Connect Business Law Final Exam
Q1. In relation to contracts, the term “consideration” pertains to parties acting in an ethical manner. True/False
Q2. The response that the offeror expects from the offeree determines whether a contract is bilateral or unilateral. True/False
Q3. Quasi-contracts are actual contracts. True/False
Q4. If a quasi-contract is imposed, the amount of damages for a breach is based upon the fair market value of any service provided to the defendant. True/False
Q5. There is no requirement that enrichment be unjust in order to recover under quasi-contract. True/False
Q6. If a contract is valid, then it is enforceable. True/False
Q7. Any contract that is not a formal contract is an informal contract, also called a simple contract. True/False
Q8. If a person is intoxicated when signing a contract, they may not back out of the contract based on being intoxicated because being intoxicated is a voluntary condition. True/False
Q9. Contracts do not have to fall under the common law or the Uniform Commercial Code. True/False
Q10. A contract for the sale of a good falls under Article 2 of the UCC. True/False
Q11. Reasonably definite terms are one of the elements of an offer. True/False
Q12. Courts interpret contracts using an objective standard. True/False
Q13. An invitation to negotiate is an offer because it expresses a willingness to be bound by acceptance. True/False
Q14. Only the offeree to whom an offer is directed can accept the offer. True/False
Q15. An offeror has no right to revoke an offer before receiving a reply. True/False
Q16. Death or incapacity of an offeror immediately terminates the offer. True/False
Q17. In the absence of a time condition in either offer, an offer by a retailer to purchase seasonal goods from a wholesaler would lapse later than an offer to purchase goods that could easily be sold all year long. True/False
Q18. It is always easy to know when acceptance has occurred. True/False
Q19. The number of circumstances under which silence can be an acceptance are limited. True/False
Q20. If the offeror becomes incapacitated, the offer terminates after notice of the offeree’s death or after 10 days, whichever comes first. True/False
Q21. If an offeree makes a mistake and sends an acceptance to the wrong address, there is an acceptance upon dispatch. True/False
Q22. If the means by which an acceptance can be communicated to the offeror is expressly stated in the offer, it is called an “implied authorization.” True/False
Q23. If an offer authorizes certain means of acceptance, use of an unauthorized means of acceptance is acceptable but the contract is not formed until the acceptance is received by the offeror. True/False
Q24. An acceptance is still valid if it is received after a rejection is received. True/False
Q25. Under the Mailbox Rule, a valid contract is formed if a rejection is dispatched, but before the rejection is received, the acceptance is communicated to the offeror. True/False
Q26. Consideration is optional in every contract. True/False
Q27. A detriment to a promisor is a type of consideration. True/False
Q28. A promise to stop doing something in the future is not valid consideration. True/False
Q29. In a bilateral contract, consideration for a promise is a completed act. True/False
Q30. Promissory estoppel is an exception to the rule requiring consideration. True/False
Q31. Reasonable reliance on a promise is one of the requirements of promissory estoppel. True/False
Q32. An illusory promise is not consideration. True/False
Q33. Past consideration generally qualifies as consideration. True/False
Q34. In some cases, the court may enforce the promise if past consideration was given with expectation of future payment. True/False
Q35. A promise to do something that you are already obligated to do is generally a valid consideration. True/False
Q36. If a minor enters into contract with an adult, both parties may disaffirm a contract based upon the minor’s lack of majority. True/False
Q37. Parents are responsible for the torts committed by their minor children in all states. True/False
Q38. As a general rule, parents are not liable for contracts entered into by their minor children. True/False
Q39. Someone who has been adjudicated insane has no capacity to enter into contracts, and any contract he attempts to enter into is void, even if he has an appointed guardian. True/False
Q40. For purposes of determining capacity, intoxicated persons include those under the influence of alcohol, but not drugs. True/False
Q41. A contract of an intoxicated person for necessaries will be enforced for the reasonable value of the necessaries. True/False
Q42. Disaffirmance laws have been found to reflect a policy of discouraging adults from contracting with minors. True/False
Q43. Minors can disaffirm contracts for necessaries, but they will still be held liable for the reasonable value of the necessary. True/False
Q44. Which of the following is an element of a legally binding contract?
Q45. Which of the following occurs when a minor’s parents or legal guardians give up their right to exercise legal control over the minor, typically when the minor moves out of the parents’ house and begins supporting himself or herself?
- Legal release
Q46. Because their contracts are ____, minors have the right, until a reasonable time after reaching the age of majority, to _____ or void their contracts.
- Void; disaffirm
- Void; affirm
- Void; resist
- Voidable; disaffirm
- Voidable; affirm
Q47. Which of the following is the correct timeframe during which a disaffirmance of a contract based on minority must occur?
- Before or within a reasonable time of the minor’s reaching the age of majority.
- Within 30 days of the minor’s reaching the age of majority.
- Within 60 days of the minor’s reaching the age of majority.
- Within 90 days of the minor’s reaching the age of majority.
- Within one year of the minor’s reaching the age of majority.
Q48. Which of the following is the majority rule regarding a minor’s misrepresentation of his or her age?
- That if a competent party relies on a misrepresentation in good faith, the minor gives up the right to disaffirm the agreement.
- That the minor must restore the competent party to that party’s precontractual position before obtaining the disaffirmance.
- That the minor may disaffirm but that the competent party has the right to sue the minor in tort and recover damages for fraud.
- That misrepresentation does not affect the minor’s right to disaffirm the contract.
- That misrepresentation results in the minor receiving a return of only half the consideration he or she supplied.
Q49. Which of the following occurs when a person reaches the age of majority and states, either orally or in writing, that he or she intends to be bound by the contract entered in to as a minor?
- Implied ratification
- Express ratification
- Express novation
- Implied novation
- Express ratification if the statement is in writing but nothing if the statement is only oral
Q50. Which of the following is true regarding the ability of persons suffering from a mental illness to enter into a binding contract?
- Persons suffering from a mental illness have no capacity to enter into a binding contract.
- Persons suffering from a mental illness have full capacity to enter into a binding contract so long as they do not present a danger to themselves or others.
- Persons suffering from a mental illness have full capacity to enter into a binding contract so long as they inform the other party that they are in treatment.
- Persons suffering from a mental illness may have full, limited, or no legal capacity to enter into a binding contract depending on the nature and extent of their mental deficiency.
- Persons who suffer from a mental illness always have full capacity to enter into a binding contract.
Q51. Which of the following was the result on appeal in the Case Opener involving the alleged breach of an oral contract based on the plaintiff lawyer loaning a corporate client funds and the client later reneging on a promise, made in gratitude, to give the lawyer three percent of the company’s stock?
- That the promise to transfer the stock flowed from the loan transaction and was enforceable by the plaintiff.
- That the promise was unenforceable because lawyers may not loan clients money.
- That the promise was enforceable only if the total the plaintiff received in funds did not violate state usury laws involving maximum interest rates.
- That the promise was not enforceable because it was a gift.
- That the promise was enforceable as a gift.
Q52. Gabrielle is three months behind on her mortgage, and her lender filed negative information affecting her credit rating. Gabrielle mailed one monthly payment to the lender along with a letter stating that she was making the payment on the condition that the lender remove negative material sent to credit reporting agencies affecting her credit rating. The lender cashed the check but did not remove the negative information. Gabrielle sues the bank for breach of contract. Which of the following is the most likely result?
- The bank will win because under the preexisting duty rule, Gabrielle was already legally obligated to make the payment, and there was no consideration to support the contract.
- The bank will win because under federal law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful.
- The bank will win because under state law, once correct negative information is reported regarding a customer, it can be removed only if it is found to be untruthful.
- Gabrielle will win because the bank’s cashing the check constituted acceptance of her offer, and a valid contract existed.
- Gabrielle will win because the bank had an obligation to notify her that it was not accepting her offer before cashing the check.
Q53. What is necessary for consideration to be valid?
- Consideration must be the product of a bargained for exchange.
- Consideration must be part of an equal exchange.
- Consideration must involve performance in exchange for a promise.
- Consideration must involve a mutual exchange of promises
- Consideration must be money
Q54. Sameer promises his uncle, Farouk, that he will study every day and earn straight A’s during the spring semester in exchange for having his tuition paid for the fall semester. Farouk agrees, but after Sameer studies all semester and receives straight A’s, Farouk refuses to pay, saying that no such contract ever existed. Which of the following is true?
- Consideration was present, there was an enforceable contract, and Farouk has wrongfully refused to pay.
- There was no consideration present, and Farouk has no obligation to pay.
- There was no consideration present, but Farouk must pay under principles of promissory estoppels.
- There was consideration present, but Farouk is not required to pay because the contract was illusory.
- There was consideration present, but Farouk is not required to pay because he did not receive a benefit personally.
Q55. Which of the following is not a type of consideration?
- A benefit to the promisee.
- A detriment to the promisor
- A promise to do something.
- A promise to refrain from doing something.
- A promise to think about refraining from doing something.
Q56. Carrie promises Tim she will clean his house and in exchange, Tim promises to pay Carrie $50. This is an example of what type of contract?
- A unilateral contract
- A bilateral contract
- An implied contract
- A contract created through promissory estoppel
- An invalid contract
Q57. In a unilateral contract, the consideration for a promise is a[n] ____.
- Return promise
Q58. Which of the following is an exception to the rule requiring consideration?
- Promissory agreement
- Promissory estoppel
- Quasi estoppel
- Quasi agreement
- Promissory performance
Q59. What must you prove in a successful promissory estoppel case?
- Reasonable reliance on a promise to your detriment.
- The exchange of adequate consideration.
- The existence of consideration.
- Intent of both parties to enter into a legally binding agreement
- The mutual exchange of promises.
Q60. Why is there no consideration when a party does what it is already legally obligated to do?
- Because there will not be adequate consideration.
- Because promising to do something you are obligated to do is an illusory promise.
- Because of the legal doctrine of promissory estoppel.
- Because there is no detriment.
- There is no consideration when a party does what it is legally obligated to do.
Q61. Which of the following is not a required element of a valid offer?
- Serious intent by the offeror.
- Intent by the offeror to be bound by an agreement.
- Reasonably definite terms.
- Communication to the offeree.
- A written document setting forth offer terms.
Q62. What standard do courts use to interpret a contract?
- A subjective standard.
- An objective standard.
- A subjective reasonableness standard.
- A common law reasonableness standard.
- A negligence standard.
Q63. Which of the following is true of intent to form a contract?
- Intent Is not a required element of an offer or acceptance to form a contract.
- Intent is determined based on the specific motivations of the offeror or offeree, including hidden motivations.
- Intent is assessed by considering proof of an offeree or offeror’s internal thought process.
- Intent is a required element of an offer or acceptance only if a contract is a contract for the sale of goods.
- An offeror must show intent to be bound by the offeree’s acceptance.
Q64. Emily asks Sasha if Sasha would consider selling her car for $2,000. What is the status of the negotiation?
- No offer has been made.
- An offer has been made, but it may be revoked prior to acceptance.
- An offer has been made that may not be revoked prior to acceptance.
- A contract has been entered into.
- A contract has been entered into, but it may be set aside at the option of either party.
Q65. Which of the following terms would be considered material terms?
- Subject matter but not price, quantity, quality, or parties
- Price and subject matter, but not quantity, quality or parties
- Quantity, quality, and subject matter, but not price or parties
- Subject matter, quality, and price, but not quantity or parties
- Subject matter, price, parties, quality, and quantity
Q66. Mary is selling her house for $100,000 and Felipe, who is expecting an inheritance soon, wants to have the option to buy it next month at that price. Felipe gives Mary a $1,000 deposit in exchange for Mary’s promise that he can buy the house next month at $100,000 if he gets his inheritance. Mary and Felipe:
- Do not have a contract because Felipe has not promised to buy.
- Do not have a contract because Felipe does not have the money yet.
- Have a standard sales contract.
- Have an option contract.
- Have an adhesion contract
Q67. In the absence of a time condition in an offer, the offer will expire _________.
- In forty-eight hours
- In seven days
- In ten days
- In forty-five days
- After a reasonable amount of time
Q68. What is an implied- in- fact contract?
- A contract created when an offeree receives and accepts in silence the benefits of an offered service with reasonable opportunity for rejection and with an understanding some form of compensation will be required.
- A contract created when an offeror provides a benefit to an offeree in a unilateral contract.
- A contract created when one party makes an offer that can be accepted only by performance.
- A contract that is created when a party’s intent to enter into a contract is unclear but the other party relies on a belief that promises have been made.
- A contract that is created by a mutual exchange of promises.
Q69. Camila, wanting to sell a used business law book, calls Jada and tells her that if she does not hear from her within twenty-four hours, she will assume that Jada wishes to purchase the book for $50. Which of the following is correct regarding the status of the proposed book sale?
- There is no contract because in this situation silence cannot be used to form a contract.
- There can be no contract because the offer was not made in person.
- There can be no contract because the offer was not made in writing.
- Jada can avoid the creation of a contract only if she can prove by preponderance of the evidence that she did not hear about the offer before the stated expiration time.
- Jada can avoid the creation of a contract only if she can prove beyond a reasonable doubt that she did not hear about the offer before the stated expiration time.
Q70. Which of the following sets forth the common law rule that the terms of an acceptance must mirror the terms of an offer?
- The Matching Rule
- The Complete Rule
- The Mirror Image Rule
- The Exact Rule
- The Parallel Rule
Q71. If no means of communicating an acceptance is specified in an offer, which of the following is generally true?
- The acceptance must be in writing.
- The acceptance must be made verbally either by telephone or in person.
- No valid contract may be entered into because the offer must specify a means by which to accept.
- Acceptance may be made by any reasonable means.
- Acceptance must be made orally or in writing within twenty-four hours.
Q72. Which of the below rules allows that an acceptance is valid when it is placed in the mailbox?
- The Acceptance Rule
- The Contract Rule
- The Reasonable Rule
- The Mailbox Rule
- The Contract Legality Rule
Q73. Mari tells Daniel that she will mow his yard during the summer for $800. Daniel considers it, and drops a note in the mail to Mari telling her that he rejects her offer. However, he thinks about it again and calls her to tell her that he accepts the offer before she receives his rejection. Which of the following is true under the mailbox rule?
- The offer was no longer outstanding because of the rejection.
- Daniel could not accept verbally.
- Daniel validly accepted, but his acceptance was revoked when Mari received the rejection.
- The acceptance was invalid because the mailbox rule requires that the time of payment be specifically set forth before an acceptance is formalized.
- The acceptance is valid, and the rejection has no effect.
Q74. [Saturday Auction] Randy, an auctioneer, held an auction on a Saturday morning. At the beginning of the auction, Randy announced that the auction was being held without reserve. Erin, Maria, and Steve were all in attendance. Erin saw an old cash register with a stuck drawer that she thought would look great in her den. The auctioneer put the cash register up for sale noting that the drawer was stuck but that it could probably be fixed with little effort. Erin bought it for $20. When she got it home, she discovered that it actually contained $5,000 in cash. Unfortunately, Erin had a teenage son who started bragging to his friends about the family’s good fortune. Randy heard about what had happened and sued Erin for return of the $5,000. At the same auction, Maria saw a great deal on a used table, and bid $20 on it. No one else bid anything. Randy announced that $20 was clearly insufficient for the table, that it was worth much more than that, and that he was taking it out of the auction. Steve started bidding on a diamond ring for his girlfriend. He bid $2,000. Just as Randy was getting ready to say “Sold,” Steve looked over at his girlfriend, decided that he was not sure about marriage, and jumped up yelling “I revoke.” Randy, however, immediately after, yelled “Sold.” Randy sues Steve attempting to obtain the money for the engagement ring. Randy also sues Erin seeking to recover the $5,000 contained in the stuck drawer. Maria sues Randy attempting to obtain possession of the table.
In the lawsuit in which Randy sues Erin for return of the $5,000, which of the following is the most likely result?
- Randy will win because when an auction is held without reserve, the auctioneer is entitled to repossess any item at will.
- Randy will lose only because he was not the actual seller. He was only selling at auction for someone else. The seller, however, would win in an action against Erin.
- Randy would win because Erin made an insufficient offer.
- Erin will win only if she can show that Randy had knowledge that cash was in the drawer before he sold it.
- Erin will win because the auction was without reserve, and she properly bid on and bought the cash register with everyone knowing that the cash drawer was stuck.
Q75. Which of the following is true when an offer authorizes a certain mode of acceptance but does not require it, and an offeree attempts to accept the offer through a method other than the authorized means?
- The acceptance becomes a counteroffer that the original offeror may or may not accept.
- There is no contract, and the attempted acceptance is of no effect.
- There is a contract only if the acceptance is received by the time that acceptance through the authorized means would have been received.
- The contract is not formed until the acceptance is received by the offeror.
- Authorizing but not requiring a certain type of acceptance has no effect, and the mailbox rule applies.
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