11.Amy, a minor, disaffirmed her agreement to buy $400 worth of cosmetics from Sephodi Company. She had used up all the eye shadows, lipsticks, and powders. The general rule is that she may:

a. disaffirm, but she has to return the makeup that is not used up. b. not disaffirm because she has used the goods. c. not disaffirm without paying the value of used makeup. d. disaffirm, but she must pay the asking price of the cosmetics used.\

12.Which of the following is correct with regard to a contract?

a. A person who deposits money in a bank account has entered into a contract with the bank. b. A contract may be for a tortious purpose. c. To be valid, a contract must be bilateral and cannot be unilateral. d. All contracts must be in writing.

13.Arlene entered into a contract with a local truck dealer to have a new truck delivered to her daughter, Stacy, as a graduation present. In this contract, Stacy is:

a. an incidental beneficiary. b. a donee beneficiary. c. an assignor. d. a creditor beneficiary.

14.Brian owns a parcel of land that is encumbered by a mortgage held by the First International Bank. Brian agrees to sell the land to Piercel for $350,000. Brian and Pierce together go to the First International Bank to discuss the sale and purchase with the banker. Brian, Pierce, and the banker sign an agreement stating that Pierce will assume the mortgage and that Brian will be discharged from all further liability on the mortgage. In this case:

a. The agreement among the three is a novation. b. the bank can collect from Brian if Pierce defaults. c. the bank is a third party donee beneficiary. d. Brian is a third party beneficiary of the agreement between Pierce and the bank.

15.Which of the following isnot trueregarding the contracts of intoxicated persons?

a. If an intoxicated person is unable to understand the nature and consequences of his act, then the contract is voidable.

b. Slight intoxication will destroy one's contractual capacity.

c. Contracts made while a person is too intoxicated to act in a reasonable manner may be ratified when the intoxicated person regains his capacity.

d. The effect of intoxication is generally the same as that given to contracts that are voidable because of incompetency.

16. Sandra signs a contract to work as a sales rep for Pharm-o-med Corporation for a period of two years. This contract is governed by:

a. the law of quasi contract.

b. federal statute.

c. Article 2 of the UCC.

d. state common law.

17.Carly, age 16, ordered a new dress to wear to the school prom. She has contracted to pay $750 when the dress arrives. Before the dress arrives, Carly decides that the dress is too expensive. If she now wishes to cancel the order, Carly:

a. must accept the dress and pay the reasonable value of the dress. b. must pay $500 for the dress because clothing is classified as a necessity. c. may disaffirm this executory contract. d. must pay $750 for the dress because the dress was specially ordered for Carly.

18.Steve purchased 400 pairs of gloves from Ivan at a contract price of $500. Fifty of the gloves were defective, and a dispute arose as to the amount due and owing under the contract. Steve refuses to pay the $500, and Ivan is threatening to sue. Which of the following is correct with regard to this transaction?

a. If Ivan agrees to accept $400 to settle the dispute and Steve agrees to pay that amount, the substitute agreement is enforceable. b. If Ivan agrees to accept $400 to settle the dispute and Steve pays that amount, Ivan can still sue for the balance of $100 and will win the lawsuit. c. Steve is under a pre-existing legal obligation to pay the $500. d. Both (b) and (c).

19.The statute of frauds does not prevent the performance of oral contracts if the parties are willing to perform.

True

False

20.Which of the following would most likely be a merchant with respect to the goods in question under the UCC definition?

a. Rebecca is an authorized IBM computer dealer. b. Sam employs two salesmen to sell his homemade furniture. c. Lawrence has a store in which he sells used lawn mowers. d. All of the above would be merchants. e. None of the above would be merchants.