Question;BUS;241;Spring;2014;Exam: Contract Law and UCC Article 2 only;STUDENT;NAME;PART;I;A. Please read carefully each of the following;true/false questions, making sure to mark a response for each question;selecting the most correct response.;Value: 1 point per question. (Note;Scantrons will be provided in class on ___________, when the;exam is due.);(T)(F);1. Contract law is one of the most;significant areas of law relating to business and commerce.;(T)(F);2. The party that breaches a contract;will be subject to legal but not equitable penalties because a contract;is a legal document.;(T)(F) 3.;An executed contract is one that has been fully performed.;(T)(F);4. Quasi-contracts do not arise from a;mutual agreement by the parties but are imposed by courts to avoid unjustly enriching a party who should not;profit from improper behavior.;(T)(F);5. Advertisements are generally;treated as offers, which if accepted, become immediately binding.;(T)(F);6. A rejection of an offer by the;offeree will not necessarily terminate an offer.;(T)(F);7. Under the common law, the mirror;image rule permitted the offeree's acceptance of a contract to vary to;some degree;from the offeror's offer.;(T)(F);8. For the doctrine of promissory;estoppel (detrimental reliance) to apply, there still must be a contract with adequate consideration.;(T)(F);9. In order for consideration to have;legally sufficient value", it must consist of goods or money.;(T)(F)10. In general, promises based on moral;obligations are always enforceable due to the pre-existing duty rule.;(T)(F)11. A promise to do what one already has a;legal duty to do is not consideration.;(T)(F)12. Parents still owe a legal duty to provide;food, clothing, and shelter for their children regardless of emancipation.;(T)(F)13. The fact that a minor has a right to;disaffirm a contract permits an adult who is a party to that very same contract to cancel it without penalty or;liability.;(T)(F)14. In some states, some contracts for such;things as student loans and insurance may not be disaffirmed by a minor under any circumstances.;(T)(F)15. Only a legal guardian can enter into a;legally binding contract on behalf of a person who has been adjudicated;as mentally incompetent.;(T)(F)16. Mistakes in judgment as to value or;quality will always be grounds to permit voiding a contract.;(T)(F)17. Fraudulent contracts may be voided based;on the argument that the innocent party was unable to consent to the agreement due to the fraud.;(T)(F)18. Restrictive covenants and covenants not to;compete are always struck down because they are unreasonable restraints of trade.;(T)(F)19. Impossibility, excusing performance of a;contract, is measured objectively.;(T)(F)20. If Rose and Peter sign a contract in which;Peter agrees to buy a handmade shawl from Rose, then the fact that;Peter decides to breach the contract will give Annie, a close friend of Rose;the right to sue Peter for;his breach.;(T)(F)21. An accord and satisfaction discharges the;original contract upon the offer of the accord.;(T)(F)22. Because of the uncertainty that they add;to contracts, conditions must be express.;(T)(F)23. The termination of an enforceable;contract by full performance of the duties is called discharge.;(T)(F)24. Specific performance is the remedy;customarily used when one party has breached a contract for the sale of ordinary goods.;(T)(F)25. A third party who is not in privity of;contract but who has rights under the contract and can enforce the contract against the obligor is;said to be an intended beneficiary.;B. Multiple Choice. Select the best answer to each of the following questions. Each correct answer is valued at 2 points;each.;25. Seasonal Selections, Inc. sends a copy of its;catalog to William along with a personalized computer-generated letter inviting;him to purchase any two items in the catalog at the advertized price. Has Seasonal Selections made an offer?;A. Yes, the letter is an offer.;B. It is an offer only if William is already a;customer.;C. The catalog and letter are an offer, because;there is no room to negotiate a price.;D. Seasonal has not made an offer.;26. Moral obligations do not form an enforceable;contract because what element is missing?.;A. Agreement.;B. Consideration.;C. Contractual capacity.;D. Lawful object.;27. Artist Annie works and displays her paintings;in a local gallery. Millionaire Marty;sees her work and is particularly interested in a seascape painting. Annie says she will sell it for $50,000. Marty tells her he really likes the painting;however, he will only buy it if the price is $45,000. Which of the following is correct?;A. Marty?s counteroffer terminates Annie?s offer;of $50,000.;B. If Annie agrees to Marty?s offer, she will be;bound by a contract to sell the painting for $45,000.;C. If Annie rejects the offer, Marty cannot then;agree to the $50,000 price and bind Annie.;D. All of the above.;28. Under this rule, the offeree must accept the;terms made by the offeror.;A. Mirror image rule.;B. Proper dispatch rule.;C. Mailbox rule.;D. Acceptance upon dispatch rule.;29. Edward Employee has organized birthday;parties for all the other employees in his office for 10 years. One day, Brenda Boss tells Edward he has done;such a great job, she is going to pay him an extra $200 this month. However, when Edward gets his check, it is;the same amount it has always been.;Which of the following is correct?;A. Brenda?s promise is unenforceable because it;is based on past consideration.;B. Brenda?s promise is unenforceable because it;is based on an illusory promise.;C. Brenda?s promise is enforceable because;Edward performed a service for the company and deserves to;be paid.;D. None of the above.;30. If a contract is a complete and final;statement of the parties? agreement, any prior or contemporaneous oral or;written statements that alter, contradict, or are in addition to the terms of;the contract are inadmissible in court regarding a dispute over the contract;based on which one of the following legal concepts?;A. The integration clause.;B. The rule for international contracts.;C. The rule against perpetuities.;D. The parol evidence rule.;31. If you are the nonbreaching party, you must;still do this to avoid or reduce damages caused by a breach of contract.;A. Mitigation.;B. Nominal damages.;C. Recission.;D. Restitution.;32. The standard which a jury must use to weigh;the evidence in a contract case is referred to as;A. The subjective standard of proof.;B. The statute of frauds.;C. The writ of mandamus.;D. The;objective theory of contracts.;33. Prior to signing a written agreement;for hotel accommodations that provided for no refunds, the hotel manager stated to;the guest, ?We will give refunds if you have a good reason.? Assuming that there was no fraud on the part of;the hotel;A.;The guest can introduce evidence of the oral statement to prove her;entitlement to a refund.;B.;The oral statement will take precedence over the terms of the written;agreement.;C. The oral statement will be ignored by the;court.;D. The contract is against public policy;because of its mixture of oral and written terms.;34. You go to the Cosmic Runners Supply;Store, where the sales person shows you some shoes and says, ?In a race, these shoes pick up the cosmic energy from;the runners around you and channel it into your own legs. This causes;everyone with these shoes to run twice as fast as in normal shoes.? In your next race, you do only slightly better than usual and sue for;fraud. What will happen?;A. You would lose because the statement did not;contain any factual assertion.;B. You would lose because your reliance was not;justified.;C. You;would win if most runners do not go twice as fast is the cosmic shoes.;D. Proving;only that the salesperson intended to deceive you is enough to win your fraud;case.;35. Joe contracts with Woodworker to build a;custom built-in walnut desk for $1,800, which Joe pays in advance. Woodworker;gets the job 75% done and stops working.;Joe shops around, and finds someone who finishes the job for $800. How much could Joe recover from Woodworker in;a breach of contract suit?;A. $0.;B. $450.;C. $800.;D. $1,800.;36. Jerry Lee was a professional singer. He entered into a contract to sing at a concern;sponsored by ABC Co. He also entered into a contract to sell his house to;Mary. Before either contract could be;performed, Jerry dies. Both ABC and Mary;sue for breach. What results?;A. Jerry?s estate wins, both;contracts are unenforceable because of Jerry?s death.;B. Both ABC and Mary win, both contracts are;fully enforceable.;C. Mary wins, but ABC loses.;D. ABC wins, but Mary loses.;37. Which of the following is not a general rule;of contract interpretation?;A. Ordinary words are given their ordinary;meaning.;B. Specific terms qualify or override general;terms.;C. Handwritten terms prevail over printed terms.;D. Ambiguities in a contract are resolved in;favor of the party who drafted the contract.;38. The owner of a dance studio tells Rupert that;if he takes just one dance lesson for $50, his life will change forever. Rupert takes the lesson and his life remains;the same. The dance instructor?s statements;could be described as;A. Statements of fact.;B. Fraud in the inception.;C. Statements of opinion or sales talk.;D. Anticipatory repudiation.;39. What is required in order for a court to;issue an injunction?;A. Any breach of contract will justify an;injunction.;B. Any breach of contract that causes injury to;the other party will justify this remedy.;C. Any situation that entitles the award of;specific performance.;D. Any situation that demonstrates mitigation of;damages.;E. A showing that the party requesting the;injunction would suffer irreparable injury without the injunction.;40. When an employer breaches an employment;contract, what obligation does the employee have in seeking substitute;employment?;A. Because it was the employer who breached, the;employee has no obligation to seek substitute employment.;B. The employee must accept any employment;available with the same employer, but is not required to seek employment with a different;employer.;C. The employee is obligated to;accept any employment for which the employee is qualified.;D. The employee is obligated to accept;substitute employment only if it is comparable employment.;41. ?Benefit of the bargain? is another way to;refer to which type of damages?;(a);Compensatory damages.;(b);Punitive damages.;(c);Reliance damages.;(d);Liquidated damages.;42. The provisions for cure and cover under;Article 2 of the UCC;A. Encourage the filing of lawsuits quickly when;any breach occurs.;B. Promote buyers and sellers working together;to resolve their differences in the event of any breach.;C. Have nothing to do with breach.;D. Relate only to sales of goods which have not;been identified to the contract.;43. The doctrine of caveat emptor means;(a);Let the seller beware.;(b);Let the buyer beware.;(c);Let the seller be liable for all damages.;(d);That the legal remedy must be just and;fair.;44. Which of the following would be a breach of;the implied warranty of merchantability?;(a);A lawnmower that does not cut the grass.;(b);A cherry pit in a cherry pie, if using the;foreign substance test.;(c);Gasoline designed for automobiles that a;consumer uses in a kerosene stove, causing an explosion.;(d);A stereo that has been stolen by the;seller.;45. The basic philosophy of the drafters of the;Uniform Commercial Code reflects which of the following beliefs?;(a);That since law professors were appointed;to draft the Code, their legal theories and ideas of how business should be run;were the only ones to consider.;(b);That a common sense approach;incorporating the ways businessmen actually operate, was the best way to;rewrite commercial law.;(c);That reliance on the Code Merchant of;England was the way to reform modern commercial law.;(d);That it should be left up to each state to;devise its own modern code, since each state is sovereign.;46. The implied warranty of fitness for human;consumption;(a);Applies to food purchased anywhere from a;merchant.;(b);Is applied using one of two tests to;determine if the warranty has been breached.;(c);Does not require a stated warranty.;(d);Applies only to situations where a;non-food item has caused the injury.;(e);A, B, and C are all correct.;47. Reviewing the requirements for buyers and;sellers who are considered merchants under the Code, the element that makes all;these provisions function well is;(a);The combined concepts of void and voidable;title.;(b);The concept of identification to the;contract.;(c);The concept of good faith, as honesty in;fact and acting in a commercially reasonable manner.;(d);The imposition of harsh penalties for;failure to fully perform a contract and the frequent use of punitive damages.;48. A logical outgrowth of the application of;warranty provisions under Article 2 resulted in;(a);Changes in the law regarding intentional;torts.;(b);Changes in the law regarding professional;errors and omissions.;(c);Changes in the law of tort, extending;strict liability to products.;(d);No other changes in the law.;49. A statement that a trailer has a capacity of;3,000 pounds would be treated as;(a);A statement of opinion.;(b);An implied warranty.;(c);An express warranty.;(d);Seller?s puff.;50. Once goods have been identified to the;contract;(a);The buyer has greater rights to the goods;than the seller.;(b);The seller?s creditors cannot take the;goods.;(c);The buyer has an insurable interest in the;goods.;(d);All of the above.;BONUS: For up to 5 additional points, please analyze;the following: (Note: this only requires a few sentences to answer;but be sure to include your legal theory.);Kerry;finds a big green ring in the street.;She shows it to Leroy, who says, ?Wow.;That could be valuable.? Neither;Kerry nor Leroy knows what the ring is made of or whether it is valuable. Kerry sells it to Leroy for $100, saying;?Don?t come griping if it turns out to be worth two dollars.? Leroy takes the ring to a jeweler who tells;him it is an unusually perfect emerald, worth at least $75,000. Kerry sues to rescind the contract. What will the court decide (i.e. does Kerry;win or lose), and what legal theory;will be used to determine if Kerry gets the ring back?
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