1) Which of the following is an example of a liquidated damages clause?

a.This contract will automatically terminate in the event that the purchaser orders less than the quota for four consecutive weeks.

b.If the supplier fails to deliver the weekly supply of products to the retailer on or before the first day of each week, the supplier shall pay the retailer $100.00 for each day that the delivery is late.

c.The supplier shall not be liable to the retailer in respect of any losses, damages, costs or claims resulting from circumstances that are not within the control of the supplier.

d.This is the entire agreement between the parties, covering everything agreed or understood in connection with the subject matter of this transaction. No oral promises, conditions, warranties, representations, understandings, or interpretations were relied on by either party to execute this contract.

2)A contract under which businesses purchase inventory or supplies falls under which category?

a.Employment contract

b.Insurance contract

c.Contract for the purchase and sale of goods

d.Leasing contract

3)Family members or friends who enter into unwritten business agreements with one another may have difficulty proving they intended the agreement to be legally binding.

a.True b.False 4)Written contracts are usually preferable to verbal contracts because...

a.Written contracts provide the parties with a record of their rights and obligations.

b.Written contracts provide proof of the parties' agreement in the event of a dispute.

c.All of the above

d.None of the above 5)If you shake hands on the essential terms of a business transaction, it will not be legally binding until a contract is written up and signed by the parties. a. True b. False

6)Advertising agreements commonly take the form of standard form contracts. a.True

b.False 7)What constitutes a breach of contract?

a.A product fails to meet the quality specified in the contract

b.A product is not delivered

c.No payment is made

d.All of the above

8)A party to a contract might choose to include a condition subsequent clause in a contract:

a.if there is a risk of forfeiting a deposit if a deadline is missed.

b.if it does not want to be bound to the terms of the contract if a certain situation arises.

c.to avoid the high cost of litigation if the contract is breached

d.to ensure any dispute will be resolved according to the law in a designated jurisdiction.

9)Consideration means that the parties must provide something of value to each other. a. True

b.False

10)If a term in a contract is ambiguous and the parties disagree on its meaning, how will a judge resolve the dispute?

a.In favour of the drafter

b.Against the drafter

11)Whichoneof the following agreements is most likely to be deemed legally binding?

a.Diana enters into an agreement to sell her diamond sapphire ring to Kate, her work colleague.

b.Janelle, a minor, enters into a loan agreement with Unibond Financial Services for $5,000.00

c.Wendy suffered from a severe mental disability for many years and entered into an agreement to sell her rare stamp collection

d.Norm and Cliff, two businessmen, negotiate an agreement after sharing a bottle of whiskey, and two cases of beer.