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1. If you have an established relationship with a buyer, you can sell small tracts of land without a written contract.
a.
True
b.
False
2. In business law, a lawyer’s primary job is to represent the client in contract litigation.
a.
True
b.
False
3. Lawyers prefer to negotiate touchy subjects as they arise rather than address them at the beginning of a relationship.
a.
True
b.
False
4. Ricardo has agreed to sell his family farm to Walter for a price of $450,000. Even though both sides agree on the terms,
it is still worth the money for Ricardo to hire a lawyer to write the contract.
a.
True
b.
False
5. It is unethical to use your lawyer as an excuse for a provision of a contract, such as, “My lawyer insists that I have a
liquidated damages clause...”
a.
True
b.
False
6. You should hire a lawyer to review any legal papers you have to sign, especially such papers as lease agreements or car
purchases.
a.
True
b.
False
7. Any ambiguity in a contract is interpreted against the party who drafted the contract.
a.
True
b.
False
8. Emily runs a children’s clothing boutique which takes in local homemade items on a consignment basis. Her standard
form contract indicates that Emily has the right to put items on sale without prior approval, but does not specify what
effect the sale has on the consignor’s payment percentage. Her intent is to keep the same profit she would have had
without the sale. She is using ambiguity in her contract to increase her sales and profit.
a.
True
b.
False
9. Some contracting parties are intentionally vague in contract terms.
a.
True
b.
False
10. Ambiguities in contracts are always interpreted in favor of the side that wrote the contract, since they are the ones who
know what the provision is supposed to mean.
a.
True
b.
False
11. In the case of a typo, a court will reform a contract if there is clear and convincing evidence that the alleged mistake
does not actually reflect the true intent of the parties.
a.
True
b.
False
12. “Scrivener’s error” is another (fancier) name for a typo.
a.
True
b.
False
13. Contracts must use formal terminology such as "whereas" and "heretofore" in order to be legal.
a.
True
b.
False
14. A contract should have a descriptive title, which is generally in all capital letters, underlined and centered at the top of
the page.
a.
True
b.
False
15. The legal term for a promise in a contract is “provision.”
a.
True
b.
False
16. In which of the following situations is it likely that you may NOT need a written contract?
a.
You are dealing with a party you do not know well, so you need to remain flexible.
b.
You are buying land from a member of your family.
c.
The terms of the agreement are simple and the value of the transaction is small.
d.
You have negotiated with the other party enough that you both know what the other person intends.
17. Which of the following is one of the four steps in reading a contract?
a.
What-ifs
b.
Scan for typos
c.
Re-write with a lawyer
d.
Final approval
18. When a party to a contract intentionally makes the terms of a contract unclear, it is called
a.
vagueness.
b.
duress.
c.
ambiguity.
d.
a mistake.
19. Two parties are debating whether or not to put their contract into writing. In making their determination, which of the
following factors would normally NOT be considered?
a.
whether or not the agreement falls within the Statute of Frauds
b.
the complexity of the agreement
c.
the length of time covered by the agreement
d.
the relationship between the two parties
20. In the case of scrivener’s errors, a court will usually
a.
reform the contract if it is clear that the mistake is not what the parties intended.
b.
instruct the parties to rewrite the contract without the errors.
c.
enforce the contract as written.
d.
throw out the contract completely.
21. If the subject of the contract includes issues that may be controversial or "touchy," it is best to
a.
keep lawyers out of the negotiation, so relationships are not strained.
b.
deal with them up front before the relationship becomes strained.
c.
deal with them one at a time, as the problems arise.
d.
state your position up front and stand firm when the other party objects.
22. Which of the following guidelines applies to writing the title of a contract?
a.
It should be written in general terms, like “Memorandum of Agreement.”
b.
It should be written like a sentence, with only the first letter capitalized.
c.
It should be brief with no more than five words.
d.
It should be descriptive of the agreement, and typed in all capital letters.
23. When one party to a contract fails to perform as promised, it is called
a.
litigation.
b.
breach.
c.
liquidated damages.
d.
bad faith.
24. Contract provisions that are enforceable independently are referred to as
a.
covenantal promises.
b.
conditional promises.
c.
reciprocal promises.
d.
material promises.
25. Statements of fact about the past and present are called
a.
provisions and terms.
b.
promises and covenants.
c.
representations and warranties.
d.
damages and remedies.
26. Standard provisions in a contract that are often listed under the heading “Miscellaneous” are called
a.
boilerroom.
b.
boilerplate.
c.
boilerpot.
d.
boilertape.
27. Which of the following is a standard provision frequently found in contracts?
a.
choice of forum
b.
understanding
c.
choice of compensation
d.
mediation
28. In a contract modification, the phrase “charged with such amendment” refers to
a.
the party who suggested the change.
b.
the party who will benefit from the change.
c.
the party who will be adversely affected by the change.
d.
the party who did NOT suggest the change.
29. Which of the following is NOT one of the three ways to amend a written contract?
a.
by writing and signing an amendment (or rider)
b.
by verbally agreeing to the changes and shaking hands on the deal
c.
by crossing out the mistakes and writing in the corrections
d.
by writing a totally new contract with the correct provisions
30. Bob, a house painter, contracts with Ollie to paint a rental house which Ollie owns. Bob hires Rob to take his place as
the painter on this contract. What has Bob done?
a.
Made a scrivener’s error
b.
Severed the contract
c.
Delegated his duties
d.
Assigned his rights
31. Ralph is a professional football player. He signs a valid contract with the Miami Dolphins. Later, he claims that he
was also promised free use of the Dolphins’ private jet, but this was not in the contract. What type of clause in his contract
would prevent him from flying away with this claim?
a.
A complete agreement clause
b.
A “no additional terms” clause
c.
An integration clause
d.
A severability clause
32. What is a force majeure event?
a.
any action that makes the contract unprofitable for either party
b.
any finding in a contract that shows a provision was deliberately left unclear
c.
a disruptive, unexpected occurrence for which neither party is to blame that prevents one or both parties from
complying with a contract
d.
any happening that fulfills one of the conditions in the contract, making it enforceable
33. A+ Modeling Agency signs a contract with Sandi to do a photo shoot for the local used car dealer’s advertising. The
contract was most likely written by
a.
the owner of A+ Modeling Agency.
b.
Sandi.
c.
A+ Modeling Agency’s lawyer.
d.
Sandi’s lawyer.
34. Rich and Archie sign an agreement in which Archie agrees to deliver ten cases of champagne in 5 days. The parties
negotiated and meant to say in the written agreement, delivery in 50 days. If the evidence is clear that the two parties
intended to agree to 50 days, the courts will probably
a.
reform the contract.
b.
rescind the contract.
c.
issue a warranty.
d.
issue a covenant.
35. When a provision in a contract is unclear by accident, it is a case of
a.
vagueness.
b.
mistake.
c.
ambiguity.
d.
condition.
36. Nate works as a sales representative. His employment contract specifies that he cannot work for a competitor for a
period of two years from employment. This is an example of
a.
vagueness.
b.
extortion.
c.
ambiguity.
d.
duress.
37. Farmer’s Fortune Insurance has a contract with Farmer Fran to insure her crops against insect damage. The contract
does not specify which insects are covered or how much damage is necessary to make a claim. The contract will probably
be enforced in favor of
a.
Farmer Fran.
b.
Farmer’s Fortune Insurance.
c.
Neither side, as it is ridiculous to try to insure against insects.
d.
Cannot determine... would have to go through litigation to decide.
38. Which of the following is generally NOT in the introductory paragraph of a contract?
a.
The date of the contract
b.
The covenants of the contract
c.
The parties to the contract
d.
The nature of the contract
39. An honest effort to meet both the spirit and letter of the contract is termed
a.
reasonable circumstances.
b.
sole discretion.
c.
honest representation.
d.
good faith.
40. Identify and explain at least four situations where a written contract is either necessary or recommended.
41. Compare and contrast the perspectives of a lawyer and a business client when approaching the negotiation of a
contract.
42. Outline the focused, multi-step process recommended for reading a contract before you agree to it.
43. Define and compare the terms “vagueness” and “ambiguity.”
44. When a party to a contract fails to fulfill all of her promises, she has breached the contract. What will a court look at in
responding to a breach of contract?
45. Outline the parts of a typical contract.
