Exam Number: 500317RR
Lesson Name: Contracts
1. While looking for apartments, Brittany finds one that she likes. The building manager agrees to an option contract in which he will hold the apartment for Brittany for four days in return for $100. At the end of the fourth day, Brittany finds another apartment that she likes more and signs a lease with its building manager. Because Brittany's contract with the original building manager is an option contract, the building manager is under
A. no legal obligation to return more than $50 to Brittany.
B. legal obligation to return Brittany's $100 payment.
C. legal obligation to return one-fourth of Brittany's $100 payment.
D. no legal obligation to return Brittany's $100 payment.
2. At his 80th birthday party, Graham declares that Elsie is his favorite grandchild and that he will leave Elsie $100,000 on his death. Sadly, Graham dies just three days later. No provision of his will leaves Elsie the $100,000. Elsie files a breach of contract claim against Graham's estate. The most likely result is that Elsie will lose because no contract existed due to lack of
A. contractual capacity and form.
B. contractual capacity and consideration.
C. form and agreement.
D. agreement and consideration.
3. Which of the following beneficiaries has no enforceable legal rights?
A. Insurance
B. Creditor
C. Incidental
D. Donee
4. Edwin, Marketing VP of Amalgamated Sales Inc. writes a letter dated August 1 to Bargain Stores Inc. offering to sell candy to Bargain Stores at $50 per case for the next 30 days. Bargain Stores then contracts with local retailers based on the offer from Amalgamated. Ten days later, Amalgamated receives an offer from Dandy Stores Inc. to purchase this same candy at a price of $75 per case. Can Amalgamated withdraw its offer to Bargain Stores?
A. No, this is a firm offer.
B. Yes, the offer may be withdrawn since it lacks consideration.
C. No, this is only an option.
D. Yes, the offer was simply an invitation to negotiate.
5. A/An _______ is an acceptance of an agreement not to sue supported by consideration, which terminates one's right to continue any lawsuit presently or in the future on grounds described in the agreement.
A. promissory estoppel
B. option
C. release
D. accord and satisfaction
6. Collin purchases a house, using a loan from Big Bank. As a condition of the loan, Big Bank requires that Collin purchase life insurance payable to Big Bank, to the extent of the outstanding mortgage, if Collin dies before fully paying the mortgage. Big Bank is
A. a creditor beneficiary but not a donee beneficiary.
B. an intended beneficiary but not a donee beneficiary.
C. both a creditor beneficiary and a donee beneficiary.
D. an incidental beneficiary but not a donee beneficiary.
7. Which of the following acts is designed to cut down on identity theft related to the use of credit cards?
A. Uniform Electronic Transactions Act
B. E-Sign Act
C. Uniform Computer Information Transactions Act
D. Fair and Accurate Credit Transactions Act
8. Natalie contracts with Paula to paint her house for $100. Paula pays Natalie, but Natalie has yet to paint. This contract is
A. executory.
B. executed.
C. executory as to Paula's duty.
D. executory as to Natalie's duty.
9. Aspen assigns his right to receive payment from Donna to Henry. Later, Aspen assigns this same right to Doris. Doris gives notice to Donna on May 1, and Henry gives notice to Donna on May 2. Which of the following is most likely to be the court's ruling?
A. Henry and Doris are joint assignees and will be given equal rights to claim the assigned benefits from Donna.
B. Since Henry was the first assignee, he will be given the superior right to claim Aspen's benefits.
C. Donna will be required to pay Aspen, who in turn will be asked to make respective payments to Doris and Henry.
D. Since Doris was the first to notify Donna, she will be given the right to claim the assigned benefits.
10. Candice hires Otto to work as a tax preparer in Candice's tax return business. The employment contract restricts the ability of Otto to set up a competing business or engage in tax preparation services if Otto leaves Candice's employ. Otto discovers he likes this kind of work and wants to set up his own tax return business. He asks you whether the restrictions in his contract with Candice will be enforceable. You should tell him that
A. any restriction regarding employment will be enforceable as long as there was adequate consideration.
B. restrictive covenants regarding future employment will be enforceable if they're reasonable.
11. Which of the following is true about the legality of an agreement?
A. An agreement isn't divisible if the legal part of a contract can be removed from the illegal part without changing the nature of the contract.
B. A court has to enforce both the illegal and legal parts of the contract.
C. An agreement can sometimes be partly legal and partly illegal.
D. The court won't enforce any agreement or contract that's either fully or partially illegal.
12. Jack and Jane formed a contract in which Jack agreed to sell Jane a large amount of apples. Jack knew that Jane planned to resell the apples at the farmers' market the following weekend. Jack failed to deliver the apples as promised. Jane will most likely be able to recover
A. both nominal and punitive damages.
B. compensatory damages only.
C. punitive damages only.
D. both compensatory and consequential damages.
13. Donna entered into an oral contract with Ava to purchase a house from Ava, with $500 monthly payments for the next 10 years. Donna moved into the house, remodeled it, and made extensive repairs. At the end of 10 years, Ava refused to convey title to the house to Donna and produced evidence at the resulting trial that the fair market rental value for the house averaged $800 per month throughout the 10-year period. Does Donna have an enforceable contract?
A. Yes, Donna is entitled to the ownership of the house because oral contracts for the sale of land are enforceable under the Statute of Frauds.
B. No, Donna isn't entitled to the ownership of the house since she was paying below the fair value.
C. No, Donna can't claim ownership of the house since there was no written contract with Ava.
D. Yes, Donna can claim ownership of the house based on equitable estoppel.
14. Lizzie works as an entertainment journalist for a tabloid newspaper. The editor of a competing tabloid tells her that if she produces a story defaming a television celebrity, she will be given a job at the competing tabloid. After Lizzie produces the article and publishes it in the tabloid she works for, the competing tabloid refuses to hire her. Lizzie wants to bring a breach-of-contract lawsuit against the competing tabloid for not hiring her. Which of the following is true of this case?
A. Lizzie can bring forth a lawsuit because her contract with the competing tabloid contained all five elements.
B. Lizzie's contract has been executed; hence, the court is likely to award her damages for breach of contract.
C. Lizzie has committed a tort, and her contract with the competing tabloid won't be upheld in the court.
D. Lizzie has committed a crime and hence can't file a lawsuit.
15. Under the _______ rule, the courts generally accept into evidence only the original of a writing, not a copy.
A. parol evidence
B. best evidence
C. original construction
D. standard construction
16. Anthony offers to sell a computer to Salvador for $900 if Salvador replies by e-mail only, sent no later than noon on Saturday. On Saturday, Salvador is unable to access his e-mail, so he mails an acceptance at the post office before noon. Which of the following is true of the situation?
A. Anthony is legally bound to the contract since Salvador's e-mail malfunction was no fault of his own.
B. No contract exists since Salvador's acceptance isn't effective until reviewed.
C. A legal contract exists since Salvador's acceptance was sent by noon on Saturday.
D. A legal contract doesn't exist since the mode of acceptance specified in the offer wasn't used.
17. Bella and Connie are struggling to find jobs. They decide they want to open a child daycare center together. They see a house in the perfect neighborhood with a "For Sale by Owner." They talk to the owner, reach an agreement, and shake hands. Just before the closing on the house, at which they'll take ownership of the house, the owner decides not to sell to Bella and Connie. They tell the owner they're going to sue him for breach of contract. Bella and Connie most likely
A. will win because the owner shouldn't have entered into a contract with them if he wasn't sure he wanted to sell the house.
B. won't win because they shouldn't have entered into an oral contract to buy the house.
C. won't win because they can find another house that will work just as well.
D. will win because the owner breached his agreement to sell them the house.
18. Finn agrees to pay $100 to anyone who will paint his house. Will hears about the offer and paints. Finn refuses to pay, saying Will never formally accepted Finn's offer. Which of the following is true?
A. Will has to formally accept, but can do so within a reasonable time after painting.
B. Offer and acceptance are irrelevant if one of the parties changes position.
C. This is a unilateral contract and painting constituted acceptance.
D. This is a bilateral contract, and Will didn't accept.
19. Daisy contracts with Mike that in exchange for $50 Daisy won't whistle for a week. This contract is
A. enforceable.
B. enforceable only if Daisy is a musician who whistles for a living and would suffer significant income loss by not whistling for a week.
C. not enforceable due to lack of consideration.
D. unenforceable due to fraud.
20. Which of the following contains all the elements of a written agreement that can be enforceable under law?
A. "Henry Shay agrees to purchase hand-knit sweaters for $45 apiece. Signed, Henry Shay."
B. "Silvie agrees to mail six hand-knit sweaters at $45 apiece to the house on Wednesday, June 17. Signed, Silvie Nader."
C. "Silvie Nader and Henry Shay are parties involved in this contract for the purchase of hand-knit sweaters on Wednesday, June 17. Signed, Henry Shay and Silvie Nader."
D. "Full Agreement by Henry Shay and Silvie Nader. Henry agrees to purchase from Silvie six of Silvie's hand-knit sweaters at $45 each. Signed, Silvie Nader, and Henry Shay."
