1. One of the elements of a valid contract is a fair price.
1. A party’s intent to enter into a contract is judged by their personal,
subjective intent or belief.
1. An executory contract is one that has been fully performed.
1. A contract is void if its purpose is illegal.
1. An advertisement is generally considered an invitation to negotiate.
1. A contract lacking a quantity term, when appropriate, may not be
enforceable.
1. An offer that a statute makes illegal automatically terminates the offer.
1. An unequivocal acceptance operates as a rejection of the original offer.
1. Inadequate consideration may reflect a lack of bargained-for exchange.
1. To be legally sufficient, consideration must include something of
economic value.
1. An obligation is enforceable only if it is supported by past
consideration.
1. Contractual capacity refers to the size or volume of a contract.
1. A minor may not contract with an adult.
1. A covenant not to compete is enforceable only if it is necessary to
restrain trade.
1. Only a mistake in value will make a contract voidable.
1. An innocent party can rescind a fraudulent contract.
1. A contract entered into under undue influence is voidable.
1. Under the Statute of Frauds, all contracts must be in writing to be
enforceable.
1. If a contract stipulates that a right cannot be assigned, then ordinarily it
cannot be assigned.
1. An incidental beneficiary is not entitled to enforce the promise of a
promisor.
1. Digital Architecture, Inc., agrees to design robotic software for
equipment owned by Chassis Assembly Corporation. Whether or not
this agreement meets all of the requirements of a contract, the parties
are most likely to follow the rules of contract law because they
a. want to avoid potential disputes.
b. are conscious of those rules.
c. are
not
conscious of those rules.
d. have a moral obligation to do so.
1. Paco offers to pay Quik Delivery (QD) $50 if it picks up and delivers to
him a package from his accountant Rupert within 30 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.
1. Build-Rite Contractors, Inc., asks Cool Electric, a subcontractor, to
provide certain services. Nothing is said about payment. Cool provides
the services and submits an invoice, which Build-Rite 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 executory contract.
c. an implied contract.
d. a voidable contract.
1. Debit & Credit Accounting Services and Brickwork Construction
Company negotiate a contract. If it has all of the elements necessary
for one of the parties to enforce it in court, it is
a. a valid contract.
b. a voidable contract.
c. a void contract.
d. an unenforceable contract.
1. John says to Kris, “I would like to sell you my sports memorabilia
collection.” This is not an offer because it
a. does not describe the subject matter specifically.
b. does not include a price term.
c. only expresses an opinion.
d. only invites Kris to negotiate.
1. Brick Products, Inc., files a suit against City Trucking Service for breach
of contract, based on what Brick claims was City’s offer. For a court to
determine if a contract has been breached, under the common law, the
offer must include terms that are
a. exactly precise.
b. reasonably definite.
c. unequivocally approximate.
d. vague or uncertain.
1. New Cell Phone Company offers to buy a laser printer, with a case of
paper and an extra cartridge, from Office Products, Inc. (OPI), for $200.
Paul, OPI’s representative, says, “Okay, but no paper and no extra car–
tridge.” Paul has
a. accepted the offer.
b. made a counteroffer without rejecting the offer.
c. rejected the offer and made a counteroffer.
d. rejected the offer without making a counteroffer.
1. Eve tells Finlay that she will pay him $50 if he unloads her truck.
Finlay’s acceptance is complete
a. as soon as Finlay says he will unload the truck.
b. once Finlay starts to unload the truck.
c. only after Finlay unloads the truck.
d. when Finlay hears Eve’s offer.
1. Quality Aluminum Corporation files a suit against Rite Tool Company,
claiming that the consideration for their contract is inadequate. The
court will most likely not examine the adequacy of the consideration if
a. it is obvious that the consideration is adequate.
b. Rite Tool asserts that there is adequate consideration.
c. something of value passed between the parties.
d. the consideration is worth more than $100.
1. Rollo promises to perform, for a price, shoe repair services in
affiliation with Togs ‘n Things, a clothing store. To support a contract, the
consideration exchanged by the parties must be
a. adequately considerate.
b. equally valuable.
c. legally sufficient.
d. wisely priced.
1. Chip’s Chips Company agrees to supply Delicioso Café with all the
corn chips that it requires for a year. A sudden demand for ethanol
results in a shortage of corn, and the price rises sharply. Chip’s asks
Delicioso to pay a higher price for the chips. This request is
a. invalid as an attempt at extortion or the so-called holdup game.
b. invalid under the preexisting duty rule.
c. valid as a risk ordinarily assumed in business.
d. valid due to the unforeseen difficulty of the sudden price
increase.
1. Koko signs a covenant not to compete as part of a sale of her ongoing
medical equipment business to Laurel Valley Medico, Inc., in exchange
for a bonus payment. The covenant is most likely enforceable by
a. both parties.
b. Koko, but not Laurel Valley.
c. Laurel Valley, but not Koko.
d. no one.
1. U-Can-Own-It Corporation sells appliances to less educated
consumers, including Viv, on installment plans. U-Can-Own-It files a suit
against Viv when she stops making payments. Viv claims that the deal is
unconscionable. The court will most likely consider
a. the geographic area of the relevant market.
b. the parties’ relative bargaining power.
c. the quality of related products in the general market.
d. the relation of this deal to those of other customers.
1. Urban City and Thru-way Construction Company enter into a contract
that includes calculations. Urban, whose engineer, Sergei, compiled the
figures, discovers later that some numbers were added incorrectly, but
Thru-way refuses to make changes. Urban can
a. not rescind the contract.
b. rescind the contract on the basis of fraud.
c. rescind the contract on the basis of mistake.
d. rescind the contract on the basis of duress.
1. Genie.com initiates an online dating service. To attract subscribers and
encourage participation, Genie.com creates and posts profiles of
fictitious persons and exaggerated profiles of actual users. Fooled by
the false profiles, Ham buys a subscription. He is most likely a victim
of
a. undue influence.
b. fraud.
c. mistake.
d. nothing.
1. Dora, an accountant, uses undue influence to induce her client
Emily to invest in Fine Gems, Ltd., a business with little potential. When
Emily learns the truth, she can
a. do nothing.
b. enforce the contract but not rescind it.
c. enforce the contract or rescind it.
d. rescind the contract but not enforce it.
1. Fresh Air Filter & Purification Company and Big Box Commercial
Storage Company enter into a contract. To be enforceable, the contract
must be in writing if it involves
a. an interest in land.
b. an air filter that costs less than $500.
c. collateral for a loan.
d. a service that can be performed within less than a year.
1. Eustace and Durango Oil Company enter into an oral contract under
which Eustace agrees to work on a Durango rig for not less than
eighteen months. This contract is enforceable by
a. Eustace.
b. Durango.
c. any interested third party, such as a member of Eustace’s family.
d. none of the choices.
1. A contract between Drill-Bit Sharpeners, Inc., and East Oil Mining
Corporation contains a clause stating that any assignment is “void.” This
ordinarily prohibits
a. any assignment.
b. no assignment.
c. only an assignment of contract rights to personal services.
d. only an assignment that would change the obligor’s risk.
1. George promises to repair Francesca’s boat dock in exchange for
Efrem’s promise to plant trees on George’s property. This is
a. a delegation.
b. an assignment.
c. a third party beneficiary contract.
d. not a contract.
1. Cody signs and returns a letter from Deb, referring to Deb’s Double–D
Ranch and its price. When Cody attempts to complete the deal, Deb
refuses, claiming that they have no contract. Cody claims they do.
What standard determines whether these parties have a contract?
1. Myra owns a house, which she advertises for sale for $400,000. On
May 1, Nico offers Myra $380,000 for the house. On May 5, Myra has
delivered to Nico at his office a form that includes additional terms but does
not state a price. At 9 A.M. on May 6, Nico signs the form and gives it to
Odell, his administrative assistant, with instructions to mail it. At 10 A.M., Myra
calls to tell Nico that the deal is off. The next day, Odell mails the signed
form to Myra. When she refuses to sell the house to Nico, he files a suit
against her, alleging breach of contract. Myra claims that there was no
contract. What are arguments supporting each party’s position? What is the
court likely to rule? Explain.