Download Business Law Final Examination 10/3/2011 Prof: Rodriguez

Business Law
Final Examination
10/3/2011
Prof: Rodriguez
Directions:
Write your name here ________________________________
Mark the most correct answer for each of the following questions.
Only one answer can be marked for each question.
This is not an open-book test. No notes are allowed during testing.
1. The elements necessary for a contract are an offer, an acceptance, and consideration. T
2. A writing is necessary for goods over $500. T
F
F
3. An oral contract is not valid. Every contract, to be recognized by law, must be written. T
F
4. A promisor makes a promise to a promisee. T F
5. One of the ways to discharge a contractual obligation is by waiver.
6. A minor lacks capacity to enter into a contract. T
F
7. You can kill an offer by a counteroffer and by lapse.
T
F
8. A contract that is impossible to perform is discharged.
T
F
T
F
9. The conversation rule is a New York based rule that states: contracts can be made during a
conversation. A written contract is unnecessary for items under $500.
T
F
10. A contract for a $900 mental health session, which is an hour long, must be in writing.
T
F
Directions: Circle Y or N for yes or no. Yes is used when there is a contract that the law will enforce.
No is used when a contract does not exist.
11. Alfred, a 16 year old student at Sunset High School, purchases an $84,000 Porsche at The
Collection. A week later, he decides to return it. Y
N
12. Javas gets an advertisement in the mail that reads: “Cars at auction starting at $34. Come one,
come all.” When he arrives at the dealership, he demands the $34 car and (wiping his nose) he says,
“I accept.” He then tugs at his pocket and expels exactly $34. Y
N
13. Maria responds to an ad that states: “Become a T-Mobile representative. Make up to $2000 per
week.” She calls and says, “You guys gotta pay me in advance, but I accept the job you offered.” Y
N
14. Apple Computer, Inc. entered into a written agreement with SGI, Inc., whereby they agreed to pay
the sum of $11 million for three Cray Supercomputers. They wrote it down.
Y
N
15. Jessee tells Rocio: “Go into that church and steal me a chicken. I’ll give you $50.” Rocio does it and
then demands payment. Y
N
16. Rocio is selling LSD (a potent hallucinogen that happens to be against the law in this jurisdiction)
in the following manner: “Doses, doses, buy my doses, so I can go in the concert and get more doses.”
Ileana accepts and gives her $5, the usual price. Y
N
17. Juliet and Romeo enter into a written agreement whereby Juliet agrees to purchase “All of the
roses produced by Romeo’s estate, the South Farthing, for $1 per pound, and for the duration of one
year.” Y
N
18. Darth and Luke enter into an oral agreement whereby Darth agrees to build the Deathstar for
$5000. Building the Deathstar will take a minimum of 18 months. Y
N
19. Darth and Luke enter into a written agreement whereby Darth agrees to build the Deathstar for
$5000. Building the Deathstar will take a minimum of 18 months. Y
N
20. Ermenegildo Zegna agrees, in writing, to sell his prized collection of ties to Nicole, for $5000. One
week later, Nicole brings the prized ties back and says: “I am a girl, dude. I don’t want these.” Y
Directions: Choose the best answer out of the four choices given.
21. An agreement to slander a third person would not be enforceable because slander is a(n):
a.
crime.
b.
civil wrong, a.k.a. Tort.
c.
infringement of privacy.
d.
assault.
22. Regarding the popcorn theory, courts will consider the adequacy of the consideration when:
a.
one party clearly has the better of the deal.
b.
one party has more business experience than the other.
c.
one party claims to have been defrauded.
N
d.
one party shows a much lower price nationally advertised on television.
23. Contractual capacity is the ability to:
a.
read and write.
b.
sign a written contract.
c.
understand that a contract is being made and to understand its general nature.
d.
understand the precise legal meaning and legal intricacies of the contract being made.
24. If an offeree accepts an offer before it is effectively revoked:
a.
a void contract is formed.
b.
a voidable contract is formed.
c.
an unenforceable contract is formed.
d.
a valid contract is formed.
25. The elements of a contract include all of the following except:
a.
an agreement.
b.
two or more competent parties.
c.
consideration.
d.
an illegal purpose.
26. A person lacks contractual capacity if:
a.
the person is a chronic alcoholic who does not comprehend that a contract is being made
or understand its consequences..
b.
the person is a drug addict who does not comprehend that a contract is being made or
understand its consequences..
c.
because of mental impairment, the person does not comprehend that a contract is being
made or understand its consequences.
d.
all of the above.
27. Alfred said to Rocio, "I'll give you $100 for that bracelet." Rocio replied, "$135." Alfred said, "NO
thanks." Rocio then said that she accepted the $100, but Alfred was no longer interested and
said there was no contract. Rocio insists there is a contract. Result?
a.
Alfred's offer of $100 was open and accepted by Rocio, forming a contract.
b.
Rocio's counteroffer of $135 terminated Alfred's offer of $100.
c.
Rocio's statement, "$135" was a negotiating statement that did not terminate the offer of
$100.
d.
Alfred's offer of $100 was irrevocable.
28. Which of the following can be consideration for a promise?
a.
refraining from beating one's spouse
b.
promising to refrain from beating one's spouse
c.
refraining from smoking cigarettes
d.
refraining from using cocaine
29. A promise to pay a contractor a bonus to complete construction of a building according to the
contract is:
a.
binding if the promise is in writing.
b.
binding if the promise is made by a merchant under duress.
c.
binding if the promise is made to an insane and intoxicated minor.
d.
ordinarily not binding on the promisor because of the pre-existing duty rule.
30. An oral contract can be enforced when it relates to:
a.
the purchase of a television set for $200.
b.
the sale of an interest in land for $400.
c.
managing a factory for five years.
d.
a promise to answer for the debt of another.
31. When Rocio the bus driver informs Alfred (the customer) that after the next quarter she will no
longer administer his business’ finances for the contractual sum of $5,000 per pay quarter, Alfred
may:
a. wait for Rocio to perform the contract and then when she doesn’t perform, sue.
b. sue immediately.
c. waive and renegotiate a higher fee.
d. all of the above.
32. If Ileana and Maria draft a contract stating that Maria shall perform oil drilling on Ileana’s land for
$1000 a day, but when Maria starts digging it soon becomes apparent that the digging will cost
upward of $20,000 per day on Maria’s end alone, the contract shall be discharged because of:
a. impossibility.
b. impractibability.
c. act of God.
d. frustration of purpose.
33. If Javas makes a contract for a hotel room across from the track on race night, paying four times
the normal rate, and then the race is cancelled, Javas may:
a. cancel because of “act of God.”
b. cancel because of frustration of purpose.
c. cancel because he was a minor during the transaction.
d. cancel because there was an avoidable bilateral mistake.
33. Most contracts are discharged by:
a.
artificial and inconsequential tender of performance.
b.
performance by the parties.
c.
operation of law.
d.
substantial performance.
34. A debt of $19 is discharged by performance when the debtor:
a.
tenders the creditor a $100 bill, but the creditor refuses it because the creditor cannot
make change.
b.
tenders the creditor a $19 bill, but the creditor refuses it because the creditor wants
smaller bills.
c.
gives the creditor a check for $19 and the creditor accepts it.
d.
gives the creditor a check for $19 and the creditor cashes the check at the debtor's bank.
35. If no time period for performance is specified in a contract:
a.
the contract is unenforceable.
b.
time shall be of the essence.
c.
a reasonable time for performance will be implied.
d.
time will be ignored by the courts.
36. A landlord who continuously accepts late rental payments without collecting the late fee
provided in the lease:
a.
waives the late fee.
b.
will collect the late fee at a later date.
c.
is ignorant of the late fee.
d.
allows the tenant to repudiate the lease.
37. When an anticipatory repudiation of a contract occurs, the aggrieved person's option(s) include
(also see question 31):
a.
do nothing and wait for performance per the contract.
b.
immediately declare breach of contract.
c.
consider the contract canceled.
d.
all of the above.
38. If Jesus and Maria make a contract whereby Maria is to provide 500 widgets for $500, and Jesus
fails to pay the $500, causing Maria to sue for exactly $500, then Maria is suing:
a. only for direct damages.
b. only for consequential damages.
c. only for punitive damages.
d. all of the above.
39. Jesus and Alfred enter into a contract whereby Alfred shall build a house and after the house is
complete and Jesus is satisfied, then Jesus shall pay Alfred for the house. In this case, Jesus’
satisfaction and the completion of the house are:
a. conditions subsequent.
b. conditions precedent.
c. conditions bilateral.
d. all of the above.
40. An American soldier fighting in Afghanistan stumbles upon an enormous set of TV production
equipment. Figuring that he has encountered the home of the most notorious producer of videos in
the world, the soldier walks inside and stumbles into the man himself: Osama bin Laden. The soldier
holds him at gunpoint and Osama surrenders. Upon incarceration, the soldier requests the 25 million
dollar bounty that the government has promised for bin Laden. The American government refuses
payment. You are the lawyer for the government. What will you allege as your reason for nonpayment?
a. conditions bilateral to the creation of a precedent contractual obligation.
b. consequential damages for repudiated late fees.
c. pre-existing duty.
d. frustration of purpose due to “act of God.”
Directions: circle T or F for True or false.
41. When one party breaks the contract, the contract is said to be breached. T
F
42. Generally, when a person of legal age makes a contract with a minor, the contract is voidable by
either party. T F
43. A minor is deemed to have capacity to enter into contracts for “necessaries.” T
F
44. A person who has drunk too much alcohol and then snorted too much cocaine at a party and signs
a contract may be able to rescind that contract for lack of capacity. T
F
45. Ordinarily, acourt will not consider whether someone paid too much for a contract. T F
46. A contract for services over $500 requires a writing to be enforceable. T
47. If there is no writing there is no contract. T
F
F
48. Performance of the contractual provisions must be exactly as detailed in the contract, unless it is
waived or modified. T
F
49. Full performance of a contract can be waived and yet a reservation to sue despite the waiver can
be made. T
F
50. A counteroffer effectively kills the initial offer. T
F