Ch.16 Writing Exam Prep 17th Edition

Business Law, 17e (Langvardt)

Chapter 16 Writing

1) All contracts must be in writing to be enforceable.

2) A signature is sufficient to form the basis of authenticity of a written contract.

3) The statute of frauds applies exclusively to executory contracts.

4) The statute of frauds does not require a writing when marriage is the consideration to support a contract.

5) The statute of frauds covers all contracts that are for an indefinite period of time.

6) Mr. Blue orally agrees to sell his home to Mr. Green. The court will refuse to recognize and enforce this agreement.

7) Mr. Yellow agreed to pay the debt created by Mr. Blue in his contract to Mr. Green. This agreement is called a collateral contract.

8) An administrator makes an oral promise to pay the debts of the deceased. The debts amount to $60,000. This oral promise is enforceable.

9) A mortgage does not have to be writing.

10) To satisfy the writing requirement of the statute of frauds, both parties must provide the entire agreement in writing.

11) An oral contract within the UCC statute of frauds can be enforced without a writing only if it involves the sale of specially manufactured goods.

12) Some courts allow promissory estoppel to bind parties to oral contracts that otherwise would be unenforceable under the statute of frauds.

13) Mr. Green signs a memorandum of understanding with Mr. Blue to buy his widgets. Mr. Green signs the last page of the memorandum by writing his initials in cursive. A court will enforce the agreement between Mr. Green and Mr. Blue.

14) Parol evidence can be used to contradict the written terms of a partially integrated contract.

15) Parol evidence can be used to resolve ambiguities in a completely integrated written contract.

16) The parol evidence rule blocks evidence of subsequent agreements that modify a completely integrated written contract.

17) In general, ambiguities in a written agreement are resolved against the party who drafted the agreement.

18) If the parties make an agreement that is partially printed and partially handwritten, the handwritten provisions prevail over the printed provisions when they conflict.

19) According to the general rules of interpretation of contracts, ordinary words are given their usual meanings and the technical words are given their technical meaning.

20) The term "parol evidence" means written or spoken statements that are not contained in the written contract.

21) Which of the following is not a reason why it is important for parties to memorialize their agreements in writing?

A) Writings are subject to the danger that a person might fabricate terms.

B) A party enhances his/her chances of proving that an obligation was undertaken and makes it harder for the other party to deny making the promise.

C) A person's signature on a written contract provides a basis for the contract to be authenticated.

D) Signing a writing communicates the seriousness of the occasion to the signer.

22) Which of the following is covered by the statute of frauds?

A) A real estate mortgage

B) A $300 contract for the sale of pencils

C) A contract that can be performed within a week

D) A $100 DVD player repair

23) The statute of frauds requires that:

A) some contracts be evidenced by a writing.

B) all contracts involving fraud must be void.

C) all three-party contracts be collateral ones.

D) there can be no secondary debts in a contract.

24) The statute of frauds was created in 1677 in which country?

A) United States of America

B) Germany

C) England

D) Russia

25) Under the ________, no writing is required where the guarantor makes a collateral promise for the main purpose of obtaining some personal economic advantage.

A) parol evidence rule

B) leading object rule

C) collateral contract rule

D) part performance rule

26) Rick tells Dan that Sue will inherit a mansion if she pays him back an old debt. Since Sue is unable to pay the debt, Dan offers to pay it, provided that he gets the mansion from Rick. The agreement between Dan and Rick need not be in writing under the:

A) collateral contract rule.

B) parol evidence rule.

C) leading object rule.

D) part performance rule.

27) When the consideration given in exchange for the collateral promise is something the guarantor seeks primarily for his own benefit rather than for the benefit of the primary debtor, the contract:

A) is the opposite of an original contract.

B) is considered void.

C) is outside the statute of frauds.

D) needs to be in writing.

28) Mr. Green has a month-to-month lease for an apartment owned by Mr. Blue. The lease between Mr. Green and Mr. Blue is oral. How will the court handle the lease?

A) The court will recognize and enforce the lease.

B) The court, due to the statute of frauds, will not recognize or enforce the lease.

C) The court will not recognize the lease unless there is a subtenant.

D) The court will only recognize the lease if requested by the Secretary of State.

29) Which of the following is true of the statute of frauds?

A) It prevents the use of oral evidence to contradict the terms of a written contract.

B) It applies to all contracts having consideration valued at $500 or more.

C) It requires an independent promise to pay the debt of another to be in writing.

D) It applies to all real estate leases.

30) Most states' statutes of frauds do not require land leases to be in writing unless they:

A) involve more than two parties.

B) are ancestral property.

C) are going to be sold permanently.

D) are for one year or more.

31) Why is the contract for the insurance of a building not covered within the real estate provision of the statute of frauds?

A) It does not involve the transfer of interests in land.

B) It involves a physical asset.

C) It involves two or more parties.

D) It need not be in writing.

32) An oral contract for the sale of land that has been completely performed by the vendor:

A) is part of the statute of frauds.

B) can be enforced without a writing.

C) needs to be signed by the parties.

D) has to be testified by witnesses.

33) Big Bank is a major creditor of Bonwill Department Store. After a major loss in profits due to poor holiday sales, Big Bank decides to help keep Bonwill from bankruptcy. Big Bank orally promises Mary Tudor, a supplier of Bonwill's, that it will guarantee Bonwill's payment for goods that Mary sells to Bonwill. Most likely, Big Bank's oral agreement:

A) is unenforceable under the statute of frauds.

B) is unenforceable because it is a collateral contract.

C) is enforceable under the "main purpose" or "leading object" exception to the statute.

D) is enforceable because a collateral contract is not covered under the statute of frauds.

34) Smith and Benson make an oral contract for the sale of land at a price of $500,000. After paying Smith $400,000 of the purchase price, Benson takes possession of the land. One month later, Smith wants to boot Benson off the land. His argument is that the parties' oral agreement is unenforceable under the statute of frauds. Which of the following is most correct?

A) Smith is correct, because the contract is for an amount greater than $500.

B) Smith is correct, because this is an oral contract for the sale of real estate.

C) Smith is incorrect, because the contract is for an indefinite period of time.

D) Smith is incorrect, because Benson paid part of the purchase price and took possession.

35) Which statement about the statute of frauds is true?

A) All contracts must be in writing in order to be enforced.

B) Contracts for the sale of goods for $500 or more must be in writing in order to be enforced.

C) Contracts for the sale of land for $500 or more must be in writing in order to be enforced.

D) All employment contracts must be in writing in order to be enforced.

36) On May 1, Dix and Wilk entered into an oral agreement by which Dix agreed to purchase a small parcel of land from Wilk for $450. Dix paid Wilk $100 as a deposit. The following day, Wilk received another offer to purchase the land for $650, the fair market value. Wilk immediately notified Dix that he would not sell the land for $450. If Dix sues Wilk for specific performance, Dix will:

A) prevail, because the amount of the contract was less than $500.

B) prevail, because there was part performance.

C) lose, because the fair market value of the land is over $500.

D) lose, because the agreement was not in writing and signed by Wilk.

37) Sean made an oral promise to sell a piece of land to Manny. Manny took a huge loan from the bank by mortgaging everything he had. After taking almost half the money from Manny, Sean decides that he wants to sell the land to Jason who is offering a higher price for the property. Which of the following doctrines can Manny take recourse to in order to implement his oral contract with Sean?

A) Integration

B) Subsequent agreement

C) Confirmatory memorandum

D) Part performance

38) A contract that cannot be performed within one year from the day on which it comes into existence:

A) is within the statute of frauds.

B) need not be in writing.

C) is called a unilateral contract.

D) is essentially illegal.

39) A bilateral contract is "taken out of the statute of frauds" when:

A) it is completed within a year from the day of its existence.

B) it is fully performed by at least one party.

C) it is put in writing.

D) it has strict rules of performance.

40) Guy and Boyd make an oral contract whereby Guy agrees to sell Boyd 480 widgets (goods) at a price of $480. Later, the parties want to modify the contract so that the price would become $520. This modification:

A) must be in writing.

B) must be oral because the first contract was oral.

C) can be oral but need not be.

D) is unenforceable because the first contract is unenforceable.

41) With regard to an agreement for the sale of real estate, the statute of frauds:

A) does not require that all parties sign the agreement.

B) does not apply if the value of the real estate is less than $500.

C) requires that the entire agreement be in a single writing.

D) requires that the purchase price be equal to the value of the real estate.

42) The marriage provision in the statute of frauds is inapplicable to agreements that involve:

A) postnuptial agreements.

B) oral one-sided promises of marriage.

C) mutual promises to marry.

D) prenuptial agreements.

43) In order to satisfy the statute of frauds, the parties' writing must be:

A) signed by both parties.

B) in legalese.

C) signed by the "party to be charged."

D) compressed into a single document.

44) Which of the following is true regarding the statute of frauds' writing requirement?

A) The writing must be contained in one document.

B) The writing must be signed by both parties.

C) The writing must be signed by the buyer.

D) The writing must indicate the parties' identities.

45) Whose signatures are needed in order to satisfy the statute of frauds?

A) Only the signatures of witnesses to the agreement are required.

B) Only the signature of the party attempting to enforce the contract is required.

C) Only the signature of the party against whom enforcement is being sought.

D) Only the signature of the third party to the contract, the beneficiary, is required.

46) If it is not indicated in the memorandum, where should the parties sign to make the document enforceable?

A) Right corner

B) Left corner

C) Bottom

D) Any place on the memorandum

47) The Uniform Commercial Code is different from the common law statute of frauds rule, as it:

A) is easier to satisfy.

B) requires all contracts to be in writing.

C) applies to service contracts only.

D) applies to real estate contracts only.

48) A memorandum for the sale of goods that does not indicate the ________ of goods to be sold will not satisfy the UCC's writing requirement.

A) quality

B) quantity

C) delivery

D) cost

49) The "confirmatory memorandum" exception to the UCC's statute of frauds provision:

A) requires that the memorandum be signed by the party to be bound.

B) requires that the memorandum be sent within ten days after the contract is made.

C) requires that both parties receive the memorandum and have reason to know of its contents.

D) requires that both parties to the contract be merchants.

50) King, a circuit board manufacturer, called Foster, a computer storeowner, and offered to sell him 500 circuit boards for $20,000. Foster accepted the offer over the telephone that same day. King immediately sent Foster a signed memorandum confirming the deal they made orally. Which of the following statements concerning the contract is correct under the statute of frauds?

A) No contract was formed because Foster did not sign the offer.

B) No contract was formed because King is not a merchant.

C) A contract was formed unless Foster objects to the memorandum within 10 days of receiving it.

D) A contract was formed but it is unenforceable.

51) The underlying purpose of the statute of frauds is to:

A) prevent fraud in general.

B) corroborate the existence of an oral contract.

C) punish those who commit fraud.

D) make fraud illegal.

52) Which of the following is a uniform state law designed to "remove barriers to electronic commerce by validating and effectuating electronic records and signatures"?

A) Uniform Electronic Transactions Act (UETA)

B) Electronic Signatures in Global and National Commerce Act (E-Sign)

C) Electronic Communications Privacy Act (ECPA)

D) Graham-Leach-Bliley Act (GLBA)

53) The Electronic Signatures in Global and National Commerce Act (E-Sign):

A) invalidates agreements between parties conducting transactions by electronic means.

B) states that electronic transactions on subjects covered by the statute of frauds require an additional writing.

C) overrides state laws that are inconsistent with the UETA.

D) creates barriers to e-commerce by invalidating electronic records and digital signatures.

54) Bruce told Adam that he was selling his house in Syracuse, New York. Adam sent Bruce an e-mail containing an offer of $300,000 for the house. Bruce responded via e-mail that he wanted $315,000 for the house. After further e-mails, the parties finally agreed on a sale with a price of $310,000. A series of e-mails contained the terms of the sale, and all included a salutation containing their typewritten names. However, Bruce later decided to sell the house to Marty for $325,000. Adam sued Bruce, claiming that Bruce breached their contract for the sale of the house. Most likely, Adam will:

A) lose, because the contract does not meet the statute of frauds.

B) lose under the parol evidence rule.

C) win, because the essential terms of the contract were set forth in the signed e-mails.

D) win, because of the partial performance exception to the statute of frauds.

55) Mr. Green and Mr. Blue contract orally to transfer 500 widgets for $1,000. Mr. Blue sends Mr. Green a receipt one week after the agreement. If Mr. Green now refuses to recognize the agreement a court will find what?

A) That a memorandum of agreement was created by the receipt sent by Mr. Blue and an enforceable agreement exists

B) That no agreement exists because there is no typed agreement according to the statute of frauds

C) There is no enforceable agreement because the receipt was not sent at the same time as the agreement

D) The agreement is not enforceable because the Secretary of State did not approve the agreement

56) The parol evidence rule is relevant only in cases:

A) that are oral in nature.

B) where parties have expressed their agreement in a written contract.

C) of the sale of goods.

D) subsequent modification do not have a suitable consideration.

57) Sammy entered into an oral contract with Macaulay for the sale of goods amounting to $900. Sammy paid the amount. But Macaulay refused to deliver the goods. Sammy thus suffered serious losses due to Macaulay's breach of contract. Sammy sued Macaulay. At the same time Macaulay took the defense under statute of frauds. Under which principle is Sammy protected?

A) Tortious liability

B) Vicarious liability

C) Part performance

D) Promissory estoppel

58) April and Brian entered into a partially integrated written contract. During negotiations, April made an oral statement to Brian regarding the terms of the contract. This statement was not contained in the written contract. Under the parol evidence rule, evidence of April's oral statement would be admissible if it were used to:

A) create a completely new agreement.

B) introduce an ambiguous term in the written contract.

C) prove an additional term consistent with the written agreement.

D) change the terms of the written contract.

59) Which of the following is admissible with respect to a partially integrated contract?

A) Evidence that seeks to make the contract completely divisible

B) Evidence that resolves ambiguities in the contract

C) Evidence that the contract is unconditional on the happening of some event

D) Evidence that contradicts the contract's provisions

60) A fully "integrated" contract under the parol evidence rule is one that:

A) is intended by the parties to include both goods and services.

B) is intended by the parties to include several agreements.

C) is intended by the parties to be a preliminary statement of their agreement.

D) is intended by the parties to be the complete and final statement of their agreement.

61) A merger clause is also known as an:

A) interpretation clause.

B) interrogation clause.

C) integration clause.

D) instrumental clause.

62) Ward is attempting to introduce oral evidence in an action relating to a written contract between Ward and Weaver. Weaver has pleaded the parol evidence rule. Ward will be prohibited from introducing parol evidence if it relates to:

A) a modification made several days after the contract was executed.

B) a change in the meaning of an unambiguous provision in the contract.

C) fraud in the inducement.

D) an obvious error in drafting.

63) Abel enters into an oral contract to work for Carr for an indefinite period of time at a rate of $50,000 per year. Is this agreement exempt from the statute of frauds?

A) No, because the agreement covers services with a value in excess of $500.

B) No, because the agreement covers a time period in excess of one year.

C) Yes, because the agreement is for an indefinite period of time.

D) Yes, because the work can be completed within one year.

64) A written agreement was signed by two parties and it was intended to be their entire agreement. The parol evidence rule will prevent the admission of evidence that is offered to:

A) prove the existence of additional terms of the agreement to contradict the written terms of the contract.

B) prove the existence of a subsequent oral agreement that modifies the contract.

C) explain the meaning of an ambiguity in the written contract.

D) establish that fraud had been committed in the formation of the contract.

65) Subsequent agreements are treated in what way under the parol evidence rule?

A) Subsequent agreements are admissible under the parol evidence rule

B) Subsequent agreements are not admissible unless they were filed with a governmental agency

C) Subsequent agreements are not admissible since they attempt to modify an integrated contract

D) Subsequent agreements are not admissible unless that involve two international parties

66) In 17th-century England, before the enactment of the Statute of Frauds in 1677, a legal rule:

A) allowed both parties to a lawsuit and third-party witnesses to testify.

B) only allowed parties to a lawsuit to testify in their own cases.

C) prohibited parties to a lawsuit from testifying in their own cases.

D) prohibited parties to a lawsuit from calling third-party witnesses to testify.

67) A contract that fails to comply with the statute of frauds is generally:

A) unenforceable.

B) illegal.

C) void.

D) voidable.

68) If a contract is unenforceable for failure to comply with the statute of frauds, a party that conferred some benefit on the other party pursuant to the contract may be able to recover in an action based on:

A) express contract.

B) quasi-contract.

C) implied contract.

D) actual contract.

69) Which of the following contracts is not covered by the statute of frauds?

A) A contract for the sale of an interest in real estate.

B) A contract for the sale of goods for a price of $400.

C) A contract that is collateral in nature where a person promises to perform the obligation of another.

D) A contract in which marriage is the consideration.

70) Which of the following statements about the United Nations Convention on Contracts for the International Sale of Goods (CISG) is true?

A) The CISG requires that all contracts be in writing to be enforceable.

B) The CISG requires that contracts can only be proven by subsequent agreements.

C) The CISG requires that all contracts must be supported by independent evidence.

D) The CISG permits parties to a written contract to require that any modifications of the contract be in writing.

71) A(n) ________ contract is one in which one person agrees to pay the debt or obligation that a second person owes to a third person if the second person fails to perform.

A) implied

B) third-party beneficiary

C) collateral

D) quasi

72) Jenny promises National Bank that she will repay the loan that National Bank makes to Garrett if Garrett fails to pay it. In this instance, Jenny is the:

A) obligor.

B) guarantee.

C) guarantor.

D) principal debtor.

73) Stewart, who wants to help Marcy establish her own business, promises ABC Bank that he will repay the loan that ABC Bank makes to Marcy if Marcy fails to pay it. In this instance, Marcy is the:

A) principal debtor.

B) obligor.

C) guarantor.

D) guarantee.

74) Which of the following statements about collateral contracts is true?

A) The guarantor promises to pay only if the principal debtor fails to do so.

B) A collateral contract involves three parties and one promise to perform.

C) The guarantor's debt is primary.

D) The principal debtor's debt is secondary.

75) When a person undertakes an obligation that is not conditioned on the default of another person, and the debt is his own rather than that of another person, his obligation is said to be ________, not collateral.

A) secondary

B) original

C) implied

D) express

76) As demonstrated in Dynegy, Inc. v. Yates, the case in the text, when a contract is determined to be collateral:

A) the principal debtor must pay the guarantor directly.

B) the guarantor must pay, even if the principal debtor is able to do so.

C) it will be unenforceable unless it is evidenced by a writing.

D) proof of an oral agreement is sufficient to prove a contract existed.

77) Which of the following is a contract remedy whereby the defendant is ordered to perform according to the terms of his or her contract?

A) Rescission

B) Specific performance

C) Promissory estoppel

D) Restitution

78) In determining whether a contract is within the one-year provision of the statute of frauds, courts begin counting time on the day when the:

A) offer was sent.

B) parties initiated negotiations.

C) contract comes into existence.

D) parties filed their agreement with the secretary of state.

79) In the case in the text, Browning v. Poirier, the court held that:

A) Poirier was entitled to a judgment in her favor because the statute of frauds required the agreement to be in writing.

B) Poirier was entitled to a judgment in her favor because evidence showed that Browning did not contribute to the purchase of the winning lottery ticket.

C) Browning was entitled to judgment in his favor because the agreement was to continue as long as the parties were involved in a romantic relationship.

D) Browning was entitled to judgment in his favor because the statute of frauds did not require the agreement to be in writing.

80) Which of the following statements about the "in writing" requirement for the majority of states is false?

A) The entire contract must be in writing.

B) To satisfy this requirement, a memorandum of the parties' agreement will suffice.

C) The essential terms of the contract must be stated in the writing.

D) The writing need not have been created with the intent that the memorandum itself would be binding.

81) In Green Garden Packaging Co. v. Schoenmann Produce Co., the case in the text, the court found in favor of Schoenmann because:

A) the oral agreement did not satisfy the statute of frauds because the agreement was for the sale of goods of $500 or more.

B) Green Garden specially manufactured food items.

C) Green Garden partially performed the contract.

D) the parties fully integrated their agreement into a single writing.

82) ________ is an equitable doctrine that protects those who foreseeably and reasonably rely on the promises of others by enforcing such promises when enforcement is necessary to avoid injustice, even though one or more of the elements normally required for an enforceable agreement is absent.

A) Reformation

B) Specific performance

C) Part performance

D) Promissory estoppel

83) In the case in the text, Yung-Kai Lu v. Univ. of Utah, the court held that:

A) Lu's claim satisfied the statute of frauds but under Utah's parol evidence rule, he could not testify to any pre-contract verbal agreement.

B) Lu's claim satisfied the statute of frauds and under Utah's parol evidence rule, he could testify to any pre-contract verbal agreement.

C) Lu's claim was barred by the statute of frauds and under Utah's parol evidence rule, he could not testify to any pre-contract verbal agreement.

D) Lu's claim was barred by the statute of frauds and under Utah's parol evidence rule, he could testify to any pre-contract verbal agreement.

84) Once a court has decided what promises are included in the contract, the court is faced with interpreting the contract. The court will first attempt to determine:

A) the parties' principal objective.

B) whether the parties intended to use the words they used.

C) whether proper consideration was given.

D) the parties' individual positions.

85) Which of the following statements about "usage" is false when courts interpret contracts?

A) "Usage" refers to past actions by the parties in previous transactions that demonstrate what the parties mean when they use specific language in their agreements.

B) If both parties to the contract are members of a trade, profession, or community in which certain words are commonly given a particular meaning, courts will presume that the parties intended the meaning that the usage gives to the terms they use.

C) If the court finds that a certain practice is a matter of common usage in the parties' trade, it will assume that the parties intended to include that practice in their agreement.

D) If contracting parties are members of the same trade, business, or community but do not intend to be bound by usage, they should specifically say so in their agreement.

86) Davis owes a $5 million debt to C Bank. He also owes $2 million to Samuel. However right now, Davis is having trouble paying either loan. C Bank is willing to finance Davis's debt, but only if Samuel co-signs. Samuel, who fears that he will get nothing on his $2 million loan if Davis does not get some help from the bank, is willing to do so. Thus, C Bank, Samuel, and Davis complete a three-party agreement in which the bank agrees to finance the $5 million debt, Davis agrees to pay it back at a certain rate over a certain term, and Samuel agrees to pay the debt "in the event that Davis first defaults." Is this agreement covered by the statute of frauds? Why or why not?

87) Ned and Bill complete an oral contract for the sale of land from Ned to Bill for $100,000. Bill pays Ned the $100,000, and then begins to build his house on the land. At this point, Ned says that the deal is off and refuses to convey the deed to Bill. In doing so, Ned relies on the statute of frauds. Is this agreement enforceable by Bill?

88) Jones goes to a clothing store and orders $1,000 worth of clothing on credit. The salesperson writes up a receipt describing the terms of the deal, but Jones does not sign anything. Three days later, the store delivers $750 worth of clothing, which Jones accepts. One day later, however, Jones decides that he does not want the clothing. When the store insists that he has to pay the full $1,000, Jones pleads the statute of frauds. Does the statute of frauds give Jones a defense against payment here?

89) In entering into contracts for services, customers might be influenced by statements made by sales representatives. Businesses offering services often use standardized form contracts. Under the parol evidence rule, pre-contract statements made in these circumstances are effectively unenforceable. How can a business effectively and ethically use standardized form contracts and the parol evidence rule?

90) Arnold promised to sell his car to Adams in lieu of full payment of his debt. However, in the written contract, Adams had forgotten to specify which car he wants to sell. Is there any remedy?