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Flashcards in CONT Deck (106)
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1

Which of the following remedies is available to party who had entered into contract in reliance upon the other contracting party's innocent misrepresentations as to material facts?

a. Neither

b. Compensatory damages and Rescission

c. Rescission

d. Compensatory damages and Punative damages

Rescission

2

Which of the following contract rights can generally be assigned?

a. The right of an insured to coverage under fire insurance policy.

b. The right to receive a sum of money.

c. The right to receive personal services.

d. A right whose assignment is prohibited by statute. 

 The right to receive a sum of money.

3

Which of the following requires consideration in order to be binding on the parties?

a. Material modification of a sale of goods contract under the UCC.

b. Ratification of a contract by a person after reaching the age of majority.

c. Material modification of a contract involving the sale of real estate.

d. A written promise signed by a merchant to keep an offer to sell goods open for 10 days.

 Material modification of a contract involving the sale of real estate.

4

Diel entered into a written contract to sell a building to Stone. The contract was properly recorded. Stone breached the contract and Diel has brought an action for breach of contract. Stone pleads the statute of limitations as a defense. The 

Remedy sought by Diel will be barred when the period of time provided by the statute of limitations has expired.

5

Lark, CPA, entered into a signed contract with Sale Corp. to perform management advisory services for Sale. If Lark repudiates the contract prior to the date performance is due to begin, which of the following is not correct? 

a.Sale can obtain judgment ordering Lark to perform.

b. Sale can obtain a judgment for the monetary damages it incurred as result of the repudiation.

c. Sale could successfully maintain an action for breach of contract after the date performance was due to begin.

d. Sale could successfully maintain an action for breach of contract prior to the date performance is due to begin.

Sale can obtain judgment ordering Lark to perform. 

6

Quick Corp. has $270,000 of outstanding accounts receivable. On March 10, Quick assigned a $30,000 account receivable due from Pine, one of Quick's customers, to Taft Sank for value. On March 30, collect $30,000 from

Quick only. 

7

Silvers entered into contract which contains substantial arithmetical error.  Silvers asserts mistake as defense to his performance. Silvers will prevail

If the error was unilateral and the other party knew of it. 

8

Assuming all other requirements have been met, which of the following terms generally must be included in writing in order to satisfy the UCC Statute of Frauds regarding the sale of goods for? 

a. Price, Quantity, and Time of payment

b. Quantity

c. Price and Time of payment

d. Price and Quantity

Quantity

9

On reaching majority, minor may ratify contract in any of the following ways except by

a. Affirming, in writing, some of the terms of the contract.

b. Failing to disaffirm within a reasonable time after reaching majority.

c. Acting in a manner that amounts to ratification.

d. Orally ratifying the entire contract.

 Affirming, in writing, some of the terms of the contract. 

10

After substantial oral negotiations, Ida Frost wrote Jim Lane on May I offering to pay Lane $160,000 to build a warehouse. The writing contained the terms essential to form a binding contract. It also provided that the offer would remain open until June I and that acceptance must be received to be effective. On May 20, Lane mailed a signed acceptance. This was received by Frost on May 22. Lane completed the warehouse on July 15. On July 30, Lane assigned his right to receive payment to Reid Sank which did not notify Frost of the assignment. Two weeks later, Frost paid Lane $155,000 after deducting $5,000 in satisfaction of a dispute between them unrelated to the construction contract. If Reid sues Frost on the contract, Reid will be entitled to recover

Nothing, because notice of the assignment was not given to Frost. 

11

Kram sent Fargo, a real estate broker, a signed offer to sell a specified parcel of land to Fargo for $250,000. Kram, an engineer, had inherited the land. On the same day that Kram's letter was received, Fargo telephoned Kram and accepted the offer. Which of the following statements is correct under the common-law statute of frauds?

a. A contract was formed but would be enforceable only against Kram.

b. No contract could be formed because Kram's letter was signed only by Kram.

c. No contract could be formed because Fargo's acceptance was oral.

d. A contract was formed and would be enforceable against both Kram and Fargo.

 A contract was formed but would be enforceable only against Kram. 

12

West, Inc. and Barton entered into a contract. After receiving consideration from Egan, West assigned its rights under the Barton contract to Egan. In which of the following circumstances would West not be liable to Egan?

a. Egan released Barton.

b. West breached the contract.

c. Barton paid West.

d. West released Barton. 

 Egan released Barton. 

13

Sand sold a warehouse he owned to Quick Corp. The warehouse was encumbered by an outstanding mortgage securing Sand's note to Security Sank. Quick assumed Sand's note and mortgage at the time it purchased the warehouse from Sand. Within 3 months, Quick defaulted on the note and Security Sank commenced a mortgage foreclosure action. The proceeds of the resulting foreclosure sale were less than the outstanding balance on the note. As to the contract between Sand and Quick, Security is 

A third-party creditor beneficiary. 

14

In an action for breach of contract, the statute of limitations time period would be computed from the date of the

Breach of the contract.

15

Foster Co. and Rice executed a contract by which Foster was to sell a warehouse to Rice for $270,000. The contract required Rice to pay the entire $270,000 at the closing. Foster has refused to close the sale of the warehouse to Rice. If Rice commences a lawsuit against Foster, what relief would Rice likely be entitled to? 

Specific performance or compensatory damages. 

16

Sable Corp. has $500,000 of outstanding accounts receivable. On July 10, year I, Sable assigned a $50,000 account receivable due from Baker, one of Sable's customers, to Rich Sank for value. On July 15, Baker paid Sable the $50,000. On July 17, Rich notified Baker of the July 10 assignment from Sable to Rich. Rich is entitled to collect $50,000 from

Sable only.

17

Graham contracted with the city of Harris to train and employ high school dropouts residing in Harris. Graham breached the contract. Long, resident of Harris and a high school dropout, sued Graham for damages. Under the circumstances, Long wil

 Lose, because Long is merely an incidental beneficiary of the contract.

18

Wilson sold his factory to Glenn. As part of the contract, Glenn assumed the existing mortgage on the property which was held by Security sank. Regarding the rights and duties of the parties, which of the following is correct?

a. The promise by Glenn need not be in writing to be enforceable by Security.

b. Security is a mere incidental beneficiary since it was not party to the assignment.

c. Wilson has no further liability to Security.

d. Security is creditor beneficiary of Glenn's promise and can recover against him personally in the event of default. 

Security is creditor beneficiary of Glenn's promise and can recover against him personally in the event of default.

19

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 Wilk would not sell the land for $450. If Dix sues Wilk for specific performance, Dix will

Lose, because the agreement was not in writing and signed by Wilk. 

20

Pam orally agreed to sell Jack her used car for $400. At the time the contract was entered into, the car had been stolen and its whereabouts were unknown. Neither party was aware of these facts at the time the contract was formed. Jack sues Pam for her failure to deliver the car in accordance with their agreement. Pam's best defense would be that the 

 Parties were under a mutual mistake of a material fact at the time the contract was entered into. 

21

On December I, Gem orally contracted with Mason for Mason to manage Gem's restaurant for one year starting the following January I. They agreed that Gem would pay Mason $40,000 and that Mason would be allowed to continue to work for Gem if "everything worked out." On June I, Mason quit to take a better paying job, alleging that the contract violated the Statute of Frauds. What will be the outcome of a suit by Gem for breach of contract? 

Gem will lose because the contract could not be performed within one year. 

22

On May 25, Fresno sold Bronson, a minor, a used computer. On June I, Branson reached the age of majority. On June 10, Fresno wanted to rescind the sale. Fresno offered to return Bronson's money and demanded that Bronson return the computer. Bronson refused, claiming that a binding contract existed. Bronson's refusal is 

Justified, because Fresno must perform under the contract regardless of Bronson's minority. 

23

Stone engaged Parker to perform personal services for $1,000 a month for a period of 3 months. The contract was entered into orally on August I, year I, and performance was to commence on January I, year 2. On September 15, year I, Parker anticipatorily repudiated the contract. As a result, Stone can 

Immediately sue for breach of contract.

24

Kent, 15-year old, purchased used car from Mint Motors, Inc. Ten months later, the car was stolen and never recovered. Which of the following statements is correct?

a. Kent effectively ratified the purchase because Kent used the car for an unreasonable period of time.

b. Kent may disaffirm the purchase because Mint, a merchant, is subject to the UCC.

c. The car's theft is a de facto ratification of the purchase because it is impossible to return the car.

d. Kent may disaffirm the purchase because Kent is minor. 

 Kent may disaffirm the purchase because Kent is minor.

25

Aqua, Inc., a Florida corporation, entered into a contract for $30,000 with Sing, Inc., to perform plumbing services in a complex owned by Sing in Virginia. After the work was satisfactorily completed, Sing discovered that Aqua violated Virginia's licensing law by failing to obtain a plumbing license. Virginia's licensing statute was regulatory in nature, serving to protect the public against unskilled and dishonest plumbers. upon Sing's request, independent appraisals of Aqua's work were performed, which indicated that the complex was benefited to the extent of $25,000. Sing refuses to pay Aqua. If Aqua brings suit it may recover 

Nothing. 

26

For which of the following contracts will court generally grant the remedy of specific performance?

a. A contract for the sale of stock that is traded on national stock exchange.

b. A contract for the sale of a patent.

c. A contract of employment.

d. A contract for the sale of fungible goods. 

 A contract for the sale of a patent. 

27

Green purchased a business from Tanner. During negotiations, Tanner told Green that it was a wonderful business that Green will love. He also told Green that he was sure she will make at least $150,000 next year. At the end of the next year, it turns out that Green only makes a profit of $75,000, even though she worked very hard putting in 90 to 100 hours per week. She sues Tanner for fraud. Who wins? 

Tanner, because none of the statements constitute actionable fraud.

28

Barret contracted in writing to purchase land from Gott to build a hotel. Riggo was pleased because he owned a restaurant next door. However, shortly after the contract was made, Barret breached the contract. Both Riggo and Gott have sued Barret for the breach of contract. Which parties can win in a law suit against Barret?

 Gott.

29

Ward is attempting to introduce oral evidence in an action relating to 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 change in the meaning of an unambiguous provision in the contract. 

30

Paco Corp., a building contractor, offered to sell Preston several pieces of used construction equipment. Preston was engaged in the business of buying and selling equipment. Paco's written offer had been prepared by a secretary who typed the total price as $10,900, rather than $109,000, which was the approximate fair market value of the equipment. Preston, on receipt of the offer, immediately accepted it. Paco learned of the error in the offer and refused to deliver the equipment to Preston unless Preston agreed to pay $109,000. Preston has sued Paco for breach of contract. Which of the following statements is correct? 

Paco will be able to rescind the contract because Preston should have known that the price was erroneous.