Download Chapter 9 Practice Exam

Chapter 9 Practice Exam
Matching Questions
Match the following terms with their definitions:
(5) B. Mirror image rule.
(3) C. Consideration
(1) D. Liquidated debt.
1. A debt in which the amount is undisputed.
3. Bargaining that leads to an exchange between the parties.
5. A common law principle requiring the acceptance to be on exactly the terms of the offer.
True/False Questions
Circle true or false:
1. T
F
To be enforceable, all contracts must be in writing.
3. T
F
If an offer demands a reply within a stated period, the absence of a reply indicates
acceptance.
5. T
F
As long as one party gives consideration, there is a binding contract.
Multiple-Choice Questions
7. Raul has finished the computer installation he promised to perform for Tanya, and she has paid him in
full. This is
(a) An express contract.
(b) An implied contract.
(c) An executed contract.
(d) A bilateral contract.
(e) No contract.
9. On Monday night, Louise is talking on her cell phone with Bill. “I’m desperate for a manager in my
store,” says Louise. “I’ll pay you $45,000 per year, if you can start tomorrow morning. What do you
say?”
“It’s a deal,” says Bill. “I can start tomorrow at 8 a.m. I’ll take $45,000 and I also want 10 percent
of any profits you make above last year’s.” Just then Bill loses his cell phone signal. The next
morning he shows up at the store, but Louise refuses to hire him. Bill sues. Bill will
(a) Win, because there was a valid offer and acceptance.
(b) Win, based on promissory estoppel.
(c) Lose, because he rejected the offer.
(d) Lose, because the agreement was not put in writing.
(e) Lose, because Louise revoked the offer.
Short-Answer Questions
11. Interactive Data Corp. hired Daniel Foley as an assistant product manager at a starting salary of
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$18,500. Over the next six years Interactive steadily promoted Foley until he became Los Angeles
branch manager at a salary of $56,116. Interactive’s officers repeatedly told Foley that he would have
his job as long as his performance was adequate. In addition, Interactive distributed an employee
handbook that specified “termination guidelines,” including a mandatory seven-step, pretermination
procedure. Two years later Foley learned that his recently hired supervisor, Robert Kuhne, was under
investigation by the FBI for embezzlement at his previous job. Foley reported this to Interactive
officers. Shortly thereafter, Interactive fired Foley. He sued, claiming that Interactive could only fire
him for good cause, after the seven-step procedure. What kind of a claim is he making? Should he
succeed?
Answer: Foley is arguing that he has an implied contract with Interactive based on the informal discussions concerning his future and the employee handbook. His argument convinced the California
Supreme Court. Foley v. Interactive Data Corp., 47 Cal. 3d 654, 765 P.2d 373 (1988). Foley had no
express contract for any period, and thus he started work as an employee-at-will. However, the
company’s repeated assurances, and the handbook, created an implied contract.
13. Arnold owned a Pontiac dealership and wanted to expand by obtaining a Buick outlet. He spoke with
Patricia Roberts and other Buick executives on several occasions. He now claims that those
discussions resulted in an oral contract that requires Buick to grant him a franchise, but the company
disagrees. His strongest evidence of a contract is the fact that Roberts gave him forms on which to
order Buicks. Roberts answered that it was her standard practice to give such forms to prospective
dealers, so that if the franchise were approved, car orders could be processed quickly. Is there a
contract?
Answer: The order forms are neither an offer nor an acceptance. Arnold has offered no evidence that
the parties agreed on price, date of performance, or any other key terms. There is no contract.
15. ROLE REVERSAL: Write a multiple-choice question focusing on UCC 2-207.