The Essentials of Contract Law Ch.7 Exam Questions

Business Law with UCC Applications, 15e (Sukys)

Chapter 7 The Essentials of Contract Law

1) A contract consists of mutual promises between two parties that can be enforced in a court of law.

Difficulty: 1 Easy

Topic: The History of Contract Law

Learning Objective: 07-01 Define contract.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

2) Law mercantilism is a complex, adaptive system of overlapping economic agents that operates on the basis of competition and a regulated market that responds to the movement of supply and demand.

Difficulty: 2 Medium

Topic: The History of Contract Law

Learning Objective: 07-02 Explain the origin of the law merchant.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

3) In Law and Revolution, Harold J. Berman tells us that some rulers agreed to incorporate the law merchant into their national documents such as the Magna Carta in 1215, which contains a clause that specifically grants safe passage to foreign merchants in England.

Difficulty: 2 Medium

Topic: The History of Contract Law

Learning Objective: 07-03 Discuss the relationship between common law and the law merchant.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

4) A person who makes an offer is called an offeree.

Difficulty: 1 Easy

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

5) Legal detriment involves the legal ability to make a contract.

Difficulty: 1 Easy

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

6) Kayla creates a unilateral contract when she promises Sam to give up her right to sue him in exchange for a cash payment.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

7) Void contracts, such as those contracts entered into with a minor, may be avoided or canceled by either of the parties.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-05 Explain the objectives of contract law.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

8) Equitable remedies are monetary damages that are imposed by the courts on innocent parties to prevent them from taking advantage of the breach by deliberately raising the amount of damages that the other party has to pay.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-05 Explain the objectives of contract law.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

9) The Uniform Commercial Code (or UCC) is a model code designed to unify statutes governing almost all commercial transactions.

Difficulty: 1 Easy

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-06 Explain the place of the UCC in contract law.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

10) An unenforceable contract may have all the elements of a complete contract and still be unenforceable.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-07 Distinguish contracts from other agreements.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

11) A breach of contract occurs when both parties fail to keep their respective promises.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-07 Distinguish contracts from other agreements.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

12) Vivian, Ewell's friend, believes that Ewell's contract with Mickey is unfair to Ewell. Even though Vivian does not have any tangible stake in the contract, she may sue since she has privity due to her interest in Ewell.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-08 Explain the role of privity and agency in contract law.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

13) Gregory sells his land to Tim. Under the Statute of Frauds, Gregory and Tim must have an oral contract to be enforceable in the court of law.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-09 List the contracts that must be in writing to be enforceable.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

14) Matthew agrees with a friend to divide the proceeds from a bank robbery that the two will commit. This agreement is unenforceable.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

15) When there is a breach of contract, the injured party has the right to ask a court to somehow remedy the situation.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

16) Clark promises to pay Mike $30 if Mike will mow Clark's yard. This is an example of a bilateral contract.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

17) When contracting parties accept mutual obligations through oral discussion, they have created a quasi-contract.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

18) Pumping gas into a car at a self-service gas station would be an example of a bilateral contract.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

19) In the case of an implied-in-fact contract, the court will apply reasons of justice and fairness and may obligate one who has unfairly benefited at the innocent expense of another.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

20) The quasi-contract concept involves the mutual assent of the parties.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

21) ________ outlines the historical laws and the procedures that were followed by merchants in commercial transactions.

A) Contract law

B) Commercial law

C) Trade law

D) Lex mercatoria

Difficulty: 1 Easy

Topic: The History of Contract Law

Learning Objective: 07-02 Explain the origin of the law merchant.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

22) The doctrine of ________ restricts a party from denying that a promise was made under certain conditions, even though consideration has not been exchanged to bind an agreement.

A) enforceability

B) privity

C) Statute of Frauds

D) promissory estoppel

Difficulty: 2 Medium

Topic: The History of Contract Law

Learning Objective: 07-03 Discuss the relationship between common law and the law merchant.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

23) Fair courts, established in 11th century England, were:

A) tribunals set up in seaport towns to handle disputes involving maritime law.

B) composed of judges who applied fair and equitable principles to commercial transactions.

C) composed of legal scholars who applied common law to all commercial cases.

D) courts in which juries were composed of merchants who were empowered to hear cases involving commercial disputes.

Difficulty: 1 Easy

Topic: The History of Contract Law

Learning Objective: 07-03 Discuss the relationship between common law and the law merchant.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

24) ________ exists when an offeror communicates a valid offer with clear and unambiguous terms to the offeree, and the offer has been accepted properly by the offeree.

A) Legality

B) Capacity

C) Consideration

D) Mutual assent

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

25) A proposal made by Braxton to his friend Mike, indicating a willingness to enter a contract to buy Mike's old car for $4,000, fulfills the element of ________ in contract law.

A) capacity

B) consideration

C) mutual assent

D) legality

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

26) A non-breaching party in a breach of contract case has a ________ and cannot take advantage of the breach that increases the amount of damages the breaching party must pay.

A) duty to mitigate damages

B) right to punitive damages

C) duty to mitigate equities

D) right to specific performance

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-05 Explain the objectives of contract law.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

27) In contract law, the non-breaching party is compensated by the payment of ________ damages to make up for their real financial losses.

A) punitive

B) compensatory

C) consequential

D) incidental

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-05 Explain the objectives of contract law.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

28) Article 2 of the ________ is a model set of laws designed to govern the sale of goods in commercial transactions in the United States.

A) Uniform Contract Law Code

B) Uniform Common Code

C) Uniform Civil Code

D) Uniform Commercial Code

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-06 Explain the place of the UCC in contract law.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

29) All ________ are ________, but not all agreements are ________ because an agreement may not be ________.

A) agreements; contracts; enforceable; in writing

B) agreements; contracts; contracts; equitable

C) contracts; agreements; contracts; legally enforceable

D) contracts; agreements; contracts; in writing

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-07 Distinguish contracts from other agreements.

Bloom's: Apply

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

30) Matrix, Inc. contracts with Smalltown Economic Development Corp. to build a factory in Smalltown that will employ 1,000 workers from Smalltown. Matrix later breaches this contract, and Smalltown citizens who were expecting to be employed sue Matrix for breach of its contract. Smalltown citizens' best argument for damages involves the legal doctrine of:

A) quasi contracts.

B) privity of contracts.

C) intended beneficiaries.

D) implied-in-fact contracts.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-08 Explain the role of privity and agency in contract law.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

31) Which of the following contracts should be in writing to be enforceable in courts under the Statute of Frauds?

A) Contracts that can be completed within one year.

B) Contracts to pay the debt of another.

C) Contracts involving the sale of all types of goods.

D) Contracts in consideration of employment.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-09 List the contracts that must be in writing to be enforceable.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

32) Some parties, when entered into a(n) ________ contract, may choose to cancel the contract.

A) unenforceable

B) void

C) voidable

D) valid

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

33) Beth and Joan, both 15 years of age, enter into a written contract. In the contract, Beth agrees to do Joan's math homework for two weeks for $50, and Joan agrees to pay Beth at the end of the two-week period. This contract is:

A) implied-in-law.

B) void.

C) unenforceable.

D) voidable.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

34) A(n) ________ contract cannot be upheld by a court of law, although it may have all of the elements of complete contract.

A) unenforceable

B) valid

C) voidable

D) void

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

35) Henrietta offers a $500 reward for the return of Fifi, her lost dog. Silas finds and returns the dog. This is an example of a(n):

A) bilateral contract.

B) unilateral contract.

C) quasi-contract.

D) unenforceable contract.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

36) Webtel Services, Inc. and Acme Co. sign a document which states that Webtel Services will create a web page for Acme and that Acme will pay for this work. This is an example of a:

A) bilateral, voidable contract.

B) quasi, unilateral contract.

C) bilateral, express contract.

D) unilateral, implied-in-law contract.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

37) To be enforceable under the Statute of Frauds, a:

A) written contract has to be a formal, preprinted agreement.

B) written contract cannot be keystroked or scrawled.

C) sales slip or a receipt do not qualify as forms of written contracts.

D) written contract can be a notation or a memorandum.

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

38) A(n) ________ contract is implied by the direct or indirect acts of the parties.

A) express

B) implied-in-fact

C) unilateral

D) void

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

39) A(n) ________ contract does not exist, but is imposed by the court as an equitable remedy in the interests of fairness and justice.

A) quasi-

B) implied-in-fact

C) informal

D) executory

Difficulty: 2 Medium

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Understand

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

40) An informal contract is also known as a(n):

A) void contract.

B) quasi-contract.

C) implied-in-fact contract.

D) simple contract.

Difficulty: 1 Easy

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Remember

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

41) Eloise made a contract in January that gave her until the end of the year to complete her work on a new computer system for Dexter. In mid-July, Eloise is working on the computer system. The contract in July is considered:

A) executory.

B) unenforceable.

C) being expressed.

D) executed.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

42) Mark was speeding on the highway when he and John had a car accident and suffered serious head injuries. As a result, John's memory was affected, and he could not remember any of the incidents on the day of the crash, including the fact that Mark's rash driving caused the car crash. At the hospital, Mark, who suffered minor injuries, convinces John that the crash was no one's fault and just bad luck. John is empathetic and signs a contract with Mark stating that neither party would sue the other for damages. However, Lily, who was with John in the car and was also injured, knows that Mark was responsible and challenges the contract in court, in addition to filing a lawsuit against Mark. Analyze the case.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law; Contractual Characteristics

Learning Objective: 07-04 Identify the four elements of a contract.; 07-08 Explain the role of privity and agency in contract law.; 07-10 List the characteristics of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

43) Donita, 34, and Terry, 25, enter into a contract which stipulates that Donita will allow Terry to occupy her apartment for six months, beginning next month. Terry has agreed to pay a rent of $100 per month. Discuss the elements that make this contract legally binding for Terry and Donita.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

44) Ruben promises to pay Talana $200 if she steals Jessica's business law textbook. Talana steals the business law book, but Ruben, who now feels guilty for his act, refuses to pay Talana and asks her to return the book. Discuss ways in which Reuben has breached the contract.

Difficulty: 2 Medium

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-04 Identify the four elements of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

45) Georgia purchases what proves to be a defective product from ZBest Enterprise to give to her best friend, Sarah, on her birthday. Georgia refuses to take legal action against ZBest because she is afraid of confrontation. Sarah, wanting to help Georgia, and angry at ZBest, wants to sue ZBest. Discuss the options Sarah has to sue the company.

Difficulty: 3 Hard

Topic: The Multidimensional Nature of Contract Law

Learning Objective: 07-08 Explain the role of privity and agency in contract law.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

46) Alan persuades Charles to buy his truck by falsely telling Charles that the truck has just had a new engine installed. In fact, the truck has an old engine that has been cleaned to look new. Charles buys the truck and finds out the truth about the engine. Discuss the situation.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

47) Shannon offered a $50 reward for the return of a lost kitten. When Mark found the kitten and returned it to Shannon, she refused to give him the reward because he had not promised to find the kitten before he went looking for it. Analyze the case.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Analyze

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

48) Charleen goes to Big Basket Supermarket and fills her cart with food, pushing it up to a checkout line. Discuss the type of contract between Charleen and Big Basket that would obligate Charleen to pay for the food prior to leaving Big Basket, even if Charleen and the clerk never say a word to each other.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

49) Jackie takes her car to the All Clean Car Wash and watches the employees while they mistakenly give her car a special $30 hand wax treatment, rather than the $5 spray wax she requested. Jackie refuses to pay $30 saying that she requested a service that would cost her only $5. Analyze the case.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

50) Emerson, a wealthy man, has a special seal made that contains his family crest and motto. Emerson places the seal impression next to his name on every contract that he signs in order to prove that other contracts containing a signature without the impression are forgeries. Discuss the type of contract Emerson makes.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Evaluate

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

51) Fraser entered into a written contract with the Plastica Company to purchase 100 plastic black bats for a Halloween party he was hosting. The terms of the contract called for Plastica to deliver all 100 bats by October 25. On October 20, Fraser received from Plastica 85 plastic bats and 15 paper red bats. A letter accompanying the shipment stated, "We no longer make plastic black bats. For the inconvenience, we will charge you 15 percent less than the price we originally agreed upon." Was the contract between Fraser and Plastica an executed contract? Explain.

Difficulty: 3 Hard

Topic: Contractual Characteristics

Learning Objective: 07-10 List the characteristics of a contract.

Bloom's: Apply

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation