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b. Smith stated to Burns that he, Smith, would sell a certain typewriter to Burns for $300. In fact, Smith never intended to sell the typewriter, and this can be proven. Burns agreed to buy it for the $300 price. With regard to these facts
there is a contract if a reasonable person would think that Smith was making an offer, and if Burns thought so.
c. Smith states, "I am getting tired of trying to keep my collection of Playboys and National Geographics in order, and if I get a good offer to sell them, I will take it immediately." Bright, overhearing the statement immediately responds, "I make you a good offer of $400." This transaction
is not a contract because there was no offer and acceptance.
d. Sparky, Nancy's pet dog was lost. Nancy ran an ad in a local paper offering $50 for Sparky's return. Jane did not know of the advertisement but found Sparky, and because Nancy's address was on Sparky's collar returned the dog to Nancy.
Jane could not accept Nancy's offer because she did not know of it.
e. Stable Corp. offered in a signed writing to sell Mix an office building for $350,000. The offer, which was sent by Stable on April 1, indicated that it would remain open until July 9. On July 5, Mix mailed a letter rejecting Stable's offer. On July 6, Mix sent a telegram to Stable accepting the original offer. The letter of rejection was received by Stable on July 8 and the telegram of acceptance was received by Stable on July 7. Which of the following is correct?
Receipt of Mix's telegram resulted in the formation of a valid contract.
f. Steven makes a material misrepresentation of fact regarding his motorcycle to Thelma who agrees to buy the motorcycle based upon the misrepresentation. This contract is.
g. Steven offered to sell his portable CD player to Thomas for $50, and told Thomas that he had ten days in which to accept. One week later Thomas saw the CD player at Violet's house. Violet tells Thomas that she just bought it from Steven.
Steven has revoked his offer to Thomas.
h. Susie offers to sell Ralph her Mustang for $500. Ralph says it will take him a week to talk his dad into giving him the money, but that he wants it. A contract is formed:
when Ralph accepts the deal.
i. Ted offers to pay Dennis one million dollars, plus one of his television stations, if Dennis can better Ted's record-setting time in the Newport to Bermuda yacht race. Dennis accepts the challenge. This would be an example of:
j. The Acme Corporation is having a "T.V. giveaway." To win, a person must guess the number of marbles in a large jar. No purchase is necessary. This is probably not an illegal lottery because what element is lacking?
k. The attempted acceptance of an offer by a person to whom the offer was not made:
has the effect of an offer.
l. The Code follows the common law rule and allows the parties to a contract to modify that contract without additional consideration.
m. The Code provides that a merchant is bound to keep an offer open for a stated period not in excess of
n. The concept of consideration in contract law includes:
an inducement to each party to make a return exchange.
o. The courts usually consider all of the following matters relevant to contracts except:
adequacy of consideration.
q. The effect of the making of a partial payment to satisfy a debt which is certain in amount and which is past due is an example of the rule that:
doing what one is bound to do is not consideration.
u. The following conversation took place between Mary and Ed: "Ed, if you wanted to sell your table, what would you ask for it?" Ed: "I suppose $400 would be a fair price." Mary: "I'll take it, if you will have it refinished." Ed: "Sold." Thus, for that price
a contract was formed when Ed said: "Sold."
w. The manager of the local J.C. Penney store sends you a signed personal notice that its chainsaws will be on sale for 30% until January 15th. If you go in on January 12th and they refuse to give you 30% off, you will win if you argue that
no consideration is needed for the promise.
y. The parties may enter into a contract for the sale of goods even though they have reached no agreement on that price.
cc. The plaintiff in a quasi-contract action can recover:
the reasonable value of the benefit conferred upon the defendant.
dd. The president of Deal Corp. wrote to Boyd, offering to sell the Deal factory for $300,000. The offer was sent by Deal on June 5 and was received by Boyd on June 9. The offer stated that it would remain open until December 20. The offer
may be revoked by Deal any time prior to Boyd's acceptance.
ee. The requirement that each party to a contract must intentionally exchange something of value as an inducement to the other party to make a return exchange is known as:
ff. The Rogers family has always wanted to buy the beautiful house at the top of the hill. The owners of the house, the Thompsons, decided to sell and called Mr. Rogers. Before he could get back in touch with Mr. Thompson, he suffered a heart attack and died. Mrs. Rogers still wants the house.
She may not accept since the offer is terminated.
gg. The Save the Earth Society mailed unsolicited a calendar to all graduates of U.S. West University, including Sidney, with a statement that, if the recipient did not return the calendar within 10 days, he or she would be billed $15. Sidney will be liable for the $15 if he:
none of the above.
hh. The State of Indiana agrees with the Ace Construction Company that Ace will do some repair work on a bridge. The agreement, however, does not specify the exact work to be done, the quality standards Ace must meet, and the time the job must be completed. Also, the agreement states an ambiguous formula for determining Ace's compensation. Later, before either it or the state has done anything, Ace backs out of the job. Then it is sued by the state. Ace defends by arguing that the contract fails because it (or the offer) is indefinite. Which of the following is true?
Ace's argument is correct and the state cannot recover.
b. The UCC Battle of the Forms rule:
changes the mirror image rule..may yield different results depending on whether the parties are merchants.,may result in formation of a contract quite different from the terms of the offer.
c. The UCC provides that a merchant is bound to keep a written offer open for a stated period but no longer than:
d. The Uniform Commercial Code does not apply to:
employment contracts.service contracts.insurance contracts.contracts involving real property.
e. The Uniform Commercial Code makes certain offers irrevocable even though no consideration is given to keep the offer open. Such offers are known as:
f. The validity of a contract is not affected by:
the fact that the contract turned out to be a bad bargain for one of the parties.
g. Theodore agreed to pay Hal Hays, the owner of a grocery store, $50 if Hays would send a $100 gift certificate, identifying Theodore as the donor, to a recipient chosen randomly from a phone book. Hays mailed the gift certificate. Which of the following is correct?
Theodore's promise to pay is supported by consideration.
h. Tim Carlton was swimming at the beach when he happened to see Fay Hudson struggling in the water. Carlton saved Hudson's life. Hudson was so grateful that she promised Carlton a job for the rest of his life. Carlton went to work for Hudson, but a few months later Hudson found that she did not get along with Carlton and demanded Carlton's resignation. The contract is
unenforceable because Carlton did not give consideration.
i. To announce the grand opening of a new retail business, Hudson placed an advertisement in a local newspaper quoting sales prices on certain items in stock. The grand opening was so successful that Hudson was unable to totally satisfy customer demands. Which of the following statements is correct?
Hudson made an invitation seeking offers.
j. To be effective, an offer must be definite and complete. Which of the following is correct?
Only reasonable definiteness is necessary.
l. To which of the following situations does the common law "pre-existing duty" rule not apply?
Where the alleged promise to perform a pre-existing duty really contains some new obligation, no matter how small,Where unforeseen and unforeseeable circumstances make performance of the pre-existing obligation far more difficult than originally believed,Where the parties mutually agree to terminate the first contract between them
m. Tom Payne had a toothache and stopped by Quick Fix Dentist during his lunch hour. Although he had never been to Quick Fix before, Fix accepts Payne as a patient and pulls a tooth. On Payne's way out, the receptionist hands him a bill for $500. Payne is outraged and claims that a contract was never formed.
Payne is only liable for a reasonable amount.
n. Twentieth century contract law is generally characterized by:
increased government intervention into private contracts.
o. UCC section 2-207 (the "battle of the forms" provision) implicitly distinguishes between different terms in the acceptance and additional terms in the acceptance. The latter refers to a subject not mentioned in the offer, while in the former case the acceptance treats some subject differently than the offer does. Under 2-207, why does this distinction matter?
It matters because, while additional terms can become part of the contract, it isn't clear what terms apply in "different terms" situations.
p. UCC section 2-207 (the Code's "battle of the forms" provision) says that additional terms in the acceptance are part of the contract when both parties are merchants, UNLESS:
the offer expressly limited acceptance to its own terms.,the additional terms materially altered the offer.,the offeror gave notice of his objection to the additional terms within a reasonable time.
q. Under the common law, in order to be enforceable, a modification of an existing contract must be supported by mutual consideration.
r. Unless the offer states otherwise or a rejection has been previously sent, acceptance is generally effective when
dispatched by the offeree.
t. Vantage telephoned Breyer on December 18, and offered to sell a plot of land to Breyer for $5,000. Vantage promised to keep the offer open until December 27. Breyer said he was interested in the land but wanted to inspect it before making any commitment. Which of the following best describes the legal significance of these events?
Vantage may revoke the offer at will.
u. Victor thought that Wade's house was ugly, so he decided to paint it while Wade was out of town. When Wade returned, Victor presented him with a bill for $1,200, the amount a professional house painter would have charge. A court would find:
Wade has no obligation to pay Victor.
v. Water Works had a long-standing policy of offering employees $100 for suggestions actually used. Due to inflation and a decline in the level of quality of suggestions received, Water Works decided to increase the award of $500. Several suggestions were under consideration at that time. Two days prior to the public announcement of the increase to $500, a suggestion by Farber was accepted and put into use. Farber is seeking to collect $500. Farber is entitled to
$100 in accordance with the original offer.
w. Watts offered to buy a car from Stills for $1,200, in writing, by mail. Stills, thinking that was too low, wrote, "Your bid is low. I will only sell it for $1,400," and mailed the letter to Watts. A few hours later, Stills reconsidered and telegraphed, "I accept your deal, regards, Stills."
There is a contract if the acceptance gets to Watts first.
x. Wes, who is an art collector, offered to buy a Miro original from Le Monde Gallery. Le Monde balked at the price, sending Wes a letter of rejection. The same day it was discovered that the print was not as highly valued as originally thought. Le Monde immediately telephoned Wes to accept his offer. Is there a contract?
Yes, since the acceptance was received before the rejection.
z. When a client accepts the services of an accountant without an agreement concerning payment, the result is
an implied-in-fact contract.
aa. When does acceptance of an offer to enter into a unilateral contract occur?
Upon full performance by the offeree
dd. When Western Chicken Ranch offered to sell eggs to Deb's Dinner at 35 cents per dozen, Deb said, "I promise to pay for as many eggs as I order in the next six months." Deb's promise:
is illusory and therefore unenforceable.
ee. Where the amount of the debt to be paid has not been agreed upon by the parties, there is
an unliquidated debt.
ff. Which of the following agreements is unenforceable because of indefiniteness?
The seller agrees to supply a quantity of pears dependent upon the buyer's wish.
gg. Which of the following contracts is covered by Article 2 of the Uniform Commercial Code?
The sale of a new car
hh. Which of the following contracts is covered by Article 2 of the Uniform Commercial Code?
The sale of a new Ford Mustang
ii. Which of the following does not require consideration to be effective and binding?
Waiver of a breach
kk. Which of the following is a true illusory promise?
"I promise to mow your lawn on such occasions as I designate."
ll. Which of the following is a true statement about the requirements of an assignment?
Consideration is not required.
nn. Which of the following is an exception to the consideration requirement?
Promissory estoppels,Promises to pay debts whose enforcement is barred by the statute of limitations,Charitable subscriptions
oo. Which of the following is correct with regard to consideration?
In a unilateral contract, a promise is exchanged for an act or forbearance to act.,In a bilateral contract, there is an exchange of promises.
pp. Which of the following is correct with regard to a contract?
A person who deposits money in a bank account has entered into a contract with the bank.
qq. Which of the following is correct with regard to counteroffers?
A counteroffer operates as a rejection of the original offer.,A conditional acceptance is a common type of counteroffer.,The receipt of a counteroffer terminates the original offer.
rr. Which of the following is enforceable without consideration?
A new promise to pay a debt barred by the statute of limitations
ss. Which of the following is necessary for the existence of an offer?
Facts and circumstances that reasonably indicate the offeror's intent to contract
vv. Which of the following is not always necessary in order for a valid contract to be formed?
xx. Which of the following is not generally required in order to have a valid contract?
Fairness of the bargain
yy. Which of the following is required for a "firm offer?"
merchant, in writing, signed, not over 90 days
zz. Which of the following is true regarding promissory estoppel?
It requires that the promisor should reasonably expect to induct the promisee's action or forbearance.
aaa. Which of the following is true regarding the approach taken by the UCC toward the proper means of acceptance and the implications of using it or not using it?
The UCC does not change the traditional rule that, where the offer stipulates a certain means of acceptance, the acceptance must use that means or there is no contract.
ddd. Which of the following offers terminates earliest? Assume that there is no time limitation on the offer unless the question says otherwise.
An offer to purchase stock on a stock exchange
eee. Which of the following promises are enforceable without consideration?
A contract modification in a contract covered by the U.C.C.,A written offer signed by a merchant to buy or sell goods that assures it will be kept open for one month, A renunciation of a claim a written waiver that is signed and delivered by the aggrieved party when the contract involves a sale of goods
fff. Which of the following promises is enforceable in most states?
A written promise to pay a debt barred by the statue of limitations
ggg. Which of the following represents the basic distinction between a bilateral contract and a unilateral contract?
Only one promise is involved if the contract is unilateral but two if it is bilateral.
hhh. Which of the following requires consideration in order to be binding upon the parties?
Material alteration of a personal service contract
iii. Which of the following requires consideration to be binding on the parties?
Material modification of a contract involving the sale of real estate
jjj. Which of the following situations are not considered to be sufficient legal consideration?
A promise given in exchange for past occurrence,Where there is a pre-existing duty,Where there is a moral obligation,Where there is an illusory promise
kkk. Which of the following statements is correct?
Legal sufficiency has nothing to do with adequacy.
lll. Which of the following statements is most correct concerning promise to make a gift to a charity?
They are generally enforceable.
mmm. Which of the following statements is most descriptive of past consideration?
Past consideration is no consideration.
3. Which of the following transactions would be subject to Article 2 of the UCC?
An agreement to sell a television set
b. Which of the following will be legally binding despite lack of consideration?
A promise to donate money to a charity on which the charity relied in incurring large expenditures
c. Which of the following will be legally binding on all the parties despite the lack of consideration?
A promise to donate money to a charity that was relied upon by the charity in incurring large expenditures.
d. Which of the following will not be sufficient to satisfy the consideration requirement for a contract?
The offeree expends both time and money in studying and analyzing the offer.
g. Which of the following would most likely be a merchant with respect to the goods in question under the Code definition?
Arthur is an authorized IBM computer dealer.,Brian employs two salesmen to sell his homemade furniture.,Clarence has a store in which he sells used lawnmowers.
h. Which of the following would most likely be enforceable?
A promise following the rendering of emergency services that is not supported by new consideration
i. Which of the following would most probably be considered a valid offer?
$75 reward for return of lost ring to Arthur Adams, 350 Main Street, Peoria, IL.
j. Which of the following would NOT be a merchant under Article 2 of the UCC?
A person who inherits three speedboats and wants to sell them to buy a car
k. Which of the following would not be enforceable without consideration?
A promise to pay a debt discharged in bankruptcy where the promise meets the requirements of the Bankruptcy Act
l. While Jane is swimming she cuts her foot on some coral and is quickly surrounded by several sharks. Within earshot of several startled sunbathers, Jane screams that she will pay one million dollars to anyone who saves her. Gertrude, the lifeguard on duty, throws Jane a line and pulls her in. When Jane refuses to pay, Gertrude sues. The court would find for:
Jane, since Gertrude was under a pre-existing duty to do as she did.
m. (Refers to question above.) If, instead of making her offer while dodging sharks, Jane said nothing until after she was rescued by a jogger, and only then promised to pay the million dollars, the court would rule that:
past consideration is not legally sufficient to support a contract.
o. Why does it matter whether or not a contracting party is an Article 2 merchant?
Because Article 2 sometimes creates different rules for merchants in sale-of-goods cases.
q. Why is nominal consideration usually not consideration?
Because it suggests the absence of a genuine bargain
r. Wilcox mailed Norriss an unsigned contract for the purchase of a tract of real property. The contract represented the oral understanding of the parties as to the purchase price, closing date, type of deed, and other details. It called for payment in full in advance or certified check at the closing. Norriss signed the contract, but added above his signature the following:This contract is subject to my (Norriss) being able to obtain conventional mortgage financing of $100,000 at 13% or less interest for a period of not less than 25 years.Which of the following is correct?
By adding the "conventional mortgage" language above his signature, Norriss created a condition precedent to his contractual obligation and made a counteroffer.
s. William agrees to drill a well up to 200 feet deep for John's rural cabin. The contract price is $3,000. After drilling 100 feet, William strikes solid granite rock. He talks to John and explains that this is highly unusual for the area and could not have been anticipated at the time of entering into the contract. He offers to get a special drill, but says it will cost him more money, so that he will be unable to complete the project for the agreed upon price. Because John is anxious to have the well, he agrees to pay William an additional $1,000 to complete the job. However, once the well is finished, he changes his mind and now says he will pay only the originally agreed upon amount.
The parties have agreed to a substitute contract which discharges the original contract. John is obligated to pay the additional $1,000.
t. Within the law of consideration, which of the following is a correct statement of law?
A promise in writing to pay a debt barred by the statute of limitations is binding without new consideration.
u. X, a manufacturer of pencils, offers to sell Y 1,000,000 pencils for $1 million. The offer, which is signed by X's president, says that it will remain open for six months. The offer does not request that Y pay any consideration for the promise to keep the offer open, and Y does not pay X any consideration. When can X revoke the offer?
After three months
v. X and Y contract for X to build Y a house for $150,000. Later, without terminating the first contract, X and Y modify that contract so that Y will pay X $175,000. In return, X promises to build exactly the same house, but one day earlier than in the previous contract. Assume that all the other elements of a contract besides consideration are present; this is a consideration question. This second contract:
is a binding contract.
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