Reference no: EM13840106
1. When is a contract voidable?
When the contract is entered into by a person adjudicated as a habitual drunkard
When the contract is entered into by a minor
When the contract is entered into by a person adjudicated insane
When the contract is entered into by an intoxicated person who understands his or her contractual obligations
2. A(n) _____ is best described as a statement made in court, under oath, or at some stage during a legal proceeding in which a party against whom charges have been brought admits that an oral contract existed, even though the contract was required to be in writing.
recognizance
illusory promise
admission
assignment
3. Which of the following contracts falls within the statute of frauds?
Contracts related to an interest in land
Contracts for lifetime employment
Contracts whose terms could be performed within six months
Contracts for the sale of goods totaling not more than $100
4. A contract entered into by a person suffering from mental problems yet who still understands the nature of the contract and the obligations it imposes is considered _____.
illegal
valid
void
voidable
5. _____ is best described as a failure to provide pertinent information about a projected contract.
Slander
Nondisclosure
Defalcation
Libel
6. Contracts that are required to be in writing by the statute of frauds include:
mutual promises to marry.
promises to sell crops annually.
contracts between parties for profit sharing from the sale of real property.
contracts of suretyship promises.
7. An agreement can be rescinded on grounds of _____, when one of the parties to the contract has so much more bargaining power than the other that he or she dictates the terms of the agreement.
defalcation
false light
libel
unconscionability
8. The legal principle of _____ means that both parties to a contract are equally responsible for an illegal agreement.
pro hominem
res ipsa loquitur
in pari delicto
caveat emptor
9. In a contract made by a minor, the:
minor has the right to disaffirm the contract before or within a reasonable time of reaching the age of majority.
adult parties to the contract can disaffirm the contract.
minor can choose to disaffirm only a portion of the contract.
other party will have no recourse against the minor in any state if the consideration has been damaged or destroyed.
10. In contract law, _____ refers to having an erroneous belief about the facts of a contract at the time the contract is concluded.
mistake of fact
implied-in-fact
false light
defalcation
11. Which of the following is true of the parol evidence rule?
The rule is a unitary concept, which can be considered as a rule of evidence.
The rule takes into account evidence of prior agreements and negotiations, as well as contemporaneous agreements and negotiations.
The rule effectively applies to evidence of condition precedents.
The purpose of the rule is to prevent evidence that substantially contradicts an agreement in its written form.
12._____ occurs when a party gives a loan at an interest rate exceeding the legal maximum.
Duress
Arson
Libel
Usury
13. Agreements for a sale of goods in which the total price is $500 or more are required by the Uniform Commercial Code (UCC) to be recorded in a written contract. This writing need only state the:
price of the goods.
names of the buyer and seller.
quantity to be sold.
method of payment.
14. In which of the following cases is parol evidence inadmissible?
When a contract contains obvious typographical errors
When a contract contains ambiguous terms that significantly affect its interpretation
When certain conditions make an otherwise valid contract void
When a contract is deemed integrated by the courts
15. A(n) _____ occurs when, after reaching the age of majority, a person states orally or in writing that he or she intends to be bound by the contract entered into as a minor.
juvenile adjudication
recognizance
emancipation
express ratification
16. Naomi sold her five-year-old car to the buyer claiming that she had bought the car three years ago. This is an example of:
duress.
mistake of law.
fraudulent misrepresentation.
mistake of fact.
17. Under the _____, contracts that would normally fall under the statute of frauds and need a writing if negotiated by the principal must be in writing even if negotiated by an agent.
mirror image rule
parol evidence rule
equal dignity rule
preexisting duty rule
18. A(n) _____ results from a false statement about a fact material to an agreement that the person making it believed to be true.
innocent misrepresentation
negligent misrepresentation
intentional misrepresentation
fraudulent misrepresentation
19. When one party is forced to enter into a contract by the wrongful threat of another, the contract is voidable by the innocent party due to _____.
duress
false light
negligence per se
duty to retreat
20. A contract is referred to as a(n) _____ when a court can void the illegal part of the contract and enforce the rest as long as they represent the main purpose of the original agreement.
severable contract
executory contract
adhesion contract
constructive contract
21. A(n) _____ is best described as an agreement presented on a take-it-or-leave-it basis or as the only chance the presented party will have to enter into it.
unilateral contract
aleatory contract
executory contract
adhesion contract
22. Section 16 of the Restatement of Contracts provides that contracts of an intoxicated person are _____ if the other party had reason to know that intoxication rendered the person unable to understand the nature and consequences of the transaction.
illegal
voidable
enforceable
void
23. If a person has been adjudicated insane and has a guardian appointed, any contract the person attempts to enter into is:
valid.
void.
unilateral.
voidable.
24. Removing 10,000 miles from the odometer on a pre-owned car before selling it is an example of:
concealment.
mistake of fact.
negligent misrepresentation.
trade libel.
25. Before a contract can be voided for a mutual mistake, it must be proved that:
a party to the contract made erroneous judgment about the value of an item.
a basic assumption about the subject matter of the contract is present.
there is no material effect on the agreement.
both the parties to the contract consciously made false statements about a fact material to the agreement.
26. A _____ is an agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property.
coverture arrangement
nondisclosure agreement
cartel arrangement
prenuptial agreement
27. _____ is best described as those special relationships in which one person takes advantage of a dominant position in a relationship to unfairly persuade the other and interfere with that person's ability to make his or her own decision.
Undue influence
Defalcation
Duress
Unconscionability
28. When does an innocent misrepresentation occur?
When a person makes a false statement due to mistake of law
When a person makes a false statement due to lack of scienter
When a person makes a false statement under the influence of alcohol or drugs
When a person makes a false statement with intentions to mislead
29. When an entire contract is conditioned on something else's occurring first, that first event is known as a(n) _____.
constructive action
condition precedent
adhesion clause
undue influence
30. Which of the following elements of a contract refers to the mental ability of a person to understand his or her rights and obligations under a contract and comply with the terms?
Fair consideration
Legal capacity
Agreement
Recognizance
31. Under the statute of frauds, which of the following statements is true of the one-year rule for contracts?
The possibility that a contract's terms could be performed within one year does not remove the contract from the statute's written requirements.
The test for compliance with the one-year rule considers the likelihood of completing the contract in one year rather than the possibility.
If a contract can possibly be performed within a year, but such performance is highly unlikely, then the contract needs to be in writing to be enforceable.
Under the statute, the one-year period begins the day after the contract is created, not when it is scheduled to begin.
32. Which of the following is a primary purpose of statute of frauds?
It attempts to ease contractual negotiations by requiring that certain contracts be made orally.
It sets the maximum time within which all types of civil actions may be brought on fraudulent cases.
It addresses the issue of illegal and fraudulent contracts.
It prevents parties from entering into contracts with which they do not agree.
33. In employment contracts, what is the purpose of covenants not to compete?
It restricts an employee from quitting her current job for a designated period of time.
It makes it legal for competitors of a business to involve in corporate espionage.
It restrains an employee from competing with her boss for a designated period of time after she quits her current job.
It restricts an employee from competing against his or her coworkers in the workplace.
34. Which of the following statements is true of mistakes in contract law?
Mistakes in contract law do not result from untrue statements.
A unilateral mistake generally voids a contract.
Mistaken beliefs about the subjective value of an item affect the validity of a contract.
In a mutual mistake, neither party can choose to rescind the contract.
35. Without legal assent, a contract:
is deemed void.
is still valid.
may be valid but unenforceable.
may be voidable.
36. A(n) _____ occurs when a party outside a primary agreement promises to fulfill one of the original party's obligations if the original party fails to fulfill it.
collateral promise
recognizance
primary obligation
illusory promise
37. Which of the following statements is true of merger clauses?
They are universally considered to be conclusive proof of a contract by all courts.
They seek to blend other agreements either into the final agreement or into something explicitly identified as being outside the final agreement.
They are used by parties to a contract to signal that the written contract is not the final statement of their agreement.
They increase the amount of guesswork courts must do in determining what is the final statement of the agreement.
38. When is a contract deemed void?
When the contract is entered into by a person suffering from mental deficiencies, but he or she has the ability to understand the legal obligations under the contract
When a contract is entered into by a person who, under the influence of alcohol, exercises poor judgment
When the contract is entered into by a person under the age of majority
When the contract is entered into by an intoxicated person who has been adjudicated a habitual drunkard
39. Which of the following refers to agreements in which parties pay consideration for the chance, or opportunity, to obtain an amount of money or property?
Defalcation
Predatory lending
Usury
Gambling
40. In a contract, _____ refers to a promise the courts will require the parties to obey.
legal capacity
legal assent
legal consideration
legal object
41. Which of the following statements is true of Sabbath laws?
These laws limit the types of business activities in which parties can legally engage on Saturdays.
These laws limit the performance of charity work to Sundays.
These laws require parties to enter into contracts only on Sundays for certain business activities.
These laws do not apply to contracts for obtaining necessities and anything related to health or survival.
42. How is undue influence different from duress?
While contracts resulting from undue influence are void, contracts resulting from duress are valid.
Duress is a much more visible and active interference with free will than is undue influence.
Undue influence does not involve a dominant-subservient relationship, whereas it is an essential element in duress.
While undue influence results in aleatory contracts, duress results in adhesion contracts.
43. A(n) _____ occurs only when the party making a false statement, without the intentions to deceive, should have known the truth using the skills and competence required of a person in his position or profession.
negligent misrepresentation
innocent misrepresentation
fraudulent misrepresentation
intentional misrepresentation
44. Which of the following can be in the form of an oral contract to be enforceable?
A contract of suretyship
Mutual promises to marry
A prenuptial agreement
Contract for a sale of land
45. The _____ makes oral evidence of an agreement inadmissible if it is made before or at the same time as a writing that the parties intend to be the complete and final version of their agreement.
parol evidence rule
collateral agreement rule
mirror image rule
equal dignity rule