1. A contract with a minor is voidable at the minor’s option.
a. True
b. False
2. A contract with a party who has been declared incompetent is voidable.
a. True
b. False
3. The contracts of a person who has been declared legally incompetent are void.
a. True
b. False
4. Minors are liable for the reasonable value of necessaries.
a. True
b. False
5. Material information is something that would affect the decision to buy or sell.
a. True
b. False
6. Misrepresentation must be fraudulent before rescission can be permitted.
a. True
b. False
7. Puffing is sufficient grounds for setting aside a contract on the basis of misrepresentation.
a. True
b. False
8. “This shirt is 100% cotton” is a statement that is puffing.
a. True
b. False
9. Fraud is misrepresentation with intent to mislead or deceive.
a. True
b. False
10. Duress requires proof of physical force.
a. True
b. False
11. Contracts by minors to enter the military are generally viewed as unenforceable.
a. True
b. False
12. Undue influence requires proof of a confidential relationship.
a. True
b. False
13. Competency licensing statutes do not prevent enforcement of contracts by unlicensed parties.
a. True
b. False
14. Contracts with illegal subject matter are voidable.
a. True
b. False
15. Unconscionability is an illegality defense.
a. True
b. False
16. Covenants not to compete are valid only in sales of a business.
a. True
b. False
17. Conditions precedent are events that must happen before contract performance is required.
a. True
b. False
18. Substantial performance is available for all types of contracts.
a. True
b. False
19. A force majeure clause is one that provides excuses for nonperformance.
a. True
b. False
20. Liquidated damages are void as penalties.
a. True
b. False
21. Incidental damages are the costs of being compensated and are nonrecoverable.
a. True
b. False
22. Exculpatory clauses are generally considered void as against public policy.
a. True
b. False
23. Covenants not to compete are generally considered void as against public policy.
a. True
b. False
24. A force majeure clause is a clause that prevents additional terms in acceptances from becoming part of the
contract.
a. True
b. False
25. Incidental and consequential damages are the same types of damages.
a. True
b. False
26. A liability limitation clause is the same as an exculpatory clause.
a. True
b. False
27. A television rent-to–own contract that requires 24 payments of $30 each before the renter owns the $199 television
set is unconscionable.
a. True
b. False
28. An architect who fails to pay her annual license renewal fee will be unable to collect fees for work done until the
renewal fee is paid.
a. True
b. False
29. “Only those on the cutting edge of technology have this product,” is an example of puffing.
a. True
b. False
30. An accord and satisfaction is a void contract.
a. True
b. False
31. The types of statements that qualify for express warranties also qualify as a basis for misrepresentation.
a. True
b. False
32. Misrepresentation does not require proof of the buyer’s reliance.
a. True
b. False
33. The difference between fraud and misrepresentation is knowledge.
a. True
b. False
34. Silence, or the failure to disclose information, is not misrepresentation.
a. True
b. False
35. All contracts have conditions for performance.
a. True
b. False
36. The seller’s cost of running another ad in order to sell the car that a buyer breached a contract on is an example of
consequential damages.
a. True
b. False
37. The difference between fraud and misrepresentation is proof of intent.
a. True
b. False
38. Compensatory damages are in addition to liquidated damages.
a. True
b. False
39. Covenants not to compete are void only in sale-of-business contracts.
a. True
b. False
40. Attorneys‘ fees are an example of liquidated damages.
a. True
b. False
41. Compensatory damage formulas are provided under the UCC.
a. True
b. False
42. The failure to deal fairly with a party to a contract can result in damages for breach.
a. True
b. False
43. In a relationship of dependence, the failure to deal fairly can result in liability for the party controlling the contract
term.
a. True
b. False
44. There is no difference between assignments and delegation.
a. True
b. False
45. A bill of lading is a receipt for shipment issued by the seller.
a. True
b. False
46. Goods can be transferred physically or by transfer of the bill of lading.
a. True
b. False
47. A letter of credit is issued by the buyer’s bank.
a. True
b. False
48. A lawyer/client relationship is an example of a confidential relationship.
a. True
b. False
49. An example of a condition precedent in a home purchase contract is that the buyer must qualify for financing first.
a. True
b. False
50. An example of a condition precedent in an audit contract is access by the auditor to financial information.
a. True
b. False
51. Parents of minors can be held liable for the reasonable value of necessaries that their minor children contracted for.
a. True
b. False
52. A multi-million dollar contract between a manufacturer and a parts supplier provides for damages of $300 per day
for late delivery is void as a penalty contract.
a. True
b. False
53. A mortgage broker who sells mortgage contracts to mortgage companies has created a third party beneficiary
contract.
a. True
b. False
54. An assignment is the transfer of benefits under a contract.
a. True
b. False
55. A minor who has received medical care can never be responsible for payment for those services.
a. True
b. False
56. In the iParadigms case (Turnitin case), the court ruled that the students who submitted papers to Turnitin who did
not want to submit their papers were victims of duress.
a. True
b. False
57. Bob, age 17, has entered into a contract to buy a car. The contract is:
a. voidable.
b. void.
c. voidable only if Bob can return the car.
d. enforceable since it is for a necessary.
e. none of the above
58. Which of the following statements would not be a basis for misrepresentation?
a. “This toothpaste is the best tasting around.”
b. “This house is built the way they used to build houses.”
c. “There is no merger pending for the company.”
d. All of the above are sufficient bases for misrepresentation.
59. Duress requires proof of:
a. physical force.
b. threat of physical force.
c. deprivation of a meaningful choice.
d. none of the above
60. Contracts with illegal subject matter are:
a. void.
b. voidable.
c. neither a nor b
61. A provision in a contract requiring that a buyer obtain financing before a deal can go through is an example of:
a. a contract with no consideration.
b. economic duress.
c. a condition precedent.
d. none of the above
62. Force majeure clauses:
a. are liquidated damages clauses.
b. are void.
c. serve to shift the risk of unforeseen events.
d. none of the above
63. A seller recovering the difference between his resale price and the buyer’s original contract price is an example of:
a. compensatory damages.
b. incidental damages.
c. liquidated damages.
d. none of the above
64. James Krieg has finished law school but has unsuccessfully taken the bar exam twice. Krieg is running low on
patience and cash. He has begun writing wills to see him through this time of crisis and is charging $200 per will.
Some of his will clients have refused to pay Krieg and he wishes to take them to a small claims court. Which of the
following statements is true?
a. Krieg could recover the fees on a quasi-contract theory.
b. Krieg could recover the fees since the licensing after the bar exam is simply to raise funds.
c. Krieg agreements are voidable.
d. Krieg agreements are void.
65. Which of the following contracts would be void?
a. A contract with a person declared mentally incompetent.
b. A contract with a minor.
c. A contract with a force majeure clause.
d. All of the above are void.
66. The seller of a dry cleaning business has agreed not to open another dry cleaning business for two years within a
one–mile radius of the sold business. Such an agreement:
a. is void as against public policy.
b. is void as unconscionable.
c. is void as usurious.
d. is valid and enforceable.
67. Clothing For Accountants is a popular retail store owned by I.M. Material. Material has just sold the business to
Phil Forma. Phil has asked that a covenant not to compete be inserted into the agreement. Such covenants are:
a. void as against public policy.
b. only valid in employment contracts.
c. valid if reasonable in time and geographic scope.
d. none of the above
68. Cindy Nanson had a contract with Bob Greenly for Bob to repay Cindy $2000 plus interest by July 1986. It is now
August 1990 and Cindy has not received any payment. Cindy wishes to file suit to collect the $2000. Bob reminds
her that the statute of limitations for contract suits is four years. Cindy’s contract with Bob is:
a. unenforceable.
b. void.
c. voidable.
d. all of the above
69. Undue influence requires the presence of:
a. a fiduciary relationship.
b. some threat or force.
c. a lack of capacity in the contracting party.
d. none of the above