GLEIM 18

Question 1

In determining whether the consideration requirement to form a contract has been satisfied, the consideration exchanged by the parties to the contract must be

Answer 1

Legally sufficient - and intended as a bargained for exchange
- incurs legal detriment
-promisor receives a legal benefit

Question 2

Violation of Statute of Frauds - rule

Answer 2

Gem orally contracted with Mason for Mason to manage’ Gem’s restaurant for 1 year, but Mason quit after 6 months.

• Gem will lose because the contract could not be performed within 1 year

Question 3

If a person is adjudicated insane or otherwise incompetent before a contract is entered into , the contract is what?

Answer 3

VOID and cannot be ratified (even after the person is later adjusted competent)
- All contracts are VOID

Question 4

A donee beneficiary of a contract

Answer 4

Can sue the promisor if the promisee-donor has performed under the contract

Question 5

Parol Evidence on changing price from 80 cents per book for 500 books to 70 cents orally at a later time. Oral agreement is ?

Answer 5

Unenforceable because Dunne failed to give consideration, but proof of it is otherwise admissible into evidence

Question 6

For an offer to confer teh power to form a contract by acceptance (3) things

Answer 6

• communication to the offerree in a communication made or authorized by the offerer
  -be sufficiently definite and certain
  -manifestation of an intent to enter into a contract

Question 7

Contract purchase with certain REAL property rules (3)

Answer 7

-any amendment must be agreed to by both parties
-the statute of frauds applies to the contract
-If one party fails to perform the contract, the recipient can obtain specific performance

Question 8

What circumstance will cause a discharge of contractual duties by operation of law

Answer 8

Impossibility of performance
- Person dies or is incapacitated
-change of law makes performance illegal

NOT - NOVATION - discharged by agreement, but NOT discharge by operation of law

Question 9

Anticipatory repuidation

Answer 9

Is an express or implied indication that one has no intention to perform the contract prior to the time set for performance.

Question 10

Selling Business to someone (rule)

Answer 10

Represents an assignment of all the business assets and rights owned and a delegation of whatever duties the seller was obligated to perform.

DOES NOT FREE seller from all liability to his creditors once the purchase is consummated

Question 11

Statute of limitations - how many years?

Answer 11

4 - 5 years depending on state

Question 12

Cause of action for fraud will be met if

Answer 12

Defendant made a misrepresentation with a reckless disregard for the truth

Question 13

What type of conduct will make a contract VOIDABLE

Answer 13

Fraud in inducement - occurs when the defrauded party is aware of entering into a c contract and intends to do so. However, he is deceived about a fact material to the contract.

NOT - Fraud in execution
NOT physical coercion
NOT contracting with a person under a guardianship (judicially declared to be incompetent)

Question 14

Transferring contract to another supplier to provide services

Answer 14

An assignment of rights and a delegation of duties by original contractor

NOT - only a delegation of duties to new supplier for original contract

Question 15

IF CPA cannot prepare opinion by due date because of client’s failure to supply information to complete audit - IF CPA sues for payment still, will CPA win?

Answer 15

Yes, prevail based on the contract

Question 16

18 month oral note - defaults after 14 months - is the borrower liable under oral guarantee?

Answer 16

Borrower is NOT liable under the oral guarantee because the promise was not in writing

Question 17

Remedy of quasi-contract

Answer 17

Available although no contract was ever formed by court

Question 18

Actions that will result in a discharge of a party to a contract (2)

Answer 18

Prevention and Performance
Accord and Satisfaction

Question 19

Does UCC firm offer apply to sale of realty?

Answer 19

NO

Question 20

What happens in a rejection of an offer, before acceptance window closes?

Answer 20

Rejection of an offer terminates it. An offerree cannot accept an offer after rejection is effective. An attempted acceptance after rejection is a new offer.

Question 21

One criteria for a valid assignment of a sales contract to a third party is that the assignment must

Answer 21

Not materially increase the other party’s risk or duty

NOT - be in writing and signed by the assignor

Question 22

if a buyer accepts an offer containing an IMMATERIAL unilateral mistake , the contract is?

Answer 22

VALID as to both parties

Question 23

A contract of sale of an interest in real property must be in ?

Answer 23

Writing and signed by the party to be charged. The writing must state teh essential terms of the transactions.

Does not matter if another buyer placed $100 deposit on land.

Question 24

Does parol evidence rule apply to all writen contractrs, whether or not the statute of frauds requires them to be in writing?

Answer 24

Yes

Question 25

Will a building offer in a one month period be accepted if an inquiry to take 5k off , but then figured out a different buyer overbid and now want to take advantage of original offer (but still within one month)?

Answer 25

Yes, the offer is still valid and the seller has to sell to original offer and not with new buyer

Question 26

Life insurance claim - what is the receiver called?

Answer 26

Third party donee beneificiary NOT proper assignee of Jone's rights under the insurance policy

Question 27

Agree to sells a home for 100k in contract is silent regarding the time of payment and time of delivery of the deed.

Answer 27

The conditions involved are IMPLIED IN LAW

Question 28

First promise serve as valid consideration for second promise example

Answer 28

A debotor's promise to pay $500 for a creditor's promise to forgive the balance of $600 disputed debt

Question 29

Subleasing is allowed ; no need to get permission

Answer 29

Both assignments and subleases are permitted unless expressly prohibited by the lease. Public policy favors transferability of property.

Question 30

When is an adhesion contract most appropriate

Answer 30

realizes efficiencies that reduce transactions costs

Question 31

Elements of fraud (4)

Answer 31

1 - a false representation of a material fact 2 - scienter (knowledge of the falsehood or reckless disregard for its truth) 3 - intent to deceive 4 - reliance on the false representation that is both justifiable and detrimental

Question 32

Sell refused to go with sale, but already took 10k deposit and allowed buyer to move in. Who will win?

Answer 32

Under the provisions of the statute of frauds, buyer will win because he made down payment and took possession.

Question 33

Contractual assignments (3)

Answer 33

1 - right to receive installment payments 2 - right to receive royalties 3 - rights under an option contract NOT allowed to be insured under a liability insurance policy

Question 34

Assignment of rights under a contract be valid?

Answer 34

1 - assignment was made without notice to the obligor 2 - assignment was made without delivery of an evidentiary document 3 - assignment was made without notice to the assignee INVALID - the assignment was made WITHOUT the ASSIGNORS intent to transfer

Question 35

Traditional remedy for breach of contract (3)

Answer 35

1 rescission and restitution 2 reformation 3 injunction NOT punitive damages

Question 36

Parol evidence (rule)

Answer 36

you can only bring items of admission after the contract started. Nothing before

Question 37

if a bank reassigns a note to a new person, an doesnt notify the borrower. What happens?

Answer 37

Borrower is not liable to the reassigned debtor for the payments because the bank failed to give the borrower noticed of the assignment.

Question 38

Mailbox rule does not apply if

Answer 38

The offer provides that an acceptance shall not be effective until actually received

Question 39

Accepting a CPA services without agreement to payment - what kind of contract?

Answer 39

An implied in fact contract NOT an implied in law contract

Question 40

Define Rescission

Answer 40

Mutual rescission is a new contract in which parties agree to discharge their obligations under a prior contract and are restored to their original positions

Question 41

When is time price doctrine may apply?

Answer 41

With large retailer charging 18% interest on unpaid balances

Question 42

In contrast to CPA offering services; repairing a broken window at a later time requires what?

Answer 42

Price involved

Question 43

What legal standard is used by US courts to determine whether a contract is validly formed or breached?

Answer 43

An objective standard of law NOT a comparative professional standard of law

Question 44

to prevail in an action for innocent misrepresentation, the plaintiff must prove

Answer 44

the misrepresentations concerned material facts NOT the defendant made the false statements with a reckless disregard for the truth

Question 45

A valid contract is formed when

Answer 45

It has all elements - mutual assent -consideration -capacity -legality

Question 46

Minors are liable for what?

Answer 46

Food, clothing, shelter, medicine, and tools of a trade

Question 47

What is recoverable by the non breaching party when a contract is breached (2)

Answer 47

Foreseeability of damages Mitigation of Damages

Question 48

Refusing to sell a building to buyer. Buyer is entitled to what?

Answer 48

Compensatory damages or specific performance NOT consequential damagers or punitive damages

Question 49

Define punitive damages

Answer 49

Punitive damages are the payment that a defendant found guilty of committing a wrong or offense is ordered to pay on top of compensatory damages. They are awarded when compensatory damages—the money given to the injured party—are deemed to be insufficient. Punitive damages go beyond compensating the aggrieved party.

Question 50

Certain contracts have absolutely no effect and are not recognized under law - if entered in agreement it is what?

Answer 50

VOID NOT - unenforceable or voidable

Question 51

Assign debt to a bank, when paid by customer who does Bank need to collect from?

Answer 51

Only the BANK, not the original assignor.

Question 52

In a contract to sell a house and sufficient amount of land - the buyer sues the seller for backing out. Who will win?

Answer 52

The seller will win because the agreement is not reasonably definite

Question 53

Statute of frauds (rule) ; only on price of goods ; NOT SERVICES

Answer 53

Enforceable because the work could be completed within 1 year

Question 54

Required elements of a contract(4)

Answer 54

offer and acceptance consideration legal capacity and legal objective or purpose NOT in WRITING; however some contracts are not enforceable unless a writing signed by the defendant evidences the contract

Question 55

Job offer - got on Feb 19, have until Feb 23. But given to someone else on Feb 20 who accepted. Accepted by mail on Feb 20, now what?

Answer 55

The original acceptance was effective when mailed.