The Legal Environment of Business and Online Commerce, 7e (Cheeseman)
Chapter 9 Formation of Traditional and E-Contracts
1) Provision of services qualifies as “consideration” for an enforceable contract.
2) A contract is bilateral contract if the offeror’s promise is answered with the offeree’s promise
of acceptance.
3) An act of performance is necessary to create a bilateral contract.
4) A unilateral contract can be accepted without the performance of an act by the offeree.
5) An offer to create a unilateral contract cannot be accepted by a promise to perform.
6) 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.
7) In a recognizance, a party acknowledges in court that he or she will pay a specified sum of
money if a certain event occurs.
8) A voidable contract is also termed as an unenforceable contract.
9) A contract that has been fully performed by both sides is called an executory contract.
10) An express contract can be stated orally.
11) To create an implied-in-fact contract, it must be established that the plaintiff provided the
property or services gratuitously.
12) An implied-in-law contract is a contract in which agreement between parties has been
inferred from their conduct.
13) Unless otherwise expressly stated, an auction is considered an auction without reserve.
14) In auction without reserve, the seller is the offeree.
15) A rejection of an offer is not effective until it is actually received by the offeror.
16) A counteroffer is considered a rejection of the original offer.
17) An option contract is terminated upon the death of the offeror.
18) To meet the mirror image rule, the offeree must accept the terms of the offer without
modification.
19) Under the mailbox rule, an acceptance is only effective when it is received.
20) A promise is something of legal value given in exchange of a consideration.
21) A contract is considered to be supported by legal value if the promisee receives a legal
benefit.
22) Illusory promises require both parties to perform their contractual obligations.
23) Preexisting duty promise is unenforceable because of the introduction of a new
consideration.
24) A new promise can include a past consideration for it to be enforceable.
25) The infancy doctrine binds an adult to the minor’s decision on a contract.
26) The infancy doctrine gives adults the right to disaffirm contracts entered with minors.
27) Any contract entered into by a person who has been adjudged insane is void.
28) A person who has dealt with an insane person need not place that insane person in status quo
once the contract is voided.
29) A person who is insane but not adjudged insane cannot void a contract he or she has entered
into.
30) A person who disaffirms a contract based on intoxication must be returned to status quo.
31) The intoxicated person is not legally obligated to return consideration, received under the
contract, to the competent party.
32) An exculpatory clause that results from superior bargaining power is usually found to be
void.
33) An unconscionable contract cannot be enforced even if the unconscionable clause is removed
from it.
34) The UCITA is a law common to all states and does not require state legislatures to adopt it as
a statute for the state.
35) Which of the following is an acceptable consideration for a contract?
A) penalty
B) arrest
C) sentence
D) money
36) 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) voidable
B) enforceable
C) conditionally enforceable
D) unenforceable
37) A contract is ________ if the offeror’s promise is answered with the offeree’s promise of
acceptance.
A) executory contract
B) executed contract
C) unilateral contract
D) bilateral contract
38) 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) bilateral
B) unilateral
C) executory
D) implied-in-law
39) A contract is ________ if the offeror’s offer can be accepted only by the performance of an
act by the offeree.
A) executed
B) executory
C) unilateral
D) bilateral
40) 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) unilateral
C) executory
D) bilateral
41) 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 but cannot recover damages.
B) Martha can sue the baker to recover $150 in damages.
C) Martha cannot sue the baker.
D) The baker has to give $150 plus cost of the replacement cake to Martha as he entered into a
verbal contract with her.
42) Alan tells Sherry that he will pay her $5,000 if she runs the Boston Marathon. Once Sherry
starts running the marathon, Alan, legally, ________.
A) can revoke the contract as informal verbal agreements are not binding
B) can reduce the money on offer
C) can only increase the money on offer
D) cannot revoke the contract
43) Which of the following is an informal contract?
A) recognizance
B) lease
C) bank draft
D) check
44) What is recognizance?
A) a sealed document that contains a formal contract whose contents are known to both parties
and the referee who supervised its signing
B) a party’s acknowledgement in court that he or she will pay a specified sum of money if a
certain event occurs
C) a party’s acknowledgement in court that he or she is not liable to pay any money if a certain
event occurs
D) a sealed document that contains an informal contract whose contents are known only to the
parties
45) Which of the following is a necessary condition for a contract to be considered valid?
A) It can be voided by both parties.
B) It can be voided by one of the parties.
C) It is enforceable by both the parties.
D) It is enforceable by at least one of the parties.
46) 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) voidable
C) void
D) unenforceable
47) An offeror uses blackmail to make an offeree sign a contract that involves the sale of the
offeree’s house. The contract is ________.
A) unenforceable
B) valid
C) void
D) voidable
48) If a contract is required to be in writing under the Statute of Frauds but is not, the contract is
________.
A) voidable
B) void
C) unenforceable
D) valid
49) Contracts that have been fully performed by one side but not by the other are classified as
________ contracts.
A) void
B) voidable
C) executory
D) executed
50) 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) unenforceable
B) executory
C) void
D) executed
51) 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) Parties may voluntarily perform a contract that is unenforceable.
C) In an unenforceable contract, at least one party has the option to void his or her contractual
obligations.
D) Void contracts are enforceable in cases involving mutual mistakes.
52) An oral agreement to purchase a neighbor’s bicycle is a(n) ________ contract.
A) void
B) voidable
C) implied
D) express
53) 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 defendant accepted the property or services offered by the plaintiff as a fee for an illegal
activity.
C) The plaintiff made the defendant sign the contract and then changed its terms, calling the new
terms “previously implied”.
D) The defendant was given an opportunity to reject the property or services provided by the
plaintiff but failed to do so.
54) Which of the following statements is true of the doctrine of quasi-contract?
A) Agreement between parties to a quasi-contract has been inferred from their conduct.
B) It is an equitable doctrine intended to prevent unjust enrichment.
C) It applies only where there is an enforceable contract between the parties.
D) It allows a court to award monetary damages to a defendant because no actual contract
existed between the parties.
55) 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) implied-in-fact contract
B) express contract
C) quasi-contract
D) formal contract
56) 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) express
B) unilateral
C) implied-in-law
D) implied-in-fact
57) Which of these is an instance of a quasi-contract?
A) an employee receiving his or her paycheck every month
B) two companies signing a business agreement that spans an undefined duration
C) an unconscious man being nursed by a hospital, having been brought in by a passer-by
D) a woman hiring a caterer only after the caterer promises to deliver the food on time
58) The ________ states that the intent to contract is judged by the reasonable person standard
and not by the subjective intent of the parties.
A) objective theory of contracts
B) common law of contracts
C) Restatement of the Law of Contracts
D) Restatement (Second) of Contracts
59) According to the objective theory of contracts, the intent to enter into an express or implied-
in-fact contract is judged by the ________.
A) doctrine of equity
B) legality of the contract
C) reasonable person standard
D) common law of contracts
60) Which of the following is true for an auction with reserve?
A) The seller retains the right to refuse the highest bidder.
B) Invitations to make an offer are not allowed.
C) Goods cannot be withdrawn from sale after the offer has been made.
D) A bid once made cannot be withdrawn and is legally binding.
61) Which of the following is true for an auction without reserve?
A) The bidder is considered the offeror.
B) The seller need not accept the highest bid.
C) The goods on sale cannot be withdrawn.
D) The auctioneer is not allowed to set a minimum bid.
62) Which of the following statements is true about a counteroffer?
A) An offeree that makes the counteroffer is still considered the offeree.
B) A counteroffer terminates the existing offer.
C) A counteroffer can only be made by the offeror.
D) A counteroffer need not be communicated to the offeror.
63) Which of the following is true of an option contract?
A) If the offeree chooses not to buy the property then money paid in consideration must be
returned.
B) If money is paid as consideration, then that is not applied to the sale price.
C) Death or incompetency of either party terminates an option contract.
D) The offer cannot be revoke during the option period.
64) The ________ states that an acceptance is effective when it is dispatched, even if it is lost in
transmission.
A) rule of silence as acceptance
B) mirror image rule
C) mailbox rule
D) mutual assent rule
65) A contract is said to have legal value if ________.
A) both the promisor and the promisee receive a legal benefit
B) the promisor suffers a legal detriment
C) the promisee suffers a legal detriment
D) the promisee receives a legal benefit
66) Which of the following is true of a gift promise?
A) A gift promise can be enforced in a court of law.
B) A completed gift promise cannot be cancelled for lack of consideration.
C) A gift promise contains considerations.
D) The promisee can take legal action if the promisor does not uphold the promise.
67) Why does an illusory contract lack consideration?
A) because the consideration promised is unlawful and therefore void
B) because the person promises to perform an act or do something he is already under an
obligation to do
C) because one or both parties can choose not to perform their contractual obligations
D) because the compensation paid is for work done in the past
68) What is the significance of the age of majority in relation to legal contracts?
A) People below the age of majority can directly enter into lawful contracts.
B) Mentally incompetent persons need to achieve the age of majority in order to enter into a
legal contract.
C) It is the age above which people of capacity can enter into a legal contract.
D) Minors who have entered the age of majority require his or her parents or guardian’s consent
to enter into a legal contract with adults.
69) Which of the following is true for a minor under the infancy doctrine?
A) A minor is bound to the adult’s decisions in a contract between them.
B) A minor can disaffirm contracts he or she has entered into with adults.
C) A minor cannot enter into a legal contract with another minor.
D) A minor cannot choose to enforce a contract at his or her whim.
70) Which of the following is true of a contract with an adjudged insane person?
A) The adjudged insane person is bound by the terms of the contract.
B) The contract is void.
C) Only the competent party can enforce the contract.
D) The competent party is legally obligated to uphold the contract.
71) Which of the following is true of a contract where one of the parties is insane but not
adjudged insane?
A) The contract is voidable by the competent party.
B) The contract is only voidable by the insane person.
C) Only the court appointed legal guardian to the insane person can modify contracts.
D) The non-insane person must be placed in status quo if the insane person voids the contract.
72) A(n) ________ is a contractual provision that relieves one or both of the parties to a contract
from tort liability.
A) contract of adhesion
B) exculpatory clause
C) duty of restitution
D) fundamental breach
73) A(n) ________ is a contract that courts refuse to enforce in part or at all because it is so
oppressive or manifestly unfair as to be unjust.
A) unconscionable contract
B) contract of adhesion
C) contract in restraint of trade
D) quasi-contract
74) Which of the following elements has to be proved for a contract to be deemed
unconscionable?
A) that the weaker party did not enter the contract under duress
B) that the parties had equal bargaining power
C) that the dominant party justly used its bargaining power
D) that the adhering party had no reasonable alternative
75) Explain the basic requirements that must be met for a contract to be enforceable.
76) What are the possible problems that can come up in a unilateral contract?
77) Compare valid, void, voidable and unenforceable contracts.
78) Give an account of termination of offer due to lapse of time.
79) What is legal insanity?
80) What is UCITA? Explain its role.
81) A(n) ________ contract is a contract entered into by a way of exchange of promises of the
parties, a “promise for a promise.”
82) A contract where agreement between parties has been inferred from their conduct is referred
to as a(n) ________ contract.
83) A(n) ________ contract is only valid once the offeree performs the requested act.
84) A(n) ________ contract is a contract that has not been fully performed by either or both
sides.
85) A contract is said to be ________ where one or both parties has the option to void the
contractual obligations.
86) 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.
87) An offeror can ________ an offer by withdrawing an offer prior to its acceptance.
88) A(n) ________ is a response by an offeree that contains terms and conditions different from,
or in addition to, those of the offer.
89) Under the mailbox rule, an acceptance is effective when ________.
90) The ________ rule states that the offeree must accept the terms of an offer as stated in the
offer.
91) A(n) ________ is a contract in which the original offeree pays consideration (usually money)
in return for the original offeror giving consideration (time of the option period).
92) ________ is something of legal value given in exchange for a promise.
93) A contract into which parties enter, but where one or both of the parties can choose not to
perform their contractual obligations, is said to involve ________ promises.
94) The infancy doctrine allows minors to ________ contracts they have entered into with adults.
95) The ________ establishes uniform legal rules for the formation and enforcement of
electronic contracts and licenses.