Quiz 20: Practical Contracts

Business

List three types of contracts that should definitely be in writing, and one that probably does not need to be.

Free

Essay

Following are the three types of contracts that should be definitely in written is given below: • Contracts in consideration must be in written agreement between parties of the contract. • Certain contracts on the transfer of land are in written form. • Contracts by the executor to pay debts on the estate with their own money Contracts that does not require a written agreement is given below: • The statute of frauds requires it. • Certain deal in life and deals for running a business. • The oral agreement is much effective than written agreement.

Q 2

In the movie contract, which side was the more successful negotiator? Can you think of any terms that either party left out? Are any of the provisions unreasonable?

Free

Essay

Decisions made for the movie contract case is explained below: In a movie contract, the success of one party does not prohibit a positive outcome for the other side. This is one side for a more successful negotiator. The term that the "either party left out" denotes a lawyer. A lawyer is appointed to draft and develop a contract. There are no particular provisions that either side of the movie contract behaved unreasonable in the contract.

Q 3

Which of the following statements is true? (a) Vagueness occurs when the parties do not want the contract to be clear. (b) Ambiguity occurs when the parties do not want the contract to be clear. (c) Vagueness in a contract is often appropriate as a way to clinch a deal. (d) Ambiguity is an appropriate tactic, particularly by the party drafting the contract.

Free

Multiple Choice

Businessman often creates a contract that leaves their option open. This generally happens when they are not sure what they can get from the other side or in some cases, what they are expecting to receive. Hence, vagueness comes into picture when the parties do not want the contract to be clear. Ambiguity is a useful strategy particularly for a party who is drafting the contract. This is because it protects laypeople from the dangers of form contracts that they have little power to change. Hence, options (a) and (d) follow.

Q 4

Zoe has been offered a job as CIO at Appsley Co, but first she has to negotiate a contract with the CEO, Phil. Do a role-play with another student in your class in which one of you takes the role of Zoe and the other is Phil. What terms do you each want? Draft the contract. Now compare your results with others in the class. Who has negotiated the best deal? Who has written the best contract?

Essay

Q 5

What are the advantages and disadvantages of hiring a lawyer to draft or review a contract?

Essay

Q 6

A contract provided, "On January 5, Purchaser shall provide Seller with a certified check in the amount of $100,000. Seller shall transfer a deed for the Property to Purchaser." What is wrong with this provision? (a) It is not clear who Purchaser and Seller are. (b) The number $100,000 should be written in words. (c) The promises are reciprocal. (d) The promises are conditional.

Multiple Choice

Q 7

List three provisions in a contract that would be material, and three that would not be.

Essay

Q 8

What are the penalties if Artist breaches the movie contract? Are these reasonable? Too heavy? Too light?

Essay

Q 9

In the case of a scrivener's error, what happens? (a) A court will not reform the contract. The parties must live with the document they signed. (b) A court will reform the contract if there is clear and convincing evidence that the clause in question does not reflect the true intent of the parties. (c) A court will reform the contract if a preponderance of the evidence indicates that that the clause in question does not reflect the true intent of the parties. (d) A court will invalidate the contract in its entirety.

Multiple Choice

Q 10

Slimline and Distributor signed a contract providing that Distributor would use reasonable efforts to promote and sell Slimline's diet drink. Slimline was already being sold in Warehouse Club. After the contract was signed, Distributor stopped conducting in-store demos of Slimline. It did not repackage the product as Slimline and Warehouse requested. Sales of Slimline continued to increase during the term of the contract. Slimline sued Distributor, alleging a violation of the agreement. Who should win?

Essay

Q 11

ETHICS Sophia negotiated a contract with Pete under which she would buy his company for $10 million plus the amount of the company's outstanding debt (approximately $1 million). But when Pete sent a draft of the contract, it stated that the purchase price would be $10 million less the company's debt. What is Sophia's ethical obligation to Pete? Should she tell him about the mistake? What Life Principles would you apply in this situation?

Essay

Q 12

A contract states (1) that Buzz Co. legally exists and (2) will provide 2,000 pounds of wild salmon each week. Which of the following statements is true? (a) Clause 1 is a covenant and Clause 2 is a representation. (b) Clause 1 is a representation and Clause 2 is a covenant. (c) Both clauses are representations. (d) Both clauses are covenants.

Multiple Choice

Q 13

YOU BE THE JUDGE WRITING PROBLEM Chip bought an insurance policy on his house from Insurance Co. The policy covered damage from fire but explicitly excluded coverage for harm caused "by or through an earthquake." When an earthquake struck, Chip's house suffered no fire damage, but the earthquake caused a building some blocks away to catch on fire. That fire ultimately spread to Chip's house, burning it down. Is Insurance Co. liable to Chip? Argument for Insurance Co.: The policy could not have been clearer or more explicit. If there had been no earthquake, Chip's house would still be standing. The policy does not cover his loss. Argument for Chip: His house was not damaged by an earthquake; it burned down. The policy covered fire damage. If a contract is ambiguous, it must be interpreted against the drafter of the contract.

Essay

Q 14

Blair Co.'s top officers approached an investment bank to find a buyer for the company. The bank sent an engagement letter to Blair with the following language: If, within 24 months after the termination of this agreement, Blair is bought by anyone with whom Bank has had substantial discussions about such a sale, Blair must pay Bank its full fee. Is there any problem with the drafting of this provision? What could be done to clarify the language?

Essay

Q 15

Simon has signed a contract with Miley agreeing to provide her company with 1,000 frozen pizzas each week. The contract states: "This agreement can only be modified by a written instrument signed by the party to be charged with such amendment." But when Simon and Miley run into each other on the train, they agree that he will provide 750 pizzas instead. Which of the following statements is true? (a) As long as they both agree, they can amend the contract orally. They do not have to sign anything. (b) For the change to be valid, both parties must sign an amendment because both parties are affected by it. (c) Only Miley has to sign the amendment because she is the one to be charged by it. (d) Only Simon must sign the amendment because he is the one to be charged by it.

Multiple Choice

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