1. A contract

a. can never be implied from the actions of the parties

b. must contain consideration

c.cannot be terminated

d. none of these

2. A contract should include

a. the names of the parties

b. the consideration given by each party

c. the date

d. all of these

3. To make a legally binding contract, both parties to the agreement must be

a. able to read and write

b. able to speak and understand English

c. financially responsible people

d. of sound mind

4. Four essential elements are necessary to make a valid contract.Which of thefollowing is not one of those elements?

a. Something of value must be given by each party

b.The offeror and offeree must reach agreement

c. The parties must be competent

d. The agreement must be in writing

5.Johnson entered into a contract to sell his computer to Madison for $950.Johnson then changed his mind and refused to deliver the computer to Madison as agreed.Johnson's failure to deliver the computer is considered to be

a. an acceptance

b. a breach of contract

c. a quasi agreement

d. a performed contract

6. Another name for a "meeting of the minds" is

a. mutual assent

b. lapse of time

c. a request for further information

d. an invitation to make an offer

7. For an acceptance to be effective

a. it must be in writing

b. it must be communicated to the offeror

c. the offeree must make a down payment

d. none of these

8. Tydings Auto Center advertised in the local newspaper that all stock was reduced by 40 percent below regular price.This advertisement legally constituteda(n)

a. valid offer

b. voidable offer

c. invitation to make an offer

d. binding contract

9. Courts may question the adequacy of consideration

a. if a contract is executed

b. when legal detriment is involved

c. if different quantities of the same type of item are exchanged

d. in the case of forbearance

10. Martin sold his used car to Nixon for $2,000.Later Martin discovered that the car was worth $3,000.Martin then claimed that Nixon owed him an additional $1,000.If Martin attempted to take legal action to collect the additional $1,000., he would be entitled to

a. $1,000 plus legal fees

b. $1,000 only

c.$3,000 minus $1,000

d. nothing

11. If a person owes several people money, that person can give each of the creditors part of the total owed.If this arrangement is agreed to by all creditors, it is called

a. a pledge

b. promissory estoppel

c. a composition of creditors

d. past consideration

12. Promises to make charitable contributions

a. are exempted from the necessity of consideration

b. are not legally enforceable

c.are based on promissory estoppel

d. may not be valid unless large sums of money are involved

13. Courts sometimes apply the doctrine of promissory estoppel to enforce a promise.This doctrine

a. is grossly unfair

b. requires consideration to be applicable

c. sometimes allows enforcement of a promise even when an offeree gives no consideration for an offeror's promise

d. is a popular legal remedy

14. Consideration may be

a. money

b. property

c. a promise not to do something you have the legal right to do

d. all of these

15. To be legally enforceable as a contract, the courts require that each party to an agreement give up something of value called

a. witnesses

b. a written document

c. consideration

d. none of these

16. Benson orally promised to give his 19 year old son a car as a birthday gift.Benson is not legally bound to his promise because

a. the promise was made orally

b. a promise to make a gift is unenforceable

c. the promise was a past consideration

d. an executed gift requires consideration

17. An agreement that lacks consideration is said to be

a. illegal

b. a benefit to the promisor

c. a benefit to the promise

d. unenforceable

18. Consideration can be

a. a benefit to the offeror

b. a sacrifice by the offeree

c. performing anact

d. all of these

19. Of the following items, the one that would generally not be considered a necessary is

a. medical services

b. jewelry

c. clothing

d an education

20. Of the following items, which would most likely be considered a necessary, thus obligating a minor to become liable for payment

a. paying an employment agency for securing a job

b. rent on an apartment

c. attorney's fees

d. all of these

21. The minor's obligation to pay for necessaries is based on the theory of quasi contract.This theory protects

a. minors in their dealings with adults

b. adults in their dealings with minors

c. minors in their dealings with other minors

d. minors in their dealings with a parent or guardian

22. A minor who buys a necessary is obligated to pay

a. price stated in the agreement

b. reasonable value of the necessary

c. seller's cost

d. price demanded by the seller

23.Minors are liable for the reasonable value of the necessary

a. actually furnished

b. that they agreed to purchase

c. that their parents agreed to pay for

d. all of these

24. If a mentally ill person is determined by a court to be insane,a subsequent agreement by this insane person to purchase a TV set from the TV Home Center would be

a.enforceable

b. voidable

c . illegal

d. void

25. An intoxicated person may avoid a contract upon becoming sober

a. only if the other party had reason to know that the person was drunk and did not understand the consequences of the transaction

b. under any circumstances

c . only if he or she was slightly intoxicated

d. only if the contract is one for necessaries

26. The Statute of Frauds

a. applies only to executed contracts

b. requires certain contracts to be in writing

c. states that written contracts cannot be changed by oral evidence

d. none of these

27. Oral contracts are

a. unenforceable

b. are just as valid as written contracts

c. for the sale of real property are valid

d. are easier to prove in court than written contracts

28. Miller said to Avid, a retail merchant,"Deliver this $450 computer to my nephew Ronald and send the bill to me".Avid did as he was requested, but Miller refused to pay the bill, claiming that his nephew was really not interested o9n using the computer.Is Miller liable?

a. Yes, an oral promise to pay one's own debt is binding

b. Yes, an oral promise to pay the debt of another is binding

c. No, an oral promise to pay the debt of another is not binding

d. No, there was no consideration for the oral promise.

29. Under the provisions of the Statute of Frauds, one example of a contract that does not have to be in writing to be enforceable is a(n)

a. promise to pay the debts of another living person

b. agreement for the transfer of ownership of real property

c. agreement to rent real property for one year or less

d. agreement for the sale of merchandise valued at #700.

30. One example of a contract that must be in writing is a contract to

a. rent an apartment for six months

b. care for someone for the rest of his or her life

c. purchase a computer for $350.

d. pay a friend's debts