This section contains 10 multiple choice questions.

1.________.Which of the following IS NOT considered to be a legally binding offer?

A.Bill tells his adult softball team that he will pay $50 to the first player to cut his lawn.

B.A store mails its customers a circular that advises of this week's sale items.

C.Walmart advertises that the first 50 customers to arrive at its new store for its Grand Opening will be entitled to purchase one of only fifty 50" big screen TVs for $50.

D.All of the above are considered to be legally binding offers.

2.________.Which is true of the "objective reasonable person" standard?

A.The standard is used in negligence cases but not in contract disputes.

B.The standard is used in contract disputes but not in negligence cases.

C.The standard is used in both contract disputes and negligence cases.

D.The subjective intent of the parties governs in contract disputes and negligence cases.

3.________.Fred had great difficulty accepting Sara's decision to break off their engagement.Sara was Fred's high school sweetheart and the couple had dated off and on since their grammar school days.Fred now wonders if he is entitled to the engagement ring back.If Fred sued, what would be the MOST LIKELY RESULT?

A.Sara would be permitted to keep the ring because it was a conditional gift.

B.Sara would be permitted to keep the ring because it was given in consideration of the love she and Fred had for many years.

C.Fred would be entitled to the ring's value or its return as a matter of equity because the ring unjustly enriched her at Fred's expense.

D.Fred would be entitled to the ring's value or its return as a matter of law because Sara breached her promise to marry and the ring was a conditional gift.

4.________.Egan, a 17-year old minor, contracted with Joe's Computer Service to purchase a refurbished computer "as is" for $500.00.Joe's Computer Service operated illegally out of a back room of his parent's warehouse in a portion of the town zoned solely for Industrial and Warehouse use.The deal concluded between Egan and Joe's Computer required a downpayment of $100 from Egan to take delivery of the computer and monthly payments of $100 thereafter for the next four months.On the 20^th day after Egan paid the initial payment and took delivery, the computer was dropped and slightly damaged.Two weeks later, Egan turned 18 years old and attained the age of majority.Five days after his birthday, Egan returned the damaged computer to Joe's Computer Service and claiming that he had no further obligation to Joe's.Joe's Computer sues Egan for the remaining $400 payment.What will the likely result be?

A.Joe wins because Egan breached their deal, partial payment constituted partial performance, Egan was unjustly enriched and equity demands the result in the interests of justice.

B.Joe loses because the computer was seriously defective and he took the risk by extending credit to Egan and failing to get an adult co-signer.

C.Joe loses because Egan lacked the requisite contractual intent and properly disaffirmed within a reasonable time of reaching majority age.

D.Joe wins because a Court may award his company the reasonable value of the computer since Egan could not return the computer in or close to its original condition.

5._______.Which of the following common law principles states that a valid contract acceptance occurs when an offeree places his/her acceptance in a properly-addressed, stamped envelope and deposits it in the U.S. mail?

A.The Mailbox Rule

B.The Mirror Rule

C.The Mutuality of Obligation Rule

D.Promissory Estoppel

6._______.In which of the following scenarios is an agreement properly "voidable" within a reasonable amount of time by the aggrieved party?

A.An owner of a company learns that he has bipolar disorder at the time he signs a loan agreement and upon taking his newly prescribed medication a week after the diagnosis returns the loan monies and seeks to disaffirm the agreement.

B.A corporate President of Ajax Co. signs a deal with a supplier over dinner to sell goods at a 50% wholesale discount to a new retailer XYZ Corporation after having had four martinis.The retailer's CEO had six martinis that night and upon receipt of the goods protests that he thought the discount was 60%.The next day, the CEO of Ajax sends a letter disaffirming the contract due to his being under the influence and demands the return of the goods shipped to XYZ.

C.Jack Swindler defrauds Susie Homemaker of $1,500 promising plumbing services that he never intended to complete or render in a competent fashion.Jack performs a small portion of the work and demands full payment of the agreed upon amount from Suzie and threatens to sue if not paid immediately.Suzie pays, Jack never shows up to complete the work and Suzie alleges that Jack defrauded her.

D.The Contracts are voidable in all of the above circumstances.

7._______.In which of the following scenarios would the agreement MOST LIKELY be declared to be unenforceable as an illusory promise?

A.An oral contract for the sale of real estate.

B.A written contract for the lease of a commercial premises that contains a one-year term and permits cancellation upon non-payment and thirty (30) days notice by the Tenant to the Landlord.

C.A contract for professional services that permits cancellation upon notice by one of the parties at any time in its sole discretion.

D.All of the above agreements are likely to be unenforceable as illusory promises.

8._______.During a furlough from her work, LuAnn maxed out her credit card, hitting her limit of $6,000 while awaiting her return to work.Despite her expectations, LuAnn was not called to return to work for six months.After maxing out her credit card, LuAnn made two minimum payments of $150.00 before defaulting on her card.When the card issuer sent LuAnn a notice advising that there was a balance of $5,700 now due in full with interest, LuAnn called the company, explained her situation and made an agreement with the card issuer to make six payments of $500 to settle her outstanding debt.When LuAnn missed the last four payments, the card issuer demanded full payment of the outstanding balance of $4,700 plus interest and penalties under the original card agreement.When the credit card company sues LuAnn for the outstanding balance of $4,700 plus interest and penalties, what will be the likely result?

A.The credit card company will be awarded a judgment against LuAnn but only for $2,000 because of the company's agreement to settle LuAnn's pre-existing debt.

B.The credit card company will be awarded a judgment against LuAnn for the outstanding balance of $4,700 under the original card agreement because there was no valid consideration given by LuAnn under the settlement and she owed the pre-existing debt.

C.The credit card company will lose the case against LuAnn because it waived its right to sue her by entering into a settlement.

D.None of the above are likely outcomes.

9._______.Which of the following constitutes the proper measure of legal, consequential damages awarded under the common law for a breach of contract?

A.Benefit-of-the-Bargain damages

B.Incidental damages

C.Liquidated damages

D.Exemplary damages

10._______.Which of the following is NOT a legal principle under the common law that applies to an offer to contract?

A.The offeror fixes the terms of an offer and manner of acceptance.

B.The offeror may revoke a valid offer at any time.

C.The offeror must manifest an intent to be bound by the offer.

D.The offeror must communicate an offer that is clear in order for it to be valid.