Martin sold his used car to Nixon for $2,000. Later Martin discovered that the car was
worth $3,000. Martin then claimed that Nixon owed him an additional $1,000. If Martin
attempted to take legal action to collect the additional $1,000, he would be entitled to
a. $1,000 plus legal fees.
b. $1,000 only.
c. $3,000 minus $1,000.
d. nothing.
The minor’s obligation to pay for necessaries is based on the theory of quasi contract.
This theory protects
a. minors in their dealings with adults.
b. adults in their dealings with minors.
c. minors in their dealings with other minors.
d. minors in their dealings with a parent or guardian.
A security agreement includes
a. the names of the parties.
b. the amount of the debt and terms of repayment.
c. the property in which the creditor has a security interest.
d. all of these.
Bell, a minor, entered into a contract to sell some real property he owned to Franz, an
adult. Bell may legally disaffirm this contract
a. any time before attaining his majority.
b. within a reasonable time after attaining his majority.
c. on the day he signs the contract of sale.
d. none of these.
A person who shares in the estate of an intestate is called a(n)
a. heir.
b. executor.
c. beneficiary.
d. residuary.
If some part of a shipment of goods does not conform to the contract, the
a. seller generally must be given an opportunity to cure the defect.
b. buyer can immediately reject the entire shipment and automatically cancel.
c. buyer cannot accept the part that is conforming.
d. buyer must accept the shipment at a reduced price.
Workers’ compensation laws deny benefits to employees when an accident is
a. caused by ordinary negligence.
b. caused by gross negligence.
c. caused by intoxication.
d. job-related.
If an agent has apparent authority, any contracts made are
a. binding on the principal.
b. voidable by the principal.
c. understood as necessary to carry out the purposes of the agency.
d. none of these.
Lawrence asked Foote to sell a diamond that Lawrence owned. Foote signed a contract
with Bell to sell the diamond, but when Bell learned that Lawrence was the principal,
she refused to go ahead with the contract. Lawrence can sue
a. Foote for breach of contract.
b. Bell for breach of contract.
c. Foote and Bell for conversion.
d. neither Foote nor Bell.
To qualify as a holder in due course, the holder must first be a(n)
a. payee of the instrument.
b. holder of the instrument.
c. indorser.
d. assignee.
A life insurance policy that provides protection for a specific amount of time is known
as a(n)
a. endowment policy or annuity.
b. paid-up policy.
c. term policy.
d. universal policy.
Under the provisions of the statute of frauds, one example of a contract that does not
have to be in writing to be enforceable is a(n)
a. promise to pay the debts of another living person.
b. agreement for the transfer of ownership in real property.
c. agreement to rent real property for one year or less.
d. agreement for the sale of merchandise valued at $700.
A major reason rules or laws were first established was to
a. provide jobs for people.
b. restrict people’s movement in society.
c. make it possible for the majority to rule the rest.
d. protect the rights of individuals against acts by others.
Plante owed Premo Oil Company $350. Premo Oil Company assigned its right to the
debt to Budget Finance Company on March 10. On March 11, Plante paid Premo Oil
Company $200. On March 14, Plante received notification of the assignment by mail.
When Budget Finance attempted to collect the $350, Plante refused to pay more than
$150. Must Plante pay Budget Finance Company $350?
a. Yes; rights to money are assignable and are binding as soon as the assignment
agreement is made.
b. Yes; rights to money are assignable and are binding as soon as the assignment
agreement is recorded in the proper office.
c. No; rights to money are assignable but are not binding until the debtor agrees to the
assignment.
d. No; rights to money are assignable but are not binding until the debtor is properly
notified of the assignment.
A contract to answer for the debt of another person is called a
a. contract of adhesion.
b. prenuptial agreement.
c. contract of guaranty.
d. parol contract.
The Medicaid program is administered by
a. the federal government.
b. local government.
c. state government.
d. public hospitals.
Farnsworth mailed Jessie a letter stating that he is willing to sell her an antique desk for
$2,500 but does not stipulate the mode of acceptance. Jessie wishes to accept this offer.
Which of the following modes will result in a valid acceptance?
a. A telegram
b. Fax machine
c. Letter
d. All of these
A broker is an example of
a. a general agent.
b. an independent contractor.
c. an employee.
d. a special agent.
A principal-agent contract
a. must be in writing if it involves the sale of real estate.
b. must be in writing if the relationship is to last for less than one year.
c. never needs to be in writing.
d. must always be in writing.
If the terms of a contract make it difficult to determine whether a particular transaction
is a sale on approval or a sale on return, it will be considered a sale or return if the
buyer took the goods
a. primarily for use rather than for resale.
b. primarily for resale rather than for use.
c. on COD terms.
d. in bulk.
Candice, who owned a retail dry-cleaning establishment, planned a trip to Florida for
health reasons. On March 13 she orally agreed to hire Myron for one year to manage
her business while she was away. Myron was to manage the establishment from May 1
of that year to April 30 of the next year. Which of the following statements is correct?
a. The statute of frauds does not apply to this situation.
b. The statute of frauds does apply to this situation.
c. This agreement is void.
d. This agreement is voidable.
A contract for the sale of goods is either a present sale or a contract to sell.
Albion sold Holly a motorcycle on credit. A security agreement was signed, but Albion
failed to file it. Holly claims the security agreement is invalid. Is Holly correct?
The ____________________ decides what tasks the employee will perform.
Money bought and sold as a commodity is included in the definition of goods.
A sale on approval is a present sale.
How does a contract differ from a mere social agreement?