CLASS / COURSE: Business Law
1. Jack is a very mature looking seventeen-year-old who lives at home with his parents. Jack wants to purchase an automobile. Jack goes to Discount Car Sales where Bud, the car salesman, never considers that Jack may be a minor because Jack looks at least twenty-five. Bud sells Jack a car, with the agreement that Jack will pay Bud $100 per month over the next five years for the car. Which one of the following is true?
A. Despite Jack's minor status, Bud can prohibit Jack from disaffirming a contract for a necessary (or basic need).
B. Jack can disaffirm the contract because of his minor status at the time the contract was formed.
C. Bud can disaffirm the contract because of Jack's minor status at the time the contract was formed.
D. Bud can hold Jack's parents liable for Jack's contract, because Jack was a minor living in their home at the time the contract was formed.
2. Edward offers Austin one million dollars to break into the World Museum and steal a priceless Egyptian diamond. Austin readily accepts the offer. Both Edward and Austin have reached the age of majority and possess the capacity to contract. Which of the following requirements for the formation of a contract is missing?
C. Contractual capacity
3. Paul wants to buy an antique car from Betty. Paul believes that the car is worth $30,000, even though Betty is asking only $10,000 for the car. In actuality, the car is worth only $5,000. The result of this chain of events would be a
A. mistake of fact.
B. fraudulent misrepresentation.
C. mutual mistake.
D. mistake of value.
4. Jason contracts with Mountaintop Life Insurance to purchase life insurance. Jason lists his wife, Melba, as the beneficiary. Melba is a/an
A. donee beneficiary.
B. creditor beneficiary.
C. incidental beneficiary.
5. Lisa and Chad had been dating for several years. Chad gave Lisa an expensive birthstone ring for her birthday. Despite the lengthy courtship, Chad unceremoniously dumped Lisa the day after her birthday. Lisa went out to a club with a few friends, where the group had a few drinks. Obviously intoxicated and distraught, Lisa said, I'll sell this ring for $5.00 to anyone who agrees to give Chad a black eye. Lisa's friend Ty quickly said, I accept. A contract probably hasn't been formed because of what basic principle of contract law?
A. Freedom of contract
C. Objective theory of contracts
D. Plain-meaning rule
6. Ty and Cher went out for dinner to discuss a business venture the two had been discussing. Cher had a few glasses of wine, and became visibly intoxicated. Ty and Cher continued to discuss the venture, and the two formed a contract in which Ty received 80% of the profits resulting from the venture, and Cher received 20% of the profits, even though Cher agreed to invest the majority of the money. Ty agreed to contribute her expertise and services to the venture. When Cher wakes up the next morning, she realizes her terrible mistake. Cher's best chance at avoiding the contract with Ty is to assert that
A. she didn't know what she was doing at the time the contract was formed.
B. she was drunk at the time the contract was formed.
C. the contract is unconscionable.
D. the contract is illegal.
7. 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 likely be able to recover
A. compensatory damages only.
B. nominal damages only.
C. punitive damages only.
D. both compensatory damages and consequential damages.
8. Elliot and Richard went out to paint the town. Both Elliot and Richard were known to be pranksters, and nobody in town ever took either of them seriously. Elliot and Richard started talking to Steve in a local tavern. Elliot and Richard told Steve that they owned the Brooklyn Bridge, and would sell it to him for $10,000. Elliot and Richard even wrote out the terms of the agreement on a cocktail napkin. Steve agreed to the terms of the contract. Steve honestly believed that a contract had been formed, and he could sue Elliot and Richard if they failed to uphold the terms of the contract. A contract probably doesn't exist because
A. Elliot and Richard lacked the capacity to contract.
B. Steve lacked the capacity to contract.
C. no reasonable person would have believed a contract was formed.
D. Elliot and Richard were intoxicated.
9. Jackie told a group of her friends that she plans to sell her home one day. Meg asked how much she hoped to get for the house, and Jackie replied, Meg said, I accept your offer to purchase your house for $50,000. No contract exists because
A. the terms of the offer were not reasonably certain.
B. Jackie didn't objectively intend to enter a contract.
C. the offer wasn't properly communicated.
D. Jackie's statements were merely preliminary negotiations.
10. Josey is a seventeen-year-old who lives on her own in the city. Josey's parents are deceased, and she once lived with her grandmother, although her grandmother doesn't have legal custody of Josey. She signs a lease to rent an apartment with Syd Landlord. Josey violates the terms of the lease, and moves out six months early. Syd sues Josey for breach of contract. The most likely result will be that
A. Josey may disaffirm the contract, but will have to pay for the reasonable value of the rent.
B. Josey may disaffirm and avoid the contract.
C. Syd may disaffirm and avoid the contract.
D. Josey's grandmother may be forced to uphold the contract.
11. Joe made Mandie an offer of employment. Joe gave Mandie a copy of the employment contract, and stated, If you accept, I must receive your acceptance by December 1 at 5:00 P.M. The written contract stated the same requirement. Mandie lived 30 miles from Joe's office. Mandie signed the employment contract, and placed it in a correctly addressed, stamped envelope, and deposited it in the mail on December 1 at 12:00 P.M. Joe receives the acceptance on December 3. The result is that a contract
A. was formed because of the mailbox rule.
B. wasn't formed because mailing the acceptance wasn't authorized.
C. wasn't formed because Joe specifically conditioned his offer on acceptance by a certain time.
D. was formed because Mandie unequivocally accepted the terms of the contract.
12. Tom contracts with Jerry to purchase an oil painting. Tom and Jerry mistakenly think that the oil painting was painted by Monet, the famous artist, and that it's worth hundreds of thousands of dollars. When Tom discovers the mistake, he seeks to rescind the contract. The most likely result will be that the contract will
A. not be rescinded because the mistake was one of value.
B. be rescinded because the mistake was one of fact.
C. be rescinded due to fraudulent misrepresentation.
D. be rescinded due to undue influence.
13. Eric owes George money. Eric contracts with Mark to paint Mark's house. In the contract, Mark agrees that in return for Eric painting his house, Mark will pay George the money Eric owes George. George is a/an
A. donee beneficiary.
B. incidental beneficiary.
D. creditor beneficiary.
14. Mark tells Cindy, If you clean out my garage, I'll pay you $25. Mark has offered to form what kind of contract?
A. Bilateral contract
B. Unilateral contract
D. Implied-in-fact contract
15. Sam and Erica like to attend wild parties. Both have worked up quite a tolerance, because of their frequent drinking. One night, after both Sam and Erica had each enjoyed a couple of beers, they decided to enter a contract in which Sam agreed to purchase Erica's 1965 Mustang for $2,500.The next day, Erica has second thoughts. The most likely result will be
A. Erica will avoid the contract due to intoxication.
B. Sam will avoid the contract due to intoxication.
C. Erica won't avoid the contract because she wasn't intoxicated.
D. Erica should be able to avoid the contract because it's unconscionable.
16. Grandpa Graham declares at his eightieth birthday party that because she's his favorite grandchild, he'll leave $100,000 to his beloved granddaughter Elsie upon his death. Sadly, Grandpa Graham dies just three days later. No provision of his will left Elsie the $100,000. Elsie files a breach of contract claim against Grandpa Graham's estate. The most likely result will be that Elsie will lose because no contract existed due to
A. lack of agreement and consideration.
B. lack of contractual capacity.
C. lack of form.
17. Carrie decides to offer Susan the opportunity to purchase her motorcycle for just $500. Carrie told Carter, a mutual friend of hers and Susan's, that she intended to make the offer. Later, Carrie changes her mind. Susan approaches Carrie and says she accepts the offer. What will the likely result be?
A. No contract was formed because Carrie didn't possess a serious, objective intention.
B. No contract was formed because Carrie never communicated the offer to Susan.
C. No contract was formed because the terms of the offer weren't certain or definite enough to form a contract.
D. A contract was formed because Susan accepted Carrie's offer.
18. Will contracts with Grace to sell her 100 lamps for $1,000. Will breaches his contractual duty to deliver the lamps, and Grace buys 100 lamps for $2,000 from another dealer. Grace sues Will for breach of contract. She will most likely receive what type of damages?
A. Compensatory damages in the amount of $1,000
B. Compensatory damages in the amount of $2,000
C. Consequential damages of $3,000
D. Nominal damages of $100
19. Uncle Eb tells his wayward nephew Jonah that if he refrains from drinking and smoking until he reaches the age of 18, he'll pay him $500,000. Jonah refrains from drinking and smoking until after his eighteenth birthday. What would a judge most likely say?
A. No contract is formed because there's no bargained-for exchange.
B. No contract is formed because there's no legal value offered.
C. No contract is formed due to inadequacy of consideration.
D. A contract exists between Uncle Eb and Jonah.
20. Joey mailed Clark an offer in which he offered to sell Clark all of his baseball cards for $300. No other stipulations appeared in the offer. The next day, Clark mailed Joey his acceptance of the offer, along with a check for $300. That same day, Joey mailed Clark a letter revoking his offer. The most likely result will be that
A. no contract was formed because Joey revoked the offer.
B. a contract was formed because of the mailbox rule.
C. no contract was formed because Clark used an improper means of acceptance.
D. a contract was formed because once Joey mailed the offer, he couldn't revoke it.
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SUBJECTS / CATEGORIES:
1. Business Law/Corporate Law