Question 1

Which of the following is a basic Code writing requirement for contracts?

Accepted Answer

The basic Code writing requirement is that there be evidence of the parties' contract in the form of a written memorandum that indicates the existence of a contract between the parties, indicates the quantity of goods sold, and is signed by the party to be charged.

Question 2

According to the leading object doctrine, promises of third parties to a contract who are primarily motivated by a desire to secure some personal benefit:

Accepted Answer

According to the leading object doctrine, promises of third parties to a contract who are primarily motivated by a desire to secure some personal benefit fall outside the scope of the statute of frauds. Thus, if people promising to pay for the debt of another are primarily motivated to make the promise because they expect some personal benefit by so doing, their conditional promise does not need to be in writing to be enforceable.

Question 3

Terry and Farah have an oral contract for the sale of 100 books at $30 per book. If Terry delivers the books and Farah accepts them, or if Farah pays for the books and Terry accepts payment, which of the following is true?

Accepted Answer

In the above case, if Terry delivers the books and Farah accepts them, or if Farah pays for the books and Terry accepts payment, neither of them can raise the statute of frauds defense. If a party accepts goods or accepts payment for goods, the statute of frauds is satisfied to the extent of the payment made or the goods accepted.

Question 4

When parties to an oral contract have both fully performed their obligations under the contract, the parties are:

Accepted Answer

In most states, the statute of frauds makes oral contracts that come within its provisions unenforceable, not void or voidable. If the parties to such an oral contract have both fully performed their obligations, neither is allowed to rescind the contract.

Question 5

Leroy writes a letter that says, "I agree to sell to Jay five modern art paintings," and he signs the letter. Jay is an art dealer and he receives this writing from Leroy and does not object in writing within 10 days of receiving it. Which of the following is true according to the Uniform Commercial Code?

Accepted Answer

In the above case, Jay has lost his statute of frauds defense because he is a merchant, and he did not object to the contract in writing within 10 days of receiving it. Leroy still must convince the court that the parties had a contract, but he is not prevented by the statute of frauds from trying to do so.

Question 6

The equitable doctrine of _____ allows some parties to recover under oral contracts that the statute of frauds would have ordinarily rendered unenforceable.

Accepted Answer

The equitable doctrine of promissory estoppel allows some parties to recover under oral contracts that the statute of frauds would have ordinarily rendered unenforceable. If the plaintiff has materially relied on the oral promise and will suffer serious losses if the promise is not enforced, courts in these states hold that the other party is estopped from raising the statute of frauds as a defense.

Question 7

The parol evidence rule refers to the:

Accepted Answer

The parol evidence rule refers to the idea that when the parties to an agreement have expressed their agreement in a complete, unambiguous writing, the writing is the best evidence of their intent. This is generally true since the terms of the writing are known and irrefutable, whereas oral statements by the parties after a dispute has arisen regarding what they had agreed to may be affected by faulty memory, wishful thinking, or outright bad intent.

Question 8

A publisher makes an oral deal with an author, where the author agrees to write a new "Introduction to Marketing" book. They agree that the book is due in two years. In this scenario, the contract is most likely to be _____.

Accepted Answer

In the above scenario, the contract between the publisher and the author is unenforceable. Long-term bilateral contracts must be in writing because contracts that call for performance over a considerable period of time (more than a year) increase the risk of faulty or willfully inaccurate recollection of their terms in subsequent disputes.

Question 9

If an oral contract has been declared unenforceable under the statute of frauds, yet one of the parties has rendered some performance under the contract that conferred benefits on the other party, he or she can recover the reasonable value of the performance in _____.

Accepted Answer

If an oral contract is declared to be unenforceable under the statute of frauds, and one of the parties has rendered some performance under the contract that conferred benefits on the other party, he or she can recover the reasonable value of the performance in quasi contract.

Question 10

Under the Electronic Signatures in Global and National Commerce Act (E-Sign), _____.

Accepted Answer

E-Sign sets precise rules that businesses must follow when seeking consumer consent to electronic contracts. These include gaining a consumer's "affirmative consent" to receive contractual information electronically, making clear when consent is for more than a single transaction, and spelling out the procedures and price for withdrawing consent in the future.

Question 11

When a contract is partly printed and partly written, _____.

Accepted Answer

If the parties used a form contract, or the contract is partly printed and partly written, the written terms control the printed terms if the two conflict. If one of the parties drafted the contract, ambiguities are resolved against the party who drafted the contract. This is especially true in insurance contracts.

Question 12

In an executory bilateral contract, most courts hold that:

Accepted Answer

In an executory bilateral contract, most courts hold that if a contract has been fully performed by one side, the promise of the other party is enforceable even if it cannot be performed within a year. The one-year period is computed from the time the contract comes into existence, not from the time performance is to begin.

Question 13

Miriam makes an oral agreement with John to sell him 200 acres of prime farmland for a mere $500. Their agreement is:

Accepted Answer

Miriam's agreement with John is unenforceable as real estate contracts need to be in writing. Our legal system has historically treated land as being more important than other forms of property. This special treatment stems from the time when land was the primary basis of wealth. As a result of this special status, contracts transferring ownership rights in real estate must be evidenced by a writing to be enforceable.

Question 14

In an insurance contract, if one of the two parties involved drafted a contract, _____.

Accepted Answer

If one of the parties drafted the contract, ambiguities are resolved against the party who drafted the contract. This is especially true in insurance contracts.

Question 15

Under the Uniform Electronic Transactions Act (UETA), _____.

Accepted Answer

The Uniform Electronic Transactions Act (UETA) is a proposed uniform state law that, like E-Sign, is intended to remove barriers to e-commerce by giving effect to electronic records and signatures. Unlike E-Sign, however, UETA does not offer specific rules governing when consent has been given electronically.

Question 16

According to most states, which of the following is true if there is only a memorandum of two parties' agreement?

Accepted Answer

While the statutes of frauds of all the states are not the same, most states require only a memorandum of the parties' agreement; they do not require that the entire contract be in writing or that the writing be in a single document. The writing can be in any form, including letters, telegrams, receipts, or any other writing indicating that the parties had a contract.

Question 17

A clothing store has opened a credit account in which Judy, a college student, gets Alice, her older sister, to agree to pay the amount owed on the account if Judy fails to do so. Which of the following statements is true of this scenario?

Accepted Answer

A third person (the guarantor) agrees to perform the contractual duties another person (the obligor) owes under another contract, if the obligor does not perform. The person to whom the obligor and the guarantor are contractually liable is called the obligee. Alice is the guarantor and her contract must be in writing to be enforceable.

Question 18

Fernando is the owner of Pick Food Restaurant. He makes an oral agreement with Purple Lotus Works for the design and production of 5,000 unique custom-made dinner plates with the logo of Pick Food Restaurant on them. Purple Lotus reworks its production schedule and creates dies to add Pick Food Restaurant's logo in the designer plates. A week later, Fernando calls Purple Lotus and says that he no longer wants the plates and calls off the deal. In this scenario, it is most likely that:

Accepted Answer

If the goods are specially manufactured for the buyer and "not suitable for sale to others in the normal course of the seller's business," and the seller has made a substantial beginning in manufacturing them or has entered a binding agreement to acquire them for the buyer before learning that the buyer is denying the existence of a contract, the buyer loses the statute of frauds defense. Thus, Purple Lotus is protected by the statute of frauds exception for specially-manufactured goods.

Question 19

A collateral contract involves:

Accepted Answer

Collateral contracts involve three parties and two promises, one of which is conditional. Only the conditional promise by the guarantor to the obligee to be responsible for the obligor's debt must be in writing.

Question 20

Which of the following is true of collateral contracts?

Accepted Answer

Situations in which one person agrees to be responsible for the debts or default of another are called collateral contracts. Collateral contracts are covered by the statute of frauds.

Quiz 16: The Form and Meaning of Contracts