsizing.Can Jean legally enforce the promise the boss made? What theory or theories would Jean use? Discuss fully.

Question 49

Two neighbors have lovely landscaped yards.One yard is cared for solely by the homeowner,Hollis.The other neighbor pays ABC Landscaping Service for the gardening work done on the yard.Hollis notices one day that an apparently new employee of ABC is working in Hollis's yard by mistake.Hollis says nothing.When the employee asks for payment,Hollis refuses on the basis that the gardening work was a mistake and that Hollis has no contract with ABC.Which of the following is true regarding whether ABC could recover against Hollis?

A) ABC likely has no rights against Hollis.
B) ABC could recover against Hollis based on breach of contract.
C) ABC could likely recover on a theory of quantum meruit.
D) ABC could likely recover based on a negligence theory.

Question 50

Describe three standard measures that courts have developed to measure monetary damages in contract cases.Explain how each would be measured.

Question 51

List the elements necessary for the doctrine of promissory estoppel to be applied.

Question 52

To which of the following does the statute of frauds apply?

A) A promise to pay the debt of another person
B) A contract that cannot be performed within the space of six months
C) Any contract of employment
D) Any contract involving commerce

Question 53

Helen tells her nephew,Bernard,that she will pay him $100 if he will stop smoking for six months.Helen was hopeful that if Bernard stopped smoking for six months,he would stop altogether.Bernard stops smoking for six months but then resumes his smoking.Helen will not pay him.She says that the type of promise she made cannot constitute a binding contract and that,furthermore,it was at least implied that he would stop smoking for good.Can Bernard legally collect $100 from Helen?

A) No,because under the law his stopping smoking was not adequate consideration.
B) No,because it was implied that he would stop smoking for good,and he only quit for six months.
C) Yes,because his stopping smoking for six months,as agreed,was adequate consideration for the contract.
D) Yes,because stopping smoking was good for his health even if he only did it for six months.

Question 54

A mistake of judgment:

A) makes a contract void.
B) is not a valid defense to enforcement of a contract.
C) is a valid defense to enforcement of a contract if the mistake is substantial.
D) is a defense for ineffective negotiating techniques.

Question 55

Under the _____ rule,when a contract is unambiguous any evidence of contemporaneous statements are _____ in court.

A) parol evidence; admissible
B) parol evidence; inadmissible
C) statute of frauds; inadmissible
D) statute of frauds; admissible

Question 56

Which of the following is a technique by which a new party is substituted for one of the old parties,and a new contract is written (with the consent of all old and new parties)to effect the desired change?

A) Novation
B) Substitution
C) Formal change
D) Verified change

Question 57

Conditions ______ occur when the mutual duties of performance are to take place simultaneously.

A) precedent
B) concurrent
C) subsequent
D) consequential

Question 58

What are the four basic elements necessary for a valid contract?

Question 59

Which of the following does NOT generally make a contract voidable?

A) Fraud
B) Duress
C) Unilateral mistake of fact
D) Misrepresentation

Question 60

Seneca owns an interior painting service.Seneca promises Fran,a homeowner,that Seneca will paint the outside of Fran's house.Seneca knows that all of the painter-employees are busy for the next two months and really does not intend to paint Fran's house.In this case,Seneca's tortious behavior is known as:

A) promissory fraud.
B) duress.
C) impossibility.
D) material breach.

Question 61

Pasha found a billfold on a city street,looked inside to determine its owner,and then returned it to its true owner,Rowan.A few days later,Pasha found out that Rowan had offered a reward in the amount of $100 for the return of the billfold.Pasha asks Rowan for the reward money,but Rowan refuses.Is Pasha entitled to the reward? Why or why not?

Question 62

Identify and discuss the two factors central to procedural unconscionability.