1. The CS Ball Company made a product called the "smoke ball" which claimed to be a cure for influenza and a number of other diseases. The Company published advertisements claiming that it would pay $1,000.00 to anyone who got sick with influenza after using its product, according to the instructions set out in the advertisement. The $1,000.00 reward will be paid by CS Ball Company to any person who contracts the increasing epidemic influenza colds, or any disease caused by taking cold, after having used the ball three times daily for two weeks, according to the printed directions supplied with each ball. Showing its sincerity, the company deposited $1M with the Alliance Bank, Regent Street where they can claim their reward. Does performance of the conditions advertised in the paper constitute acceptance of an offer?

a. True

b. False

2. A bilateral contract is where an offer of the type that can be accepted by a performance without prior communication and, once the offeree has performed, she/he did not do anything more except of course to request payment from the offeror.

a. True

b. False

3. The parties entered into a lease of a charter vessel for a five-year term. At the same time, the owner and lessee agree that, provide the lease went wellmeaning a breach of the lease during the term, the lessee had the option have the option to option to buy the vessel at the end of the lease. Does the option to buy the vessel at the end of the lease is called a unilateral contract?

a. True

b. False

4. In determining the jurisdiction where a contract is made, the general rule is that a contract is formed at the place where the acceptance becomes effective.

a. True

b. False

5. A gratuitous promise is a promise made in the absence of a bargain. A promise to make a gift or a promise to perform services without remuneration are common examples of gratuitous promises. Are gratuitous promises enforceable?

a. True

b. False

6. James, who is a lender of Paul, threatens to sue Paul for non-payment of debt in the amount of $5,000.00. Stephen learned of Paul's predicament and promised to James that he will pay Paul's outstanding debt and James agreed. Later, Stephen failed to pay for his promise. James sued Stephen for non-payment of his promise. Does the action of James prosper?

A. True

B. False

7. Mr. F, a debtor, owed a large sum of money to his creditor, Mr. B. The debt was overdue. Instead of suing Mr. F, Mr. B proposed to Mr. F that he will waive the interest provided Mr. F will pay the full amount of his debt in which Mr. F agreed and pays. Later, Mr. B sued Mr. F for the accrued interest. Does the action of Mr. B prosper?

a. True

b. False

8. Equitable estoppel applies in a situation when, except?

a. Some form of legal relationship already exists between the parties.

b. One of the parties promises (perhaps by implication only) to relate the other from some or all of the others legal duties to him.

c. The other party, in reliance on that promise, acts in a way that alters his position and would make it a real hardship if the promisor reneges on his/her promise.

d. Some form of legal relationship does not exist between the parties.

9. Police officers were requested to guard the premises of the company during the strike of the employees. The tasks of the police officers are something beyond their regular duties and not in conflict. The company agreed and promised to pay for the cost of guarding their premises. Since it is a promise, does the company duty bound to their promise?

a. True

b. False

10. If the contract is for the sale of goods, the Sale of Goods Act could also apply to a frustrating situation. The act states: Where there is an agreement to sell specific goods and subsequently the goods without any fault on the part of the seller or buyer perish before the risk has passed to the buyer, the agreement is hereby avoided. In order for the section to apply, three conditions must be present. Please select below that applies.

a. First, the goods must be specific that is they must be identified and agreed upon at the time the sale is made.

b. Second, the risk must still be with the seller that is the seller must still be responsible for the safety of the goods.

c. Third, the cause of the frustration must be the perishing or destruction of the goods.

d. All the above

11. Mr. A offers Mr. B to sell a load of flour sitting at the railroad station for $20,000.00. The offer sheet was sent via fax, and it says, the risk will pass to you on delivery of the shipping documents in seven (7) business days time. Mr. B accepts by return fax. Four days later, the train on the adjacent track was derailed and knocked over the freight car containing the flour. The contents are spilled out and ruined by rain, frustrating the contract. Are both parties immediately discharged from liability under the contract?

a. True

b. False

12._______________ happens when one of the contracting parties tells the other that it does not intend to perform as it promised in the contract.

a. Express repudiation.

b. Anticipatory breach

c. A & B

d. None of the above

13. In some limited circumstances, a contract is required by the statute of fraud to be in writing for it to be enforceable. Please select below that applies.

a. Contracts not to be performed within one year.

b. Promise in consideration of marriage.

c. The promise of an executor.

d. All the above.

14. _____________ consist of actual or threatened violence or imprisonment as a means of coercing a party to accept a contract.

a. Undue influence

b. Duress

15. Peter, who is a minor, hires a riding horse and promises to handle the animal with care, as the term of the contract stipulates. In his excitement, Peter injures the horse by riding it too hard. Queen, who is the owner of the horse, realizes that if she sues Peter for breach of contract she will fail because the contract is non-necessary.

a. True

b. False

16. On Saturday, Mr. Craig and his wife, Jean, went to a restaurant for dinner. After the dinner, Mr. Craig ordered a couple of beers. Joseph, who Mr. Craig knew him for 5 years, drop at the restaurant. Joseph approached Mr. Craig and inquired if his farmland was already sold. Mr. Crag responded that he is not incline to sale his farmland, but Joseph said to him, I bet you wouldnt take $100,000.00 for farm? Mr. Craig said yes, I would, thinking that Joseph has no such huge money. Then Joseph challenge him to put it in writing, then Mr. Craig wrote in a piece of paper that said I hereby agree to sell my farmland to Joseph. Upon reading it, Joseph told Mr. Craig to change the wording from I to We and have it signed by your wife. Mr. Craig revised and hand it over to Joseph. On Monday, Joseph employed the service of a lawyer to check whether the title of farmland is clean of any encumbrances. When the title is clean, Joseph went to Mr. Craig and ask him would be ready to close the deal.

Mr. Craig said he had never agreed to sell their farmland. Does the written agreement signed by the couple considered a valid contract of sale?

a. True

b. False

In his defense, Mr. Craig argued that he was intoxicated at the time of signing. What might the court would look for in this contract of sale? Please select below that applies.

a.That the intoxication was severe enough that the person entering into the contract was incapacitated.

b. That the other party was aware of the intoxication at the time.

c. That the intoxicated person consumed enough alcohol or drugs to cause impairment in thinking sufficient enough that he could not understand the legal ramification of entering into the contract.

d. All the above.

Cases and Problems

Case 1

A retired businessman who owned a track of land was approached by a real estate agent, who is interested to buy his land. The purchase price offered by the agent was above the prevailing fair market value (FMV). The wants to develop the land into a commercial area and sell it to the public. The agent discussed the terms and conditions of the deed of sale in detail to the businessman, and the businessman agreed to the deal. Last year, the businessman was diagnosed of dementia by his family doctor.

Case 2

Jacky invited her friend, Lourdes, to her house. Lourdes has a beautiful sports car and Jacky is interested and offered to purchase it at a prevailing market price or FMV, but Lourdes rejected her offer. Jacky offered Lourdes a bottle of vodka. When Lourdes consumed so much of it, she feels dizzy. Jacky took advantage and offered again to purchase her sports car and, this time, with a copy of the bill of sale and ready for signature. The bill of sale was, indeed, signed.

Case 3

Tan, who is a minor, agreed to become a tenant of a house and to pay John, the landlord, and a certain amount for the furniture in it. Tan paid part of the sum and gave a promissory note for the balance. Tan occupied the house and had used of the furniture for several months. Later, Tan brought an action to have the contract rescinded and to recover the money he had paid to John.

Issue: Tan being a minor has no capacity to enter into a contract. Can he repudiate the contract and recover the money that he had paid to John? Please state your reason.

Case 4

Mr. K, who is an electrician, rendered services to Mr. C. After completing the job order contract, Mr. K billed and sent a charge invoice to Mr. C. When Mr. C learned that Mr. K is not a licensed electrician, Mr. C refused to pay the invoice. Mr. K then sued Mr. C for the cost of his services.

Does the action of Mr. K prosper? Please state your reason in the context of the capacity to enter into a contract.