Business Law, 8e (Cheeseman)
Chapter 9 Nature of Traditional and E-Contracts
1) Ross makes an offer to Elizabeth to sell his automobile to her for $10,000. In this case, Ross is
the offeree and Elizabeth is the offeror.
2) Provision of services qualifies as a “consideration” for an enforceable contract.
3) Agreement to a contract requires an offer by the offeror and an acceptance of the offer by the
offeree.
4) If the law requires that a contract be in writing, failure of such a contract to be in writing does
not impact its enforcement.
5) Common law of contracts refers to contract law developed primarily by state courts.
6) The goal of the Uniform Commercial Code is to regularize foreign trade norms among the 50
states of the U.S.A.
7) Article 2 of the UCC prescribes a set of uniform rules for the creation and enforcement of
contracts for the sale of goods.
8) Restatement of the Law of Contracts is the agreed upon federal law in the United States.
9) Objective theory of contracts states that the intent to contract is judged by the reasonable
person standard and not by the subjective intent of the parties.
10) Under the objective theory of contracts, the subjective intent of a party to enter into a
contract is irrelevant.
11) Companies are not permitted to issue licenses by e-commerce.
12) Traditional contract rules do not apply to e-contracts.
13) The UCITA does not require state legislature to become law of a state.
14) The UCITA establishes uniform legal rules for the formation and enforcement of electronic
contracts and licenses.
15) The UCITA is a law common to all states and does not require state legislatures to adopt it as
a statute for the state
16) If ambiguity is detected while determining the type of contract, it is presumed to be a
bilateral contract.
17) A contract is bilateral contract if the offeror’s promise is answered with the offeree’s promise
of acceptance.
18) An act of performance is necessary to create a bilateral contract.
19) A unilateral contract can be accepted without the performance of an act by the offeree.
20) An offer to create a unilateral contract cannot be accepted by a promise to perform.
21) An offer to create a unilateral contract can be revoked by the offeror any time prior to the
offeree’s performance of the requested act.
22) A letter of credit is considered an informal contract as it does not have a special method of
creation.
23) Checks and drafts are considered informal contracts as their method of creation varies from
one bank to another.
24) Contracts under seal are thus named because they are highly confidential, and the parties to
these contracts are not allowed to talk about their terms.
25) In a recognizance, a party acknowledges in court that he or she will pay a specified sum of
money if a certain event occurs.
26) If one of the parties to a contract can enforce the contract, it is considered valid.
27) A voidable contract is also termed as an unenforceable contract.
28) If one of the parties has the option to void his or her contractual obligations, the contract if
considered voidable.
29) A contract that has been fully performed by both sides is called an executory contract.
30) An express contract can be stated orally.
31) To create an implied-in-fact contract, it must be established that the plaintiff provided the
property or services gratuitously.
32) A quasi-contract is an equitable doctrine whereby a court may award monetary damages to a
plaintiff for providing work or services to a defendant even though no actual contract existed.
33) An implied-in-law contract is a contract in which agreement between parties has been
inferred from their conduct.
34) Equity is a doctrine that permits judges to make decisions based on fairness, equality, moral
rights, and natural law.
35) There is no right to a jury trial in an equitable action.
36) Which of the following is an acceptable consideration for a contract?
A) arrest
B) penalty
C) money
D) sentence
37) Which of the following statements is true about contracts?
A) The offeror is the party to whom an offer to enter into a contract is made.
B) An offeree is the authority that supervises the signing of a contract.
C) A contract is created when the offer is made and before it is accepted.
D) To have an enforceable contract, there must be mutual assent by the parties.
38) Two brothers, Sam and Jim, were fighting over the division of their ancestral property. After
ten years of legal battle, a frustrated Sam contacted a powerful politician who subjected Jim to
extreme duress to make him sign a contract of assent in favor of Sam. When Jim takes this
contract to court, the contract will be declared ________.
A) enforceable
B) conditionally enforceable
C) voidable
D) unenforceable
39) Which of the following is true of the UCC?
A) The UCC aims to create a uniform system of accounting among the 50 states.
B) The common law of contracts normally takes precedence over the provisions of the UCC.
C) Article 2 of the UCC prescribes a set of uniform rules for the creation and enforcement of
rules of taxation.
D) Article 2A of the UCC prescribes a set of uniform rules for the creation and enforcement of
contracts for the lease of goods.
40) Which of the following is true of the Restatement of the Law of Contracts?
A) It serves as a reference for guidance in contract disputes.
B) It does not identify negotiable instruments as formal contracts.
C) Its goal is to create a uniform system of commercial law among the 50 states.
D) It is the absolute federal law for contracts drafted in the U.S.A.
41) The ________ states that the intent to contract is judged by the reasonable person standard
and not by the subjective intent of the parties.
A) Restatement of the Law of Contracts
B) Restatement (Second) of Contracts
C) objective theory of contracts
D) common law of contracts
42) According to the objective theory of contracts, the intent to enter into an express or implied-
in-fact contract is judged by the ________.
A) reasonable person standard
B) legality of the contract
C) doctrine of equity
D) common law of contracts
43) The ________ establishes uniform legal rules for the formation and enforcement of
electronic contracts and licenses.
A) common law of contracts
B) Restatement of the Law of Contracts
C) UCITA
D) UCC
44) Michael Harrison opens an online store where people from all over the world can purchase
and download iPhone apps. Which of these should Michael consult to know the rules of trading
through his online store?
A) common law of contracts
B) objective law of contracts
C) UCITA
D) UCC
45) Which of the following is true of UCITA?
A) It establishes the rules for operation of franchises in the U.S.A.
B) It does not become law until a state adopts it as a statute.
C) It solely deals with the formation of electronic contracts, not licenses.
D) It addresses most of the legal issues that are encountered while starting an entrepreneurial
venture.
46) A contract is ________ if the offeror’s promise is answered with the offeree’s promise of
acceptance.
A) unilateral contract
B) bilateral contract
C) executed contract
D) executory contract
47) Windsor, the owner of Windsor’s Sandwiches contacts a new supplier Gary. He tells Gary
that he will pay him $375 if Gary delivers 20 pounds of cheese the following morning. Gary
promises to make the delivery as requested by Windsor. This creates a ________ contract
between them.
A) unilateral
B) bilateral
C) implied-in-law
D) executory
48) A contract is ________ if the offeror’s offer can be accepted only by the performance of an
act by the offeree.
A) unilateral
B) bilateral
C) implied-in-law
D) executory
49) Yvonne finds a carpenter to do some repairs for her house and tells him that if he finishes the
job within Saturday, she would pay him $1,000. This offer creates a(n) ________ contract.
A) executed
B) executory
C) unilateral
D) bilateral
50) Martha contacts a bakery to get a cake for her son’s birthday party. She tells the baker that
she will pay him $150 for the cake if he delivers the cake on Friday evening. If the baker does
not deliver the cake on Friday evening, which of the following will hold true?
A) Martha can sue the baker to recover $150 in damages.
B) Martha can sue the baker but cannot recover damages.
C) The baker has to give $150 plus cost of the replacement cake to Martha as he entered into a
verbal contract with her.
D) Martha cannot sue the baker.
51) Alan tells Sherry that he will pay her $5,000 if she runs the Boston Marathon. Once Sherry
starts running the marathon, Alan ________.
A) can revoke the contract as informal verbal agreements are not binding
B) cannot revoke the contract
C) can reduce the money on offer
D) can only increase the money on offer
52) Which of the following is an informal contract?
A) check
B) bank draft
C) lease
D) recognizance
53) What is recognizance?
A) a party’s acknowledgement in court that he or she will pay a specified sum of money if a
certain event occurs
B) a sealed document that contains a formal contract whose contents are known to both parties
and the referee who supervised its signing
C) a sealed document that contains an informal contract whose contents are known only to the
parties
D) a party’s acknowledgement in court that he or she is not liable to pay any money if a certain
event occurs
54) Which of the following statements is true about contracts?
A) Parties to an informal contract can use any words they choose to express their contract.
B) A contract under seal is disclosed only to the offeror of the contract.
C) A letter of credit is an informal contract.
D) A void contract is the same as a voidable contract.
55) Which of the following is a necessary condition for a contract to be considered valid?
A) It is enforceable by both the parties.
B) It is enforceable by at least one of the parties.
C) It can be voided by one of the parties.
D) It can be voided by both parties.
56) Ben was talking to Harry who was drunk. Harry agreed to give his car to Ben as a token of
friendship. Once sober, Harry asks Ben to return his car. This contract is considered ________.
A) valid
B) void
C) voidable
D) unenforceable
57) An offeror uses blackmail to make an offeree sign a contract that involves the sale of the
offeree’s house. The contract is ________.
A) valid
B) void
C) voidable
D) unenforceable
58) If a contract is required to be in writing under the Statute of Frauds but is not, the contract is
________.
A) valid
B) void
C) voidable
D) unenforceable
59) A contract that has been fully performed on both sides is called an ________ contract.
A) executory
B) executed
C) option
D) executive
60) Contracts that have been fully performed by one side but not by the other are classified as
________ contracts.
A) executory
B) executed
C) void
D) voidable
61) Elizabeth signs a contract to purchase a new car from Spadace Motors. She has not yet paid
for the car and Spadace Motors has not yet delivered the car to Elizabeth. This is an example of
a(n) ________ contract.
A) void
B) unenforceable
C) executed
D) executory
62) Which of the following is true of enforcing a contract?
A) A contract is only considered valid if it is enforceable by both parties.
B) In an unenforceable contract, at least one party has the option to void his or her contractual
obligations.
C) Void contracts are enforceable in cases involving mutual mistakes.
D) Parties may voluntarily perform a contract that is unenforceable.
63) An oral agreement to purchase a neighbor’s bicycle is a(n) ________ contract.
A) voidable
B) void
C) express
D) implied
64) A(n) ________ is stated orally or in written words.
A) express contract
B) implied-in-law contract
C) implied-in-fact contract
D) quasi-contract
65) In a(n) ________ contract, agreement between parties is inferred from their conduct.
A) implied-in-law
B) implied-in-fact
C) express
D) formal
66) Which of the following elements must be established to create an implied-in-fact contract?
A) The plaintiff provided the property or services gratuitously.
B) The plaintiff made the defendant sign the contract and then changed its terms, calling the new
terms “previously implied”.
C) The defendant was given an opportunity to reject the property or services provided by the
plaintiff but failed to do so.
D) The defendant accepted the property or services offered by the plaintiff as a fee for an illegal
activity.
67) A(n) ________ is an equitable doctrine whereby a court may award monetary damages to a
plaintiff for providing work or services to a defendant even though no actual contract existed.
A) bilateral contract
B) common law of contracts
C) implied-in-fact contract
D) quasi-contract
68) Which of the following statements is true of the doctrine of quasi-contract?
A) It allows a court to award monetary damages to a defendant because no actual contract
existed between the parties.
B) It applies only where there is an enforceable contract between the parties.
C) It is an equitable doctrine intended to prevent unjust enrichment.
D) Agreement between parties to a quasi-contract has been inferred from their conduct.
69) Stella is injured in a motor accident and is brought to the hospital by a passerby. Stella
subsequently passes into a coma. The doctors and other staff perform the necessary medical
procedures to save her life. Stella comes out of her coma after two months and is released from
the hospital after the doctors are satisfied by her recovery. Under the doctrine of ________
contract, Stella has to pay the hospital for its services.
A) express contract
B) quasi-contract
C) implied-in-fact contract
D) formal contract
70) Kyle goes to a used-car showroom to buy a sedan. He signs an agreement with the store
which bears the name of the car, price, and other details. This is an example of a(n) ________
contract.
A) unilateral
B) implied-in-law
C) implied-in-fact
D) express
71) Which of these is an instance of a quasi-contract?
A) an employee receiving his or her paycheck every month
B) an unconscious man being nursed by a hospital, having been brought in by a passer-by
C) two companies signing a business agreement that spans an undefined duration
D) a woman hiring a caterer only after the caterer promises to deliver the food on time
72) ________ is a doctrine that permits judges to make decisions based on fairness, equality,
moral rights, and natural law.
A) Common law of contracts
B) Restatement of the Law of Contracts
C) Equity
D) Objective theory of contracts
73) Which of the following is true of the equity doctrine?
A) Equity is resorted to when an award of money damages would not be the proper remedy.
B) In an action in equity, the jury decides the equitable issue.
C) An equitable action could be tried with a judge or a jury.
D) The doctrine of equity cannot be applied in contract cases.
74) Explain the basic requirements that must be met for a contract to be enforceable.
75) What are the possible problems that can come up in a unilateral contract?
76) Compare valid, void, voidable and unenforceable contracts.
77) How are unjust enrichment and unjust detriment prevented in the context of contracts?
78) Explain the doctrine of equity with reference to contracts.