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Business Law - Final 2.0
Terms in this set (207)
In the absence of a statute requiring a writing, a contract may be oral or written.
Because contracts are legally binding agreements, they must be in writing to be enforceable.
Under the statute of frauds, an oral contract must be completed within one year after performance begins.
An oral agreement to supply a line of credit for two (2) years cannot be enforced because of the statute of frauds.
A promise to grant a mortgage on real property does not require a writing because it is not a transfer of land.
No writing is required for a service contract that can be performed within one year after the date of the agreement.
The statute of frauds applies to promises to answer for another party's debt but does not apply to a promise to answer for another party's default.
A promise to pay an attorney a fee owed by a third person can be enforced without a writing.
If the main purpose of a promise is to pay the debt of another and benefit the promisor, the statute of frauds is not applicable, and the oral promise to pay the debt is binding.
A father's handshake and oral promise to his daughter and her fiancée made in consideration of their contemplated marriage is binding.
A contract for the sale of goods with a price of $500 or more requires written proof to be enforceable.
To be enforceable under the statute of frauds, the note or memorandum must be signed by the party sought to be
bound by the contract.
A note or memorandum does not have to contain all the essential terms of the contract to be valid.
When a contract falls within the statute of frauds, the signatures of both parties must be shown to the court.
An insurance company cannot refuse to pay the fire loss of the buyer of a house on the grounds that the sales contract
for the house was signed by electronic signature.
Under the majority view, a contract that does not satisfy the statute of frauds is not enforceable.
A person who is prevented from enforcing a contract because of the statute of frauds also is prevented from recovering the value of services, property, or money furnished the other party to the oral contract.
The parol evidence rule generally excludes words spoken before or at the time a written contract was executed from
contradicting the terms of the contract.
The parol evidence rule generally precludes testimony that would contradict a complete written contract.
Parol evidence is not admissible to show fraud, duress or mistake.
The parol evidence rule is based on the theory that any oral agreement was abandoned when the contract was written.
The parol evidence rule does not apply to changes made after the signing of the contract.
When persons enter into an agreement, it is presumed that they intent the agreement to have some effect.
Through incorporation by deference, a contract can consist of both the original document and the detailed statement that is incorporated into it.
The provisions of a contract must be construed as a whole in such a way that every part is given effect.
If words and numbers contradict each other in a contract, the rule of construction favors the words.
If a contract is unclear, it will be interpreted against the party who drafted it.
A court can imply details of a performance which are not expressly stated in a contract.
The past performance of the parties under a continuing contract is irrelevant in determining what the contract means.
Customs and trade usage can override the express provisions of a contract.
An oral contract to sell a house is binding if:
The buyer paid the price and received the deed of conveyance
An oral understanding is not binding if:
The parties intended to formalize their understanding with a written agreement.
An oral contract can be enforced when it relates to:
The purchase of a television set for $200.
The one-year performance requirement for an oral contract begins:
On the day following the agreement
The statute of frauds:
Requires that a contract for the sale of land be evidenced by a writing.
The statute of frauds applies to:
The cancellation of a written agreement for the sale and purchase of land.
A promise to pay a debt must be in writing if:
The promise is to pay the debt of another.
An oral contract containing a promise by an executor to pay estate debts from estate funds is:
When ________ of the promisor's promise to pay the debt of another is to benefit the promisor, the statute of frauds is
not applicable, and the oral promise to pay the debt is binding.
The main purpose.
The Uniform Commercial Code contains a statute of frauds rule relating to sales of personal property, specifically:
Any of the following could satisfy the requirement of a writing under the statute of frauds except:
The writing required by the statute of frauds in the case of a contract for the sale of land must:
Describe the land to be sold.
When the statute of frauds applies and there is no written proof of the contract, the contract is:
Voidable by a party who has not signed.
When a person has performed services under an oral contract that cannot be enforced because of the statute of frauds, such person:
Can recover the reasonable value of the services because there is a quasi-contractual duty to pay for the benefit received from such services.
The defense of noncompliance may not be raised by:
The parties to the oral contract.
The parol evidence rule:
Applies to complete written contracts.
When interpreting an integrated contract, a court will exclude parol evidence in all of the following cases except:
To contradict the terms of a contract.
Parol evidence generally is admissible to explain:
Parol evidence may be admitted to show that a provision was omitted as the result of:
The parol evidence rule does not apply in which of the following scenarios?
The contract is materially incomplete.
The parol evidence rule may not apply if:
The contract is materially incomplete.
A contract is interpreted to give effect to:
The intent of the parties.
In interpreting an ambiguous contract, one part of the contract:
Must be viewed in connection with the rest of the contract.
A contract is created by which the terms are stated to be for consideration in the amount of $3,000. If typewritten in the contract is the term "four thousand dollars,"; while the amount of $3,000 is printed within the form:
The contract will be interpreted to be for $4,000.
When an insurance policy is ambiguous, the policy is interpreted:
Against the insurer.
When a contract proves to be a bad bargain:
parties are generally still bound by the terms of the contract
A condition precedent must occur before a party to a contract has an obligation to perform.
Impossibility of performance applies when the debtor does not have sufficient funds to pay a debt.
All courts hold that when an agreement requires satisfaction of the other party regarding the acceptance of an act, a reasonable person standard is used.
A seller's inability to obtain from any supplier the goods called for by the contract generally discharges the contract for impossibility of performance.
A party who in good faith has provided substandard performance of a contract may sue to recover the payment
specified in the contract.
A condition subsequent can alter but not terminate a contract.
Unless a contract so provides, time is ordinarily not of the essence, and performance within a reasonable time is
In the absence of an agreement to the contrary, weather conditions constitute a risk that is assumed by a contracting
A homeowner who supplies the specifications for poured cement walls can hold a contractor liable for damages when the walls that are poured in exact compliance with those specifications prove defective.
The parties may agree that the adequacy of performance under a contract is to be determined by a third party.
Contracts may be discharged by the joint action of both contracting parties or, in some cases, by the action of one
By operation of law, a party can be discharged in bankruptcy from debts.
A contract may be discharged under the frustration of purpose doctrine if the event which frustrated the purpose was foreseeable.
A typical situation where the doctrine of economic frustration applies is when the party suffers a loss when a gain was expected.
A valid tender of payment consists of an unconditional offer of the exact amount due on the date when due.
When a building contractor has substantially performed a contract to construct a building, the contractor is entitled to
recover the full contract price.
In most bilateral contracts, the performances of the parties are concurrent conditions.
Payment by check is a conditional payment.
The time for performance is typically essential in a contract for the sale of perishable property.
An agreement that does not specify the time for performance is not binding because it is too indefinite.
There is no exact standard or test by which to determine whether contractual performance is substantial.
Commercial impracticability discharges a party's contractual obligations when the contract becomes more expensive to perform due to drastic and severe economic downturns.
For the parties to enter into an accord and satisfaction that discharges the original obligation, there must be a bona fide dispute.
When parties contract expressly for a particular subject matter, the contract is discharged if the subject matter is
destroyed through no fault of either party.
A person who substantially performs a contract is liable for damages to the other party.
A house-painting contract is discharged if continual rain makes it impossible to complete the painting by the time
specified in the contract.
Generally, contracts are discharged by the performance of the terms of the contract.
If a debtor with multiple debts specifies the debt to which a payment is to be applied and the creditor accepts the money, the creditor is bound to apply the money as specified.
In a mutual rescission, both parties, acting in good faith, renew their commitment to perform all obligations set forth
in their original agreement.
In most bilateral contracts, the performances of the parties are __________.
A Federal Trade Commission regulation gives a buyer three (3) business days in which to cancel a home-solicited sale of goods or services costing more than:
A contract may be discharged in all of the following scenarios except:
If the parties to a contract agree to undo the agreement and return any consideration involved, the contract is
A discharge by operation of law occurs in all of the following situations except:
A discharge by agreement can occur in any of the following situations except:
Death of the obligor
When a debtor makes a payment to a creditor specifying how it should be applied, the creditor must apply the
As directed by the debtor
When performance is impeded due to the occurrence of an event whose nonoccurrence was a basic assumption of the contract, the contract may be discharged on the grounds of:
In which case will performance on the exact date specified in the contract most likely be deemed essential?
A sale of goods that fluctuate rapidly in value
The death or disability of a party to a contract discharges the contract when:
Personal services requiring peculiar skill are involved
A homeowner who refinances her home mortgage may cancel the transaction:
Within three business days.
A change of law discharges a contract if the new law:
Prohibits the act called for by the contract.
Which of the following is not an element of an accord and satisfaction?
Reservation of rights under the federal Consumer Credit Protection Act
The phrase "time is of the essence" means that:
Performance under the contract at the times specified in the contract is vital or essential.
Sales of goods transactions are subject to a statute of limitations period of:
Four (4) years
A contract can be discharged by impossibility in all the following scenarios except:
Performance under the contract becomes 25% more expensive due to currency fluctuations in construction contract.
The parties may decide that their contract is not the one they want. They may then replace it with another contract. If
they do, the original contract is discharged by __________.
To avoid litigation over impossibility and impracticability issues, modern contracting parties often contract around the doctrine of impossibility, specifying the failures that will excuse performance in their contracts. The clauses in which they do this are called __________ clauses, and they are generally enforced by courts as written.
Which of the following events excuses a promisor from performing his or her contractual obligations?
Destruction of the subject matter through no fault of either party
If no time period for performance is specified in a contract:
A reasonable time for performance will be implied.
An offer to perform is known as a(n) __________.
Bankruptcy results in a discharge of contractual obligations by __________.
Operation of law
A right in a thing is considered property.
Personal property is tangible and immovable.
Title to personal property can be acquired by gift or purchase or stolen property.
If a thief sells stolen property to a good-faith buyer, the buyer acquires title to the property.
An ordinary gift made between two living persons is called an inter vivos gift.
The intent to make a gift requires an intent to transfer title at that time.
Proper delivery of a car would be satisfied with the delivery of a key.
A custodian who holds money for the benefit of a minor under the Uniform Gifts to Minors Act may choose to use the money to send the minor to summer camp.
A gift causa mortis is considered a conditional gift.
Most courts consider an engagement ring to be a conditional gift.
Wrongful dominion over a principal's tangible personal property is a form of conversion.
Personal property is lost when an owner does not know where it is located but intends to find it.
Upon the death of a joint tenancy with a right of survivorship, that deceased joint tenant's share passes to the remaining tenants equally.
If while trespassing a hunter kills game, the game belongs to that hunter.
Title to abandoned property is acquired by the first person who obtains possession and control of the property.
Unclaimed property is often transferred to the government under the concept of escheat.
Severalty is a form of property ownership by two or more persons.
Joint tenancy and tenancy in common both feature the right of survivorship.
At common law, a tenancy by entirety is created when property is transferred to both husband and wife.
In states that follow the community property tradition, property acquired after the marriage belongs solely to the party who acquired it.
In a bailment, the person who turns over the possession of bailed property is the bailee and the person who accepts
possession is the bailor.
An ordinary bailment can arise with only an implied agreement between the parties.
In certain cases, real property can constitute a bailment.
In a bailment, the bailee does not necessarily have to be aware that the bailed goods were placed within the Bailee's
exclusive possession or control.
In order for a bailment to be valid, the bailor must be the owner of the subject property.
Transfer or possession and use of bailed property without compensation is called a constructive bailment.
Joe rents a unit at the local Stor-More storage complex and places a lock on the unit's door. Joe has created a
bailment with Stor-More.
A bailee's duty of care for bailed property depends on the type of bailment.
A bailee's lien gives the bailee the right to keep possession of the bailed property until reasonable charges for storage
and/or repairs are paid.
If a bailment is for the sole benefit of the bailee, the bailor has no obligation to inform the bailee of known defects.
__________ property means land and things embedded in the land.
To establish a gift, the party claiming to be the donee must prove:
Intent and delivery.
A gift causa mortis does not become irrevocable until the donor ______ from the contemplated event, but it is ______
revoked if the donor survives.
Tom established a bank account for his daughter Mary under the Uniform Gifts to Minors Act. Tom named himself
the custodian. Later, Tom had a serious disagreement with Mary and ordered the bank to transfer the money in that
account to a similar account maintained in the same bank for Tom's son Ed. The bank must:
Refuse Tom's order, because this would clearly not be for the benefit of Mary.
If a maintenance employee at a hotel finds a pocketbook with $500 in cash while cleaning an empty guest room, the
Must give the property to the manager of the hotel to be kept for the owner.
A person becomes a(n) __________ at the moment of taking possession of abandoned personal property.
Which of the following forms of cotenancy does not have right of survivorship?
Tenancy in common
Barry and Eldridge owned Blueacre as tenants in common. Eldridge died. Blueacre is owned:
By Barry and Eldridge's heirs
A third person to whom a joint tenant's interest is transferred becomes
Tenant by the entirety
Sylvia and Morris were married and owned their home as tenants by the entirety. When Morris died, his will said that
he left his half of his home to his brother Tim. Who owns the home at Morris's death?
The home is now owned solely by Sylvia
Jill claims that Fred, who is terminally ill and scheduled for surgery, gave her a gift of a pearl necklace. Fred says he
never made such a gift and that Jill has wrongfully retained his property. If this dispute goes to court, what will the court need to determine?
Whether Fred made a gift causa mortis
Bailments may be:
Created orally or through a writing
A bailee's interest in the bailed property can be characterized as:
Which of the following is not a classification of ordinary bailments?
For the sole benefit of the third party beneficiary
If Susan rents a locked space in a U-Haul storage facility, she and U-Haul:
Have not created a bailment because there was no delivery of goods
A bailee's __________ gives the bailee the right to maintain possession of the bailed property until reasonable storage
and/or repair charges are paid.
Joan brought her car into Ace's Service Station for a tune-up. After tuning up the car, Ace decided to visit his mother.
Ace drove Joan's car. Ace was following all safety precautions when a negligent driver without insurance struck Joan&'s car. Joan sued Ace for the damages to her car. The probable result is:
Joan will win, since the harm was sustained during the bailee's unauthorized use of the property
Warren brought his television in for repairs. After Warren left the store, gunmen came in to rob the proprietor. As they ran out, Warren's television was knocked over and destroyed. Warren demanded that the proprietor of the store compensate him for the fair market value of the television. The bailee:
Is not liable, since the damage was caused by the criminal act of a third party.
When a bailor sues the bailee for damages to the bailed property, who has the burden of proving fault and that such
fault was the proximate cause of the bailor's loss?
In a(n) ___________, the bailor has a legal duty to make a reasonable investigation for defects and inform the bailee if
any are known or found
Mutual benefit bailment
A sale of goods is defined under UCC Article 2 as transfer of title to intangible property for a price.
UCC Article 2 applies not only to contracts for the sale of familiar items of personal property, such as automobiles or
chairs, but also to the transfer of commodities, such as oil, gasoline, milk, and grain.
Goods physically existing and owned by a seller at the time of a transaction are called existing goods.
A bailment is a special form of a sale of goods in which possession is transferred to a bailee.
A gift is a free transfer of the title to property.
A contract that has elements of both goods and services is always classified as a contract for the sale of goods.
If a contract calls for both rendering services and supplying materials to be used in performing the services, the contract is classified according to its dominant element.
A firm offer is effective for three months, but only if the merchant receives consideration.
Sales law includes special rules that apply to merchants.
An offer to buy or sell goods may be accepted in any manner that is reasonable under the circumstances.
The UCC has adopted the common law 'mirror image' rule.
The UCC permits a court to refuse to enforce a sales contract that it finds to be unconscionable.
A contract for the sale of goods is enforceable even if the price is "open."
An output or requirement contract is not enforceable unless the parties include an estimate of prospective amounts.
A contract of indefinite duration may be terminated by notice from either party to the other party.
Any modification of a sales contract between merchants must be supported by some form of consideration.
The parol evidence rule does not apply to the sale of goods.
The term "course of dealing" refers to the language and customs of an industry.
Defenses raised in a suit based on a sales contract differ greatly from defenses used in regard to any other type of
Suppose a merchant is about to transfer his entire inventory as part of an annual clearance action. This transfer is
called a bulk transfer.
The provisions of Article 6 concerning bulk transfers are designed to protect creditors.
To satisfy the statute of frauds, the writing must be signed and must include the price of the goods.
With regard to transactions between merchants, failure to repudiate a confirming letter within ten (10) days after
receipt binds the non-signing merchant, just as if he had signed the letter or a contract.
A writing that is offered to satisfy the statute of frauds must have been written for that purpose.
When the price of the goods is $500 or more, a writing signed by the defendant is required in all cases.
An oral contract to sell specially manufactured goods is enforceable if the goods cannot be sold to other buyers, and the manufacturer has made a substantial progress in manufacturing the goods.
When an oral contract is made to sell a 75-inch LED LCD TV for $6,800, payment and acceptance of part of the
purchase price avoids the bar of the statute of frauds.
Consumer protection statutes may require a writing that is more detailed than the writing required by the statute of
frauds provision of the Uniform Commercial Code.
A bill of sale can be used as proof of an otherwise oral agreement.
The CISG governs all contracts between parties in the countries that have ratified it.
The sale of goods is governed which article of the Uniform Commercial Code?
Harvested crops would be an example of ______.
All of the following are covered by Article 2 of the UCC except: ______.
______ is a transfer of possession - but not title - to personal property.
A contract involving both services and goods is classified as a contract for the sale of goods if:
The sale of goods is the dominant aspect of the transaction
A merchant cannot revoke a firm offer to buy or sell goods if the merchant has:
Stated in a signed letter that the offer would not be revoked for a specified period of time
Carol, who is planning to move out of town, offers to sell her sofa to her friend Betty for $750. Betty says, "I'll take it,
and I would like you to throw in the coffee table along with it." Under Article 2 of the UCC, Carol and Betty have:
A contract for the sofa only
Under Article 2, when two parties intend to form a contract but the acceptance includes conflicting terms: ______.
There is a contract based on the terms of the offer and acceptance that are consistent, but the conflicting terms in the acceptance cancel out.
As a general rule, courts will __________ in recovering money or property transferred under an illegal agreement.
Not aid either party
If a contract for the sale of goods omits the price to be paid, the: ______.
Buyer is required to pay a reasonable price for the goods
An agreement to periodically deliver home-heating oil to a residential customer that does not indicate the duration of
Is enforceable for a reasonable period of time
An agreement to modify a contract for the sale of goods that is not supported by consideration: ______.
Is binding as long as it's voluntary
__________ represents a pattern of performance between the parties to a contract.
Course of dealing
A sales contract must be evidenced by a writing if the sales price of goods is equal to or more than:
Which term is not required in a writing in order to satisfy the statute of frauds?
The price of the goods
All of the following satisfy the Statute of Frauds' except: ______.
A record that omits quantity
A sales agreement that does not satisfy the statute of frauds is:
Which of the following situations create(s) an exception to the statute of frauds writing requirement?
Specially manufactured goods
a. Governs all contracts between parties in countries that have ratified it.
b. Applies only to goods bought for personal, family or household uses.
c. Applies to contracts in which the predominant part of the obligation is the supply of labor or other services.
d. None of these.
None of these
Require the lessor to make all usual warranties made by a seller in a sale of goods
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