Deck 8: Contract Formation

Question 1

Under the Uniform Commercial Code (UCC),contracts for the sale of real estate can leave open nonquantity terms to be decided at a future time.

Answer 1

False
Explanation: Under the Uniform Commercial Code (UCC), contracts for the sale of goods can leave open nonquantity terms to be decided at a future time. Note that this rule applies only to sales of goods. It does not apply to sales of real estate or services.

Question 2

Contract law enables private agreements to be legally enforceable.

Answer 2

True
Explanation: Contract law enables private agreements to be legally enforceable. Enforceability of agreements is desirable because it gives people the certainty they need to rely on promises contained in agreements.

Question 3

Darcy offers Kate his farm house for $200,000.However,before Kate communicates her acceptance,the farm house is destroyed in a fire.In this situation,Kate can sue Darcy for breach of contract.

Answer 3

False
Explanation: In this scenario, the offer is terminated by virtue of destruction of the subject matter. Since the farm house is destroyed even before Kate's acceptance is communicated, the termination of the offer is circumstantial and valid. Termination by operation of law occurs when the subject matter is destroyed. When an offer terminates, the offeree's legal power to bind the offeror ends.

Question 4

An executed contract is one in which the parties are yet to perform their promises.

Question 5

Ana offers Corey her vacuum cleaner for $300.Corey rejects the offer,so Ana promises to sell the vacuum cleaner to Abey.However,a day later,Corey decides to buy the vacuum cleaner and informs Ana of his acceptance.Ana must sell the vacuum cleaner to Corey.

Question 6

A written promise is necessary for the rules of contract law to be applicable to a contract.

Question 7

Juan offers to sell his cycle to Charles for $1,000.Charles agrees saying,"I will pay you $1,000,if you give me an extra tire with the cycle." This is an example of a binding contract that is created between Juan and Charles as a result of the mirror image rule.

Question 8

If a debtor overpays a creditor by $5,000,the debtor can force the creditor to return that amount by suing under quasi-contract.

Question 9

Isla mails Taylor offering to sell her house at a "reasonable price." Taylor mails his acceptance.Isla and Taylor are bound by a valid contract.

Question 10

The Uniform Commercial Code (UCC)applies to individuals as well as firms.

Question 11

Contracts are legally enforceable promises.

Question 12

Quasi-contracts are usually applied by courts in cases where the contract is unenforceable for some reason,such as a lack of capacity of a party in a contract.

Question 13

A unilateral contract is an agreement containing mutual promises.

Question 14

Thomas asks Alicia,an accountant,for professional advice about his portfolio.Thomas is not obligated to pay Alicia since he does not express a promise to pay for her advice.

Question 15

Shane wants to sell his car.He accepts Layla's offer and sells the car at $15,000.Layla is the offeree.

Question 16

The legal power created in the offeree to bind the offeror in a contract lasts forever.

Question 17

The mirror image rule is the same under common law rules and the Uniform Commercial Code (UCC).

Question 18

Andrew,a professor,makes a promise to pay $3.00 to Lily,his student,if Lily gets him a reference book from the library.This is an example of a unilateral contract.

Question 19

Warranties can be disclaimed in writing if the parties so choose.

Question 20

A voidable contract is an agreement when at least one party has the right to withdraw from the promise made without incurring any legal liability.

Question 21

The doctrine of part performance creates an exception to the requirement that sales of interests in land must be in writing.

Question 22

Promissory estoppel often is used to prevent a party who has made a unilateral offer from withdrawing the offer after the requested work has begun.

Question 23

A party who is injured due to another's fraud generally has the option to avoid the contract and seek return of any consideration conveyed.

Question 24

A minor can disaffirm a contract and legally recover any consideration that has been given to an adult,even if the minor cannot return the adult's consideration.

Question 25

A party who makes a unilateral mistake can void the contract.

Question 26

Casper offers to sell a car to Amanda for $1,000,to which Amanda agrees.Both the parties sign a contract with all the details of the transaction that will be executed in 1 day.This contract is an example of a firm offer.

Question 27

Which of the following statements is true about contract laws?

A) Their application is confined to formally written documents.
B) They must be formal in order to be valid.
C) They enable private agreements to be legally enforceable.
D) They are applicable to all business dealings that are against public policy too.
E) They are invalid in instances that involve implied "promises."

Question 28

Under the Uniform Commercial Code (UCC),all contracts and contract offers must have consideration.

Question 29

Contracts are

A) legally enforceable promises.
B) always required to be written as per the Uniform Commercial Code (UCC) law.
C) a form of a circular.
D) enforceable in supreme courts but not in lower courts.
E) always informal agreements.

Question 30

Fixman Inc.agrees to renovate Melanie's house for $50,000.During the renovation,Fixman demands an additional $10,000 to complete the work,to which Melanie agrees.Fixman can sue Melanie if she fails to pay the additional amount.

Question 31

Madison promises Grace $10 if Grace collects her dry cleaning for her.This is an example of a(n)______ contract.

A) bilateral
B) unilateral
C) voidable
D) void
E) unenforceable

Question 32

A collateral promise is a secondary or conditional promise.

Question 33

The advantage of the mailbox rule is that the offeror can revoke the offer even when the offeree has accepted it.

Question 34

According to the mailbox rule,a deposited acceptance creates a binding contract even if there is a revocation in the mail.

Question 35

Adhesion contracts are those that are drafted by one party and presented to the other without a substantial opportunity for revision.

Question 36

Performance made before parties discuss their agreement counts as a valid consideration.

Question 37

In the context of contracts formed by promises,which of the following is an agreement containing mutual promises?

A) unilateral contract
B) quasi-contract
C) express-in-fact contract
D) bilateral contract
E) implied-in-fact contract

Question 38

A promise to make a gift is not binding as a contract because no bargained-for consideration supports the promise.

Question 39

When there is a mutual mistake as to a material fact relating to a contract,rescission is inappropriate.

Question 40

An option offer is open for a certain time period and is supported by the offeree's consideration.

Question 41

A(n)______ contains a specific promise and a specific demand.

A) consideration
B) revocation
C) offer
D) capacity
E) exculpation

Question 42

Brett offers to sell his old but functioning cell phone to James for $65.James says he will accept the offer if Brett lowers the price to $60.James has

A) made an unequivocal acceptance.
B) made a counteroffer.
C) demonstrated the exculpatory rule.
D) entered into an option contract.
E) entered into an executory contract.

Question 43

According to the mailbox rule,a contract is formed

A) when the offer is mailed.
B) when the offer is received.
C) when the acceptance is received.
D) when the acceptance is mailed.
E) when the offer is converted to a written document.

Question 44

In the context of implied warranties as defined by the Uniform Commercial Code (UCC),which of the following refers to the merchantability of goods?

A) The goods will be of fair average quality and conform to any labeling.
B) The goods will be suitable for the buyer's purpose if the seller is aware of it.
C) The goods will be delivered within two weeks of order.
D) The goods will be worth at least $500 or more.
E) The goods will be sold within states and not across states.

Question 45

The remedy of quasi-contract generally applies only when

A) there are more than three parties in a contractual agreement.
B) no actual contract exists to cover the dispute.
C) the contract is bilateral in nature.
D) no more than two parties expressly discuss the terms of their agreement.
E) implied warranties are included in a contract.

Question 46

The deposited acceptance rule is also known as the ______.

A) mirror image rule
B) mailbox rule
C) unilateral rule
D) bilateral rule
E) negotiation rule

Question 47

A(n)______ is one that appears to be an agreement but lacks an essential requirement for validity and enforceability.

A) voidable contract
B) unenforceable contract
C) void contract
D) valid contract
E) executed contract

Question 48

A(n)______ is one in which the promised terms of the contract are discussed by the parties.

A) express contract
B) reciprocal contract
C) implied contract
D) bilateral contract
E) unilateral contract

Question 49

Mayra offers to sell her home to Hanna for "about $100,000 plus closing costs." Hanna accepts Mayra's offer.Later,a dispute arises over the precise dollar amount of the purchase price.How will a court most likely resolve this dispute?

A) The court will determine a reasonable price to be paid by Hanna.
B) The court will determine that Hanna pay only the figures mentioned in the contract.
C) The court will appoint a licensed real estate appraiser to determine the price to be paid by Hanna.
D) The court will require Hanna to pay the average of her price and Mayra's price.
E) The court will declare the purchase price and terms too indefinite to create a binding contract.

Question 50

A(n)______ is an agreement when one party has the right to withdraw from the promise made without incurring any legal liability.

A) executed contract
B) voidable contract
C) void contract
D) implied-in-fact contract
E) reciprocal contract

Question 51

Which of the following statements is true of silence as a method of acceptance?

A) An offeree's silence implies that the offeree will make a counter offer.
B) Silence may well imply acceptance if the parties previously dealt with each other.
C) When an offer specifies that silence indicates acceptance, the offeree has to respond.
D) Silence alone can be acceptance and the basis of a binding contract.
E) Silence leads to acceptance of an offer due to the mirror image rule.

Question 52

Fred takes Betty to dinner at a very expensive and exclusive restaurant.The menu does not mention the prices.The server takes their order and both Fred and Betty enjoy the meal immensely.When the bill arrives,Fred refuses to pay because the menu had no prices and because he and the server never engaged in language indicating an offer and acceptance.The server said,"Are you ready to order?" and when Fred said "Yes," the server merely asked,"What may I get you tonight?" In the context of this scenario,which of the following statements is true?

A) Fred must pay based on an implied-in-fact contract theory.
B) Fred must pay based on a promissory estoppel theory.
C) Fred must pay based on an express contract theory.
D) Fred is correct because no contract was formed.
E) Fred is correct because he and the server entered into an agreement without a written document.

Question 53

Josh announces a reward of $500 for his dog,Ginger,that ran away from his house.Josh spreads the word only by pinning up posters in his neighborhood.Amanda,Josh's colleague,sees Ginger and brings her back to Josh without ever seeing the poster.After returning the dog,Amanda sees one of the reward posters and returns to claim the money.In the context of this scenario,which of the following statements is true?

A) Amanda is not entitled to the money because the offer was not communicated to her.
B) Amanda is not entitled to the money because she is Josh's colleague and acted in good faith.
C) Amanda is entitled to the money because the poster constituted an offer and is effective for the entire neighborhood.
D) Amanda is entitled to the money since performance of the requested act in the poster indicates acceptance.
E) Amanda is not entitled to the money since she did not communicate the acceptance of the offer in writing.

Question 54

A(n)______ is one when parties have not performed their agreement.

A) executed contract
B) executory contract
C) express contract
D) exculpatory contract
E) unenforceable contract

Question 55

The doctrine of quasi-contracts is predominantly based on a(n)

A) reciprocal contract.
B) implied-in-law contract.
C) express contract.
D) bilateral contract.
E) unilateral contract.

Question 56

In the context of contracts formed by interactions of parties,which of the following arises from the conduct of the parties rather than from words?

A) express contracts
B) implied-in-fact contracts
C) executed contracts
D) void contracts
E) adhesion contracts

Question 57

In the context of termination of an offer,______ occurs when an offeror retracts the offer before the acceptance.

A) rejection
B) reversion
C) novation
D) revocation
E) rescission

Question 58

According to the mirror image rule,______.

A) the acceptance must exactly match the offer
B) a contract must be accepted in writing by both the parties involved to make it enforceable in the court of law
C) the acceptance of an offer involves changing the terms of the offer or adding new terms
D) one of the parties to a contract should be a minor
E) there has to be at least two or more counteroffers to bind a contract

Question 59

Laborers working on a building are promised by their contractors that their wages would be paid at the end of every month.The laborers also in return promise to work from the beginning of the subsequent month.When the laborers have worked for the entire duration of the month and are awaiting their wages at the end of the month,the contract is ______.

A) void
B) executory
C) implied
D) executed
E) unilateral

Question 60

The ultimate purpose of a contract is the creation of an agreement that courts will order parties to perform or to pay consequences for the failure of performance.When courts uphold the validity of such promises,the resulting agreement is a(n)______.

A) absolute contract
B) differentiated contract
C) void contract
D) relative contract
E) enforceable contract

Question 61

Which of the following terms refers to force or threat of force?

A) rescission
B) misrepresentation
C) undue influence
D) duress
E) revocation

Question 62

In which of the following cases does the legal power of the offeree to bind the offeror end?

A) When the offeree accepts the offer
B) When the offeror is declared insane before acceptance of the offer by the offeree
C) When the subject matter of the contract is destroyed after the acceptance of the offer
D) When the offeror accepts the counteroffer
E) When the offeror attempts to retract the offer after its acceptance by the offeree

Question 63

Smith Inc.sends a letter dated August 1 to Cervaille Stores,offering to sell 20 table lamps to Cervaille Stores at $80 each.Cervaille Stores provides a consideration of $160 to Smith Inc.to keep the offer open for at least two weeks.In the second week of August,Smith Inc.receives an offer from Shine Retailers Inc.to purchase the table lamps at a price of $85 each.Can Smith withdraw its offer made to Cervaille Stores?

A) Smith cannot withdraw its offer as the agreement is in the form of an option.
B) Smith cannot withdraw its offer since the doctrine of promissory estoppel is applicable.
C) Smith can withdraw its offer as the offer was simply an invitation to negotiate.
D) Smith cannot withdraw its offer as this is a firm offer.
E) Smith can withdraw its offer as the consideration makes it enforceable as a property transfer.

Question 64

Which of the following statements is true about the consideration in a contract?

A) Courts usually enforce contractual promises in the absence of consideration.
B) The amount of the consideration is the most important and relevant part of a contract for a legal action.
C) The consideration must be contemporaneous and a part of both parties' understanding of the contract terms.
D) The consideration in any unilateral contract is usually absent.
E) Performance made before parties discuss their agreement counts as a consideration.

Question 65

Valid consideration can include any promise to do something one has no obligation to do,refrain from doing something one has the right to do,or in the case of a unilateral contract,a performance when there is no obligation to do so.This is known as a(n)______.

A) exculpation
B) legal detriment
C) release
D) negotiation
E) promissory estoppel

Question 66

Dustin,who is 17 years old,purchased a car from Speed Auto Sales Inc.for $1,000.The following year,Dustin's father gifted him a brand new car on his 18th birthday.Dustin returned the car that he had purchased to Speed Auto Sales the next day,and he demanded his money back.At the time of disaffirmance,Dustin was 18-the age at which he was considered an adult in his jurisdiction.Will this disaffirmance be enforceable in the court of law?

A) The disaffirmance will not be enforceable since Dustin did not give Speed Auto Sales a signed revocation.
B) The disaffirmance will be enforceable since Dustin disaffirmed during the year he attained adulthood.
C) The disaffirmance will not be enforceable since the disaffirmance must be written when the price exceeds $500.
D) The disaffirmance will be enforceable since courts and laws always rule in the favor of minors.
E) The disaffirmance will not be enforceable since Dustin attained adulthood, and disaffirmance can be expressed only by a minor.

Question 67

Tristam,an insurance agent,wants Philomena to purchase the insurance policy of his choice.Despite Philomena's resistance to accept his offer,Tristam compels her to purchase the policy by exerting his physical force on her and forces her to sign the insurance documents.Which of the following has been most likely used by Tristam to complete the contract arrangements?

A) duress
B) misrepresentation
C) undue influence
D) misstatement
E) fraud

Question 68

The legal mechanism for evaluating the existence of an incentive for a person's promise to establish a binding contract and acts as a receipt of a legal benefit or the suffering of a legal detriment is ______.

A) collusion
B) accord and satisfaction
C) consideration
D) reversion
E) novation

Question 69

Which of the following statements is true about the acceptance of an offer?

A) Bilateral contracts are predominantly accepted by the offeree performing the act.
B) Unilateral contracts are accepted by making a promise.
C) The language of an offer is optional in determining the nature of contract and its acceptance.
D) Counteroffer usually means an acceptance of an offer.
E) Acceptance must follow the mirror image rule to create a binding contract.

Question 70

An important exception to the rule requiring consideration to support a promise is the doctrine of ______.This doctrine arises when a promisee justifiably relies on a promisor's promise to his or her economic injury.

A) firm offer
B) consideration
C) termination
D) promissory estoppel
E) accord and satisfaction

Question 71

Which of the following statements is true about minors as parties to a contract?

A) A contract into which a minor has entered is voidable at the election of the minor.
B) A minor can be legally bound to contractual promises involving necessaries of life such as shelter and medical care.
C) In a number of states, courts do not hold a minor who has misrepresented his or her age.
D) A minor can explicitly ratify a contract and forego disaffirmance even before reaching the age of majority.
E) Upon ratification, a minor gains the right to disaffirm.

Question 72

Which of the following statements is true about a promise to make a gift?

A) Upon delivery of the item, a true gift can be enforceable as a property transfer.
B) Promissory estoppel prevents a gift from being enforceable.
C) A promise to make a gift is binding as a contract as it usually supports the bargain.
D) A promise to make a gift becomes an option when it has a clause in the agreement that revokes the gift.
E) Insignificant consideration in return for a great one raises concerns that the exchange is actually not a gift.

Question 73

Robert is about to graduate from his university.His parents tell him that as he is the first member of the family to graduate college,they want to buy him a new but inexpensive car.They have the money to buy the car,and Robert is excited to receive his gift.On graduation day,his parents tell him that they have decided to use the car money for a vacation and that there will be no car.In this situation,can Robert sue his parents?

A) Robert can successfully sue based on promissory estoppel.
B) Robert can successfully sue based on the promise of a gift.
C) Robert cannot sue because the promise was not reasonable and did not follow the mailbox rule.
D) Robert cannot sue because he did not suffer any legal detriment in the receipt of the promise.
E) Robert can sue since the promise is his legal benefit, and it is an implied-in-fact contract.

Question 74

Systek 22 Inc.made a promise to Garrett offering him a job with an annual salary of $150,000 and at least two years of employment.Since Garrett had to move to New York for the new job,Systek 22 also offered to reimburse all of his moving expenses.Based on this promise,Garrett resigned from his job at another firm that offered him an annual salary of $100,000.When Garrett moved to New York,his employment with Systek 22 was terminated,because the company found a candidate who was willing to work for a lesser salary.Which of the following is true of this situation?

A) Garrett cannot sue Systek 22 since the promise was oral.
B) Garrett can sue Systek 22 under the doctrine of promissory estoppel.
C) Garrett cannot file a lawsuit since a promise of employment is always subject to market conditions.
D) Garrett can sue Systek 22 only for the moving expenses that Garrett can prove he incurred.
E) Garrett cannot sue Systek 22 since the reasons for termination will be accepted in court as a legal detriment.

Question 75

Brandie is facing financial difficulties.Warren wants to help Brandie,and tells her that he will loan her $1,000.Later,Warren refuses to loan the promised money to Brandie.In the context of this scenario,which of the following statements is true?

A) Warren must loan the money to Brandie because a promise is made and consideration has nothing to do with the agreement.
B) Warren need not loan the money to Brandie because Brandie did not promise anything in return.
C) Warren must loan the money to Brandie because he has entered into an implied-in-fact contract by promising her the money.
D) Warren does not have to loan the money to Brandie because of the mirror image rule.
E) Warren must loan the money to Brandie because he has entered into an executory contract by promising her the money.

Question 76

In contracts that are not between merchants selling goods,a promise to keep an offer open for a certain time period must be supported by the offeree's consideration.Such agreement to not revoke an offer is called a(n)______.

A) firm offer
B) option
C) promissory estoppel
D) novation
E) accord

Question 77

Tony's Carpets Inc.wants to charge $9.80 a yard for installing a carpet for Serenity Bookstore but accidentally states $8.90 a yard in the bid.Serenity Bookstore accepts Tony's Carpets' bid.Tony's Carpets made a ______.

A) bilateral mistake
B) unilateral mistake
C) mutual mistake
D) rescission mistake
E) contractual mistake

Question 78

If a minor fails to disaffirm a contract within a reasonable time after reaching majority,the minor is said to ______ the contract.

A) transcend
B) terminate
C) rescind
D) ratify
E) breach

Question 79

Which of the following terms refers to a person's ability to be bound by a contract?

A) legality
B) capacity
C) usability
D) negotiability
E) measurability

Question 80

Aria asks Jessica if she can borrow an outfit for an office party and Jessica agrees.When Aria picks an outfit,Jessica refuses to give it to her.Which of the following statements is true of this situation?

A) Jessica has committed a breach of contract.
B) A bargained-for exchange has not occurred, so Jessica does not have to loan the outfit to Aria.
C) Jessica has promised Aria something of value, so she must loan her the outfit.
D) The contract between Aria and Jessica is terminated as Aria makes a counteroffer.
E) Jessica has given a valid consideration, thereby making the agreement between her and Aria a binding contract.