Constance asks Kathy if Kathy will sell her used business book for $50. What is the status of the negotiation?
No offer has been made.
An offer has been made, but it may be revoked.
An offer has been made that may not be revoked.
A contract has been entered into.
A contract has been entered into, but it may be set-aside at the option of either party.
Which of the following is FALSE regarding rights of an assignee and assignor?
Assignees essentially fill in for the assignor as the legal recipient of contractual duties.
Assignees acquire the same rights as the assignor had.
Assignees are offered additional protection than assignors.
The obligor may raise any of the same defenses for nonperformance to the assignee that he or she would have been able to raise against the assignor.
When an assignor transfers rights to an assignee, the assignor legally gives up all rights he or she previously had to collect on the contract.
Marcy’s mother, Sue, did not want her to date until she was older. She also wanted Marcy to attend law school. Just before Marcy started her freshman year in college, Sue told Marcy that if Marcy would refrain from dating until she received her law degree, then Sue would pay off all of Marcy’s school loans and throw in an extra $50,000. Marcy agreed and stated, “Thanks, Mom; when I graduate, I’m throwing you a big party for all you have done for me!” Sue smiles and hugs Marcy. Marcy finished law school and asked for payment of her loans, the $50,000 in cash, and for a car. Sue said, “No way—I know you went out on some dates during law school, and I never agreed on the car.” Marcy said those were just study nights and that her mother had never objected to Marcy’s frequent statements that she wanted a car upon graduation. Sue asks about the party. Marcy tells her that she is nuts because there is no way Marcy can afford a party since Sue has backed out of the deal. After some serious negotiation, Marcy and Sue settled their dispute with Sue agreeing to pay for half of Marcy’s school loans and for all of the expenses of Marcy’s upcoming wedding; Sue also agreed to forget about Marcy throwing a party for her. Was there sufficient consideration to support Marcy’s agreement to throw a party for Sue?
Yes, sufficient consideration was present.
No, there was insufficient consideration because Sue did not promise anything in exchange.
No, there was insufficient consideration because Marcy’s agreement was illusory.
No, because throwing a party is not of a monetary value such as to constitute consideration.
No, because close relatives are involved.
When a party’s obligations under a contract are terminated, the party is said to be __________.
Distinguishing between unilateral and mutual mistakes is important because the classification bears on which contracts __________.
none of these because mutual mistakes are not recognized in the area of contracts
Which of the following would NOT be viewed as an example of consideration?
A promise to stay in a job until a particular project is completed
A promise to your football coach to refrain from riding your motorcycle during football season even though you love riding it
A promise to cook dinner for your roommate for the next six months
A promise to stop drinking alcohol during exam week
A promise to pay your employees as required by law
Which of the following occurs when a party to a contract transfers his or her rights to a contract to a third party?
In Hamer v. Sidway, the New York Court of Appeals found that forbearance:
negates the enforceability of a contract.
is not mandatory for a contract to be binding.
is sufficient consideration for a valid contract.
is insufficient consideration for a valid contract.
Consideration is defined as __________.
being cordial in the negotiation of contracts
refraining from unethical behavior in the negotiation of contracts
being both cordial and refraining from unethical behavior in the negotiation of contracts
a bargained-for exchange
a contract negotiated in person as opposed to by telephone or e-mail
Which of the following is an example of consideration?
A benefit to the promisor but not a detriment to the promisee
A detriment to the promisee but not a benefit to the promisor
A promise to do something, a benefit to the promisor, or a detriment to the promisee
An accepted offer
A valid counteroffer
Which of the following occurs when a party unjustifiably fails to substantially perform his or her obligations under the contract?
If the plaintiff is seeking legal damages which would put him or her in the same position he or she would have been in had the contract been fully performed, he or she is suing for __________ damages.
What are the elements of a binding contract?
Offer, acceptance, consideration, and assent
Acceptance, consideration, assent, and legal object
Agreement, offer, acceptance, and consideration
Agreement, consideration, contractual capacity, and assent
Agreement, consideration, contractual capacity, and legal object
George offers to sell Penelope a ring that George found in his yard. He and Penelope look at the ring and decide that they are not sure what it is. Penelope pays George $10 for the ring. The ring turns out to be a diamond worth much more than $10. George wants the ring back, and Penelope refuses. What is the most likely result?
The ring will be returned to George because of mutual mistake.
The ring will be returned to George because of unilateral mistake.
The ring will be returned to George because of equity.
The ring will remain with Penelope unless George can establish that she was negligent in not recognizing the ring’s true value.
The ring will remain with Penelope because the parties contracted on the assumption that they did not know the value of the ring.
Harry accepts Frank’s offer to sell a used car for $2,000. At what point is there a binding contract?
When the agreement is made
When the money is paid
When the car is delivered
10 days after the car is delivered and approved
20 days after the car is delivered and approved
Which of the following are the two most important primary sources of contract law?
Case law and the restatement of law
Case law and the Uniform Commercial Code
The Uniform Commercial Code and the Convention on Contracts for International Sales of Goods
Case law and the Convention on Contracts for International Sales of Goods
The Convention on Contracts for International Sales of Goods and the Restatement of the Law Second, Contracts
Which of the following are the two primary kinds of performance?
Partial and significant
Partial and complete
Partial and substantial
Complete and substantial
Complete and significant
Which of the following is TRUE regarding illusory promises?
Illusory promises are not consideration.
Illusory promises are consideration.
Illusory promises qualify as consideration when past consideration is at issue.
Illusory promises qualify as consideration when promissory estoppel is at issue.
Illusory promises are consideration only when a sale of goods is involved.
Business law teacher, Debby, needed some yard work done. She told her class that she would give $50 to the first person who mowed her yard. Max went to mow Debby’s yard. Unfortunately, just as he finished mowing, a neighborhood dog bit him, and he had to go to the emergency room for a couple of stitches. Debby refused to pay Max on the basis that the agreement was not in writing and that Max ended up being more trouble than he was worth. Max refused to pay the emergency room because he said that he did not have a binding, bilateral contract with Debby. Which of the following is an appropriate characterization of the agreement between Debby and Max?
They had a bilateral, express contract.
They had a bilateral, implied contract.
They had a bilateral and unilateral contract.
They had a unilateral contract.
They did not have any type of enforceable agreement.
A __________ is a FALSE representation of a material fact that is consciously false and intended to mislead the other party.
negligent misrepresentation, fraudulent misrepresentation, and scienter misrepresentation
negligent or fraudulent misrepresentation, but not a scienter misrepresentation
The person who agrees to the terms of an offer by another party is called the __________.
Stewart, the owner of ABC Construction, agreed with Joan, the owner of XYZ Hotel, that he would complete renovations on her upscale hotel on the beach in Florida by October 1. The amount due to Stewart under the contract was $250,000. The contract contained a clause by which Stewart would pay Joan $50,000 for each day he was late on completing the project. Unfortunately, an unexpected earthquake shook the area, and while the earthquake did not damage the hotel itself, Stewart encountered significant difficulty in getting supplies due to the high demand for building material following the earthquake. Because he believed that traveling himself to other states to obtain supplies would be prohibitively expensive, he delayed the project for two weeks while waiting for local stores to have sufficient supplies available. Stewart finished renovations six days late. Joan told Stewart that she owed him nothing but that he owed her $50,000. Stewart told Joan that he was suing for the entire $250,000 because it was not his fault the earthquake delayed matters. Assuming the earthquake does not affect Stewart’s liability for damages, which of the following is true regarding the provision that he will pay $50,000 for each day he is late?
It will be upheld based on freedom of contract.
It will be upheld because the penalty per day is less than one half of the amount due for the job.
It will be upheld as a stipulated amount.
It will be struck because parties are prohibited as a matter of law from specifying damages.
It will be struck as a penalty.
Beverly decides to go on a great trip to Hawaii. She needs someone, however, to take care of her two dogs, Creaky and Toady, while she is gone. Creaky has hives, and Toady passes gas frequently because of a digestive problem. Beverly hires Frank three months in advance, and they reach a contractual arrangement whereby Frank will be paid $200 for keeping the dogs for two weeks. Frank comes over two months before Beverly is set to leave, takes one look at Creaky and Toady, and declares that the dogs are too creepy to be around. Beverly then hires Alice who agrees to care of Creaky and Toady. Two weeks before Beverly is set to leave, however, Alice calls and tells her that she just broke both of her legs in an automobile accident, sustained other injuries, and has been put on bed rest for two months. Finally, Beverly hires Betty to care for the dogs and heads off to Hawaii, where she has a great time. Unfortunately, when Beverly returns home, she finds that Betty fell in love with Creaky and Toady and has absconded with them. It was a month before Beverly was able to get a court order, which required the dogs to be returned. Which of the following is true regarding Frank’s refusal to keep Creaky and Toady?
He committed an anticipatory repudiation.
He is not guilty of any breach because he gave Beverly sufficient warning that he was not willing to perform.
He is not guilty of any breach because of the frustration of purpose doctrine.
He is guilty of an immaterial breach because of the low value of the contract.
He is guilty of a nominal breach.
For $300,000, Willis agrees to build a new home for Robert, who is very picky. Willis builds the home to Robert’s specifications with one exception. The faucets and linoleum flooring in a powder room are not exactly what Robert specified. That was a mistake on Willis’ part, but he had not intentionally failed to follow specifications. When Robert sees the powder room, he goes ballistic and tells Willis that he will not pay Willis anything for the house. It will take $300 to put in correct faucets and linoleum. Willis says that he is willing to pay $300 to put Robert in the position he would have been in had the correct faucets and linoleum been used, but that is all he is willing to pay. Which of the following is true regarding whether Willis breached the contract?
Willis did not breach the contract.
Willis materially breached the contract.
Willis substantially breached the contract.
Willis breached the contract, but the breach was not material.
Willis committed an anticipatory breach of the contract.
In a __________ contract, the offeror wants a performance to form the contract.