Final Exam Flashcards
(146 cards)
1
Q
After an assignment, only the assignee has a right to the obligor’s performance.
True or False?
A
True
2
Q
The person who makes an assignment is the assignor.
True or False?
A
True
3
Q
A gratuitous assignment is always revocable.
True or False?
A
False
4
Q
Consideration is required in order to have a valid assignment.
True or False?
A
False
5
Q
The general rule is that an assignee stands in the shoes of the assignor. He acquires the rights of the assignor but no new or additional rights.
True or False?
A
True
6
Q
Arthur enters into a contract with Bob as a result of Bob’s fraud in the inducement. Under the contract, Bob has the right to the payment of $100. Bob assigns the right to the $100 to Carl. Arthur may not assert the defense of fraud in the inducement to avoid paying Carl the $100.
True or False?
A
False
7
Q
A gratuitous assignment is generally valid and enforceable.
True or False?
A
True
8
Q
The delegation of a duty still leaves the delegator responsible for the performance of the duty.
True or False?
A
True
9
Q
An incidental beneficiary has no right to enforce a contract.
True or False?
A
True
10
Q
An intended donee beneficiary may enforce the contract only against the promisor.
True or False?
A
True
11
Q
In some states, the vesting of a third party’s rights occurs only when the third party learns of the contract and assents to it.
True or False?
A
True
12
Q
Some states have statutes which prohibit an employee from assigning his future wages.
True or False?
A
True
13
Q
A valid assignment requires that notice be given to the obligor.
True or False?
A
False
14
Q
An assignor normally guarantees that the obligor will pay the assigned debt.
True or False?
A
False
15
Q
Though contractual duties generally are delegable; a delegation will not be permitted if the nature of the duties is personal in that the obligee has a substantial interest in having the delegator perform the contract.
True or False?
A
True
16
Q
When the assignee gives consideration in exchange for an assignment, there is a contract between the assignor and the assignee that prevents the assignor from revoking the assignment without the assent of the assignee.
True or False?
A
True
17
Q
The right to property other than money, such as goods or land, is not assignable.
True or False?
A
False
18
Q
A promisor and a promisee may provide that the benefits under a contract will never vest in a third person.
True or False
A
True
19
Q
In a novation, the delegator is discharged and the third party becomes directly bound upon his promise to the obligee.
True or False?
A
True
20
Q
A contract in which a party (the promisor) promises to render a certain performance not to the other party (the promisee) but to a third person (the beneficiary) is called a third party beneficiary contract.
True or False?
A
False
21
Q
A creditor beneficiary is a type of incidental beneficiary
True or False?
A
False
22
Q
The law governing assignments arises solely from the common law of contracts.
True or False?
A
False
23
Q
Pedro has a contract to build a garage. He delegates the wiring job to a local electrician who improperly performs it. Pedro is responsible, even though he delegated the duty.
True or False?
A
True
24
Q
An assignor is bound by any express warranties he makes to the assignee with respect to the right assigned
True or False?
A
True
25
Contractual duties are assignable.
True or False?
False
26
Lauren received a $1,500 scholarship to attend the local community college. She decides not to attend college that year, so she can assign her right to the money to her friend, Sean.
True or False?
False
27
Rick has a contract with a home repair company to paint his house and landscape his yard. When he realizes that he will have some unexpected medical expenses, he calls the home Repair Company to cancel the contract. Rick's next door neighbor can sue Rick to enforce the contract, because if Rick improves his own property, his neighbor's property will also be worth more money.
True or false?
False
28
The Restatement and Article 2 of the Code provide that, unless circumstances indicate the contrary, a contract term that prohibits the assignment of a contract bars only the delegation to the assignee of the assignor's duty of performance and does not bar the assignment of contract rights.
True or false?
True
29
In a third-party beneficiary contract, the third party’s rights arise after the contract is made.
True or false?
False
30
The Restatement adopts the majority American rule and provides that, where there are successive assignments of the same right, the first assignee in point of time prevails.
True or false?
False
31
Third party rights in contracts can arise by assignment of rights, delegation of duties, or express terms in third party beneficiary contracts.
True or False?
True
32
The UCC imposes a writing requirement on all assignments of $500 or more.
True or false?
False
33
The UCC prohibits assignments of $5,000 or more.
True or false?
False
34
Ron owes Lloyd $500 due March 1. Lloyd assigns his right to the money to Lou, but neither Lloyd nor Lou notifies Ron. On March 1, Ron pays Lloyd the $500. Ron is not discharged from his obligation, but is liable to Lou for the money.
True or false?
False
35
In England and in a minority of states, the first of two or more assignees to give notice to the obligor is entitled to the assigned performance.
True or false?
True
36
Donee beneficiaries and incidental beneficiaries are called intended beneficiaries.
True or false?
False
37
Assignment of rights is the voluntary transfer to a third party of the rights arising from a contract.
True or False?
True
38
In an assignment or delegation, the third parties' rights or duties arise after the contract is made.
True or false?
True
39
The student government of State University has a contract with a famous rock band to perform at the university on homecoming weekend. The band cannot assign its rights and delegate its duties under this contract.
True or false?
True
40
Generally, rights under an option contract are not assignable.
True or false?
False
41
As a general rule, most contract rights are assignable.
True or false?
True
42
Unless otherwise provided by statute, an assignment may be oral.
True or false?
True
43
A partial assignment is a transfer of a portion of the contractual rights to one or more assignees.
True or false?
True
44
As a general rule, partial assignments of contract rights are not enforceable.
True or false?
False
45
An agreement between Greg and Margaret to marry one another cannot be transferred to a third party.
True or false?
True
46
The voluntary transfer of a contractual right to a third party is known as a(n):
A. Implied warranty.
B. Assignment.
C. Delegation.
D. Novation.
B. Assignment.
47
A(n) ____ is a method of discharging a contract in which a third party becomes bound upon a promise to the obligee.
A. Assignment
B. Delegation
c. Partial assignment
D. Novation
D. Novation
48
A(n) ____ is a third party who obtains possible benefits but no rights under a contract.
A. Incidental beneficiary
B. Intended beneficiary
C. Assignor
D. Donee beneficiary
A. Incidental beneficiary
49
A(n) ____ is an intended beneficiary of a contract who receives the benefits of the contract as a gift.
A. Incidental beneficiary
B. Intended beneficiary
C. Assignor
D. Donee beneficiary
A. Incidental beneficiary
50
Anita owes Brad $75,000. Brad signs a written statement granting Glen a gratuitous assignment of his rights from Anita. Brad delivers the signed statement to Glen before Brad dies.
A. The delivery of the statement makes the assignment irrevocable.
B. The assignment is terminated upon Brad's death.
C. The signing of the statement makes the assignment irrevocable.
D. The assignment is invalid, because it is revocable.
A. The delivery of the statement makes the assignment irrevocable.
51
Which of the following duties would not be delegable?
a. John has a contractual duty to pay Isaac $50.
b. Karl has a contractual duty to deliver 50 bushels of corn to Michael by October 1.
c. Jeffrey has a duty to mow Georgia's lawn at least once a week.
d. Arthur has a duty to teach an accounting class at a community college during the fall semester.
D. Arthur has a duty to teach an accounting class at a community college during the fall semester.
52
Theresa has a contract to teach eighth grade at Washington Middle School. She decided she could make more money writing a book, so she assigns her teaching contract to her friend, Stephanie, who is also a licensed teacher.
a. The duties under the teaching contract are nondelegable.
b. The duties which Theresa has attempted to delegate are personal in nature.
c. If the school district agrees to accept Stephanie's services, a novation would occur, which would relieve Theresa of her obligation to the school district.
d. All of the above are correct.
d. All of the above are correct.
53
Annette entered into a contract with a local truck dealer to have a new truck delivered to her daughter, Sue, as a graduation present. In this contract, Sue is:
a. An incidental beneficiary.
b. A donee beneficiary.
c. A creditor beneficiary.
d. An assignor.
b. A donee beneficiary.
54
Professor Dought has a life insurance policy on his own life that provides that in the event of his death, his mother will receive the proceeds. Professor Dought's mother is a(n):
a. Incidental beneficiary.
b. Creditor beneficiary.
c. Donee beneficiary.
d. Assignee.
c. Donee beneficiary.
55
Bill wants to buy a new car. He goes to the bank to get a loan for the purchase, and signs an agreement to pay $10.00 per month in premiums on a term life insurance policy which names the bank as the recipient of the policy proceeds in the event of his death before the loan is repaid. The bank is a(n):
a. Incidental beneficiary.
b. Creditor beneficiary.
c. Donee beneficiary.
d. Assignee.
b. Creditor beneficiary.
56
Betty owes Agatha $1,000. On March 1 Agatha, for value, assigned the debt to Clara. Thereafter, on March 30 Agatha assigned the same right to Diane.
a. Under the American rule, Clara will prevail over Diane.
b. Under the English rule, the first assignee to notify Betty will prevail.
c. Under the Restatement rule, the first assignee to notify Betty will prevail.
d. Both (a) and (b) are correct.
d. Both (a) and (b) are correct.
57
Courts will enforce contracts for the benefit of all but which of the following?
a. Donee beneficiaries
b. Creditor beneficiaries
c. Incidental beneficiaries
d. Intended beneficiaries
c. Incidental beneficiaries
58
Bill has a right against Heather and assigns it for $100 to Dan. Later, Bill grants Heather a release. Bill:
a. Is liable to Dan for damages because he breached an implied warranty.
b. Has no liability to Dan because he did not expressly warrant that he would not impair the assignment.
c. Has no liability to Dan because the only implied warranty he made was that the assigned right actually existed at the time of the assignment.
d. Was acting contrary to public policy by assigning a contractual right for money.
a. Is liable to Dan for damages because he breached an implied warranty.
59
Stark enters into a contract with a contractor to build a large shopping mall in River City. Donner will benefit from this contract since his restaurant is adjacent to the planned mall. Donner in this instance is a(n):
a. Implied beneficiary.
b. Partial beneficiary.
c. Donee beneficiary.
d. Incidental beneficiary.
d. Incidental beneficiary.
60
The party to whom a contractual duty of performance is owed is known as the:
a. Obligee.
b. Obligor.
c. Assignee.
d. Assignor.
a. Obligee.
61
Mr. Homayer hired Blake Painters to paint his house. Blake decides it has too many jobs and delegates the duties to the Andrews Company. Andrews does a poor job, and drips paint on the Homayers' flowers and windows.
a. Mr. Homayer can sue both Blake and Andrews.
b. Mr. Homayer can sue Blake, but he cannot sue Andrews.
c. Mr. Homayer can sue Andrews, but he cannot sue Blake.
d. Mr. Homayer cannot sue, because he has accepted the benefits of the assignment.
a. Mr. Homayer can sue both Blake and Andrews.
62
Mary goes to a stockbroker, purchases 50 shares of a certain stock, and instructs the broker to register the stock in her husband Warren's name. If this stock is intended as a Valentine’s Day gift, Warren becomes a(n):
a. Donee beneficiary.
b. Transferee.
c. Delegatee.
d. Assignee.
a. Donee beneficiary.
63
When contract terms prohibiting the assignment of rights exist, most courts will:
a. Strictly construe them.
b. Interpret a general term prohibiting assignments as rendering any assignment ineffective.
c. Award the obligor no right to damages for breach of a general term prohibiting assignments.
d. All of the above
a. Strictly construe them.
64
Which of the following is NOT true concerning the requirements for an effective assignment?
a. The assignment must be voluntary.
b. Consideration is required.
c. There must be an intention to make the assignee the owner of the right.
d. The assignment may be either written or oral.
b. Consideration is required.
65
Which of the following involves a creditor beneficiary relationship?
a. A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance policy
b. A contract between an employer and a union representing the employees, which contract is made for the benefit of the employees
c. A contract between the owner of a building and the contractor stating that the contractor will pay his employees at a stated rate
d. A contract between a governmental unit and business for services to be rendered to area citizens
a. A contract where the insured names a bank with which he has a loan as the beneficiary of a life insurance policy
66
Lynne is the intended beneficiary of a third-party contract. Her rights have vested. In an action by Lynne to enforce the promise, the promisor may assert the defense of:
a. rescission.
b. contractual modification.
c. fraud.
d. All of the above.
c. fraud
67
Which of the following involves an invalid assignment that a court would not enforce?
a. An assignment of a savings account accompanied by the delivery of the passbook
b. An assignment lacking consideration
c. An assignment of an automobile liability insurance policy accompanied by the delivery of the policy
d. An assignment in writing signed by the assignor and delivered to the assignee
b. An assignment lacking consideration
68
Noel and Lyle have a contract whereby Noel is to perform routine construction services according to the blueprints Lyle provided. Noel assigns the contract to David. As a result of this assignment:
a. Lyle can bring suit based upon detrimental reliance.
b. Noel has no more rights or responsibilities with regard to the contract.
c. Noel no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform.
d. Noel has all of his rights under the contract, but he has no responsibility for the performance of the duties.
c. Noel no longer has any rights under the contract, but he remains responsible for the duties he agreed to perform.
69
Brice owns a parcel of land that is encumbered by a mortgage held by the First National Bank. Brice agrees to sell the land to Paul for $50,000. Brice and Paul together go to the First National Bank to discuss the sale and purchase with the banker. Brice, Paul, and the banker sign an agreement stating that Paul will assume the mortgage and that Brice will be discharged from all further liability on the mortgage.
a. The bank is a third party donee beneficiary.
b. The bank can collect from Brice if Paul defaults.
c. Brice is a third party beneficiary of the agreement between Paul and the bank.
d. The agreement among the three is a novation.
d. The agreement among the three is a novation.
70
Anita owes Brad $75,000. Brad signs a written statement granting Carla a gratuitous assignment of his rights from Anita. Brad dies prior to delivering the statement to Carla.
a. Brad's death has no effect on the assignment.
b. The assignment is terminated upon Brad's death.
c. The signing of the statement makes the assignment irrevocable.
d. The assignment is invalid because it is gratuitous.
b. The assignment is terminated upon Brad's death.
71
Odessa owes Kevin $2,000. On July 1, Kevin assigns the right to the $2,000 to Troy. Thereafter, on July 15, Kevin assigns the same right to Donna, who in good faith gives value for it and knows nothing about the first assignee.
a. Troy has the right to the payment of $2,000.
b. Donna has the right to the $2,000.
c. Neither Troy nor Donna can claim the $2,000.
d. The rule differs in different states. Depending on which rule a state follows, the answer will vary.
d. The rule differs in different states. Depending on which rule a state follows, the answer will vary.
72
Barbara owes Arturo $2,000. On July 1, Arturo assigns the debt to Charles. Thereafter on July 15, Arturo assigns the same right to Dennis, who in good faith gives value for it and knows nothing about the first assignee. Dennis immediately notifies Barbara of the assignment.
a. Under all of the rules, Charles has priority since he was the first assignee in time.
b. Under the majority rule, Dennis has priority.
c. Under the English Rule, Dennis has priority.
d. Under the English Rule, Charles has priority.
c. Under the English Rule, Dennis has priority.
73
Under Section 2-210 of the Code, unless circumstances indicate to the contrary, a contract that prohibits an assignment:
a. Prohibits both an assignment of rights and a delegation of duties under the contract.
b. Prohibits only a delegation of the delegator's duty of performance and not the assignment of rights.
c. Renders any subsequent assignment ineffective.
d. Both (a) and (c).
b. Prohibits only a delegation of the delegator's duty of performance and not the assignment of rights.
74
Notice of an assignment:
a. Must be given to the obligor.
b. Cuts off any defenses based on subsequent agreements between the obligor and assignor.
c. Precludes subsequent setoffs and counterclaims of the obligor that arise out of entirely separate matters.
d. All of the above.
e. Only (b) and (c).
e. Only (b) and (c).
75
The law governing assignments is found in Articles ____ and ____ of the Uniform Commercial Code (UCC), as well as the common law.
a. 1 and 2
b. 2 and 4
c. 2 and 9
d. 3 and 4
c. 2 and 9
76
A gratuitous assignment is rendered irrevocable if, prior to the attempted revocation, the assignee:
a. Receives payment of the claim from the obligor.
b. Obtains a judgment against the obligor.
c. Neither of the above. A gratuitous assignment is always revocable.
d. Both (a) and (b).
d. Both (a) and (b).
77
What is an assignment?
An assignment is the voluntary transfer of a contractual right.
78
What is a delegation?
A delegation is the transfer of a contractual duty or obligation.
79
What does it mean to "assign a contract?"
The term "assign a contract" is frequently used to include both the transfer of contractual rights and the transfer of contractual duties.
80
What is a third party beneficiary?
A third party beneficiary is one who benefits from a promise made in a contract but who is not a party to the contract.
81
A contract contains the provision, “Walter Hamilton promises to pay Faye Weeks $1,200 for a 2003 V-6 motor provided that Phelps’ Garage approves the quality of the motor.” This provision:
a. Makes the contract unenforceable since Walter’s promise is illusory.
b. Creates an express condition which must be met before Walter’s duty to pay arises.
c. Cannot create an express condition because it lacks the necessary words “on condition that.”
d. Cannot be valid since it makes Walter’s duty to pay dependent upon the opinion of a third party.
b. Creates an express condition which must be met before Walter’s duty to pay arises.
82
William has a contract to build a new office building for Angela. The contract contains a provision requiring William to furnish a certificate of occupancy from the building inspector before Angela is required to pay. This provision is:
a. An express condition.
b. An implied-in-fact condition.
c. An implied-in-law condition.
d. A condition subsequent.
a. An express condition.
83
Which of the following is a contract with a condition subsequent?
a. Rhonda enters into a contract to buy a new car conditional upon her getting a loan from her bank.
b. Roger bought a VCR, but he may return the VCR within ten days and get all of his money back.
c. Both (a) and (b) are examples of a condition subsequent.
d. Neither (a) nor (b) is an example of a condition subsequent.
b. Roger bought a VCR, but he may return the VCR within ten days and get all of his money back.
84
A(n) ____ is a substituted contract that involves an agreement among three parties to substitute a new promisee in place of an existing promisee, or to replace an existing promisor with a new one.
a. Accord
b. Satisfaction
c. Novation
d. Mutual rescission
c. Novation
85
A(n) ____ is a contract between a promisee and a promisor by which the promisee agrees to accept and the promisor agrees to render a substituted performance in satisfaction of an existing contractual duty.
a. Accord
b. Mutual rescission
c. Material alteration
d. Movation
a. Accord
86
Which of the following is/are correct with regard to conditions subsequent?
a. Conditions subsequent are quite common in contracts.
b. A "sale or return" contract is an example of a contract with a condition subsequent.
c. A condition subsequent must occur before performance is due under a contract.
d. All of the above are correct.
b. A "sale or return" contract is an example of a contract with a condition subsequent.
87
Bill recently borrowed $50 from Ricardo for a couple of weeks. Bill, still short of cash, tells Ricardo, "I will wash and wax your car in exchange for the $50 I owe you." Ricardo tells Bill, "OK, that's great!" Ricardo's performance of his new duty will be a(n):
a. Accord.
b. Novation.
c. Rescission.
d. Satisfaction.
d. Satisfaction.
88
On November 1, Paula and Roberta enter into a contract where both parties are obligated to perform on December 31. On December 1, Paula tells Roberta, "I can, in no way, perform my duties in our contract." This statement is a(n):
a. Marital alteration
b. Anticipatory repudiation
c. Nonmaterial breach since the statement is made before December 31.
d. Accord
b. Anticipatory repudiation
89
A and B enter into a contract on January 1 of this year. A's friend C tells A, "The law generally restricts the time within which an action can be brought by either party to a contract." C's statement is:
a. False.
b. True, because of statutes of limitation.
c. True, because of the law of repudiation.
d. True, because of covenants not to sue.
b. True, because of statutes of limitation.
90
The Code greatly alters the common law doctrine of material breach by adopting what is known as the:
a. Perfect tender rule.
b. Anticipatory repudiation rule.
c. Prevention of performance rule.
d. Discharge by operation of rule law.
a. Perfect tender rule.
91
Unless one of the parties contractually assumes the risk, the ____ discharges a contract if supervening circumstances make fulfillment of the purpose which both parties had in mind impossible.
a. Bankruptcy law
b. Frustration of purpose doctrine
c. Perfect tender rule
d. Subjective impossibility doctrine
b. Frustration of purpose doctrine
92
Meg has contracted to paint a portrait of Julio, but dies before completing the portrait. Which of the following is correct?
a. Meg’s executor must find a capable artist to complete the work to Julio’s satisfaction.
b. Meg’s contractual duty is discharged due to objective impossibility.
c. A novation must be entered between Julio and a third person in order to discharge Meg’s duty under the contract.
d. Meg’s contractual duty is discharged due to subjective impossibility.
b. Meg’s contractual duty is discharged due to objective impossibility.
93
Refusal of a tender of performance by one party to a bilateral contract will:
a. Be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.
b. Not discharge either party from further duty of performance under the contract.
c. Be considered a condition subsequent.
d. None of the above.
a. Be treated as a repudiation, excusing the tendering party from further duty of performance under the contract.
94
Conditions may be classified:
a. By how they are imposed.
b. By when they affect a duty of performance.
c. Both (a) and (b); they are not mutually exclusive.
d. Neither (a) nor (b).
b. By when they affect a duty of performance.
95
Which of the following would be considered a material breach of a contract?
a. Partial performance that omits some essential part of the contract.
b. Delivery of 50 chairs in a contract that calls for 100 chairs.
c. An intentional breach of the contract.
d. All of the above would be material breaches.
e. Only (a) and (b) above would be material breaches.
d. All of the above would be material breaches.
96
Russell promises Marty $1,500 if he will completely landscape Russell's yard. Which of the following would discharge Russell's obligations to pay under this contract?
a. Marty leaves a one-foot strip of land barren.
b. Marty doesn't begin work on the landscaping until after he finishes two other jobs.
c. Marty doesn't plant any flowers, shrubs, or grasses.
d. Russell isn't satisfied with Marty's design.
c. Marty doesn't plant any flowers, shrubs, or grasses.
97
Fred contracts to sell a certain tract of land to Maria for $20,000, but the contract is silent as to the time of delivery of the deed and payment of the price.
a. The payment of the $20,000 and the delivery of the deed are independent of each other.
b. The delivery of the deed is a condition subsequent to the payment of the $20,000.
c. The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an agreement to the contrary, are concurrent conditions.
d. The payment of the $20,000 is a condition precedent to the delivery of the deed.
c. The payment of the $20,000 and the delivery of the deed are mutually dependent and, in the absence of an
agreement to the contrary, are concurrent conditions.
98
Phil, the tax accountant, promises to do Marge's individual federal, state, local, and gift taxes for the year. He completes all but the gift taxes. Under the substantial performance doctrine:
a. Marge will not have to pay Phil.
b. Marge will not have to accept the work.
c. Marge will have to pay Phil for all but the gift taxes.
d. Marge will have to pay Phil the contract price.
c. Marge will have to pay Phil for all but the gift taxes.
99
Henry hires Ace Roofing to put a new roof on his house. When Ace comes, Henry refuses to let them on the roof, saying that he has a headache and doesn't want to listen to pounding. The next day, Henry still has a headache and he refuses to allow them on the roof. The day after, the baby is sleeping and Henry refuses to allow them to work. After four weeks of this, Ace:
a. May be discharged, but Henry is not.
b. May be discharged, and so would Henry.
c. Can sue for damages, but must perform when Henry is ready.
d. Has no choice but to keep coming back each day until Henry is ready.
a. May be discharged, but Henry is not.
100
Anita, who is a tailor, agrees to sew a suit for Bryan, who promises in return to pay Anita $500 for the suit if he is satisfied with it. Anita completes the suit, which fits Bryan perfectly. Nevertheless, he says that he is not satisfied and refuses to accept or pay for it. Bryan is honest in his dissatisfaction, but he is unreasonable.
a. Bryan must pay for the suit even if he is dissatisfied.
b. This is an illusory contract, because only Anita is bound.
c. Bryan's approval is an objective standard.
d. Anita has no recourse against Bryan, because she agreed to the subjective standard.
d. Anita has no recourse against Bryan, because she agreed to the subjective standard.
101
Lynn, who is a tailor, agrees to sew a pair of drapes for Zach's living room. Zach promises to pay Lynn $300. Lynn completes the drapes using material selected by Zach, but Zach is not satisfied and refuses to pay for them.
a. Whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied.
b. The standard applied here is a subjective standard of satisfaction.
c. The condition of satisfaction is an implied-in-law condition.
d. The condition of satisfaction is an express condition.
a. Whether Zach will have to pay for the drapes depends upon whether as a reasonable man he ought to be satisfied.
102
Jim contracted with Kevin to serve as a guide for Kevin on his three-week fishing trip to Canada. The contract was made on April 1 with the trip to begin on June 1. On May 1, Kevin notified Jim that he had changed his mind and would be unable to make the trip. He also refused to pay Jim any compensation.
a. Because the contract is executory, Jim has suffered no damages, and Kevin has no obligation to pay any compensation.
b. Kevin has anticipatorily repudiated the contract and is liable to Jim for damages.
c. Jim is discharged from his duty to serve as guide, and he may bring suit immediately against Kevin.
d. Both (b) and (c) above are correct.
d. Both (b) and (c) above are correct.
103
Miller has a contract to sell 1,000 bushels of wheat to a bakery. The wheat is stored in a grain elevator and has become infested with insects. What is the consequence?
a. Miller is discharged from performance because of impossibility.
b. Miller is discharged because of frustration.
c. Miller is not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.
d. Miller is discharged if he can prove that he did not cause the damages to his wheat.
c. Miller is not discharged, but must substitute wheat or pay damages to the bakery for breach of contract.
104
Arnold and Doug make a contract for Arnold to manufacture five leather chairs of a specified design. Prior to their manufacture, the factory is destroyed in an accidental fire that is no one's fault. The chairs are available from other sources.
a. Arnold must supply the chairs, even if he must buy them elsewhere.
b. Arnold's duty to deliver the chairs is discharged by the destruction of the factory.
c. Arnold has materially breached the contract if he fails to deliver the chairs.
d. Both (a) and (c).
b. Arnold's duty to deliver the chairs is discharged by the destruction of the factory.
105
Louis agreed to provide all the apples that Cindy's Cider Mill will need at $3 per bushel unless weather conditions require additional labor to be hired. The rate would then be $3.50 per bushel. A freeze warning required Louis to hire 100 additional overtime workers, raising the cost per bushel to $4.75. Louis wants to get out of his contract. Can he?
a. No, the parties expected the hardship and provided for it in their contract
b. No, there is no hardship
c. Yes, the contract is impracticable
d. Yes, the freeze is a supervening event
a. No, the parties expected the hardship and provided for it in their contract
106
Janice contracts to sell a certain tract of land to Anthony for $5,000, but the contract does not state a time for delivery of the deed and payment of the price. In this situation:
a. The contract will be considered void for lack of essential terms.
b. The law will imply that the respective performances are independent of each other and may occur whenever “reasonable under the circumstances.”
c. Courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony’s duty to pay is conditioned upon Janice’s delivery of the deed and Janice’s duty to deliver the deed is conditioned upon Anthony’s payment or tender of $5,000 to Janice.
d. Janice’s duty to deliver the deed and Anthony’s duty to pay the $5,000 are “implied-in-fact” conditions.
c. Courts will treat the promises to deliver the deed and to pay the $5,000 as mutually dependent. Anthony’s duty to pay is conditioned upon Janice’s delivery of the deed and Janice’s duty to deliver the deed is conditioned upon Anthony’s payment or tender of $5,000 to Janice.
107
Which of the following generally is not grounds for discharge of a contract by operation of law?
a. Objective impossibility
b. Subsequent illegality
c. Running of the statute of limitations
d. Bankruptcy
c. Running of the statute of limitations
108
The usual remedy for breach of contract is:
a. Injunction.
b. Specific performance.
c. Punitive damages.
d. Money damages.
d. Money damages.
109
If Jana, a minor, transfers property to Scott and Scott sells the property to a good faith purchaser for value before Jana avoids the transfer:
a. Jana loses the right to recover the property if the transfer involved goods.
b. Jana can recover the property as long as the property was a sale of goods.
c. Jana can recover the property whether it was real or personal property.
d. The good faith purchaser of goods for value receives a voidable title.
a. Jana loses the right to recover the property if the transfer involved goods.
110
Miller made a contract to sell his condominium to Jefferson for $80,000. Two days later Miller changed his mind after discovering that he could have sold the property to another buyer for an additional $20,000. Jefferson sues and
asks the court to have the property conveyed to him at the price of $80,000. Jefferson is seeking:
a. Restitution.
b. Punitive damages.
c. Specific performance.
d. Valid tender.
c. Specific performance.
111
A contractor and Buckingham, Inc. have a contract, which calls for the contractor to build a building with the completion of it by June 15. If the building is not completed by that date, the contract calls for the contractor to pay $100 per day in damages. The $100 per day is:
a. Punitive damages.
b. Nominal damages.
c. Liquidated damages.
d. An illegal penalty.
c. Liquidated damages.
112
Garrett ordered 100 pieces of 2 × 6 lumber from his supplier and paid upon delivery. Later, when he unpacked the lumber, he discovered that the supplier had delivered 2 × 4 lumber. After being notified, the supplier picked up the lumber, apologized, and gave Garrett his money back. The response the supplier made to rectify the breach is:
a. An injunction.
b. Mitigation.
c. Liquidation of damages.
d. None of the above
d. None of the above
113
When an injured party is required to elect remedies, which of the following would be mutually exclusive?
a. Restitution and liquidated damages
b. Specific performance and compensation for incidental damages
c. Specific performance and restitution
d. Incidental and consequential damages
c. Specific performance and restitution
114
The return to the aggrieved party of the consideration, or its value, which he gave to the other party is:
a. Injunction.
b. Restitution.
c. Specific performance.
d. Reformation.
b. Restitution.
115
The process whereby a court "rewrites" or "corrects" a written contract to make it conform to the true intentions of the parties is:
a. Injunction.
b. Reformation.
c. Specific performance.
d. Rescission.
b. Reformation.
116
The majority of states follow the ____ rule in awarding damages for fraud.
a. Benefit-of-the-bargain
b. Out-of-pocket
c. Liquidated
d. Restitution
a. Benefit-of-the-bargain
117
Equitable remedies will not be granted where:
a. The terms of the contract are fair.
b. The consideration is adequate.
c. The terms of the contract are sufficiently certain.
d. The contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.
d. The contract is tainted with fraud, duress, undue influence, mistake, or unfair practices.
118
David enters into a contract to give Edward the right of first refusal to purchase a tract of land owned by David. David subsequently offers the land to Fred without first offering it to Edward. An appropriate remedy for Edward to seek would be:
a. Injunction.
b. Liquidated damages.
c. Reformation.
d. Punitive damages.
a. Injunction.
119
A power of avoidance held by a party may be lost if:
a. The contract is affirmed.
b. There are unreasonable delays in exercising the power.
c. The rights of third parties intervene.
d. All of the above
d. All of the above
120
In which of the following situations is restitution available as a remedy?
a. As an alternative remedy for a party injured by breach
b. For a party in default
c. For a party who may not enforce the contract because of the statute of frauds
d. All of the above are situations where restitution is available.
d. All of the above are situations where restitution is available.
121
Damages for reliance include expenses for:
a. Lost profits.
b. Injury to the person.
c. Preparing to perform.
d. Punishment of the breaching party.
c. Preparing to perform.
122
In the case of Hadley v. Baxendale, the plaintiff was seeking damages for:
a. Restitution.
b. Lost profits.
c. Failure to convey land.
d. Failure to specifically perform a contract.
b. Lost profits.
123
Which of the following is correct with respect to election of remedies?
a. The Code rejects any doctrine of election of remedies; its remedies are cumulative.
b. The remedy of specific performance is inconsistent with that of restitution.
c. A person who seeks an injunction may also seek incidental damages for the breach.
d. All of the above are correct.
d. All of the above are correct.
124
In which of the following situations will a court grant specific performance?
a. In a case involving breach of contract for the sale of real property.
b. In contracts for personal services.
c. Where goods are unique or rare.
d. Both (a) and (c).
d. Both (a) and (c).
125
Restitution is available when:
a. Elizabeth agrees to sell an acre of land to Vanessa, and after Vanessa makes a partial payment Elizabeth wrongfully refuses to transfer title.
b. Lawrence makes an oral contract to provide physical training for Lee for fourteen months and Lee discharges Lawrence after six months.
c. Gilbert uses undue influence to induce Cynthia to sell him an antique chair for $10.
d. Restitution is available in all of the above cases.
d. Restitution is available in all of the above cases.
126
Contract damages that put the injured party in as good a position as if the other party had performed are:
a. Compensatory damages.
b. Incidental damages.
c. Consequential damages.
d. Liquidated damages.
a. Compensatory damages.
127
Barbara, an antique dealer, intentionally represents the value of an antique chest of drawers, as $6,000 when she has reason to know the value is considerably less. Margaret agrees to buy it for $5,500. It is worth $2,500. In a state that uses the "benefit-of-the-bargain" rule, Margaret's damage award would be:
a. $3,500.
b. $3,000.
c. $500.
d. $2,500.
a. $3,500.
128
A small damage amount fixed without regard to the amount of loss is known as:
a. Reliance damages.
b. Out-of-pocket damages.
c. Nominal damages.
d. Incidental damages.
c. Nominal damages.
129
Carolyn agrees to sell Marianne an antique handmade lace tablecloth for $1,500. When Carolyn discovers that her cousin wants it too, she breaks the contract with Marianne. Marianne can ask the court to order:
a. Nominal damages.
b. Specific performance.
c. Restitution.
d. Equitable rescission.
b. Specific performance.
130
Bartow signed a contract to coach baseball for Washington High for a period of three years. After two years he is offered and accepts an assistant coach position at State University. Contract law will not allow Washington High to ask for:
a. Specific performance.
b. Payment of compensatory damages.
c. An injunction.
d. Liquidated damages.
a. Specific performance.
131
Vladimir entered into a contract to buy Daniel's collection of rare stamps. Vladimir mailed payment of $10,000 for the stamps to Daniel, but now Daniel tells Vladimir, "I'll never part with these stamps." Are the following remedies available to Vladimir?
a. Restitution: Yes; Specific Performance: Yes
b. Restitution: Yes; Specific Performance: No
c. Restitution: No; Specific Performance: Yes
d. Restitution: No; Specific Performance: No
a. Restitution: Yes; Specific Performance: Yes
132
Lynne agrees to buy Harriette's farm for $100,000 and puts $20,000 down. Then Lynne learns she is allergic to hay and repudiates the contract. If Harriette can sell the farm one month later for $90,000, she may:
a. Keep Lynne's $20,000.
b. Keep $10,000 of Lynne's down payment.
c. Not keep any of the down payment money.
d. Sue for specific performance.
b. Keep $10,000 of Lynne's down payment.
133
Howard needs a truck to pull a 2,000-pound trailer. Gordon tells Howard, "My truck will pull a 2,000-pound trailer with ease." Relying on Gordon's statement, Howard buys the truck, but it will not pull a 2,000-pound trailer. If Gordon did not intend to deceive and Howard sues for non-fraudulent misrepresentation, he can recover:
a. Punitive damages, but not out-of-pocket damages.
b. Out-of-pocket and consequential damages, but not punitive damages.
c. Out-of-pocket damages plus punitive damages.
d. Nominal damages, because Howard should have known the capacity of the truck.
b. Out-of-pocket and consequential damages, but not punitive damages.
134
Harry said to Marge, "I have a ring once owned by Marilyn Monroe. Would you like to buy it for $500?" Marge pays for the ring, but the next day a friend tells her that Harry had recently purchased the ring at a local department store. Marge enjoys wearing the ring and wears it constantly for twelve months. Finally, she goes to Harry and says, "Here is the ring you lied about. Give me my $500." Most likely:
a. Marge will get her money back since Harry's representation was fraudulent.
b. Marge will not get her money back since she should have investigated the facts about the ring more carefully.
c. Marge will get her money back since she is a good faith purchaser of merchandise.
d. Marge will not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.
d. Marge will not get her money back since she has affirmed the contract by taking an unduly long time to disaffirm.
135
Busby contracts to build a house for Connell. Busby finishes approximately half of the house and quits. Connell files suit against Busby. Which remedy is not available to her?
a. Compensatory damages
b. Specific performance
c. Special damages
d. Incidental damages
b. Specific performance
136
What Article of the UCC governs sales of goods?
a. 1
b. 2
c. 3
d. None of the above.
b. 2
137
BONUS: A contract of which of the following is void?
Contract where there is a court-ordered guardian
138
BONUS: A 17-year old ordered a pair of skis, then turned 18. She tries to sell them and disaffirm. What happens?
Selling the skis is a ratification.
139
BONUS: When can ratification occur?
All of the above.
140
BONUS: A minor lies about their age to make a contract. What happens?
The minor can disaffirm and get their money back.
141
BONUS: 16-year old Laura tries to disaffirm land. Only effective when?
Never; ratify at 18 years old.
142
BONUS: A minor buys a truck then wrecks it. He wants to disaffirm the contract. Can he?
Minor can simply return the truck and get their money back.
143
BONUS: Power to avoid a contract is known as:
Disaffirmance
144
BONUS: Violet, adult, makes a contract with a minor. What happens?
Violet cannot disaffirm.
145
BONUS: Which is NOT true regarding slightly intoxicated persons?
A slightly intoxicated person can lose all contractual capacity.
146
BONUS: Which would be a valid ratification two days after an 18th birthday?
All of the above
