1. Saul orally agreed to sell Ramie some land for $500,000. Ramie paid Saul the $500,000; Saul gave Ramie the deed to the land. Ramie took possession of the land and began building a cabin on it. One month later, Saul tried to retake possession of the land by arguing that the contract for the sale was invalid because it was oral, not written. Saul sued Ramie to invalidate the contract and retake the land.

The court will likely conclude that Saul will:

1. Win; the sale exceeded $500 so the contract must be written to be valid.
2. Win; all land sales contracts must be written.
3. Lose; because the contract was fully executed Saul cannot rescind the contract.
4. Lose; because Ramie had begun building a cabin on the property, Saul cannot rescind the contract.

2.Kelly, Lars and Mona agreed to be partners in Neighborhood Deliveries (ND), all splitting the profits equally. Kelly contributed 70% of the capital upon formation of the partnership. Later, the partners agreed to dissolve the partnership as it was not as profitable as they had expected, and its liabilities were greater than its assets.

The losses are paid by:

a) All the partners in proportion to their capital contributions.

b) All the partners in proportion to their share of the profits.

c) Kelly alone because she contributed the most capital.

d) Lars and Mona because they contributed the least amount of capital.

3.Ed hired Frankie, who is 13 years old, to buy a computer on Ed's behalf.

Which of the following identifies the legal relationship between Ed and Frankie?

1. This is a valid agency relationship even though Frankie is a minor, and Ed would be bound by authorized contracts Frankie enters into on Ed's behalf.
2. This is a valid agency relationship even though Frankie is a minor, but Ed would have the option of disaffirming any contracts Frankie enters into on Ed's behalf.
3. This is a valid agency relationship even though Frankie is a minor, but Frankie would not be entitled to any payment under the terms of the agency because he is a minor.
4. This is an invalid agency relationship because Frankie is a minor.

4. .Nat signed a two-year contract to play soccer for the Scores, for $100,000 per game. During the second year of his contract, and just before a big game, Nat demanded that the team owner pay him an additional $5000 per game on his contract, starting with the current game. The owner reluctantly agreed to the new contract terms because Nat was the team's leading scorer. At the end of the season, Nat demanded the additional $5000 per game; the owner refused to pay. What best describes the new contract between Nat and the owner?

1. It is unenforceable because the owner agreed to Nat's contract terms under economic duress.
2. It is unenforceable because both parties did not give new legal consideration for the new contract.
3. It is enforceable because both parties gave legal consideration for the new contract.
4. It is enforceable because under the common law, all contract modifications are valid if the parties consent.

5.Assume a salesperson intentionally made one of the following statements - knowing that the statement was false - to a customer considering a purchase. Which statement could create liability for fraudulent misrepresentation if the customer made the purchase?

1. "In my opinion, this car is in flawless mechanical condition."
2. "This crane will probably lift about 10,000 pounds."
3. "This car is a real gem."
4. "This is an original painting by the artist, Pablo Picasso."

6.Don promised to buy his girlfriend, Sophie, a new car so Sophie sold her old car. Don now refuses to buy Sophie the car. Sophie has a job that requires her to have a car to get to work. If Sophie sues Don to enforce the promise, the likely result is that the promise will:

1. Be enforced under promissory estoppel because Sophie reasonably relied on Don's promise, to her detriment.
2. Not be enforced as Sophie was not unjustly enriched simply because she did not receive the car.
3. Be enforced because the car is a necessity for Sophie and all contracts for necessities are binding and enforceable for all parties even if contract formation is flawed.
4. Not be enforced as Don's promise was a gift to Sophie; Sophie gave consideration, but Don did not.

7. X and Y agreed that X would sell Y his small business, including the land on which the business was situated, for $500,000. Both X and Y knew at the time the contract was formed that the business was actually worth $800,000. Is this a valid, enforceable contract?

1. Yes, provided the contract was in writing, in accordance with the Statute of Frauds and the parties freely consented.
2. Yes, provided the contract was in accordance with state statutory law that permits real estate sales for 40% or more below market value.
3. No, because $500,000 is not valid consideration for a business worth $800,000.
4. No, because X has no pre-existing legal duty to sell his business.

8.Ralph, a 16-year old minor, is manager for the high school football team. Ralph signed a contract to purchase alcoholic beverages from Liquormart, Inc. for the team party. This contract is:

1. Void as a matter of law because it is illegal to sell alcohol to minors by state law.
2. Void only if Ralph misrepresented his age and told Liquormart he was an adult.
3. Valid and enforceable, but Ralph has the right to disaffirm because he is a minor.
4. Valid and enforceable, if Liquormart knew that Ralph was a minor.

9.Which of the following activities may involve the use of a contract, and/or constitute a sales contract?

1. Purchasing medications from a pharmacy.
2. Hiring a contractor to make home repairs.
3. Purchasing insurance policies from an insurance agent.
4. Selling books to customers in a bookstore.
5. All of the above.

10.CC's Day Spa, LLC, is a member-managed limited liability company. So long as it is in accordance with state law, and unless the members previously agreed otherwise, voting rights will be apportioned according to:

a) Participation in management.

b) Capital contributions.

c) The number of members.

d) Each individual transaction of the LLC, and will vary with each transaction.

11.Kisha operates River Valley Soccer, an athletic equipment shop as a sole proprietorship. Taxes on the business's income are paid by

a) The Federal Government but only if Kisha is operating under a Ficticious Name.

b) Kisha as the sole owner.

c) The state or federal government if Kisha holds a Small Business Administration loan acquired to start her business.

d) The business entity of River Valley Soccer, not Kisha personally.

12.Distinguish which of the following is an advantage of limited liability companies (LLCs) over corporations.

a) Only one member of a LLC must have unlimited liability as compared with corporations in which all shareholders have unlimited liability.

b) LLCs can be formed without any specific steps being taken by the owners as compared with corporations that must file Articles of Incorporation with the State.

c) In most cases, a LLC can choose whether to be taxed as a partnership or corporation, as compared with corporations that are subject to double corporate taxation.

d) LLCs can choose whether to sell shares publically to investors, as compared to private corporations that must sell shares publically to investors.

13. Restitution allows for the return of any monies paid if

1. There is a material breach of the contract
2. There is a minor breach of the contract
3. If there has been complete performance
4. Any time the Buyer is unsatisfied with the products delivered.

14. A contract may be discharged by the Parties if there is

1. Mutual Rescission
2. Novation
3. Accord & Satisfaction
4. All of the above

15. A Quasi contract

1. Confers a benefit on another even though there is no formal contract.
2. Can never be enforced.
3. Are contracts in law.
4. Would cause unjust enrichment to not cause a party to pay for a benefit received.
5. A & C
6. A & D
7. A, C & D

16. If a contract is to be assigned notice must be given by

1. The assignor to the third party.
2. By the assignee to the third party.
3. By the third party to the assignor and the assignee.
4. Any of the above.

17. The Statute of Frauds was created

1. To allow for verbal contracts in certain circumstances.
2. To allow for the rescission of a contract prior to performance.
3. Require that certain contracts be in writing to be enforceable.
4. All of the above.

18. In order to prove undue influence, a party must show:

1. That a fiduciary relationship existed between the Parties.
2. It must be shown that one Party has a mental incapacity.
3. There must be a dominant Party who used unduly used their influence to cause the other party to enter into the contract.
4. A & B
5. A & C
6. All of the above.

19. In order to prove fraud which of the following elements must be present?

1. There must be an intentional misrepresentation, with reliance on the misrepresentation by the other party.
2. There must be an intention by the wrongdoer that the other Party rely on the misrepresentation.
3. There must be harm.
4. A & B
5. B & C
6. All of the above

20. An illegal contract is:

1. Voidable
2. Void.
3. Fully enforceable.
4. None of the above.

21. A contract made by an emancipated minor for necessaries is:

1. Voidable because the Party is a minor
2. Void because the Party is a minor
3. Fully enforceable.
4. All of the above.

22. A contract made by a minor may be ratified

1. At any time up to the time of majority.
2. Never. A contract made by a minor is void ab initio.
3. Only after the minor reaches the age of majority.
4. At any time.

23. An acceptance is effective:

1. After it is received by the offeror.
2. When the offeree performs
3. As soon as the offeree executes the acceptance.
4. As soon as the offeree transmits the acceptance

24. A unilateral contract requires:

1. A bilateral exchange of promises
2. An offer
3. A written acceptance
4. An acceptance by performance
5. All of the Above
6. B & D
7. None of the above

25. A contract must always contain the following:

A. An offer, acceptance, and consideration

B. A writing

C. A legal purpose

D. A handshake

E. A, B, & C

F. A & C

G. All of the above

TRUE/FALSE-

Place a T for True or an F for False in front of each of the following statements.

1. _____ A contract that has been fully performed is an executory contract.

1. _____ A written contract to buy a home is an express contract.

1. _____ A void contract is often referred to as a contract where one party has the option to void the contract if they wish.

1. _____ A revocation of an offer is effective as soon as it is sent to the Offeree.

1. _____ An advertisement for sale is not considered an offer.

1. _____ If a Party makes a counteroffer, then the original offer is considered to be terminated.

1. _____ At common law, if an Offeree changes the terms of the offer received, they can still accept the original offer with the changes made.

1. _____ If there is a contract and one of the parties dies, the contract must be carried out by the Estate of the dead party.

1. _____ A General Partner in a Limited Partnership has the right to make any decisions on behalf of the partnership; without consultation to the Limited Partners.

1. _____ If I make a promise of a gift, there is not an enforceable contract created.

1. _____ If I promise to pay my 16 year old son $5,000 if he refrains from smoking , this is an enforceable contract.

1. _____ Corporate shareholders are only liable to creditors of the corporation up to the amount of their investment.

1. _____ If I promise to buy my wife a new car and as a result she sells her old beat up car I have created an enforceable gift based upon the theory of quasi contract.

1. _____ In a General Partnership, each of the partners are jointly and severally liable for the debts of the business.

1. _____ A parent is liable for the contracts made by their emancipated minor children.

1. _____ A Principal is responsible for the torts committed by their Agents outside the course and scope of their employment.

1. _____ A contract that contains a usurious interest rate is an example of an illegal contract.

1. ____ In general, if there is a unilateral mistake in a contract, the party making the mistake will be allowed to rescind the contract in order to avoid an unjust result.

1. _____ If I give my wife a card to sign telling her that it is a note to our family and on the back of the card is a power of attorney allowing me to sell all of her assets; this is an example of Fraud in the Inception.

1. _____ In general if there is a written contract; the Parol Evidence Rule will not allow additional documentation to interpret the written contract.

1. _____ A Principal is typically not responsible for the torts committed by their Independent agent.

1. _____ The named beneficiary of a life insurance policy is called an intended beneficiary.

1. _____ Liquidated damages are determined by the court in order to compensate a Plaintiff for actual damages.

1. _____ A writ of garnishment is a court order that directs that bank accounts or wages of a defendant are paid over to the Plaintiff after a judgment has been issued.

1. _____ An Agency Agreement is terminated only if the Principal dies; not if the Agent dies.