Question 1

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for
A) nothing.
B) fraud.
C) mistake.
D) undue influence.

Accepted Answer

Beau's failure to disclose the odometer discrepancy constitutes fraud, as he intentionally misled Cody about a material fact regarding the car's history.

Question 2

Selena buys a cell phone for $350 and an air hockey table for $1,500, and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month. The Statute of Frauds covers
A) the employment contract, and the game table and phone purchases.
B) the employment contract and the game table purchase only.
C) the employment contract only.
D) the game table and phone purchases only.

Accepted Answer

The answer of Selena buys a cell phone for $350...

Question 3

Chloe files a suit against Digital Associates, Inc. (DAI), to enforce a con?tract. The only written evidence of the contract is a memo on DAI's let?terhead as signed by a DAI officer in its files. The con?tract can be en?forced if the memo includes
A) a correct title, such as "Chloe-DAI Contract."
B) all essential terms.
C) a statement of the consideration.
D) the parties' addresses.

Accepted Answer

All essential terms must be included in a contract for it to be enforceable. A statement of consideration is also necessary, but the contract cannot be enforced if it is missing any essential terms. The title and parties' addresses are not essential to the enforceability of the contract.

Question 4

Valley Tack Shop signs a contract with Gary's Boots and Saddles for delivery of five saddles that cost $200 each. To be enforceable under the Statute of Frauds, the written contract must designate
A) the method of delivery.
B) the method of payment.
C) the quantity of saddles.
D) the seller.

Accepted Answer

The Statute of Frauds requires that contracts for the sale of goods worth $500 or more must be in writing and must include certain elements, including the quantity of goods being sold. Therefore, the written contract must designate the quantity of saddles being delivered. The other options, such as the method of delivery, method of payment, and the seller, may be important details to include in a contract, but they are not required elements under the Statute of Frauds.

Question 5

Dixie May enters into a contract to buy one hundred pounds of pecans from Margaret. The contract must be in writing if the pecans cost
A) $100.
B) $150.
C) $250.
D) $500.

Accepted Answer

According to the statute of frauds, contracts for the sale of goods over $500 must be in writing. Therefore, if the pecans cost $500 or more, the contract between Dixie May and Margaret must be in writing.

Question 6

Barb, a real estate agent, is showing John a house. She tells him that this is a house where "his family can live happily ever after." John buys the house, but his wife does not like it. John
A) can rescind the contract on the ground of fraud.
B) can rescind the contract on the ground of misrepresentation.
C) can rescind the contract on the ground of mistake.
D) was not defrauded.

Accepted Answer

The answer of Barb, a real estate agent, is showing...

Question 7

Multi Investments, Inc., offers to buy Nano Toy Corporation. On May 1, Nano provides copies of its financial statements for the pre?vious year, showing an inventory of $10 million. On May 15, Nano discovers that the previous year's inventory is overstated by $5 million, but does not inform Multi. On June 1, Multi, relying on the fi?nancial statements, buys Nano. On June 10, the buyer discovers the inven?tory over?statement. Can Multi succeed in a suit against Nano for fraud?

Accepted Answer

The answer of Multi Investments, Inc., offers to buy Nano...

Question 8

Andy knows nothing about horses. Peter, an expert horse trainer, knows that a certain horse has no talent and is not likely to win any competitions. Peter convinces Andy to buy the horse for $500,000 by assuring him that it has great talent. The horse turns out to have no talent and never wins any competitions. Andy can most likely recover damages based on
A) fraud.
B) mistake.
C) undue influence.
D) duress.

Accepted Answer

This scenario involves fraud because Peter, the expert horse trainer, intentionally misled Andy by assuring him that the horse has great talent when in reality, it did not. Because of this misrepresentation, Andy suffered damages (losing $500,000 on a horse that has no talent) and can recover those damages through a fraud claim.

Question 9

Best Products, Inc., hires Cole to develop and implement an e-commerce strategy for marketing Best's products. Cole signs a contract that in?cludes a clause prohibiting him from competing with Best during and af?ter the employment. Before the strategy is implemented, Cole resigns from Best's employ and opens a business to compete with Best. In Best's suit against Cole, what is the most important factor the court should consider in determining whether Cole should be allowed to compete with Best?

Accepted Answer

The answer of Best Products, Inc., hires Cole to develop...

Question 10

Kathleen sells Richard a racehorse for $1,000. Both Kathleen and Richard think that the horse is too slow to win any races. Richard then enters the horse in a race, and it wins easily. He enters it in more races, and the horse soon wins more than $1 million. Kathleen tries to rescind the contract to sell the horse, claiming that it was worth more than $1,000. A court will
A) cancel the contract due to Kathleen's failure to know the horse's value.
B) cancel the contract due to Richard's failure to know the horse's price.
C) cancel the contract due to the difference between the contract price and the horse's true value.
D) enforce the contract.

Accepted Answer

Both Kathleen and Richard agreed to a price of $1,000 for the racehorse, and there was no misrepresentation or fraud involved. Therefore, the contract is valid and enforceable, regardless of any change in the horse's value or performance after the sale. Kathleen cannot rescind the contract simply because she undervalued the horse, and Richard has the right to keep and race the horse.

Question 11

Wild Rides Theme Park owes money to both RollercoasterRepair, Inc. and Hot Dog Harry. RollercoasterRepair orally agrees to assume Wild Rides's debt to Hot Dog Harry to prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable by
A) no party.
B) any party.
C) Wild Rides only.
D) RollercoasterRepair only.

Accepted Answer

The answer of Wild Rides Theme Park owes money to...

Question 12

James is in an art gallery when Mitch, who has no special art expertise, points to a painting and says, "That artist is so good. That piece will be worth a fortune in a few years!" James buys the painting, which does not turn out to be valuable. James tries to return the painting and recover his purchase price. A court will
A) order the art gallery to pay James the full purchase price.
B) order Mitch to pay James the full purchase price.
C) enforce the contract between James and the art gallery.
D) enforce the contract between James and the art gallery, but order Mitch to pay James the full purchase price.

Accepted Answer

There is no fraud or misrepresentation on part of the art gallery, and Mitch's statement is solely his personal opinion without any basis in fact. Therefore, the contract between James and the art gallery is enforceable, and James cannot recover his purchase price from either the art gallery or Mitch.

Quiz 8: Capacity, Legality, and Enforceability

Beau sells a car to Cody without disclosing that the odometer, which reads 40,000 miles, was disconnected 80,000 miles ago. Beau is liable for

Selena buys a cell phone for $350 and an air hockey table for $1,500, and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month. The Statute of Frauds covers

Chloe files a suit against Digital Associates, Inc. (DAI) , to enforce a con?tract. The only written evidence of the contract is a memo on DAI's let?terhead as signed by a DAI officer in its files. The con?tract can be en?forced if the memo includes

Valley Tack Shop signs a contract with Gary's Boots and Saddles for delivery of five saddles that cost $200 each. To be enforceable under the Statute of Frauds, the written contract must designate

Dixie May enters into a contract to buy one hundred pounds of pecans from Margaret. The contract must be in writing if the pecans cost

Barb, a real estate agent, is showing John a house. She tells him that this is a house where "his family can live happily ever after." John buys the house, but his wife does not like it. John

Wild Rides Theme Park owes money to both RollercoasterRepair, Inc. and Hot Dog Harry. RollercoasterRepair orally agrees to assume Wild Rides's debt to Hot Dog Harry to prevent Hot Dog Harry from filing suit against Wild Rides. This contract is enforceable by