66. In Hinson v. N&W Construction Co., where N&W relied on a plumbing bid by Hinson in making a bid on a
construction contract that was later awarded, the court held that N&W could rely on the bid based on promissory
estoppel.
a. True
b. False
67. In Hinson v. N&W Construction Co., where N&W relied on a plumbing bid by Hinson in making a bid on a
construction contract that was later awarded, the court held that since Hinson received no consideration for his bid,
he could not be bound to it later.
a. True
b. False
68. The promise of a gift is generally considered to be an enforceable promise.
a. True
b. False
69. If you promise to give $1 million to a church, which begins new construction based on your promise, you may be
held legally obligated to make the gift even though there is no contract.
a. True
b. False
70. An intoxicated person has no capacity to contract.
a. True
b. False
71. An intoxicated person often has partial capacity to contract.
a. True
b. False
72. A void contract never was or will be a valid contract.
a. True
b. False
73. A voidable contract never was or will be a valid contract.
a. True
b. False
74. A voidable contract is a contract that one party has the right to avoid.
a. True
b. False
75. A contract formed under conditions of fraud is voidable.
a. True
b. False
76. Contracts created by an intoxicated person may be voidable by that person because he only had partial capacity to
contract.
a. True
b. False
77. Contracts created by intoxicated persons, or persons under the influence of drugs, are always voidable at their
option.
a. True
b. False
78. A minor always has the ability to disaffirm a contract.
a. True
b. False
79. A minor may ratify a contract, upon reaching the age of majority, that she had the right to disaffirm if she so
desired.
a. True
b. False
80. Generally, minors and intoxicated persons have only partial capacity to contract.
a. True
b. False
81. If a minor buys a car and later wants his money back after the car burns in a fire, courts will typically hold the
contract to be voidable and a full refund is required.
a. True
b. False
82. If a 16-year-old buys a car, uses it for six months, then decides to disaffirm the contract to buy the car on a three–
year payment plan, the contract is voidable.
a. True
b. False
83. If a minor agrees to join the Army, the minor’s agreement to join is voidable.
a. True
b. False
84. If a minor contracts for student loans for college, the contract is not voidable.
a. True
b. False
85. Contracts in many low income countries are more difficult and costly to enforce than they are in more developed
countries.
a. True
b. False
86. If the subject matter of a contract is unlawful, such as a deal to sell heroin, then there is no contract.
a. True
b. False
87. A valid contract can become unenforceable because of a statute passed after the contract was formed.
a. True
b. False
88. If state law limits the interest rate that may be charged on a loan, then a loan charging a higher interest rate may be
an illegal, unenforceable agreement.
a. True
b. False
89. When the U.S. government announced that no Americans could do business with Iraq, all existing contracts
became unenforceable.
a. True
b. False
90. An employer can avoid liability for on–the-job injuries so long as fully informed workers sign exculpatory
agreements.
a. True
b. False
91. Joe contracts with Phil to set fire to Joe’s warehouse so he can collect the insurance money, but then Joe refuses to
pay Phil for his work. This contract is unenforceable.
a. True
b. False
92. If an agreement is held by the courts to be illegal or in violation of public policy, it will allow the parties to recover
their costs.
a. True
b. False
93. If you win a lot of money at a poker game, and the other players refuse to pay you, in many states you could not
sue to collect your winnings.
a. True
b. False
94. Unconscionable contracts are upheld by the courts unless force was used to obtain them.
a. True
b. False
95. Contracts that unreasonably restrict competition are unenforceable.
a. True
b. False
96. In Arthur J, Gallagher v. Babcock, where Babcock quit working for Gallagher and went into competition,
drawing away clients, and Gallagher sued to enforce a non-solicitation and non-competition agreement, the
courts held that the agreements would be enforced and Babcock owed damages.
a. True
b. False
97. In Arthur J, Gallagher v. Babcock, where Babcock quit working for Gallagher and went into competition,
drawing away clients, and Gallagher sued to enforce a non-solicitation and non-competition agreement, the
courts held that the agreements violated provisions of the antitrust statutes that prohibit overly restrictive restraints
on competition.
a. True
b. False
98. In Arthur J, Gallagher v. Babcock, where Babcock quit working for Gallagher and went into competition,
drawing away clients, and Gallagher sued to enforce a non-solicitation and non-competition agreement, the
courts held that the agreements violated provisions of the antitrust statutes that prohibit overly restrictive restraints
on competition.
a. True
b. False
99. If parties enter into a contract by mistake, the contract may be disaffirmed.
a. True
b. False
100. If a contract is made under duress or undue influence, it may be disaffirmed because there was no real consent.
a. True
b. False
101. If a party accidentally puts in a contract that a house is to sell for $20,000, when it should have said $200,000, the
contract is enforceable if both parties signed it.
a. True
b. False
102. The Federal Trade Commission cooling-off rule allows purchasers of door-to–door sales of more than $25 to
rescind the contract within three days, even if there was no undue influence used in the sale.
a. True
b. False
103. Contracts signed with a door-to-door seller may be voided within three days of signing under a Federal Trade
Commission Rule.
a. True
b. False
104. If a contract is agreed to in the presence of any incorrect information, the contract may be voided.
a. True
b. False
105. If a person signs a contract because of “undue influence” by the other party to the contract, the person can later
disaffirm the contract.
a. True
b. False
106. Fraud occurs whenever there is any false information passed to the party being induced to enter into a contract.
a. True
b. False
107. Fraud occurs when there is false material information passed to the party being induced to enter into a contract.
a. True
b. False
108. Fraud requires scienter; that is the party accused of fraud must have wanted to mislead the other party.
a. True
b. False
109. There must be privity between the parties in a case of fraud.
a. True
b. False
110. In a suit for fraud, the losses suffered that are sued for must be related to the action that was induced by the fraud.
a. True
b. False
111. Misrepresentation, unlike fraud, is not grounds for rescinding a contract.
a. True
b. False
112. Even if misrepresentation is innocent, the party who engaged in misrepresentation is liable for losses suffered by the
party who received the bad information.
a. True
b. False
113. Misrepresentation, to be grounds for rescinding a contract, must have included a misstatement of a material fact.
a. True
b. False
114. For there to be damages in a case of fraud, there must be proximate cause between the false information and the
losses suffered.
a. True
b. False
115. The Statute of Frauds is quite old, having evolved from an English law of 1677.
a. True
b. False
116. The Statute of Frauds states that all contracts that involve more than $1,000 must be in writing.
a. True
b. False
117. The Statute of Frauds requires that a promise to pay debts of another person must be in writing to be a valid
contract.
a. True
b. False
118. The Statute of Frauds applies to the sale of all vehicles.
a. True
b. False
119. The Statute of Frauds requires that all contracts for the sale of property must be proven by written evidence signed
by the defendant.
a. True
b. False
120. The Statute of Frauds holds that if you are going to paint my house two years from today, the contract should be in
writing.
a. True
b. False
121. Courts generally will not accept digital signatures because of the lack of security.
a. True
b. False
122. The parol evidence rule holds that oral testimony by one party that contradicts a written contract cannot be
accepted as evidence in court.
a. True
b. False
123. The parol evidence rule allows oral testimony to revise the terms of contracts written more than one year ago.
a. True
b. False
124. The parol evidence rule allows oral testimony to help the court clarify terms of a vague contract.
a. True
b. False
125. The parol evidence rule allows oral testimony to help the court understand a contract in which fraud is claimed.
a. True
b. False
126. In Deschamps v. Treasure State Trailer Court, where the buyer of a trailer court said he was promised the water
system was in good condition when in fact it was not, the Montana Supreme Court held that oral testimony could
not contradict the written contract.
a. True
b. False
127. In Deschamps v. Treasure State Trailer Court, where the buyer of a trailer court said he was promised the water
system was in good condition when in fact it was not, the Montana Supreme Court held that the oral promise could
amend the contract.
a. True
b. False