Question 1

A contract to sell life insurance is covered by Article 2 of the Uniform Commercial Code.

Accepted Answer

Article 2 of the Uniform Commercial Code covers contracts for the sale of goods, not services such as life insurance. Life insurance contracts may fall under different laws and regulations, such as state insurance laws.

Question 2

A promisee is the person making a promise.

Accepted Answer

A promisee is the person to whom a promise is made, not the person making the promise. The person making the promise is called the promisor.

Question 3

In addition to the four basic requirements of a contract, which of the following must also occur in order to have a valid contract?
A) The agreement must always be in writing.
B) All terms of the agreement must be clearly indicated.
C) There must be an absence of invalidating conduct.
D) A legal remedy must be available for there to be a breach.

Accepted Answer

In addition to the four basic requirements of a contract (offer, acceptance, consideration, and legal capacity), there must also be an absence of invalidating conduct, such as fraud or duress. The agreement may be in writing or oral, and the terms may not always be clearly indicated. Additionally, a legal remedy does not need to be available for the contract to be valid.

Question 4

George has been declared incompetent by the court and is under the care of his sister.Unknown to his sister, George rents the 10,000-seat civic center for his birthday party.George's contract to rent the civic center is best described as:
A) a void contract.
B) a quasi contract.
C) a voidable contract.
D) an enforceable contract.

Accepted Answer

The answer of George has been declared incompetent by the...

Question 5

Thomas contacted Welsh, a realtor, and asked him to be looking for property that is at least 20 acres, zoned commercial, within the city limits.  Welsh responded that he would look for such a property and reminded Thomas that the typical finders fee in such a situation is 10% of the property asking price.  If Thomas responds with "I know," the parties have formed an express contract by mutually manifesting assent to the essential terms.

Accepted Answer

The statement accurately describes the formation of an express contract through mutual assent to essential terms.

Question 6

A noncontractual promise may be enforceable where there has been justifiable reliance on the promise.

Accepted Answer

This is known as the doctrine of promissory estoppel, which allows a noncontractual promise to be enforceable if the promisee has relied on the promise to their detriment. However, this is only applicable in certain circumstances and is not a guarantee of enforceability in all cases.

Question 7

Charles says to Wes, "If you will mow my lawn, I will give you $15." Wes says nothing, but he mows the lawn.No contract exists under this fact situation, because Wes did not accept Charles's offer.

Accepted Answer

Wes's action of mowing the lawn can be interpreted as acceptance of Charles's offer, even though he did not verbally communicate acceptance. Therefore, a contract can be argued to exist between the two parties.

Question 8

Contracts are governed primarily by statute, including the UCC.

Accepted Answer

The answer of Contracts are governed primarily by statute, including...

Question 9

An implied in fact contract is formed by conduct.

Accepted Answer

An implied in fact contract is formed based on the conduct of the parties involved, rather than an express agreement or written contract. This type of contract is implied from the circumstances surrounding the transaction and the behavior of the parties.

Question 10

Matt says to Lynn, "If you will mow my lawn, I will give you $20." Lynn replies, "O.K." Under these facts, each party is a promisor and each party is a promisee.

Accepted Answer

Matt is promising to pay Lynn $20 if Lynn performs the act of mowing his lawn, making Matt the promisor and Lynn the promisee. Conversely, Lynn is promising to mow Matt's lawn in exchange for receiving the $20, making her the promisor and Matt the promisee.

Question 11

The requirement that each party to a contract must intentionally exchange something of value as an inducement to the other party to make a return exchange is known as:
A) mutual assent.
B) consideration.
C) legality of object.
D) contractual capacity.

Accepted Answer

Consideration is the exchange of something of legal value between the parties to the contract. It can be a promise, act, or forbearance on the part of the promisor. Mutual assent, legality of object, and contractual capacity are also essential elements of a valid contract, but they do not specifically address the requirement of consideration.

Question 12

A contract is a binding agreement that the courts will enforce.

Accepted Answer

A contract is a legally binding agreement between two or more parties, and if any of the parties breach their responsibilities, the other parties can take legal action to enforce the terms of the contract.

Question 13

A contract in which both parties exchange promises is a:
A) voidable contract.
B) bilateral contract.
C) unilateral contract.
D) quasi contract.

Accepted Answer

A bilateral contract is a type of contract in which both parties exchange promises to perform an act in the future. This distinguishes it from a unilateral contract, in which one party makes a promise in exchange for the other party's performance. A voidable contract is one that can be legally avoided or canceled by one of the parties. A quasi contract is not a true contract, but rather a court-implied remedy to prevent unjust enrichment.

Question 14

Ronald says to Evan, "If you design and build my back deck according to these specifications by the time I return from California in 6 weeks, I will pay you $5,000." Evan does not respond but has the landscaping done by the time Ronald returns.This is an example of a unilateral contract.

Accepted Answer

This is an example of a unilateral contract because Ronald made an offer and Evan can accept the offer by completing the specified task. Evan's completion of the task constitutes acceptance, and Ronald is obligated to pay the specified amount upon completion. There is no need for Evan to verbally agree to the terms for the contract to be binding.

Question 15

Atsuko signs a contract to work as a sales rep for Incellmed Corporation for a period of two years.This contract is governed by:
A) Article 2 of the UCC.
B) state common law.
C) federal statute.
D) the law of quasi contract.

Accepted Answer

Employment contracts are typically governed by state common law.

Question 16

The United Nations Convention on Contracts for the International Sales of Goods (CISG) governs all contracts for the international sales of goods between parties located in different nations that have ratified the CISG.

Accepted Answer

The statement is correct. The CISG is a treaty that has been ratified by many countries and provides a uniform set of rules for international sales contracts. It applies to contracts for the sale of goods, including both tangible and intangible goods, between parties located in different countries that have ratified the CISG. However, it does not apply to services or to the sale of goods for personal, family, or household use.

Question 17

A valid contract is one that meets all of the requirements of a binding contract.

Accepted Answer

A valid contract includes all of the essential elements of a contract, such as an offer, acceptance, consideration, capacity, and legality, and is therefore binding and enforceable by law.

Question 18

Mike, a plumbing contractor, was hired to correct a stoppage in the sewer line at Sarah's house.During his work, he discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line.To meet public regulations, the water pipe had to be replaced either then or later, when the yard would have to be redug.Mike replaced the water pipe and Sarah inspected the work daily and did not object to the extra work.When Mike finished, Sarah refused to pay for the water pipe replacement since that was not what she originally hired Mike to do and she had never specifically agreed to that work.Sarah must pay Mike for his labor and materials costs for both the sewer and water line repair.

Accepted Answer

Although Sarah did not specifically agree to the water line repair, she inspected the work daily and did not object to the extra work. Therefore, it can be assumed that she approved of the additional work and must pay for it.

Question 19

Alfred makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract.Betty now realizes she was deceived and wants to get out of the contract.This contract is voidable at Betty's option.

Accepted Answer

If a party makes a material misrepresentation of fact and the other party relies on that misrepresentation in entering into a contract, the contract is voidable at the innocent party's option. Therefore, Betty can choose to rescind the contract due to the misrepresentation made by Alfred.

Question 20

Alfred makes a material misrepresentation of fact to Betty, and based upon the misrepresentation, Betty enters into a contract.Alfred now thinks that the contract is not fair to him.This contract is voidable at Alfred 's option.

Accepted Answer

The contract is voidable at Betty's option, not Alfred's, because the misrepresentation was made by Alfred, which induced Betty to enter into the contract.

Quiz 9: Introduction to Contracts