01. A contract is a voluntary exchange of promises, creating obligation, which, if defaulted on, can be enforced, and remedied by the courts. To qualify as a valid contract, the agreement must meet certain basic qualifications. Please select below that applies.

A. Consensus and consideration.

B. Capacity of the parties to a contract.

C. Legality of the object and intention.

D. All the above.

02. Does a barter considered a contract that can be enforced by the court or by other government agencies? A. True B. False

03. ________ is the direct exchange of goods or services without an intervening medium of exchange or money either to established rates of change or by bargaining. Please select below that applies.

A. Consensus.

B. Consideration.

C. Barter.

D. All the above.

04. Generally, a contract begins with a promise. Does the promise constitute a binding contract, though, there may moral obligation to keep all promises seriously?

A. True B. False

05. Generally, an offer is communicated by the offeror in form of writing or orally. Does the conduct of holding up ones hand for taxi, raising a finger at an auction, and the gestures of floor traders at a stock exchange constitutes an offer? A. True B. False

06. Normally, an offeree cannot accept an offer until after learning of an offer. In an event where a person finds a lost article and return it to the owner, and later that person learned that there was reward has been offered for its return. Does the finder entitle to the reward? A. True B. False

07. When an offer has lapsed, the offeree can no longer accept it even if he is unaware that it has lapsed? A. True B. False

08. Below are ways where an offer has lapsed, except? Please select below that does not apply.

A. When the offeree fails to accept within a time specified in the offer.

B. When the offeree fails to accept within a reasonable time, if the offer has not specified any time limit.

C. When either of the parties dies and becomes insane prior to acceptance.

D. One of the parties to the contract becomes incapacitated, however, in the Will & Testament, the appointed Executor will act on her behalf.

09. Which of the following are determined to be illegal contract because it is against public policy?

A. Contracts to commit a crime or tort.

B. Contracts involving immoral acts.

C. Contracts that are bets and wagers.

D. All the above.

10. According to the law of contract, there are several ways for an offer to end before acceptance. Please select below that does not apply.

A. End of a specified time and expiration of a reasonable time.

B. Death or insanity of offeror and revocation of offer.

C. Rejection and counteroffer by the Offeree.

D. A contract of which one party is a minor. 1

1. There are ways in which a contract may be discharged meaning to cancel the obligation of a contract. Please select below that does not apply.

A. Discharge by illegal contract.

B. Discharge by tendering performance of the contract.

C. Discharge by agreement in which both parties agreed.

D. Discharge by the operation of the law in which the debtor is discharge from liabilities.

12. John, a sales representative from Electric Supply Co, demonstrated a new high-speed auto-analyzer to Jill, the owner of Speedy Car Repair Shop. Though the devise is good and useful, but the price is too high at $7,500.00. Jill made a bargain at $5,000.00, but John said the price cannot be reduced and got back the machine. Two weeks later, the auto-analyzer arrived with a letter from John that the price was reduced to $6,000.00, with the permission of his manager. They just want to break into the market. The letter further said that if we did not hear from you in ten days, we shall assume that you have accepted the offer and we will expect a payment of our invoice, enclosed.

Jill allows to sit the machine idle for more than 10 days. Does the offer constitute a binding contract? A. True. B. False.

On the contrary, if Jill takes the risk of using machine for experiment purposes. Is there a binding contract? A. True. B. False.

13. The essence of a contract is the meeting of minds of the contracting parties. To qualify as a valid contract, an agreement must meet certain basic requirements and they are: consensus, consideration, capacity, legality, and intention. Please select that does not apply with respect to capacity to enter into a contract.

A. Tax professional

B. A lawyer

C. A taxpayer under bankruptcy.

D. A minor

14. Mr. Jack just retired from car dealership business. He owns couple of vintage cars. He made an offer to sell one of it to his friend, Mr. Robinson, for $5,000.00. The offer gives Mr. Robinson until 5:00 P.M. Wednesday. Since the vehicle was well maintained and in a good condition, it attracts more buyers, and some buyers offered to buy it at $6,000.00. Mr. Robinson is aware that Mr. Jack is trying to sell it to someone else and that is why he hurriedly went to Mr. Jacks home, but he did not find him. However, he left a written notice of acceptance to make sure that he receives before the deadline. On the way to his home, he met Mr. Jack at the marketplace, and he tendered the letter of acceptance. However, Mr. Jack said it was too late and that he already sold the car.

Is there a valid contract between Mr. Jack and Mr. Robinson? a. True b. False

Does Mr. Jack have the right to sue Mr. Robinson for breach of contract? a. True b. False

15. Bill wrote to his friend, Charles, and offered to sell his car for $3,200.00. In response, Charles replied by mail with a counteroffer of $3,000.00. Days later, Charles wrote again to Bill and said that he will accept the offer.

Is there a valid contract between Bill and Charles? a. True b. False

16. John has a lending company. In his letter mailed on September 15, he offered to sell his business to Peter for $20,000.00. The letter was received by Peter on September 20. On September 25, Peter sent his letter of acceptance in which John received on September 28. However, on September 23, John had decided to withdraw and mailed a letter to Peter revoking it. The letter was not received until September 26.

Is there a binding contract between John and Peter? a. True b. False

17. Last week, Mike, who has just ordered a new 90-HP out-board motor, tells his friend, Peter, that he will give him his old 35-HP motor as soon as the new one arrives. To accommodate the old engine, Peter needs to modify his small boat and he will have to spent expensive modification. With Mikes suggestion, he bought a new boat. When the brother of Mike learned of arrangement, he reminds Mike that he promised the old motor to him. To avoid a family quarrel, Mike told Peter that he cannot carry his promise anymore. Peter sues mike for compensation for the money he spent for the new boat including incidental expenses.

Will Mikes action succeed? A. True B. False

18. Craig, who rented a retail space from Anthony, retired from retail shoe business, and he sells his business to Rey. Rey told Anthony that he wants an adequate space to display his stuff, and he wants the back room, but the back room was stocked with old and antique furniture belonging to Craig. Anthony told Rey that that furniture belonged to you when you acquired the business, therefore, you can do as you like. The tenant next door was present and heard the conversation. Anthony told his wife about the furniture, and his wife was furious because that furniture were given from her grandmother. The following day, Anthony hurriedly went to Rey, but it was too late because Rey already disposed all those furniture and dumped it in the city landfill. Anthony sues Rey for the fair market value of the furniture.

Will Anthonys action succeed? A. True B. False

On the other hand, if however, that stuff belonged to his wife and Anthony is aware of it but made a statement that Rey can dispose it so long as he will not tell his wife and further said that he (Anthony) promises not to interfere. When the wife of Anthony learned of this incident, she was furious. Anthony sues Rey for the fair market value of the that furniture.

Will Anthonys action succeed? A. True B. False

19. A client asked the lawyer for a legal advice. Afterwards, the client asked the lawyers professional fee, the lawyer suggested a certain sum of money, but the client refuses to pay. If, however, the client agreed on certain figure and later changed her mind and refuses to pay. Is the client bound by the agreement, though the fee is not reasonable?

A. True B. False