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Chapter 8
Nature and Classification
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank,
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
1. Some promises create moral, but not legal, obligations.
2. A promise is a declaration that something will or will not happen in the future.
3. If a contractual promise is not fulfilled, the person who made it may be required
to perform the promised act.
4. The person who makes a promise is the promisee.
5. A contract is an agreement that can be enforced in court.
2 UNIT TWO: CONTRACTS
6. Contract law assures the parties to private agreements that the promises they
make will be enforceable.
7. The element of intent is not very important in determining whether a contract
has been formed.
8. In contract law, intent is determined by the objective theory of contracts.
9. The intention to enter into a contract is judged by objective facts as interpreted
by a reasonable person.
10. An agreement is NOT one of the requirements of a valid contract.
11. The term consideration refers to the voluntary consent of all of the parties to a
contract.
12. The only requirement for a valid contract is that the parties voluntarily entered
into it.
13. A contract is valid only if both of the parties entering into it have the capacity to
do so.
14. Every contract involves at least two parties.
15. All contracts must be in writing to be enforceable.
16. An offeree is a person who makes an offer.
17. An offer to form a bilateral contract is accepted only by promising to perform
the contract performance.
18. A unilateral contract is formed when the party receiving the offer completes the
requested act or performance.
19. A lottery is an example of an offer for an unilateral contract.
20. Informal contracts require a special form or method of creation.
21. A check, like other negotiable instruments, is a formal contract.
22. Letters of credit are formal contracts that are often used in international sales
contracts.
23. An implied contract is implied from the conduct of the parties.
24. An express contract does not need to be in writing.
25. An executed contract is one that has been fully performed by both parties.
26. A contract can be executed on one side and executory on the other.
27. A voidable contract is a valid contract that can be avoided at the option of at
least one of the parties to it.
CHAPTER 8: NATURE AND CLASSIFICATION 5
28. If a voidable contract is avoided, the parties to it are released from it.
29. A void contract is enforceable if it is in writing.
30. An otherwise valid contract may be unenforceable if it is not in writing.
31. A quasi contract is not enforceable by a court.
32. A quasi contract arises from a mutual agreement between two parties.
33. A quasi contract is not a true contract.
34. One purpose of quasi contracts is to prevent unjust enrichment of one party at
the expense of another.
35. Quasi contracts are often used by courts, even in cases where there is an
actual contract that covers the area in controversy.
6 UNIT TWO: CONTRACTS
MULTIPLE-CHOICE QUESTIONS
1. Jim tells Dana that he will take her out to lunch on Thursday. Jim has made
Dana a
a. prediction.
b. promise.
c. bilateral contract.
d. void contract.
2. Cynthia tells Darryl that she will deliver his boxes of Paradise Cookies as he
directs. A declaration that one will do something in the future is part of the
definition of
a. a prediction.
b. a premise.
c. a principle.
d. a promise.
3. Jonathon promises to pay child support and alimony to his ex-wife every month
after their divorce. Jonathon has
a. only a moral obligation to do keep his promise.
b. only a legal obligation to keep his promise.
c. both a legal and a moral obligation to keep his promise.
d. no obligation to keep his promise.
4. InTown Delivery Service promises to deliver a certain couch to Kurt, who
promises to pay for the service. If InTown does not perform, it may be required
to
a. do nothing.
b. make another promise.
c. pay monetary damages.
d. perform a different service.
5. Jack promises to buy Lizette’s used textbook for $60. Jack is
a. an executor.
b. an offeree.
c. a promisee.
d. a promisor.
6. Tania promises to buy Saki’s handheld video game-player for $40. Saki is
a. an executee.
b. an offeror.
c. a promisee.
d. a promisor.
7. Phil agrees to work for Vacation Resorts, Inc., as a chef. In determining
whether a contract has been formed, an element of prime importance is
a. the parties’ intent.
b. Phil’s rate of pay.
c. Phil’s education.
d. the terms of Phil’s employment.
8. Bobbie claims that Carly breached their contract. Carly responds that she
never intended to enter into a contract with Bobbie. The intent to enter into a
contract is determined with reference to
a. the conscious theory of contracts.
b. the objective theory of contracts.
c. the personal theory of contracts.
d. the subjective theory of contracts.
9. Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave
Fabricated’s parking lot for which Fabricated agrees to pay. The requirements
of this, and any other, contract do not include
a. consideration.
b. capacity.
c. legality.
d. practicality.
10. Ellen offers to sell her math textbook to Julia for $50. Julia does not respond.
Ellen and Julia do not have a contract because they lack the requirement of
a. agreement.
b. capacity.
c. consideration.
d. legality.
11. Kelly tells Jimmy she will pay him $1,000 if he builds a shed in her backyard.
Kelly is a(n)
a. offeree.
b. offeror.
c. promisee.
d. contractor.
12. On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500
if various tasks are completed by Friday. On Wednesday, when Outdoor has
finished more than half of the work, Neil says that he has changed his mind.
These parties had
a. an expired contract when Neil said that he had changed his mind.
b. a quasi contract when Neil said that he would pay for certain work.
c. a unilateral contract as soon as Outdoor began to perform.
d. no contract.
13. Jonah tells Levi he will give him an Xbox if Levi does Jonah’s chores for a
month. Levi promises to do the chores. Jonah and Levi have formed a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract.
14. Wilson buys a lottery ticket at his local gas station. Wilson has accepted an
offer for a
a. bilateral contract.
b. unilateral contract.
c. void contract.
d. unenforceable contract.
15. Peter offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a
package of business documents from Rico within thirty minutes. QD can accept
the offer only by meeting the deadline. If QD performs as directed, these
parties will have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
16. Lana applies for a firefighter’s job with Metro City, which responds with a letter
setting an appointment for a medical exam. The letter also states that it is “an
employment offer conditioned on the applicant passing the exam.” This letter is
a. a bilateral contract that Lana accepted by applying for the job.
b. a quasi contract on which Lana can rely for employment.
c. a unilateral contract that Lana can accept by passing the exam.
d. no contract.
17. Clay offers to pay Dot $50 for a golf lesson for Eula. They agree to meet the
day after tomorrow to exchange the cash for the lesson. These parties have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
18. On behalf of the rock group Uno, their manager Thalia agrees to a performance
in Seaside Amphitheater on July 4. Rex, acting for Seaside, sends a written
copy of the agreement to Thalia to be signed. If Thalia signs the copy, the
parties will have
a. an express contract.
b. an implied contract.
c. an implied-in-law contract.
d. no contract.
19. Opie offers to sell his guitar to Pinky for $200. Pinky agrees. They complete
and sign a printed form and Pinky gives Opie a check for the price. The check
is
a. a formal contract.
b. an informal contract.
c. a social contract.
d. no contract.
20. Kathryn signs a lease agreement for an apartment. Kathryn has entered into
a(n)
a. express contract.
b. implied contract.
c. quasi contract.
d. unenforceable contract.
21. When Jeff’s car breaks down, he asks Insta–Tow, Inc., to tow it to Huey’s
Repair Shop. There is no discussion of a price, and Jeff and Insta-Tow do not
sign any documents. Later, Insta–Tow sends Jeff a bill. With respect to Jeff’s
obligation to pay the bill, this is
a. an express contract.
b. an implied contract.
c. an implied-in-law contract.
d. no contract.
22. Bay City Construction, Inc., a contractor, asks Cool Electric, a subcontractor, to
provide certain services. Nothing is said about payment. Cool provides the
services, but Bay City refuses to pay. In Cool’s suit to recover, the chief issue is
most likely to be whether these parties had
a. a formal contract.
b. an express contract.
c. an implied contract.
d. a voidable contract.
23. Flo tells Ginger during a phone call that she will buy her textbook from last
semester for $65. Ginger agrees. These parties have
a. no contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
24. GR8 Marketing Company and Brainfreeze Tunes, Inc., sign a document that
states GR8 agrees to create a marketing campaign for Brainfreeze, which
agrees to pay GR8 for the service. GR8 and Brainfreeze have
a. an executed contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
25. Scot and Tiffany enter into an implied contract. The parties’ conduct
a. defines the contract’s terms.
b. finds the contract’s facts.
c. terminates any unintended consequences.
d. undercuts any terms based on the facts.
26. Livewire Company and McCoy’s Candy, Inc., sign a document that states
Livewire agrees to design a Web page for McCoy’s, which agrees to pay for the
service. This is
a. an actual contract.
b. a fictional contract.
c. an implied contract.
d. a quasi contract.
27. Avatar, Inc., and Bling Corporation sign a contract in which Avatar agrees to
deliver t–shirts emblazoned with video game characters in exchange for Bling’s
promise to pay. Avatar delivers. The contract is
a. voidable.
b. executed.
c. executive.
d. executory.
28. Demi promises to buy a house from Caleb, who promises to vacate the prop–
erty on June 1. If these promises are in writing, they are most likely
a. enforceable.
b. unenforceable.
c. void.
d. voidable.
29. Holiday Sales Company and Global Distributors, Inc., enter into a contract for
the delivery of imported specialty goods. Until the goods are delivered and paid
for, these parties have
a. an executory contract.
b. no contract.
c. a quasi contract.
d. an informal contract.
30. Vernon claims that his contract with Ulani is voidable. If their contract is
avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. both parties agree to a wholly different contract.
d. a wholly different contract is imposed “as if” the parties had agreed.
31. Green Grocers, Inc., enters into a contract with Hiway Transport Company for
the delivery of a shipment of fresh produce. In a later dispute between these
parties over the delivery, the doctrine of quasi contract cannot be used
because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
32. In negotiations with Coastal Distribution Company, Briggs Trucking, Inc., insists
that their contract be drafted according to certain plain language laws. These
laws concern the phrasing of
a. contracts.
b. ads.
c. product instruction manuals.
d. documents of delivery.
33. Cory believes that he and Dian agreed that he would act as her personal sports
trainer for seven workout sessions. In a later dispute, the existence of any
contract can be judged by
a. the parties’ intent as expressed in their contract.
b. what the defendant claims was the parties’ intent.
c. what the plaintiff claims was the parties’ intent.
d. what the parties agree they intended.
34. Debit & Credit Accounting Services and Brickwork Construction Company
negotiate a contract. Terms in the contract that are the subject of separate
negotiation will be considered subordinate to
a. standardized terms.
b. terms that can be understood only by lawyers and judges.
c. terms that are not negotiated separately.
d. none of the choices.
35. Holiday Sales Company and Global Distributors, Inc., enter into an express
contract for the delivery of imported specialty goods. Express contract terms
are given
a. less priority than the parties’ prior dealing.
b. less priority than the trade usage in the parties’ industry.
c. less priority than the parties’ course of performance.
d. more priority than the prior dealing, course of performance, and trade
usage.
ESSAY QUESTIONS
1. Cody signs and returns a letter from Dora, referring to her sale of the Bar-D
Ranch and its price. When Cody attempts to complete the deal, Dora refuses,
claiming that they have no contract. Cody claims they do. What standard
determines whether these parties have a contract?
2. Ed, a businessperson, is a friend of Fran, the owner of a Percolated Coffee &
Baked Goods store. Every day, Ed spends five minutes in Fran’s store, looking
at the goods and usually buying one or two cinnamon buns or bagels. One
afternoon, Ed goes into the store, looks at the items, and picks up a $1
chocolate brownie. Ed waves the brownie at Fran without saying a word and
walks out. Is there a contract? If so, how would it be classified in terms of
formation, performance, and enforceability?