Business law ethics 214

Book: Dynamic Business Law (SmartBook) ( Kubasek, 4e)

true/false questions

1.when there is a substitution of a party to a contract, it is called rescission.

2.reasonable reliance on a promise is one of the requirements of promissory estoppel.

3.assignments require special wording or forms to be valid.

4.a promise to stop doing something in the future is not valid consideration.

5.parents are responsible for the torts committed by their minor children in all states.

6.parties can discharge their duty under a contract by tendering performance.

7.assignment of a contract that is personal in nature is generally permitted.

8.there is only one situation in which a third patricians rights to a contract.

9.an offeror has no rights to revoke an offer before receiving a reply.

10.if a minor enters into contract with an adult, both parties may disaffirm a contract based upon the minor's lack of majority.

11.privity of contract is usually required in order for a party to be bound to a contract or have rights under a contract.

12.someone who has been adjudicated insane has no capacity to enter into contracts, and any contract he attempts to enter into is void, even if he has an appointed guardian.

13.there are two types of conditions that can be placed on contracts and affect a party's duty to perform the promise agreed to in the contract.

14.completion of all of the terms of a contract is required for substantial performance.

multiple choice questions

1.when someone has some sort of mental or physical defect that prevents him or her from being able to enter into a legally binding contract, what term is used?

a.terminal illness

b.immajority

c.chronic illness

d.capacity

e.incapacity

2.which of the following is true of consideration?

a.consideration is valid only if it part of an equal exchange

b.consideration is not required in bilateral contracts

c.consideration is never required

d.consideration is required in all contracts

e.consideration is not required in unilateral contracts

3.what is necessary for consideration to be valid?

a.consideration must be the product of a bargained for exchange

b.consideration must be part of an equal exchange

c.consideration must involve a mutual exchange of promises

d.consideration must be money

e.consideration must involve performance in exchange for a promises

4.which of the following is an element of a legally binding contract?

a.knowledge

b.capacity

c.inquiry

d.acknowledgement

e.affirmance

5.what standard do courts use to interpret a contract?

a.a negligence standard

b.a common law reasonableness standard

c.an objective standard

d.a subjective standard

e.a subjective reasonableness standard

6.why do parties who are not in privity of contract usually not have rights to a contract?

a.because it would be against public policy to provide rights to a contract to those without privity.

b.because privity of contract is necessary to ensure a contract is in compliance with the UCC.

c.because of the state of frauds.

d.because contracts are private agreements between parties who each agree to give or do something for the other party.

e.because it would be too difficult to determine who has contractual rights if privity of contract is not required.

7.when is an ad treated as an offer?

a.an advertisement is only treated as an offer if the language of the advertisement says "THIS IS AN OFFER."

b.an advertisement is treated as an offer if the ad specifies a limited quantity and provides a specific means by which the offer can be accepted.

c.an advertisement is treated as an offer if the ad specifies a price that it is willing to sella product for.

d.an advertisement is never treated as an offer.

e.an advertisement is always treated as an offer.

8.which of the following is true of intent to form a contract?

a.intent is assessed by considering proof of an offer or offeror's internal thought process.

b.intent is a required element of an offer or acceptance only if a contract is a contract for the sale of goods.

c.intent is not a required element of an offer or acceptance to form a contract.

d.intent is determined based on the specific motivations of the offeror or offeree, including hidden motivations.

e.an offeror must show intent to be bound by the offeree's acceptance.

9.regarding European courts, which statement is true?

a.European courts are in total disagreement with the reluctance of American courts to interfere with a contract because the value of the item in question has changed since the agreement.

b.European courts refuse to assume that parties accept the risk when they make a contract that the value might change later.

c.European courts permit rescission of the contract for a mistake of value when the mistake involved more than 10 percent of the value at the time of the contract.

d.European courts permit rescission of the contract for a mistake of value when the mistake involved more than 50 percent of the value at the time of the contract.

e. European courts permit rescission of the contract for a mistake of value when the mistake involved more than 40 percent of the value at the time of the contract.