Question 1

Whenever you begin to draft a contract or start a negotiation, you should take the perspective of which of the following?
A) The integrated whole
B) The worst-case scenario
C) The best-case scenario
D) Enhancing ambiguity

Accepted Answer

B

Question 2

The formation of a contract has which of these four fundamental aspects?
A) Offer, consideration, capacity, and authority
B) Acceptance, capacity, authority, and integration
C) Offer, rescission, authority, and capacity
D) Agreement, consideration, capacity, and legality

Accepted Answer

The formation of a contract requires agreement (offer and acceptance), consideration, capacity, and legality of purpose. Option A is incorrect because it includes "authority," which is not a fundamental aspect of contract formation but rather relates to the ability of parties to enter into a contract. Option B is incorrect because "integration" is not a fundamental aspect of contract formation, but rather relates to the completeness of the agreement. Option C is incorrect because it includes "rescission," which is not a fundamental aspect of contract formation but rather relates to the possibility of undoing a contract that has already been formed.

Question 3

A liquidated damages provision in a contract will be upheld so long as:
A) The contract is an integrated whole
B) The provision does not operate as a penalty
C) The damages amount is reasonable in relation to the anticipated damages for breach
D) All of the above
E) B and C

Accepted Answer

A liquidated damages provision in a contract will be upheld if it does not operate as a penalty and the damages amount is reasonable in relation to the anticipated damages for breach. Additionally, the contract does not necessarily need to be an integrated whole for the provision to be upheld.

Question 4

A non-breaching party must make reasonable efforts to lessen the consequences of the breach, according to this principle.
A) Promissory estoppel
B) Mutuality of obligation
C) Specific performance
D) Mitigation of damages

Accepted Answer

The principle mentioned in the question is known as the "Mitigation of damages" principle. It requires the non-breaching party to take reasonable steps to lessen the consequences caused by the breach of contract. This can include finding alternative solutions or mitigating the losses suffered. By doing so, the non-breaching party can reduce the damages awarded and is not allowed to claim damages that could have been reasonably avoided.

Question 5

Which of the following is an example of an employer terminating an employment contract after an employee has breached that contract by engaging in behavior that violates the standards of job performance?
A) Just cause termination
B) Violation of authority
C) Punitive termination
D) Without cause termination

Accepted Answer

Just cause termination is when an employer terminates an employment contract because the employee has breached the terms of the contract by engaging in behavior that violates the standards of job performance. The breach of contract must be serious enough to justify immediate termination without notice or payment in lieu of notice.

Question 6

Which clause restricts the ability of the employee to terminate the employment contract early or to take a comparable job with a competitor elsewhere?
A) Liquidated damages
B) Promissory estoppel
C) Restrictive covenant (covenant not to compete)
D) Punitive employment

Accepted Answer

Restrictive covenant (covenant not to compete) is a clause that restricts the ability of the employee to terminate the employment contract early or to take a comparable job with a competitor elsewhere. It is also known as a non-compete clause. Liquidated damages refers to a predetermined amount of damages that will be paid by the breaching party in case of a breach of contract. Promissory estoppel refers to a legal principle where a promise is enforceable even though there is no consideration. Punitive employment is not a recognized legal term.

Question 7

Many states have passed __________ statues providing that employees who report illegal activities allegedly committed by their employer shall not be subject to discrimination or retaliation by the employer.
A) Good faith and fair dealing
B) Non-reassignment
C) Restrictive covenant
D) Whistleblower

Accepted Answer

The term "whistleblower" refers to an employee who reports illegal activities allegedly committed by their employer. Many states have passed Whistleblower statutes, which protect employees from discrimination or retaliation by their employer as a result of reporting such activities.

Question 8

Sometimes employees attempt to bring defamation claims against employers who disclose unfavorable information about them. However, employers have a(n) __________ to disclose pertinent information in good faith to those who have a legitimate need for that information.
A) Absolute privilege
B) Absolute immunity
C) Qualified privilege
D) Good faith disclosure privilege

Accepted Answer

Employers have a qualified privilege to disclose pertinent information in good faith to those who have a legitimate need for that information. This means that while the employer may be protected in making such disclosures, they must be able to show that the disclosure was made in good faith and for a legitimate purpose. Absolute privilege and absolute immunity are not applicable in this context, and there is no such thing as a "good faith disclosure privilege."

Question 9

Which of the following prohibits improper interference with existing contracts?
A) Tortious interference with contractual relations
B) Misrepresentation
C) Contractual freedom
D) Good faith and fair dealing

Accepted Answer

Tortious interference with contractual relations prohibits third parties from intentionally causing one party to breach an existing contract with another party or from interfering with the performance of that contract. B (misrepresentation) is related to false information or statements made during the formation of a contract. C (contractual freedom) refers to the ability of parties to enter into contracts on their own terms. D (good faith and fair dealing) requires parties to act in good faith and not to do anything that would prevent the other party from receiving the benefits of the contract.

Question 10

__________ refers to the legal competence of a party to enter into a contractual relationship.
A) Legality
B) Consideration
C) Integration
D) Capacity

Accepted Answer

Capacity refers to the legal ability of a party to enter into a contractual relationship. This includes being of legal age and having the mental capacity to understand and consent to the terms of the contract.

Question 11

You may have an enforceable contract if there is no consideration.

Accepted Answer

Consideration is a necessary element for a contract to be enforceable. It refers to something of value that is exchanged between the parties, such as money or services. Without consideration, there is no mutual obligation between the parties and therefore no contract.

Question 12

Minority is an example of lack of capacity to enter into a contract.

Accepted Answer

A minor (someone who has not yet reached the age of majority) is considered to lack the legal capacity to enter into a contract, and any contract they do enter into may be voidable at their option. This is an example of a lack of capacity to contract.

Question 13

The Statute of Oral Contracts requires that certain types of contracts be in writing in order to be enforceable.

Accepted Answer

The correct term is the Statute of Frauds, not the Statute of Oral Contracts. The Statute of Frauds requires that certain types of contracts be in writing to be enforceable.

Question 14

In most contract cases, a non-breaching party may be compensated for the loss of the bargain through punitive damages.

Accepted Answer

In most contract cases, a non-breaching party may be compensated for the loss of the bargain through actual damages, not punitive damages. Punitive damages are generally only awarded in cases of intentional or egregious misconduct by the breaching party.

Question 15

A non-breaching party must act reasonably to lessen the consequences of the breach, according to the principle of mitigation of damages.

Accepted Answer

The principle of mitigation of damages requires the non-breaching party to take reasonable steps to minimize the harm caused by the breach. This may include seeking alternative sources of goods or services, or limiting the extent of damages through reasonable efforts. Failure to mitigate damages may limit the non-breaching party's ability to recover compensation for losses resulting from the breach.

Question 16

Specific performance is often used as a remedy in personal services contracts.

Accepted Answer

Specific performance is generally not used as a remedy in personal services contracts due to the difficulty in enforcing performance and concerns over involuntary servitude. Courts prefer to award damages instead.

Question 17

Courts will not uphold penalty provisions in a contract.

Accepted Answer

Courts generally do not enforce penalty provisions in contracts because they are seen as punitive rather than compensatory. Instead, courts enforce liquidated damages clauses if they are a reasonable forecast of just compensation for harm.

Question 18

Liquidated damages provisions are used when parties are not able to ascertain the exact damages attributable to a breach.

Accepted Answer

Liquidated damages provisions specify a predetermined amount of damages that will be payable in the event of a breach, and are commonly used in situations where determining the actual damages would be difficult, time-consuming, or costly. This helps to provide certainty and predictability in the event of a breach.

Question 19

The amount of authority designated by the principal to an agent is known as promised authority.

Accepted Answer

The amount of authority designated by the principal to an agent is known as actual authority, not promised authority. Promised authority refers to the authority that the agent may have assumed or believed they would have, but which was not actually granted by the principal.

Question 20

In an employment contract, the reassignment clause gives an employer the right to transfer an employee to a different employment position than the one for which he or she was originally hired.

Accepted Answer

The reassignment clause does indeed give the employer the right to transfer an employee to a different employment position.

Quiz 3: The Employment Relationship: Creation and Termination of Employment

Whenever you begin to draft a contract or start a negotiation, you should take the perspective of which of the following?

The formation of a contract has which of these four fundamental aspects?

A liquidated damages provision in a contract will be upheld so long as:

A non-breaching party must make reasonable efforts to lessen the consequences of the breach, according to this principle.

Which of the following is an example of an employer terminating an employment contract after an employee has breached that contract by engaging in behavior that violates the standards of job performance?

Which clause restricts the ability of the employee to terminate the employment contract early or to take a comparable job with a competitor elsewhere?

Many states have passed __________ statues providing that employees who report illegal activities allegedly committed by their employer shall not be subject to discrimination or retaliation by the employer.

Sometimes employees attempt to bring defamation claims against employers who disclose unfavorable information about them. However, employers have a(n) __________ to disclose pertinent information in good faith to those who have a legitimate need for that information.

Which of the following prohibits improper interference with existing contracts?

__________ refers to the legal competence of a party to enter into a contractual relationship.