Deck 7: Contracts

Question 1

Most advertisements are treated not as offers but as invitations to negotiate.

Answer 1

True

Question 2

Consequential damages are compensation for losses that occur as a foreseeable result of the breach.

Answer 2

True

Question 3

Only an attorney can hold a power of attorney.

Answer 3

False

Question 4

Most non-English-speaking countries follow the common law tradition.

Question 5

An offeror may not revoke an offer before the offeree has had a reasonable time in which to consider it.

Question 6

A novation occurs when a new party is substituted for one of the original parties to a contract.

Question 7

A counteroffer does not terminate the original offer.

Question 8

Any breach of a contract discharges the nonbreaching party from its obligations and provides grounds to sue for damages.

Question 9

Unconscionability has both a procedural and a substantive element.

Question 10

Void means the same thing as voidable in contract law.

Question 11

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

Question 12

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

Question 13

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

Question 14

An option contract holds an offer open for a certain amount of time in exchange for some consideration.

Question 15

An offer terminates at the end of a reasonable period if the offeror did not specify a time.

Question 16

Reliance damages are awarded in addition to expectation damages.

Question 17

Expectation damages give the plaintiff the benefit of its bargain,putting the plaintiff in the cash position it would have been in if the contract had been fulfilled.

Question 18

Courts enforce liquidated damages as a form of a penalty.

Question 19

The statute of frauds requires that all contracts be in writing to be enforceable.

Question 20

In a requirements contract,the buyer agrees to purchase all of the seller's output of a particular product.

Question 21

A contract entered into by a minor is

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

Question 22

Contract law comes from which of the following?

A)Case law
B)Statutes
C)Tradition
D)All the responses are correct

Question 23

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 24

Commercial transactions involving the sale of goods,movable personal property,are governed by which of the following?

A)Article 2 of the Uniform Commercial Code
B)Articles 1-3 of the Uniform Sale of Goods Code
C)Article 1 of the Federal Sales Code
D)Article 1 of the Uniform Credit Code

Question 25

A _________ contract is a promise given in exchange for another promise.

A)unilateral
B)bilateral
C)mutual
D)collateral

Question 26

Which of the following are damages that compensate the plaintiff for any expenditures it made in reliance on a contract that was subsequently breached?

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

Question 27

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 so long as the revocation is made before an acceptance is received.

Question 28

An offer can be terminated by __________.

A)operation of law
B)action of the parties
C)detrimental reliance
D)operation of law and also action of the parties

Question 29

If a contractual promise is broken,the person to whom the promise was made,the __________,has certain legal rights against the person who made the promise,the ________.

A)promisee,promisor
B)promisor,promisee
C)perfector,perfectee
D)perfectee,perfector

Question 30

An offer is only effective if

A)offer is communicated to the offeree.
B)terms of the offer are reasonably definite.
C)offeror has an intention to be bound by the offer.
D)all of the responses are correct.

Question 31

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

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

Question 32

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 33

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 34

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

A)Incidental
B)Reliance
C)Restitution
D)Consequential

Question 35

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 36

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

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

Question 37

A(n)________ is any agreement to accept performance that is different from what is called for in the contract

A)accord and satisfaction
B)anticipatory repudiation
C)frustration of purpose
D)mutual rescission

Question 38

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 39

Liquidated damages are damages that

A)punish the breaching party.
B)fluctuate with the market conditions.
C)are an estimate of the damages likely to be sustained from the breach.
D)none of the above

Question 40

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 41

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 42

Fact pattern 7-1
Prudence offered to sell her car to Danny for $3,000.Danny was not sure what to do,so he asked Prudence if she would hold the offer open for him for one week for $50.Prudence said sure.Meanwhile,the next day,Bobby offered Prudence $3,500 for the car,and Prudence sold it to him on the spot.When Danny came to pick up the car the next day,it was gone.Prudence gave Danny his $50 back and told him that was her only obligation and that if he had any complaints,he could take it up with Bobby.Danny found a similar car the next week for $3,500 and purchased it.
Refer to fact pattern 7-1.What damages,if any,could Danny likely collect against Bobby in litigation over the car?

A)None
B)Reliance damages consisting of $500
C)Incidental damages consisting of $50
D)Compensatory damages consisting of $500

Question 43

What are the elements necessary for a valid contract? Define and discuss these elements.

Question 44

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

Question 45

Fact pattern 7-2
Hester offers to sell her house to Frank for $250,000.Frank says that he would like to think about it,and Hester says that is fine.The next day,Martha,Hester's friend,says that she will give Hester $240,000 for the house.Hester really likes Martha more than Frank and signs a contract to sell the house to Martha.Later that day Hester sees frank walking up her driveway.She immediately opens the window and yells "I revoke the offer on the house" before Frank says anything.Frank replies that he accepts the offer and expects to purchase the home.
Refer to fact pattern 7-2.Which of the following is true regarding the offer to Frank assuming Hester's revocation was ineffective?

A)It was probably still open the next day because a reasonable length of time would not have expired.
B)It would have terminated because Frank did not provide any consideration to leave it open.
C)By operation of law,it would have terminated at midnight on the day it was made.
D)By operation of law,it would still have been open because it would not have terminated until midnight on the day after it was made.

Question 46

Under the doctrine of ________,a court may order restitution if one party has received a benefit for which it has not paid when there was no contract between the parties

A)mutuality of obligation
B)laesio enormis
C)quantum meruit
D)precontractual liability

Question 47

Fact pattern 7-1
Prudence offered to sell her car to Danny for $3,000.Danny was not sure what to do,so he asked Prudence if she would hold the offer open for him for one week for $50.Prudence said sure.Meanwhile,the next day,Bobby offered Prudence $3,500 for the car,and Prudence sold it to him on the spot.When Danny came to pick up the car the next day,it was gone.Prudence gave Danny his $50 back and told him that was her only obligation and that if he had any complaints,he could take it up with Bobby.Danny found a similar car the next week for $3,500 and purchased it.
Refer to fact pattern 7-1.What damages,if any,could Danny likely collect against Prudence in litigation over the car?

A)None
B)Reliance damages consisting of $500
C)Incidental damages consisting of $50
D)Compensatory damages consisting of $500

Question 48

Which of the following is not an element of promissory estoppel?

A)A promise
B)Unjustifiable reliance
C)Foreseeability
D)Injustice of result

Question 49

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

Question 50

Fact pattern 7-1
Prudence offered to sell her car to Danny for $3,000.Danny was not sure what to do,so he asked Prudence if she would hold the offer open for him for one week for $50.Prudence said sure.Meanwhile,the next day,Bobby offered Prudence $3,500 for the car,and Prudence sold it to him on the spot.When Danny came to pick up the car the next day,it was gone.Prudence gave Danny his $50 back and told him that was her only obligation and that if he had any complaints,he could take it up with Bobby.Danny found a similar car the next week for $3,500 and purchased it.
Refer to fact pattern 7-1.Did Danny have any type of contract with Prudence,and if so what type?

A)Danny did not have any type of contract with Prudence.
B)Danny had an option contract with prudence.
C)Danny had a hold contract with prudence.
D)Danny had a conditional contract with Prudence.

Question 51

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 and 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 52

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 53

Fact pattern 7-2
Hester offers to sell her house to Frank for $250,000.Frank says that he would like to think about it,and Hester says that is fine.The next day,Martha,Hester's friend,says that she will give Hester $240,000 for the house.Hester really likes Martha more than Frank and signs a contract to sell the house to Martha.Later that day Hester sees frank walking up her driveway.She immediately opens the window and yells "I revoke the offer on the house" before Frank says anything.Frank replies that he accepts the offer and expects to purchase the home.
Refer to fact pattern 7-2.Which of the following is rue regarding whether Hester's attempted revocation was effective?

A)It was effective because Hester had left the offer open the amount of time required by law regardless of whether she revoked before Frank could accept.
B)It was effective because Hester issued the revocation before Frank could accept.
C)It was ineffective because the amount paid by Martha was less than the offer to Frank.
D)It was ineffective because Hester attempted the revocation at too early a point in time.

Question 54

Which of the following is true regarding a mistake of judgment?

A)It is a valid defense to enforcement of a contract.
B)It is not a valid defense to enforcement of a contract.
C)Whether it is a valid defense to enforcement of a contract depends upon the substantiality of the mistake.
D)Whether it is a defense to enforcement of a contract depends upon: (1)the substantiality of the mistake,(2)whether the risks were allocated,and (3)timing.

Question 55

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 56

Define the term "consideration" as it is used in contract law.

Question 57

Which of the following is a doctrine that may excuse the government from performance on a contract due to legislative or executive acts?

A)The sovereign acts doctrine.
B)The legislative and executive acts doctrine.
C)The separation-of-powers doctrine.
D)The governmental privilege doctrine.

Question 58

A __________ is a provision specifying which country's courts will have exclusive jurisdiction over any dispute involving a multinational contract.

A)choice-of-forum provision
B)choice-of-law provision
C)choice-of-court provision
D)choice-of-law provision

Question 59

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 60

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

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

Question 61

Fully discuss the following issues involving mistake.
a.When will a unilateral mistake of fact by one party make a contract voidable?
b.What will a court consider in determining whether to undo a contract based on a mistaken assumption of fact by both parties?

Question 62

Jack is an accountant who works for the firm of Readum & Weep.Jack was approached by Ima Phool,who represents one of Readum's competitors,Numbers R Us.Jack was offered a substantial raise to leave his company and work for Numbers.When Jack's boss heard this he called him in and said,"If you stay with us,I promise that next year you will receive a promotion with a 50% raise,and a 5-year contract." Jack turned down the offer and stayed with Readum.Nine months later Jack was dismissed due to corporate downsizing.Can Jack legally enforce his boss's promise? What theory or theories would Jack use? Discuss fully.

Question 63

Big Company owed Struggling Company $50,000.Because officials at Big Company knew that Struggling Company was having significant financial problems,the president of Big Company told the president of Struggling Company that Big Company would only pay $25,000 in satisfaction of the debt.The president of Big Company knew that Struggling Company lacked sufficient assets with which to hire a lawyer and sue.Struggling Company did accept the $25,000 in settlement of the debt and signed a release.A few months later,Struggling Company's financial position improved.The president of Struggling Company would like to sue Big Company for the remaining sums.What theory represents Struggling Company's best chance to prevail,and what elements must be proven under that theory?